Windset Capital Corporation v. Thomas Debosky

• Court: Court of Appeals of Virginia
• Decided: September 12, 2023
• Docket: 1216224
• Status: Unpublished

Opinion

COURT OF APPEALS OF VIRGINIA UNPUBLISHED

Present: Judges Humphreys, Malveaux and Fulton Argued by videoconference

WINDSET CAPITAL CORPORATION MEMORANDUM OPINION* BY v. Record No. 1216-22-4 JUDGE ROBERT J. HUMPHREYS SEPTEMBER 12, 2023 THOMAS DEBOSKY, ET AL.

FROM THE CIRCUIT COURT OF LOUDOUN COUNTY Jeanette A. Irby, Judge

Peter S. Askin (John P. O’Herron; Tracy Kissler; ThompsonMcMullan, P.C.; LegumFitzpatrick, PLC, on briefs), for appellant.

Alex Heidt (The Heidt Law Firm, PLLC, on brief), for appellees.

Windset Capital Corporation appeals an order of Loudoun County Circuit Court vacating

a default judgment order that was entered by the court on May 6, 2016, against Thomas Debosky

and Crystal Blue Aquatics, LLC (“Crystal Blue”). Windset argues that the circuit court erred in

vacating the 2016 default judgment order because the signature defect in Windset’s original

complaint could not be collaterally attacked and had been cured; the circuit court lacked

jurisdiction to consider the appellees’ complaint; the appellees’ complaint against the default

judgment was time-barred under Code § 8.01-428(A); and the court failed to articulate its

findings regarding the necessary elements for setting aside the default judgment pursuant to

Code § 8.01-428(D).

* This opinion is not designated for publication. See Code § 17.1-413(A). BACKGROUND

On November 17, 2015, Crystal Blue Aquatics, LLC, entered into a promissory note and

security agreement (“Agreement”) with Windset Capital Corporation, whereby Windset loaned

Crystal Blue $60,000. Crystal Blue agreed to make daily payments to Windset beginning on the

third business day after the loan amount was disbursed. Debosky signed the Agreement and

guaranty of the note as president of Crystal Blue.

On February 2, 2016, Windset filed a complaint in the Loudoun County Circuit Court

against Debosky and Crystal Blue, alleging breach of guaranty and breach of contract. The

complaint alleged that Crystal Blue made only six payments pursuant to the Agreement before

defaulting on December 1, 2015, and, upon demand, Debosky and Crystal Blue failed to make

further payments to cure the default. The complaint contained no signature above Windset’s

counsel’s name.

On March 17, 2016, without obtaining leave of court, Windset filed in the circuit court

clerk’s office a page containing only counsel’s signature. The accompanying cover letter noted

that enclosed was “Plaintiff’s Original signature page to the Complaint which was inadvertently

not filed with the Court at the time of filing.”

On March 28, 2016, Windset filed a motion for default judgment. In the motion, Windset

stated that Debosky and Crystal Blue were served with the complaint and neither had filed

responsive pleadings. On May 6, 2016, the circuit court entered a final order on Windset’s

motion for default judgment. The court ordered that “defendants are deemed to have admitted all

allegations contained in the Complaint” and that judgment is entered against Debosky and

Crystal Blue, “jointly and severally, in the principal amount of $84,447.62,” plus attorney fees

and interest.

-2- On June 29, 2021, Debosky and Crystal Blue filed a complaint to vacate the default

judgment order. Debosky and Crystal Blue asked that the circuit court find Windset’s complaint

“void” pursuant to Code § 8.01-271.1 and Rule 1:4 because it lacked an attorney’s signature.

Windset filed an answer to the complaint and denied that the default judgment was entered on a

void complaint. It admitted that the complaint was originally filed unsigned but stated that “the

signed page was submitted to the court on March 17, 2016.”

