G. NELSON MACKEY, JR., v. HARRIOTTE DODSON McDANNALD, EXECUTRIX OF THE ESTATE OF E. GRIFFITH DODSON, JR., ET AL.
Record No. 190671
Supreme Court of Virginia
May 28, 2020
JUSTICE WILLIAM C. MIMS
PRESENT: All the Justices
FROM THE CIRCUIT COURT OF THE CITY OF ROANOKE
Humes J. Franklin, Jr., Judge Designate
In
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
Nelson Mackey joined the law firm of Dodson, Pence, Viar, Young & Woodrum as a partner in 1987. In 1990, the firm filed a certificate of partnership under the name “Dodson, Pence, Viar, Woodrum, and Mackey” that listed Mackey as a partner. Mackey soon determined that his partners were not “on the same page with” him regarding compensation arrangements and so he left the firm in 1995. In response, the remaining partners—Griffith Dodson, Richard Pence, and Richard Viar—formed the partnership of “Dodson, Pence, & Viar” by filing another certificate of partnership that same year. No formal winding up of the partnership or accounting of partnership assets occurred upon Mackey‘s departure, nor did he seek any distribution of assets.
A. Trigon Issues Stock
A mutual insurance company, Trigon Health Care, Inc., provided health insurance coverage for the firm before, during, and after Mackey‘s tenure as a partner. Mackey maintained a family plan through Trigon during his time with the firm, the premiums for which were paid as a partnership expense from partnership revenue.
In 1997, Trigon demutualized and became a stock insurance company. As part of this restructuring process, Trigon issued 683 shares in the name of Dodson, Pence, Viar, Woodrum, & Mackey even though the partnership purchasing insurance coverage at that time was Dodson, Pence, & Viar. Over the ensuing years, various mergers and a stock split occurred. As a result, the 683 Trigon shares eventually became 1,450 shares in WellPoint, Inc., plus approximately $20,000 cash in merger consideration.
As these corporate developments occurred, Mackey‘s former partners were aging. Pence passed away in 1999 and Dodson followed in 2001. Their respective daughters, Liza Urzo and Harriette Dodson McDannald, qualified as their estates’ representatives.
Shortly before his own death, Viar wrote to National City Bank to inquire regarding “some shares of Trigon stock registered in the name of Dodson, Pence, Viar, Woodrum & Mackey, a law partnership dissolved years ago” that he learned may exist from a recent proxy statement. The bank responded on July 11, 2002, advising him that 683 shares had been issued in that firm‘s name in 1997 and that the shares were worth approximately $64,000 at the time. Viar apparently took no further action based on this letter before his October 2002 death. His wife, Joyce Viar, qualified as his estate‘s representative.
B. Mackey Learns of the Stock‘s Value
While working to close down what remained of the partnership‘s practice in late 2002, Viar‘s longtime assistant, Mary Workman, came across documents relating to the Trigon stock. She contacted Mackey, who traveled to the office to pick up copies of the documents including Viar‘s letters with National City Bank. A few weeks later, Mackey called Workman to ask if she had access to his former partners’ death certificates. She did not, and Mackey did not attempt to contact the executors of his former partners’ estates regarding the certificates or to let them know about the stock. During this same period, Mackey changed the mailing address for Dodson, Pence, Viar, Woodrum & Mackey to his residential address.
Following Viar‘s death, his former associate, Michael Quinn, helped Mrs. Viar with various tax matters relating to her late husband‘s estate. In doing so, Quinn came across Viar‘s 2002 letter to National City Bank regarding the Trigon stock. He did not, however, find the letter from the bank to Viar confirming the value of the stock and so did not know how much it was worth at the time. Quinn reached out to Mackey to let him know he was helping Mrs. Viar, and they discussed the stock “on a couple of occasions” over the following months.
Quinn relayed Mackey‘s statements to Mrs. Viar, telling her that Mackey said “there wasn‘t enough there to bother with.” Based on these statements, the Viar estate made no efforts to collect the stock. Quinn acknowledged that he had enough information to look into the stock value himself, but he did not because “[he] trusted Mr. Mackey” and believed Mackey was trying to help a widow of a former partner just like he was. Quinn did not contact the Dodson or Pence estates regarding the stock or Mackey‘s statements, although he later acknowledged that had he known the value of the stock at the time, he would have informed the other estates.
