Updated: Nov 22
Back on August 11, the Supreme Court of Virginia dropped a major bomb on the appellate world with a single sentence in Hill v. Commonwealth. The sentence was “In judicial orders, as in ordinary conversation, meaning can be clearly expressed and just as clearly implied.” The idea that a judicial order can have “clearly implied” meaning that is not found in the words of the order seems to run contrary to the well worn adages that “Court’s speak only though their written orders.” Heretofore, appellate lawyers had always assumed that meant interpretation of orders was, like statutes, limited to the words actually written — with the appellate court’s neither adding nor taking away from those words by implication. Whether Hill will turn out to be a sea change in interpretation of trial court orders on appeal remains to be seen — but I do not see how the Court can avoid addressing the issue eventually.
Now you are probably asking yourself, if Hill came out nearly a month ago, why are you just posting about it now? Fair question, but regularly readers of this space know that by gentleman’s agreement, Steve Emmert, the sage of Virginia Beach, and I divide BLAWG duties for the appellate courts of Virginia with Steve handling the Supreme Court , while I deal with the Court of Appeals. I had considered treading into his territory at the time, but decided against it as basically all that could be said was contained in his post.
Then today the Supreme Court issued Fines v. Rappahannock Area Community Services Board and once again I could feel shock waves running through the bar . . . but not just the appellate bar. Because in Fines the Court says that just because an entity functions exactly like a “municipal corporation” (a term which the opinion points out is something of misnomer as it is not limited to municipalities), it may not actually be one and therefore is not entitled to sovereign immunity. Sovereign immunity is one of those doctrines that the Court has consistently declared to be “alive and well” in Virginia, right up there with the freedom to contract and at-will employment. As you probably can guess, whenever a court has to declare something to “alive and well” within its jurisdiction, then it is likely that elsewhere that doctrine is on life-support or already pushing up daisies.
So a little background on sovereign immunity and why it’s health status is important. Sovereign immunity (let’s call it SI from hereon out so I don’t have to keeping checking that I got the e and i in the right order) dates for a time when Kings and Emperors and Princes and others of that ilk were the “sovereigns” (darn, had to spellcheck again) within their own domains — the law was what they said it was and therefore they were “above the law,” that is immune from its application. Before 1066 and all that, and in truth for long after, the kings, and later the Pre-Enlightenment parliaments, could pretty much do what every they pleased and the Courts, which they conveniently controlled, would do nothing about it because of SI.
Starting in the 1600s, some people began to seriously question the idea that government and its officials were above the law. By the late 1700s, people who had been influenced by this radical notion actually did something about it. In North America, for example, they declared their independence from a King and Parliament on the other side of the Atlantic, and a decade of so later, some folks in country just across a narrow body of water from the one that had lost some of its American Colonies actually decapitated their king. Now the curious thing is that in both these places, the new governments, wherein the law itself, not any one person or groups of persons, was considered the sovereign, they leaders decided that maybe permitting the great unwashed masses to be able to sue the government was not such a great idea after all, and thus SI lived on in their new court systems.
In the intervening almost 250 years, whether by legislative action or court limits, SI has been reduced significantly. Even in Virginia we have, for example, the Tort Claims Act, which allows for claims to filed against the Commonwealth and its agencies for injuries caused by individuals through an administrative process, and eventually in court if the administrative process doesn’t provide releif. But with respect to most direct claims against local governments and their agencies, that is ones in which the government is said to have caused the injury by failing to perform its function in accord with the law, SI is indeed “alive and well.”
With respect to “municipal corporations” this has led to some fine hair-splitting as to what is a governmental function, to which SI applies, and a “proprietary function” to which it does not. This has resulted in some decisions that are hard to reconcile, for example the Court has found that planning and designed a sidewalk is a governmental function, but maintaining a sidewalk is a proprietary one. cf. Maddox v. Commonwealth, 267 Va. 657, 663 (2004) and City of Virginia Beach v. Flippen, 251 Va. 358, 362 (1996). For other such examples see the cases collected in City of Chesapeake v. Cunningham, 268 Va. 624 (2004).