The parties appeared for a hearing on November 10, 2021. Debosky and Crystal Blue

argued that Windset’s original complaint was void for lack of a signature and that “nothing in the

record [shows] that [Windset] served either Mr. Debosky or Crystal Blue Aquatics after the

attempted fixing of the complaint.” Windset argued that the signature defect was corrected. It

further argued that Code § 8.01-271.1(E) states, “Failure to raise the issue of a signature defect in

a pleading, motion or other paper before the trial court’s jurisdiction expires waives any

challenge to that pleading, motion or other paper based on such defect.” The circuit court

informed Windset that subsection E did not exist at the time the original complaint was filed in

2016. The circuit court stated that the pleading is void without a signature, and under the prior

version of Code § 8.01-271.1, “[a] Plaintiff must obtain leave of court prior to curing a signature

defect. If a leave is not sought, the signature affixed to the pleading without leave of court is

ineffectual.” The circuit court observed that Windset did not request leave of court to correct the

signature defect. The court found that the complaint was “void” and the “default judgment is

void, based upon the law at the time, and it will be set aside.”

By order dated November 16, 2021, the circuit court vacated the 2016 default judgment

order dated May 6, 2016, with no further explanation of its reasoning in the written order. The

circuit court never ruled on Windset’s motion for reconsideration and lost jurisdiction over the

matter on June 21, 2022. Windset appealed.

-3- ANALYSIS

I. Standard of Review

Windset’s assignments of error relate to the interpretation of Code § 8.01-271.1, Code

§ 8.01-428 and Rule 1:8 of the Rules of the Supreme Court construing the active jurisdiction of

the circuit court, and whether the default judgment order was void. These are questions of law

that this Court reviews de novo. Guan v. Ran, 70 Va. App. 153, 156 (2019) (questions of a

court’s jurisdiction and statutory interpretation are questions of law); Kelley v. Stamos, 285 Va.

68, 73 (2013) (whether order was voidable is question of law).

II. Lack of Attorney’s Signature on Complaint

Windset first argues that the “circuit court erred in vacating the 2016 default judgment

when the signature defect at issue could not be attacked collaterally, and in any event had been

cured under Code § 8.01-271.1.”

“[A] void order is a nullity without force or effect and may be collaterally challenged.”

Kelley, 285 Va. at 75.

An order is void ab initio if entered by a court in the absence of jurisdiction of the subject matter or over the parties, if the character of the order is such that the court had no power to render it, or if the mode of procedure used by the court was one that the court “could not lawfully adopt.”

Id. (quoting Singh v. Mooney, 261 Va. 48, 51-52 (2001)) (collecting cases where circuit court did

not have power to render the judgments at issue).

When the circuit court entered the default judgment order in 2016, Code § 8.01-271.1

(2015) stated, “[E]very pleading, written motion, and other paper of a party represented by an

attorney shall be signed by at least one attorney of record in his individual name . . . .” By

signing the pleading, the attorney certifies that he has read the pleading, that the pleading is well

grounded in fact and is warranted by existing law or makes a good faith argument for a change to

-4- the law, and that the pleading is not interposed for an improper purpose. Id. “If a pleading,

written motion, or other paper is not signed, it shall be stricken unless it is signed promptly after

the omission is called to the attention of the pleader or movant.” Id. Code § 8.01-271.1 as it

existed in 2016 was silent regarding whether the pleader must obtain leave of court to correct the

omitted signature. However, Rule 1:8 (2016) stated that, “No amendments shall be made to any

pleading after it is filed save by leave of court.”1

Our Supreme Court has “repeatedly held that a pleading, signed only by a person acting

in a representative capacity who is not licensed to practice law in Virginia, is a nullity.” Shipe v.

Hunter, 280 Va. 480, 483 (2010) (collecting cases). The issue in Shipe was whether the

signature of only the out-of-state lawyer appearing pro hac vice, without the signature of the

Virginia licensed attorney, was sufficient to satisfy Rule 1A:4(2), stating that any pleading is

invalid unless it is signed by local counsel. Id. Citing “strong public policy considerations

underlying” Code § 8.01-271.1 and the rules requiring counsel’s assurances that a pleading is

tendered in good faith, the Supreme Court construed the statute and rules to require that a lawyer

who files a pleading in a Virginia tribunal “must append his personal, handwritten signature to

the pleading.” Id. at 484 (noting exceptions to cases filed electronically).

