The Lawletter Vol 47 No 3

Brad Pettit—Senior Attorney, National Legal Research Group

            A recent decision by the District of Columbia Court of Appeals indicates that since a judgment for the debt of only one spouse does not attach to property held by the judgment debtor and his or her spouse as tenants-by-the-entireties, the nondebtor spouse takes the subject property free from a judgment lien against the debtor spouse's property even if the spouses’ divorce and the former couple's divorce decree and property settlement agreement calls for the debtor spouse to transfer to the nondebtor spouse his or her share of the couple's tenancy-by-the-entities property. Blount v. Padgett, 261 A.3d 200 (D.C. 2021). In Blount, the court relied upon the rule that “[a]lthough the characteristics of a tenancy by the entireties include ‘an inability of one spouse to alienate his interest,’ Morrison [v. Potter], 764 A.2d [234,] 236 [(D.C. 2000)], one spouse can voluntarily ‘relinquish [and convey] his or her interest to the other.’ Clark [ v. Clark], 644 A.2d [449,] 452 [(D.C. 1994)]. Id. at 203. The Blount court also cited the District of Columbia rule, which is not followed in all jurisdictions, that "a lien that cannot attach to property held as tenants by the entireties during a debtor's marriage will not necessarily attach to the property upon the debtor's divorce." Id. at 204.

The Lawletter Vol 47 No 3

Nadine Roddy—Senior Attorney, National Legal Research Group

       Over the last two decades, over two-thirds of the states have enacted legislation authorizing the use of marijuana and marijuana products for medical purposes by persons with debilitating conditions. See, e.g., Va. Code Ann. § 18.2-251.1. At present, over one-third of the states have also decriminalized possession of small amounts of marijuana and marijuana products for recreational (“adult”) use by persons 21 years of age and older. See, e.g., Conn. Gen. Stat. § 21a-279a. Unsurprisingly, such laws have created difficulties for employers wishing to prevent their employees from bringing marijuana into the workplace and/or performing work while under its influence. Employers’ drug-use policies have been challenged in the courts by aggrieved employees on the basis of such laws, with mixed results.

The Lawletter Vol 47 No 3

Charlene Hicks—Senior Attorney, National Legal Research Group

            It is common enough for an overworked attorney drafting a contract to regard a choice-of-law clause as boilerplate and therefore not in need of thoughtful consideration. However, the specific wording of such a clause may well alter the outcome of a future dispute between the contracting parties. Perhaps the most important consideration in this regard is whether the clause is worded broadly enough to encompass all potential causes of action that may arise in both contract and tort. In addition, specific language may be included to ensure that the chosen forum’s statute of limitations will also apply.

            One recent illustrative case is ARKRAY America, Inc. v. Navigator Business Solutions, Inc., No. N20C-12-012 MMJ (2021) (CCLD), 2021 Del. Super. LEXIS 463 (June 9, 2021). There, the parties entered into two separate contracts, one for software and consulting services and one for a license. Both contracts contained nearly identical choice-of-law clauses except that one provided for Utah law to apply and the other for Delaware law.

The Lawletter Vol 47 No 3

Fred Shackelford—Senior Attorney, National Legal Research Group

            In a case of apparent first impression, the Ninth Circuit Court of Appeals has decided when a cause of action in admiralty for wrongful death accrues. In Deem v. William Powell Co., 33 F.4th 554 (9th Cir. 2022), a shipyard machinist contracted mesothelioma while employed in repairing naval vessels. His illness was diagnosed on February 20, 2015, and he died on July 3, 2015. His wife filed suit within three years of his death but more than three years after the illness was diagnosed. The federal district court ruled that the claim was time-barred because the three-year statute of limitations began to run at the time of the diagnosis.

            The issue on appeal was succinctly stated: "When does a wrongful death claim accrue in a maritime case?" Id. at 559. To decide the question, the appellate court recognized that there is a fundamental distinction between survival actions and wrongful death actions under admiralty law.

The Lawletter Vol 47 No 3

Amy Gore—Senior Attorney, National Legal Research Group

            The Virginia Supreme Court in Erie Insurance Exchange v. Jones by Hardison, ___ Va. ___, 870 S.E.2d 716 (2022), reversed a lower court ruling concerning the scope of coverage under a homeowner’s policy for injuries involving an all-terrain vehicle (“ATV”). There, a passenger on an ATV was injured when a tree limb struck her. The vehicle was operated by the daughter of the named insureds under the Erie Exchange Insurance policy. As with most homeowner’s policies, the Erie Exchange policy excluded coverage for bodily injury arising out of the ownership, maintenance, or use of a land motor vehicle. However, the policy exempted from the exclusion a vehicle if “they are a lawn or farm type vehicle or snowblower, wherever used or located, if not subject to motor vehicle registration.” Id. at ___, 870 S.E.2d at 717.

