In the case of Butler v. Stegmaier, 77 Va. Ct. App. 115 (2023), the Virginia Court of Appeals declined to recognize a “good faith and probable cause” exception to “no contest clauses,” also called “forfeiture clauses” and “in terrorem clauses.”
This was a case that I litigated, and while I will not delve into the specific facts here, the ruling is significant because it was previously an open issue of law as to whether Virginia recognized such an exception. The key case on the issue was the Virginia Supreme Court’s holding in Womble v. Gunter, 198 Va. 522 (1956). In that case, the Virginia Supreme Court discussed the rationales for and against a good faith and probable cause exception but, ultimately, did not rule on the issue, as it held that the issue had been waived because it was not preserved at the trial court. I litigated this issue up to the Virginia Supreme Court a few years earlier in Hunter v. Hunter, 298 Va. 414 (2020), when the court granted an assignment of error on that point. Still, the Virginia Supreme Court ultimately overruled the trial court on a different ground, so it did not reach that assignment of error then.
One of the things that I have scratched my head about many times over the years is why no litigant had previously litigated this issue to the point of a written ruling from the Virginia Supreme Court. I do not necessarily believe this is due to the limited number of cases in Virginia involving no contest clauses—in my practice, we regularly handle these types of cases. It may be that attorneys with a more general litigation background did not focus on the issue.
The ruling by the Court of Appeals discussed how the Virginia Supreme Court considered the issue in Womble and the rationales for and against the exception that the Supreme Court articulated in Womble. The Court of Appeals also recognized how the exception is the majority rule in other states. The Court of Appeals then stated:
At present, there is no statutorily created good faith and probable cause exception to enforcement of no contest clauses in Virginia. Ultimately, it is the role of the General Assembly to evaluate and adopt or discard particular public policy changes as the elected representatives of Virginians directly accountable to the citizenry. Hence, we decline to adopt a good faith and probable cause exception based on policy considerations.
Butler, 77 Va. Ct. App. at 134.
Is this the end of the story for the exception in Virginia? Maybe not. Litigants seeking to invoke the exception may try to argue in the future that the ruling by the Court of Appeals ignored an implicit holding in Womble that the decision of whether to recognize the exception is for the judiciary to make after weighing the policy rationales. In support of this view, litigants would argue that it would have made no sense for the Womble court to devote so much time to discussing the policy rationales for and against the exception if it did not presuppose that the decision was one that is properly for the judiciary to make. Under this theory, a future litigant could try to convince the Virginia Supreme Court to overrule the holding by the Court of Appeals in Butler as being inconsistent with Womble. It will be interesting to watch this issue unfold in the future.