The Court’s holding in Shipe also turned on the fact that the statute of limitations had run

on the claim and barred the cause of action by the time the omission of the proper signature was

called to the pleader’s attention. Id. at 485. The Court “observed” that “because the initial

pleading was invalid, there were no valid proceedings pending before the circuit court that could

have been amended.” Id. (citing Kone v. Wilson, 272 Va. 59, 63 (2006)). The Court held that,

1 Rule 1:8 has also since been amended and currently states, “No amendments may be made to any pleading after it is filed save by leave of court.” (Emphasis added.) This amendment replacing “shall” with “may,” effective March 1, 2021, does not affect our analysis or the outcome of this case. -5- “[b]ecause neither a pro se plaintiff nor an attorney licensed to practice law in Virginia signed

the complaint, and because that defect could not be cured by amendment, the circuit court did not

err in dismissing the complaint.” Id.

In Kone, the Supreme Court found that the initial pleading before the circuit court was

invalid because Kone, who signed the pleading, was not authorized to practice law in Virginia

and therefore there were no valid proceedings pending before the court. Kone, 272 Va. at 63.

Kone had filed a motion for judgment representing the interests of beneficiaries of a decedent’s

estate against healthcare providers. Id. at 61. However, the circuit court found that Kone could

not legally proceed pro se as a representative and he was not licensed to practice law in Virginia.

Id. Kone argued on appeal that once he obtained counsel, the circuit court “should have allowed

his attorney to file an amended motion for judgment,” or should have permitted counsel’s filing

to relate back to the date Kone filed an initial pleading. Id. at 63. The Court found that “Kone’s

initial motion for judgment was invalid and without legal effect.” Id. (citing Nerri v.

Adu-Gyamfi, 270 Va. 28, 31 (2005) (holding that a pleading signed by an attorney whose bar

license is suspended was “invalid and had no legal effect,”); Wellmore Coal Corp. v. Harman

Mining Corp., 264 Va. 279, 283 (2002) (amendment to a pleading “presupposes a valid

instrument as its object”)). “Thus, in the absence of a valid motion for judgment, there were no

pleadings before the court that could have been amended.” Id. “Moreover, because Kone’s

initial pleading was invalid, there were no valid proceedings pending before the court.” Id.

(emphasis added). The Court affirmed the circuit court’s judgment dismissing Kone’s motion

for judgment.

In the present case, the circuit court issued a default judgment which proceeded from a

complaint that contained no signature. Based on Virginia Supreme Court precedent, the

-6- complaint was a nullity and no valid proceedings, including issuance of a default judgment,

could follow from it.

Windset attempted to correct the omitted signature. However, the circuit court found that

Windset did not obtain leave of court to correct the omitted signature, nor was the omitted

signature served on the opposing party. To the extent that adding an omitted signature is an

amendment, Rule 1:8 requires that an amendment to any pleading must be made by leave of

court, and amendments made without leave of court are without effect. Mechtensimer v. Wilson,

246 Va. 121, 122-23 (1993).

In Mechtensimer, the Supreme Court held that failure to comply with Rule 1:8 was a

jurisdictional defect. Id. at 123. Mechtensimer filed a motion for judgment against Wilson. Id.

at 122. Prior to service on Wilson, Mechtensimer filed an amended motion for judgment without

seeking leave of court as Rule 1:8 requires. Id. Wilson was served with the amended complaint

and filed a response. However, he later learned that the amended complaint had been amended

without leave of court and he moved to “dismiss the action on the ground that the court lacked

jurisdiction because Mechtensimer failed to comply with Rule 1:8.” Id. The circuit court

granted his motion to dismiss. Id. The Supreme Court affirmed the circuit court’s finding that

the “amended motion was without legal efficacy because [Mechtensimer] failed to obtain leave

of court to amend his original motion for judgment.” Id. at 122-23. “Thus, the court did not

acquire jurisdiction to adjudicate any causes of action alleged in the amended motion.” Id. at

123.

