Peerless Ins. Co. v. County of Fairfax

• Decision Date: 08 June 2007
• Docket Number: Record No. 061279.
• Court: Virginia Supreme Court
• Parties: PEERLESS INSURANCE COMPANY, et al. v. COUNTY OF FAIRFAX.

645 S.E.2d 478

PEERLESS INSURANCE COMPANY, et al. v. COUNTY OF FAIRFAX.

Record No. 061279.

Supreme Court of Virginia.

June 8, 2007.

Stephen A. Horvath (Trichilo, Bancroft, McGavin, Horvath & Judkins, on briefs), Fairfax, for appellants.

Karen L. Gibbons, Assistant County Attorney (David P. Bobzien, County Attorney; Peter D. Andreoli, Jr., Deputy County Attorney, on brief), for appellee.

Present: All the Justices.

OPINION BY Justice DONALD W. LEMONS.

This appeal involves a suit seeking to allocate financial responsibility between Peerless Insurance Company and Excelsior Insurance Company (collectively "Peerless") and the County of Fairfax (the "County") arising out of a tragic incident and resulting injuries to a child, Adam Afzall ("Adam"). In this appeal, we consider whether the trial court erred in sustaining the County's demurrers and plea in bar.

I. FACTS AND PROCEEDINGS BELOW

In its notice of appeal, Peerless stated that it appeals the trial court's final order sustaining the County's demurrer to the third amended motion for judgment, and "the [trial] court's interim orders." Pursuant to Peerless' assignments of error, we must consider the trial court's ruling that sustained the County's demurrer to the County's third amended motion for judgment as well as the trial court's rulings that sustained the County's plea in bar and demurrer to the first and second amended motions for judgment, respectively. Accordingly, we provide the following summary of the relevant facts and proceedings in the trial court.

A. Facts

Burke Centre Conservancy ("Burke Centre") owns property subject to a storm water easement. Peerless, the subrogee of Burke Centre, alleged the following facts in its motion for judgment and in each of its three amended motions for judgment. On or about July 8, 2001, Adam, then nine years old, was "playing along an outdoor recreational path" which is the subject of the storm water detention easement owned and maintained by the County. "After a rainfall, the storm water detention easement backed up making a large, deep, and dangerous pond." Adam fell into the pond and sustained severe brain damage, reducing his mental age to that of a nine-month-old child.

The dry pond facility at issue is located at Burke Centre, Section 13-D-1, designated by the County as "9174DP Burke Centre, Section 13-D-1." Fairfax County "expressly and impliedly agreed to maintain the easement." "The pond was fed by storm water runoff from at least three inlets." "By design, in a two-year storm, the pond would reach a depth of eleven feet within twenty-four minutes."

Sections 6-0303.6 and 6-1306.1 of "Fairfax County's Public Facilities Manual recognize the importance of the design and maintenance of a dry pond." "The Fairfax County Department of Public Works and Environmental Services undertook a duty, as part of its implied and express contractual obligations to maintain the easement and to maintain this dry pond." Nevertheless, on the day of Adam's injury, because of the County's failure to maintain the easement, "the outlet was impeded by a tire, trash and debris." "This resulted in a much larger and deeper than normal pond, which did not drain as fast as planned".

Additionally, the County's records "show spotty and inconsistent maintenance." "In the early 1990's the County made efforts to remove saplings on the dam, and to remove brush." However, more recently, "[c]ontrary to the requirements stated in the County's Public Facilities Manual: (1) no warning signs were posted; (2) the slopes were too steep; (3) the area was located in close proximity to residential and recreational areas but did not have low, flat entrances; (4) and the brush and bushes had been allowed to grow in the area." The County also did not put a fence around the dry pond, despite the fact that the dry pond had steep side slopes that were located in close proximity to areas where children were expected to play.

Peerless insured Burke Centre and settled the claims made against Burke Centre. Peerless is subrogated to the claims of its insured, Burke Centre, against the County. Peerless made a written demand pursuant to Code § 15.2-1245 upon the Fairfax County Board of Supervisors (the "Board of Supervisors") to recover the full amount they paid to settle a personal injury case arising from this unfortunate incident. The Board of Supervisors rejected Peerless' claim against the County. Peerless appealed the Board of Supervisor's decision to the trial court pursuant to Code § 15.2-1246, by filing a motion for judgment on May 20, 2005.