Fines does not involve the governmental/proprietary distinction, but a different issue, and apparently one of first impression — when a group of municipalities form a multi-jurisdictional community services board, is that agency a “municipal corporation” for purposes of SI? Before today’s opinion, I would have assumed that the answer was yes. However, in a unanimous opinion authored by Justice Powell, the court determines that the Rappahannock Area Community Services Board does not have a sufficiently level of governmental authority to qualify as a municipal corporation and, therefore, is not entitled to SI.The Courts have dealt with similar issues, but community services board as so ubiquitous and so closely aligned with governmental functions in the social services that it apparently has never been question whether they were agencies of the local government(s) that support them entitled to SI, at least not until Fines arose.
Two particularly striking factors in today’s opinion is that RACSB employees are covered under the Virginia Retirement System and the agency is subject to the Freedom of Information Act. Given these two factors, one might naturally assume that RACSB is clearly a “governmental” entity. But therein lies a fine distinction between state and municipal application of SI. Agencies of the Commonwealth are entitled to SI as a matter of course because they are also subject to laws that provide for alternative means of obtaining compensation like the Tort Claims Act. Participating in VRS and being subject to the FOIA might very well suggest that RACSB has some of the hallmarks of an agency of the Commonwealth, but the Court finds just as clearly that it is not established by the State, so it can’t be a state agency. Thus, whether it is entitled to SI depends on its status as a municipal corporation (or not).
The Court’s decision is founded on some fairly prosaic distinctions, the principal one of which is that RACSB is an “operating” community services board, not a “an administrative policy community services board or a policy-advisory community services board.” So in a footnote, the Court specifically limits this opinion to operating community services boards. The analysis of whether an operating CSB is a “municipal corporation” involves a six part test as to what the board does and how much independence it has from the forming governments — that is, can it function as a government agency without the approval of the forming governments in, for example, borrowing money and issuing bonds. While it is not necessary for an entity to possess all of the six attributes of a municipal corporation, only enough of them, “enough” is a particularly useful term for allowing a court to decide a question how it wishes to, especially where the court can also assert that such decisions are made on the particular facts of the case — that is, with respect to RACSB and what it actually did. The Court concludes that RACSB did not possess sufficient independence from the localities that created it to permit it to be treated as a municipal corporation in its own right. That means that it is “a mere auxiliary of a city or county government” or, in this case, governments.
In the headline I suggested that this was either a “bomb” or a “bomblette” — and I suppose the answer is that it depends on who is being bombed. Certainly for RACSB and its forming governments this is a bomb, as it mean the agency is subject to direct suit not just in this case, which involved the sexually battery of a client of the RACSB by one of its contract counselors, but in all tort and contract actions. For local governments it’s more of a bomblette — I suppose one must drop a few bombs to make a bomblette (sorry, I couldn’t resist) — in that they will need to reexamine the powers that they have extended to any quasi-independent agencies they have created either on their own or with neighboring jurisdictions. For example, I am fairly sure that regional jails and water authorities will be consider municipal corporations because, unlike RACSB, these entities usually possess the power of eminent domain and the ability to issue bonds, which were two points the Court focused on in its opinion because RACSB did not have these powers. On the other hand, there are many types of agencies that perform functions that, like an operating community services board, are less clearly governmental — tourism boards, regional park authorities, regional landfills, etc. Of course, because the Court makes clear that the determination of whether SI applies is decided on a case by case basis, it may be that other governments won’t worry about the issue much . . . until one of their agencies gets sued. This may depend a great deal on whether the CSBs are covered under the Virginia Risk Sharing Association, self-insurance scheme that many if Virginia’s local governments participate in.
There are two possible directions the law could go from this point. First, I suspect that local governments will lobby the General Assembly for some legislation to give agencies like RACSB protection from suit by expressly declaring them to be municipal corporations. Second, even if that does not occur or the legislature balks doing so, local governments will probably amend their enabling acts for agencies that are vulnerable to suit to provide them with “enough” hallmarks of independence to allow them to be consider municipal corporations. One way or another, I think we have not seen that last of Fines and this issue.