Our Supreme Court’s jurisprudence dictates that Windset’s unsigned complaint had no

legal effect, and no valid proceedings could have resulted from it. Windset’s attempt to correct

the omitted signature was ineffectual. The signature defect on the complaint places the default

-7- judgment in the category of orders “that the court had no power to render.” Kelley, 285 Va. at

75. Therefore, the circuit court did not err in vacating the default judgment order.2

III. Application of Code § 8.01-4283

Windset’s remaining assignments of error collectively assert that the circuit court erred

by failing to comply with the requirements of Code § 8.01-428 for setting aside default

judgments. As discussed supra, the circuit court ruled the default judgment order was void

because the underlying complaint was a legal nullity based upon Rule 1:8 and not pursuant to

any authority provided in Code § 8.01-428. Virginia case law provides that a void order can be

directly or collaterally attacked in any court at any time. Rook v. Rook, 233 Va. 92, 95 (1987);

Singh, 261 Va. at 51. Therefore, the circuit court did not err in vacating the default judgment

order outside of the 21 days after entry of the final order provided in Rule 1:1, as Windset

asserts. The circuit court’s ruling also does not implicate the two-year statute of limitations that

is provided in Code § 8.01-428(A), because the court’s ruling was not based on a finding of

2 We observe that at the time the circuit court acted in this case, there were inconsistencies in Virginia’s jurisprudence concerning whether an unsigned pleading was a legal nullity and therefore could not be amended or was a nullity until properly amended. Compare Kone, 272 Va. 59, with Braun v. QuantaDyn Corp., No. 190974 (Va. May 28, 2020) (observing that Code § 8.01-271.1 (2015) contemplated corrections to a signature defect, but a signature added without leave of court rendered the pleading ineffectual). Under either legal proposition, Windset’s complaint was a nullity. Going forward, the General Assembly clearly intends that a signature defect on a pleading only renders that pleading “voidable.” Code § 8.01-271.1(A); 2020 Va. Acts ch. 74 (H.B. 1374). “Failure to raise the issue of a signature defect in a pleading, motion, or other paper before the trial court’s jurisdiction expires pursuant to Rule 1:1(a) and Rule 1:1(B) waives any challenge to that pleading, motion, or other paper based on such a defect.” Code § 8.01-271.1(E); see also Rule 1:5A (promulgated in 2020 following amendments to Code § 8.01-271.1 and stating signature defects render pleadings “voidable”). 3 Windset’s second assignment of error asserts that the circuit court erred by finding the appellees pleaded and proved fraud on the court under Code § 8.01-428. The circuit court made no findings whatsoever regarding fraud upon the court, and we will not address this alleged error. Rule 5A:20(c)(2) (“An assignment of error that does not address the findings, rulings, or failures to rule on issues in the trial court or other tribunal from which an appeal is taken . . . is not sufficient.”). -8- fraud perpetrated upon the court. Finally, the circuit court’s order vacating the default judgment

was not based on authority provided in Code § 8.01-428(D); thus, it was not required to

articulate its findings regarding the five necessary elements for setting aside a judgment pursuant

to Code § 8.01-428(D), as set out in Charles v. Precision Tune, Inc., 243 Va. 313, 317-18 (1992).

IV. Appellees’ Motion to Dismiss

Debosky and Crystal Blue filed a motion to dismiss this appeal. They argue that Windset

failed to appeal the underlying case (case number 99-427), that Windset’s assignments of error

improperly reference pleadings, motions and other filings in the underlying case in violation of

Rule 5A:19(e), and that Windset failed to file an appendix in violation of Rule 5A:25(a).

In this appeal Windset challenges the circuit court’s November 2021 order vacating the

2016 default judgment order. Windset appealed the correct order. Windset cites to the record in

this case and did not run afoul of Rule 5A:19(e). Finally, Windset was not required to file an

appendix because a circuit court clerk filed the electronic record. Rule 5A:25(a)(1). We

therefore deny the appellees’ motion to dismiss. We also decline to award the appellees attorney

fees and costs associated with defending this appeal.

For the foregoing reasons, we affirm the judgment of the circuit court.

Affirmed.

-9-