Shebelskie v. Brown

• Decision Date: 10 January 2014
• Docket Number: Record No. 130503.
• Citation: 752 S.E.2d 877,287 Va. 18
• Court: Virginia Supreme Court
• Parties: Michael R. SHEBELSKIE, et al. v. Larry E. BROWN.

287 Va. 18

752 S.E.2d 877

Michael R. SHEBELSKIE, et al.

v.Larry E. BROWN.

Record No. 130503.

Supreme Court of Virginia.

Jan. 10, 2014.

Steven D. Benjamin (Betty Layne DesPortes; Benjamin & DesPortes, on briefs), Richmond, for appellants.

Edward E. Nicholas, III (James C. Cosby; Vandeventer Black, on brief), Richmond, for appellee.

PRESENT: KINSER, C.J., MILLETTE, MIMS, McCLANAHAN, JJ., and LACY, S.J.

Opinion by Chief Justice CYNTHIA D. KINSER.

Michael R. Shebelskie and William H. Wright, Jr., both of whom are licensed to practice law in the Commonwealth, appeal the circuit court's judgment sanctioning them pursuant to Code § 8.01–271.1. We conclude that Shebelskie did not violate Code § 8.01–271.1 because he neither signed the “Brief in Response to Show Cause Order” (Show Cause Response Brief) nor made a motion under the terms of that statute. Likewise, we conclude that Wright did not violate the statute because he could have formed, after reasonable inquiry, the belief that the Show Cause Response Brief and the arguments set forth therein were warranted under existing law. Thus, the circuit court abused its discretion, and we will reverse its judgment.

I. FACTS AND PROCEEDINGS

Shebelskie and Wright represented Betty G. Brown in a suit filed in the Circuit Court of the City of Richmond by her ex-husband Larry E. Brown, seeking partition and judicial sale of real property located in the City of Richmond. ¹ After extensive litigation concerning the sale of the property, the circuit court confirmed the sale pursuant to a 2008 real estate purchase contract (the Contract). Subsequently, the purchasers, intervening in the partition suit, filed a joint motion with Betty asking the circuit court to approve assignment of the Contract to Betty. In an order dated April 26, 2011, the circuit court granted the motion and directed Betty to close on the purchase of the property no later than May 5, 2011. Among other things, the April order stated: “[Betty] is to pay all costs and attorneys' fees incurred by [Larry] for this matter, including costs and expenses and fees for the April 25, 2011 and April 26, 2011 hearings, and an additional $12,500.” ²

The following day, Wright asked Larry's counsel the amount of attorney fees and costs incurred for the April 25 and April 26 hearings. Larry's counsel responded that the total amount was $3,815.50.³ Betty closed on the real property on May 5 in accordance with the terms of the April order but did not submit any payment to Larry at that time.

Following the closing on the real property, Wright suggested to Larry's counsel that the attorney fees and costs due under the April order, including the $12,500, be offset from money owed by Larry to Betty in connection with their divorce. Larry rejected the proposal, stating that he “prefer[red] compliance with the [April order].” About two weeks later, in the absence of any payment from Betty, Larry filed a motion for the issuance of a rule to show cause as to why Betty should not be held in contempt for failure to pay the attorney fees, costs, and the $12,500 according to the April order. On August 1, 2011, the circuit court issued a rule to show cause and ordered Betty to appear in court to explain why she should not be held in contempt.

In the Show Cause Response Brief signed by Wright, he argued, on behalf of Betty, that the April order was “not yet final, making it unclear that [Betty] ha[d] any current obligation to pay.” Citing Winn v. Winn, 218 Va. 8, 235 S.E.2d 307 (1977), Wright stated that contempt only lies for failing to comply with an order's definite terms and that the order must contain an express command rather than an implied one. According to Wright, the April order did not “set any deadline for payment and [said] nothing whatever about the manner in which the payment [was] to be made.” Wright contended that Betty's proposal to offset the amounts due under the April order from sums Larry owed to her was simply a different manner of payment and was consistent with the April order. Moreover, Wright argued, the order failed to specify the total amount due.

