Wood v. Board of Sup'rs of Halifax County

• Decision Date: 23 September 1988
• Docket Number: No. 860074,860074
• Citation: 236 Va. 104,372 S.E.2d 611
• Parties: , 49 Ed. Law Rep. 999 Udy C. WOOD v. BOARD OF SUPERVISORS OF HALIFAX COUNTY, et al. Record
• Court: Virginia Supreme Court

Page 611

372 S.E.2d 611

236 Va. 104, 49 Ed. Law Rep. 999

Udy C. WOOD v. BOARD OF SUPERVISORS OF HALIFAX COUNTY, et al.

Record No. 860074.

Supreme Court of Virginia.

Sept. 23, 1988.

Anthony F. Troy (John K. Burke, Jr., Mays & Valentine, Richmond, on briefs), for appellant.

S. Vernon Priddy, III (Frank B. Miller, III, Howard P. Anderson, Jr., Com.'s Atty, Sands, Anderson, Marks & Miller, Richmond, on brief), for appellees.

Present: All the Justices.

STEPHENSON, Justice.

The issue in this appeal is whether the trial court erred in enjoining the Halifax County School Board (the School Board) from paying certain attorneys' fees incurred by Udy C. Wood, the former division superintendent of schools of Halifax County.

On April 3, 1985, the Board of Supervisors of Halifax County (the Board of Supervisors) filed a bill of complaint in the trial court alleging that the School Board improperly had authorized payment of attorneys' fees on behalf of Wood. The Board of Supervisors sought declaratory and injunctive relief. On motion, Wood was permitted to intervene as a party defendant. Thereafter, nine parents ¹ of students enrolled in Halifax County schools petitioned for leave to intervene as parties plaintiff. The trial court granted their petition.

In a bench trial, the parties submitted a written stipulation of facts, including exhibits attached thereto. Based upon these facts, the trial court enjoined the payment of the attorneys' fees incurred by Wood, ruling that the payment was illegal. Wood appeals. The appellees are the Board of Supervisors and the nine parents (collectively, the Board of Supervisors).

I

The facts, as stipulated by the parties, are as follows. Wood was the division superintendent of schools for Halifax County from 1965 until he retired in December 1983. On March 2, 1984, a seven-count felony indictment and a one-count misdemeanor indictment were returned against Wood by a Halifax County grand jury. On May 14, 1984, the grand jury returned another two-count felony indictment against Wood. These indictments contained various allegations that Wood, while serving as school superintendent, had misused public funds and had engaged in bid-rigging.

On March 5, 1984, the County of Halifax filed a bill of complaint in the Circuit Court of Halifax County against Wood and others under the Virginia Antitrust Act, Code § 59.1-9.1 through -9.18. In this civil action, Halifax County alleged that the defendants had conspired to rig bids in connection with the purchase of school buses for the Halifax County school system. In June 1984, the Commonwealth of Virginia was granted leave to intervene in the suit as a party plaintiff.

In March 1984, the law firm of Mays, Valentine, Davenport & Moore (Mays & Valentine) began its representation of Wood in connection with the criminal indictments and the civil suit. Mays & Valentine initially was contacted by a lawyer for the School Board regarding representation of Wood. There was no prior approval by the School Board regarding retaining counsel to represent Wood.

After a hearing on July 26, 1984, the Circuit Court of Halifax County dismissed the sole misdemeanor indictment against Wood, consolidated Counts 5 and 6 of the March felony indictment into one count, and dismissed Counts 2 and 3 of the March felony indictment. Thus, after July 26, 1984, six felony counts remained. Those counts contained allegations that Wood:

1. knowingly misused public funds through requesting and receiving reimbursement for improper expenses in violation of Va.Code § 18.2-112;

2. fraudulently used a public vehicle for personal benefit during the summer of 1982 in violation of Va.Code § 18.2-111;

3. unlawfully on or about August 1978, August 1979, and February 1981, by virtue of his office, knowingly misappropriated public funds by authorizing payments to L.A. Rice in violation of Va.Code § 18.2-112;

4. unlawfully conspired with L.A. Rice from August, 1978 through February, 1981 to misappropriate public funds by authorizing payments to Mr. Rice in the aggregate amount of $1,800 in violation of Va.Code §§ 18.2-112 and 18.2-22;

5. unlawfully and feloniously conspired with F.W. Merryman to rig, alter or manipulate bids submitted to the Halifax County School Board for the purchase of school buses in violation of Va.Code § 59.1-68.7; and

6. knowingly misappropriated funds in the amount of $35,876.00 by causing such funds to be deposited in the bank account of the Joint Committee for Control, said funds belonging to the Halifax County School System, in violation of Va.Code § 18.2-112.

