Cherokee Corp. v. Chicago Title Ins.

35 Va. Cir. 19
CourtWarren County Circuit Court
DecidedJuly 1, 1994
DocketCase No. (Law) L93000228
StatusPublished
Cited by4 cases

This text of 35 Va. Cir. 19 (Cherokee Corp. v. Chicago Title Ins.) is published on Counsel Stack Legal Research, covering Warren County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cherokee Corp. v. Chicago Title Ins., 35 Va. Cir. 19 (Va. Super. Ct. 1994).

Opinion

By Judge Paul M. Peatross, Jr.

Counsel appeared before the Court on June 1, 1994, and presented argument on á number of motions pendmg before the Court in the above case. The Court took the motions under advisement to review authority and arguriíéiit of counsel.

The Court will rule bn the motions in the order that they were argued on June 1,1994.

Motion to Dismiss of James A. Drown, Substitute Trustee

Defensive pleadmg in Virginia does not mclude a Motion to Dismiss under die Rules of the Supreme Court of Virginia. Modem day practice M Virginia recognizes the use of the demurrer to test the legal sufficiency of a cause of action. See T. Boyd, E. Graves, L. Middleditch, Jr., Virginia [20]*20Civil Procedure, § 8.2 (1982). Accordingly, the Court is going to treat the Motion to Dismiss as a demurrer to the Motion for Judgment of plaintiffs.

I. Parties Plaintiff

In paragraphs 1, 2 and 3 of the Motion to Dismiss, now treated as a demurrer, James A. Drown, substitute trustee, challenges whether a cause of action has been stated by all the named plaintiffs. Upon reviewing the Motion for Judgment, it is clear that Cherokee of Linden, Virginia, Inc., was the owner of the real estate on which the ski resort in question had operated at the time of foreclosure. (Paragraphs 2, 3, 4, and 5 of the Motion for Judgment). Facts regarding other named plaintiffs, Cherokee Coiporation, Trustee, Occoquan Land Development Corporation, R. E. Adkins and B. G. Oliver, do not allege property ownership or interest in the real estate in question sufficient to state a cause of action against the named defendants. Accordingly, for the reasons stated in argument of counsel, and based upon a review of the Motion for Judgment, the demurrer is sustained as to all parties named as plaintiffs except Cherokee of Linden, Virginia, Inc.

II. Remedies Available

The second argument on the Motion to Dismiss, treated as a demurrer, is that Cherokee of Linden, Virginia, Inc., hereinafter referred to as “Cherokee,” only had three remedies available to it to challenge the actions of Mr. Drown as substitute trustee. Those remedies were as follows:

1. Seek an injunction from the Circuit Court enjoining the sale;

2. Note exceptions to the report of the trustee’s settlement of accounts to the Commissioner of Accounts within the time permitted by statute; or

3. File a suit in equity to surcharge and falsify the report of the trustee.

Mr. Drown also asked the Court to take judicial notice of a case pending in the Circuit Court of Warren County styled In re Settlement of Accounts of James A. Drown, Trustee, of the sale under deed of trust from Cherokee Corporation, Cherokee Corporation, Trustee, Cherokee Corporation of Linden, Virginia, Inc., Cherokee Corporation of Linden, Virginia, Inc., Trustee and Occoquan Land Development Corporation, Case No. WF9315.

Counsel for Mr. Drown represented that objections to the approval of the trustee’s report by the Commissioner of Accounts have been filed by Cherokee Corporation of Linden, Virginia. In fact, since the June 1,1994, hearing, the ündersigned has been designated to hear the objections.

[21]*21In considering the relief permitted in a suit to surcharge or falsify the report, “surcharge” is defined as “[t]he amount with which a court may charge a fiduciary who has breached his trust through intentional or negligent conduct The imposition of personal liability on a fiduciary for such conduct” Black’s Law Dictionary 1292 (5th ed. 1979).

The question then becomes whether or not this is a suit to surcharge or falsify the report. Although it is titled a Motion for Judgment the claims of Cherokee against Drown ask for a monetary judgment for compensatory damages and treble damages, an award of attorney’s fees, and a declaration by the Court that the conveyance of the property to Capital Skiing Corporation be declared void and title be returned to plaintiffs.

Clearly, the Court cannot grant relief in a motion for judgment on the law side of the court to declare the transfer of the property to Capital Skiing Corporation void and return title to the plaintiffs. For reasons herein addressed, supra, on the pleading filed by Chicago Tide Insurance Corporation, the Court will transfer the claims against James A. Drown, Substitute Trustee, from tire law side of the Court to the equity side of the Court pursuant to § 8.01-270 of the Code of Virginia of 1950, as amended. Therefore, the question becomes whether or not the claims of the remaining plaintiff herein amount to a suit in equity to surcharge and falsify a report of the trustee.

A court in equity obtains jurisdiction on the basis of the requested relief of declaring the sale to Capital Skiing Corporation void; it may retain the case for all purposes and administer complete relief. Accordingly, the Court in equity would have authority to determine monetary damages as a result of declaring any sale void because of improper conduct of a trustee. See Shield v. Brown, 166 Va. 596 (1936), and E.I. DuPont de Nemours & Co. v. Temple, 272 F. 456 (4th Cir. 1921).

However, in interpreting § 26-34 of the Code of Virginia, it is clear that the statute addresses two methods of attacking a report of a fiduciary. One is to file exceptions to the report and the other is to file a suit to surcharge or falsify the report. The Motion for Judgment filed in this case is not a claim attacking the report of the Trustee, James A. Drown. Therefore, the Motion to Dismiss (demurrer) is denied and the statute is not a bar to this claim against the Trustee.

m. Merits of Claim

The next argument under the Motion to Dismiss (demurrer) advanced by Mr. Shmidheiser went to the merits of the claim against Mr. Drown as [22]*22to his negligence in allowing the sale to go forward on November 30, 1992. Cherokee alleged that Drown was negligent because he did not offer the parcel separately as advertised, but offered the entire property as a whole. If Mr. Shmidheiser is addressing the “Second Claim for Relief” contained in the Motion for Judgment, it does not appear that the allegation that Mr. Drown failed to sell by parcel rather than the whole is pertinent to the claim. Therefore, the demurrer as to the Second Claim for Relief is denied.

The second claim of negligence on the merits against Drown is that he did not provide title insurance per the advertisement. This argument seems to apply to the “Third Claim for Relief” against Mr. Drown. The argument is that the announcement that Chicago Title would not insure the title on the 350 acres was contrary to the provision of the deed of trust. However, the claim does not rely on the allegation that Drown conducted the sale contrary to the advertisement as to title insurance. Therefore, the Motion to Dismiss (demurrer) as to the Third Claim for Relief is denied.

IV. Recovery of Damages

The final argument under the Motion to Dismiss (demurrer) by Drown is that Cherokee cannot recover for damages because it is asking die Court to void the sale. If that were done, the foreclosure sale would be set aside and the property readvertised for foreclosure under the deed of trust. Accordingly, no damages would exist

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Bluebook (online)
35 Va. Cir. 19, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cherokee-corp-v-chicago-title-ins-vaccwarren-1994.