Shuttleworth, Ruloff & Giordano, P.C. v. Nutter

493 S.E.2d 364, 254 Va. 494, 1997 Va. LEXIS 116
CourtSupreme Court of Virginia
DecidedOctober 31, 1997
DocketRecord 962538
StatusPublished
Cited by18 cases

This text of 493 S.E.2d 364 (Shuttleworth, Ruloff & Giordano, P.C. v. Nutter) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shuttleworth, Ruloff & Giordano, P.C. v. Nutter, 493 S.E.2d 364, 254 Va. 494, 1997 Va. LEXIS 116 (Va. 1997).

Opinion

JUSTICE KINSER

delivered the opinion of the Court.

At issue before this Court is the enforceability of a provision in an addendum to an employment contract entered into between Shuttleworth, Ruloff and Giordano, RC. (Shuttleworth), a law firm, and R.J. Nutter, II (Nutter), who was both a stockholder and an employee of Shuttleworth. Because we find that the disputed addendum provision does not violate the Virginia Code of Professional Responsibility, we will reverse and remand for proceedings consistent with this opinion.

I.

On May 26, 1987, at the outset of his employment with Shuttleworth, Nutter signed an “Employment Agreement.” Subsequently, *496 on February 12, 1990, Shuttleworth and Nutter entered into an “Addendum To Employment Agreement.” At that time, Shuttleworth was preparing to execute an eleven-year lease for new office space. The Addendum’s stated purpose was to address Nutter’s obligation pursuant to his personal guarantee of the lease. The Addendum provided that, in exchange for Nutter’s personal guarantee, Nutter would receive a portion of the cash incentive being offered to Shuttleworth by the landlord of the leased property. However, should Nutter leave his employment with Shuttleworth during the first five years of the lease, Nutter would have to refund a pro rata portion of his share of the cash incentive. 1

Nutter had an additional obligation under the Addendum. Upon the voluntary or involuntary termination of his employment with Shuttleworth, he would remain liable on a monthly basis for his “proportionate share” of the lease payments. 2 The commitment to make lease payments was a “continuing obligation,” commencing on the date of the lease and continuing through the end of the eleven-year lease term.

However, the obligation to make lease payments after termination of employment with Shuttleworth was not absolute. Nutter would not have been required to make payments if his termination was the result of death or disability, if he was appointed to the judiciary, or if he was terminated involuntarily by a non-unanimous vote of Shuttleworth’s board of directors. 3 Most important to our determination here is the provision that the lease payments would continue after the first five years of the lease “only in the event that [Nutter] has entered into the active practice of law.”

In September 1995, more than five years after commencement of the lease, Nutter terminated his employment with Shuttleworth. 4 Fol *497 lowing Nutter’s termination, Shuttleworth filed a petition for declaratory judgment in the court below. In its petition, Shuttleworth requested the court to declare that the Addendum’s lease payment provision requires Nutter to make monthly payments. Shuttleworth also sought a judgment for the sum of all lease amounts “accruing and unpaid” by Nutter up until the time of final adjudication.

In response to Shuttleworth’s petition, Nutter filed a motion for summary judgment pursuant to Rule 3:18. In his motion, Nutter contended that the Addendum’s lease payment provision was void as a matter of law because it violated the public policy stated in Disciplinary Rule (DR) 2-106(A) of the Virginia Code of Professional Responsibility. 5 Specifically, Nutter argued that the provision was a financial disincentive to his continued practice of law. Nutter further contended that the challenged provision infringed on the public’s right to obtain counsel of its choosing.

After considering briefs submitted by both parties as well as hearing oral argument, the trial court granted Nutter’s motion for summary judgment. In explaining its rationale, the trial court stated:

I do think that the provision of the agreement that says that partners who have withdrawn from the firm or shareholders who have withdrawn from the firm, have to pay their proportionate share of the lease obligation after the fifth year, only if they’re engaged in the active practice of law, does run afoul of Rule 2-106(A) of the Virginia Code of Professional Responsibility and is therefore unenforceable as contrary to the public policy of Virginia.

Shuttleworth appeals.

II.

We have often stated that “ ‘[t]he parties’ contract becomes the law of the case unless it is repugnant to some rule of law or public policy.’ ” Rash v. Hilb, Rogal & Hamilton Co., 251 Va. 281, 285, 467 S.E.2d 791, 794 (1996) (quoting Winn v. Aleda Const. Co., 227 Va. 304, 307, 315 S.E.2d 193, 194 (1984)). If a contract violates public policy, it is void and of no legal effect. Cohen v. Mayflower *498 Corp., 196 Va. 1153, 1160, 86 S.E.2d 860, 864 (1955); Wallihan v. Hughes, 196 Va. 117, 124, 82 S.E.2d 553, 558 (1954). However, “the law looks with favor upon the making of contracts between competent parties upon valid consideration and for lawful purposes, and ‘courts are averse to holding contracts unenforceable on the ground of public policy unless their illegality is clear and certain.’ ” lessee v. Smith, 222 Va. 15, 17-18, 278 S.E.2d 793, 795 (1981) (quoting Ryan v. Griffin, 199 Va. 891, 895, 103 S.E.2d 240, 244 (1958)).

In ruling on Nutter’s motion for summary judgment, the circuit court found that the contested provision of the Addendum is contrary to public policy because it violates DR 2-106(A). Accordingly, the court declared the provision unenforceable. In effect, the court used the disciplinary rule to measure whether the contested provision violates public policy, thereby elevating DR 2-106(A) to the status of decisional or statutory law. We question the propriety of equating the force of a disciplinary rule with that of decisional or statutory law in light of our decisions in Carter v. Williams, 246 Va. 53, 60, 431 S.E.2d 297, 301 (1993), and Ayyildiz v. Kidd, 220 Va. 1080, 1085, 266 S.E.2d 108, 112 (1980). In those cases, we held that the Code of Professional Responsibility does not provide the basis for a private cause of action. However, for the purpose of this decision, we assume, without deciding, that a disciplinary rule may properly be considered in determining the public policy of this Commonwealth and conclude that the contested provision of the Addendum does not violate DR 2-106(A).

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Bluebook (online)
493 S.E.2d 364, 254 Va. 494, 1997 Va. LEXIS 116, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shuttleworth-ruloff-giordano-pc-v-nutter-va-1997.