At an August 25, 2011 hearing on the rule to show cause, Shebelskie argued, on behalf of Betty, that the April order specified neither a “particular date” by which Betty had to pay, nor “a dollar amount” due. ⁴ Shebelskie pointed out that Betty had discussed the amount and method of payment with Larry, making clear that she was not simply ignoring the April order. Shebelskie also contended that because the April order lacked specificity with respect to the date due and the amount owed, it was an interlocutory order for which there was no current obligation to pay. In conclusion, Shebelskie argued that for contempt to lie, “[t]he order must obviously be a present obligation that's clear and definite. Here, we don't have that because we didn't have the attorney's fees amount quantified, a date certain to pay, nor was it a final judgment.”

In response, the circuit court stated:

The [c]ourt finds the argument that there is no requirement to comply with interlocutory orders ... at best novel and interesting, at worst a possible violation of [Code § ] 8.01–271.... [T]his [c]ourt has never heard the argument from any attorney that the fact an order is preliminary [means] there's no requirement to comply with it. I'm going to take this matter under [advisement] because there's a possible [Code § ] 8.01–271 violation.

The following day, Shebelskie sent the circuit court a letter, citing authorities to “establish the good faith basis of [Betty's] position.” In the letter, Shebelskie disavowed claiming “that no interlocutory order is enforceable by contempt.” Instead, Shebelskie stated that the argument was that the April order was not enforceable by contempt because it failed to specify the amount owed and the date due and thus lacked “definite terms as to the duties.” Absent these specifications, Shebelskie contended, the April order was “a general damages award that becomes due upon entry of a final order.”

On November 7, 2011, the circuit court entered an order that exonerated Betty of contempt because she had paid Larry. The court found, however, that Betty's

counsel violated [Code] § 8.01–271.1 by arguing in August 2011—both in writing and orally—that [Betty] did not have to comply with the April 2011 [o]rder because it did not state payment had to be in cash, did not set a date or deadline for payment, and was an interlocutory order.

The court concluded that the reasons asserted by Wright and Shebelskie as to why Betty should not be held in contempt were “neither well grounded in fact, nor warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, in violation of [Code] § 8.01–271.1.” The court ordered that “Defendant's counsel” pay Larry's costs and attorney fees associatedwith compliance with the April order, as well as those incurred in the contempt proceedings.

Shebelskie and Wright, now represented by counsel, filed a motion asking the circuit court to reconsider its finding that they had violated Code § 8.01–271.1. Concerned that the court had misunderstood the argument they had made on behalf of Betty, Shebelskie and Wright stressed that their argument was not that Betty did not have to comply with the April order, but rather that she could not be held in contempt because the April order did not specify both an amount due and a payment date. Shebelskie and Wright also pointed out that the court's November order failed to identify the attorneys and the pleadings that formed the basis of the court's finding of a Code § 8.01–271.1 violation. They asserted that because the November order held “Defendant's counsel” in violation of Code § 8.01–271.1, it improperly included non-signatory attorneys listed on pleadings and attorneys who appeared on behalf of Betty but made no oral motions.

The circuit court denied the motion for rehearing in an order dated November 28, 2011.⁵ In November 2012, the circuit court held a hearing to address both the amount of sanction to be imposed and the contention that it was unclear which attorney was the subject of the sanction. Shebelskie and Wright argued that Wright alone signed a pleading that fell within Code § 8.01–271.1. They also asserted that neither attorney made an oral motion but, instead, only presented oral arguments in response to the show cause order.

In a final order entered on December 12, 2012, the circuit court held that the sanction was imposed against both Shebelskie and Wright. “These two attorneys,” the court stated, “argued, both in [the] Brief in Response to ... Show Cause Order and at the August 25, 2011 hearing, that [Betty] did not have to comply with the [c]ourt's April 26, 2011 [o]rder for a number of reasons.” Pursuant to Code § 8.01–271.1, the court imposed sanctions in the amount of $12,605.33, the sum requested by Larry as the attorney fees and costs “associated with compliance with the April 26, 2011 [o]rder.”

We granted this appeal. Shebelskie and Wright assert that the circuit court erred by finding that they violated Code § 8.01–271.1: (1) because Shebelskie was a “non-signatory attorney who only presented oral argument”; (2) because the court based its decision on arguments they did not make; and (3) because their actual arguments on behalf of Betty were warranted by existing law concerning contempt.

II. ANALYSIS

The relevant provisions of Code § 8.01–271.1 state that “every pleading, written motion, and other paper” signed, as well as every “oral motion made” by an attorney, “constitutes a certificate” or “representation,” respectively, that: (1) “to the best of his knowledge, information and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law”; and (2) “it is not interposed for any improper...