Also on July 26, 1984, the Circuit Court of Halifax County granted Wood's motion for a change of venue of the criminal cases pursuant to Code § 19.2-25. Venue was changed to the Circuit Court of Hanover County, which ruled that Wood was entitled to four separate trials with respect to the six felony charges remaining against him. The trial on Counts 1 and 2 of the March felony indictment was scheduled to begin on August 22, 1984, in the Circuit Court of Hanover County.

On August 22, 1984, upon the motion of the Commonwealth's Attorney and pursuant to a plea agreement, Count 1 of the March felony indictment was reduced to the following misdemeanor charge to which Wood pled guilty: "that he did '[u]nlawfully between July 1978 and July 1983 [obtain] reimbursement from the Halifax County School System in an amount of less than $200 in violation of § 18.2-96 of the Code of Virginia.' " Also on motion of the Commonwealth's Attorney and pursuant to the plea agreement, all the remaining felony charges were dismissed.

In accordance with the plea agreement, the court's order provided, in pertinent part, as follows:

1. Restitution has already been made, and

2. The defendant will cooperate and make himself available and provide truthful information and testimony at all times and places as the Commonwealth may require and the defendant shall have the right to be represented by counsel.

3. Imposition of sentence will be suspended.

Following entry of the order, Wood met with prosecutors, investigators, and representatives of the Attorney General's office on several occasions.

On February 7, 1985, the Commonwealth's bill of complaint against Wood was dismissed. On February 22, 1985, the bill of complaint of the County of Halifax against Wood also was dismissed.

Wood subsequently applied to the School Board pursuant to Code § 22.1-82 for reimbursement of the attorneys' fees and expenses he had incurred in defending the dismissed civil and criminal proceedings. Mays & Valentine charged Wood $65,552.75 in attorneys' fees and expenses for the defense of the criminal charges that had been dismissed; $5,745.00 in fees and expenses in connection with the misdemeanor charge to which Wood had pled guilty; and $11,069.00 in fees and expenses in connection with the civil action that had been dismissed. Mays & Valentine did not seek payment of fees incurred in connection with the plea agreement. After considering the matter at its meetings on February 4, 1985, March 12, 1985, and April 1, 1985, the School Board voted 6 to 3 to approve the following resolution:

Whereas, Udy C. Wood was required to hire counsel to defend himself against several criminal charges arising out of the performance of his duties as superintendent of schools; and

Whereas, the Board finds that Mr. Wood reasonably incurred $42,000 in attorneys' fees and expenses in defense of those charges, which sum does not include $5,745 which the Board finds was incurred in relation to the charge of petit larceny to which Mr. Wood pled guilty; and

Whereas, Mr. Wood was also required to hire counsel to defend himself in certain civil actions arising out of the performance of his duties as superintendent of schools; and Whereas, the Board finds that Mr. Wood reasonably incurred $8,000 in attorneys' fees and expenses in defense of those civil actions.

Now, therefore, be it resolved that the Board, pursuant to [Code § 22.1-82] and in the exercise of its discretion, ratifies the employment of the law firm of Mays, Valentine, Davenport & Moore by Mr. Wood to defend himself against the aforesaid criminal charges and in the aforesaid civil actions and approves payment to the law firm of Mays, Valentine, Davenport & Moore of $50,000 for said defense of Udy C. Wood, such sum representing $42,000 arising out of the defense of the criminal charges and $8,000 arising out of the defense of the civil actions; ....

The School Board also conditioned payment of the fees upon the execution of an agreement under which Mays & Valentine agreed to place the funds in an interest-bearing escrow account so the funds, with interest, could be repaid to the School Board should the payment subsequently be found unlawful. The School Board, Wood, and Mays & Valentine have entered into such an escrow agreement.

II

In approving Wood's attorneys' fees, the School Board resolved that it acted "pursuant to [Code § 22.1-82] and in the exercise of its discretion." Code § 22.1-82 provides in pertinent part as follows:

A. Notwithstanding any other provision of law, the attorney for the Commonwealth or other counsel may be employed by a school board to advise it concerning any legal matter or to represent it, any member thereof or any school official in any legal proceeding to which the school board, member, or official may be a party, when such proceeding is instituted by or against it or against the member or official by virtue of his actions in connection with his duties as such member or official.

B. All costs and expenses of such advice and all costs, expenses and liabilities of such proceedings shall be paid out of funds appropriated to the school board.

(Emphasis added.)

The Board of Supervisors first contends that Code § 22.1-82 is not applicable because Wood is not a "school official" and the term "any legal proceeding" does not encompass a criminal proceeding. The Board...