In all but its third amended motion for judgment, Peerless alleged "[t]he County entered into an implied contract by accepting the easement to control storm water." Moreover, in only its second and third amended motions for judgment, Peerless alleged that Adam assigned and transferred all rights, claims or interest he had against others to Peerless.

B. Proceedings Below

In response to Peerless' motion for judgment, the County filed a petition to place the terms of the settlement in the underlying suit under seal. The trial court ordered the motion for judgment including an ad damnum amount to be placed under seal.

In its motion for judgment as well as its first and second amended motions for judgment, Peerless alleged that the County breached its express and implied contractual obligations to maintain the storm water detention easement, and Peerless was, therefore, entitled to contribution and indemnification. The County filed a demurrer and a plea in bar to Peerless' first amended motion for judgment. The plea in bar asserted, in part, that Count I, breach of implied contract, and Count II, breach of express contract, were barred by the statute of limitations applicable to personal injury actions. The trial court sustained the plea in bar as to the statute of limitations.

The County filed a demurrer to the second amended motion for judgment. The first two grounds of the demurrer stated:

1. The Second Amended Motion for Judgment fails to state a cause of action because there is no written contract and thus pursuant to Va.Code Ann. § 15.2-970 this action may not be brought.

2. The Second Amended Motion for Judgment fails to state a cause of action because as the plaintiffs allege in ¶ 13 that Adam Afzall was "playing along an outdoor recreational path that is the subject of a storm water detention easement, owned and maintained by Fairfax County," and thus pursuant to Va.Code Ann. § 29.1-509 this action may not be brought.

The trial court sustained the demurrer because it held that Code § 15.2-970 applied to the storm water detention easement at issue in this case.

In its third amended motion for judgment, Peerless stated for the first time that the County breached its statutory duty to indemnify Burke Centre pursuant to Code § 29.1-509. Additionally, Peerless asserted that the County was estopped from denying the easement in question was for recreational purposes. Code § 29.1-509(E) provides:

For purposes of this section, whenever any person . . . grants an easement to . . . any county, . . . concerning the use of, or access over, his land by the public for any of the purposes enumerated in subsections B [outlining recreational uses] and C of this section, the . . . county . . . with which the agreement is made shall hold a person harmless from all liability and be responsible for providing, or for paying the cost of, all reasonable legal services required by any person entitled to the benefit of this section as the result of a claim or suit attempting to impose liability.

The County filed a demurrer to the third amended motion for judgment stating in part that Peerless failed to state a cause of action because:

1. There is no written contract and thus pursuant to Code § 15.2-970 this action may not be brought.

2. Peerless alleges that [Adam] was "playing along an outdoor recreational path that is the subject of a storm water detention easement, owned and maintained by Fairfax County," and thus pursuant to Code § 29.1-509 this action may not be brought because the County is a landowner.

The trial court sustained the demurrer and dismissed the third amended motion for judgment with prejudice. The trial court found:

First, the defendant's inconsistent positions argument fails to recognize that the [] statement in the defendant's papers is a reformulation of the plaintiffs' allegations, and, in any event, such a statement does not give rise to judicial estoppel because it is not a change of position with respect to facts.

Second, the issue, and I think the principal issue here is whether or not the easement granted was one for recreational purposes within the meaning of Virginia Code Section [29.1-509(E)].

I do not think that a recreational easement is defined by virtue of the duties that arise pursuant to [509(B)], and, in the absence of a specific recreational easement being pled, the demurrer is sustained.

Peerless filed a timely notice of appeal to this Court. We granted Peerless' petition for appeal on three assignments of error:

1. The trial court erred in ruling that Virginia Code § 15.2-970, which requires a written contract in order to bring suit against the County arising out of the construction of a dam, levee, [or] seawall, was applicable in this implied breach of contract case for the failure of the County to properly maintain a storm water easement.

2. The trial court erred in ruling that the Defendant's inconsistent positions in response to amended pleadings did not rise to the level of judicial estoppel and this ruling was clearly erroneous.

3. The trial court erred when it ruled the statute of limitations barred Plaintiffs' claims as subrogee of Burke Centre Conservancy because the plaintiffs' claims did not arise until the payment of the settlement.

The first assignment of error concerns the trial court's ruling that sustained the County's demurrer to Peerless' second...