The Lawletter Vol 47 No 2

Alistair Edwards—Senior Attorney, National Legal Research Group 

            It is not unusual for homes in a subdivision to be subject to restrictive covenants limiting the owners’ use of their property to residential purposes and/or prohibiting the use of the property for commercial, trade, or business purposes. This sort of restriction can also be found in instruments such as declarations governing condominium or townhouse communities. With the increasing popularity of programs such as VRBO and Airbnb, numerous courts have recently dealt with the issue of whether these so-called short-term rentals violate these sort of use restrictions. So far, the courts, strictly construing the covenants, have been fairly hesitant to find a violation.

            For example, recently in Lake Serene Property Owners Association v. Esplin, No. 2020-CA-00689-SCT, 2022 WL 713417 (Miss. Mar. 10, 2022), the Mississippi Supreme Court held that a homeowner's use of his property for short-term rentals was a “residential use” and, thus, did not violate the restrictive covenants governing the subdivision and limiting use to residential use.

The Lawletter Vol 47 No 2

Fred Shackelford—Senior Attorney, National Legal Research Group

        In Capriati Construction Corp. v. Yahyavi, 137 Nev. Adv. Op. 69, 498 P.3d 226 (2021), a motorist brought an action against a forklift operator's employer to recover for injuries caused by a collision with the forklift. At trial, the forklift operator admitted fault, and the plaintiff told the jury that the defendant had discarded the forklift operator’s employment file. After the plaintiff rested, the defendant employer elicited testimony that it had filed for reorganization under the bankruptcy laws. The plaintiff objected on the ground that the bankruptcy evidence was inadmissible because it suggested that the defendant would be unable to pay a judgment. The defendant argued that the evidence was introduced in order to rebut the plaintiff’s allegation of spoliation of the employment file.

        The trial court agreed with the plaintiff and instructed the jury that the defendant had liability insurance to satisfy any verdict. On appeal, an issue of first impression was whether evidence of the defendant’s liability insurance was admissible.

The Lawletter Vol 47 No 2

Brad Pettit—Senior Attorney, National Legal Research Group

            Although most states now have statutes that address the scope of powers of an agent under a durable or general power of attorney, it is safe to say, as a general proposition, that an agent cannot make a gift of his or her principal's property to himself or to a third party unless such a power is given to the designated attorney-in-fact in the power-of-attorney instrument. Dingle v. Prikhdina, 59 So. 3d 326 (Fla. Dist. Ct. App. 2011). Thus, in the absence of specific provision in a power-of-attorney document that authorizes the agent to make gifts of the principal's assets or property, if the attorney-in-fact makes a gift of the principal's money or property to himself, herself, or a third party, a court will presume that the gift was improper or constituted an act of prohibited self-dealing, and the agent carries the heavy burden of proving, with clear evidence, that the principal intended to allow him or her to make the gift in question. In re Estate of Curtis, 83 A.D.3d 1182, 923 N.Y.S.2d 734 (2011).

The Lawletter Vol 47 No 2

John Stone—Senior Attorney, National Legal Research Group

            The Ninth Circuit Court of Appeals has held that assuming a California state statute prohibiting, with certain exceptions, the possession of large-capacity magazines holding more than 10 rounds of ammunition implicated the Second Amendment, the statute did not facially violate the Second Amendment. Under an intermediate scrutiny analysis, the court reasoned that the statute was a reasonable fit for an important government interest of reducing the devastating damage wrought by mass shootings. Because it outlawed no weapon, it interfered only minimally with the core right of self-defense of home and family, and it saved lives. Duncan v. Bonta, 19 F.4th 1087 (9th Cir. 2021). In so holding, the court reversed the decision of a federal district court that had granted a motion for summary judgment filed by the plaintiff gun owners. Duncan v. Becerra, 366 F. Supp. 3d 1131 (S.D. Cal. 2019).

The Lawletter Vol 47 No 2

Paul Ferrer—Senior Attorney, National Legal Research Group

            As part of the check collection process governed by Article 4 of the Uniform Commercial Code (“UCC”), the “midnight deadline” rule of § 4-302 requires that a payor bank pay or return an item, or send notice of its dishonor, before midnight of the next banking day following the banking day on which the bank receives the item. The rule imposes strict liability on a payor bank that fails to meet the midnight deadline requirement. But what if something happens to the payee while the check is being dishonored as part of the collection process? Who has standing to sue the payor bank to enforce the midnight deadline rule?

            That was the unusual question decided by the Virginia Supreme Court in Stahl v. Stitt, ___ Va. ___, 869 S.E.2d 55 (2022).