C. Mackey Sells the Stock
Years later in 2009, Mackey wrote to Computershare—the contractor WellPoint, Inc., employed to administer its securities transactions—directing it to sell the stock. He drafted the letter on “Dodson, Pence, Viar, Woodrum & Mackey” letterhead he created that included his home address, phone number, and personal email address. He directed Computershare to “remit the merger consideration and net sales proceeds payable to Dodson Pence Viar Woodrum Mackey, G. Nelson Mackey, Jr.,” to his home address. Computershare complied and sent Mackey two checks—one for $20,513.49 for the merger consideration and another for $77,995.90 from the stock sale. Mackey deposited the checks into a business account he and his wife controlled. Mackey did not inform any of the estates of the sale even though he “understood [the stock] was a partnership asset” that he “assume[d]” his “deceased law partners would have an ownership interest in.”
While reviewing old files in 2015, Quinn came across the July 2002 letter from National City Bank to Viar explaining the Trigon stock had been worth approximately $64,000 at the time. After reviewing the letter, Quinn notified Mrs. Viar and attempted to contact Mackey to no avail. Quinn eventually contacted Computershare, which said that it could not release information unless he proved he represented someone entitled to the stock. Nevertheless, Computershare advised him that there had been “some activity in the account” and suggested Quinn contact Mackey—something Quinn found “very suspicious.” After Quinn provided documentation, Computershare confirmed that Mackey had liquidated the stock in 2009. Quinn reported his findings to Mrs. Viar and contacted the other estates. The Pence and Dodson estates thus learned of the stock‘s existence and Mackey‘s actions for the first time in November 2015.
D. Litigation Ensues
On December 22, 2015, the executors of the three estates sued Mackey alleging, among other things, conversion of the stock. Mackey filed a plea in bar of the statute of limitations. The trial court determined that the limitations issue should be decided at trial. The case was tried without a jury on August 21, 2017. At the close of evidence, Mackey moved to strike arguing that no tolling occurred because the misrepresentation, if any, was made long before any act creating a cause of action occurred. The trial court asked the parties to brief the limitations issue in written closing statements.
The trial court ultimately issued a letter opinion ruling that Mackey converted the stock. It first found that
These acts and omissions do not rise to the level of affirmative misrepresentations, but they cast Mackey as having deliberately prevented other parties from accessing the stock. On the other hand, Quinn had no personal stake in the stock, followed up numerous times to ask if Mackey had any information or could provide updates on its status, then suddenly stopped. Quinn‘s representation that he did so because Mackey told him to the stock was essentially worthless is both compelling and persuasive.
I am sympathetic to Mackey‘s argument that Quinn could have looked up the value of the Trigon stock at any time. However, I am not comfortable finding that an experienced lawyer should question every statement from other experienced lawyers with whom he has an ongoing professional relationship and no reason not to trust.
The trial court concluded that “[g]iven Mackey‘s misrepresentation, I find it reasonable for Quinn to have relied on that statement in deciding not to act further.” By ruling that Mackey concealed the stock from “each of its rightful owners,” the trial court found that the tolling applied to all of the estates even though Mackey spoke only to Quinn, who was representing Viar‘s executor.
The trial court further held that the executors had proven the elements of conversion. It found that the executors, as representatives of the deceased partners’ estates, had an actual right to the stock at the time of conversion but Mackey did not because he was not a member of the partnership when Trigon issued the stock in 1997. The trial court ultimately awarded $259,212 in compensatory damages and $100,000 in punitive damages, which it confirmed by final order incorporating the letter opinion.
We awarded Mackey this appeal.
II. ANALYSIS
Mackey‘s five assignments of error challenge two aspects of the trial court‘s decision: its application of
A. Code § 8.01-229(D) Tolling and Accrual of Cause of Action
Mackey first argues that
Whether the executors’ claims against Mackey are barred by the statute of limitations presents a mixed question of law and fact. William H. Gordon Associates, Inc. v. Heritage Fellowship, 291 Va. 122, 136 (2016). We review the trial court‘s legal determination as to the correct limitations period de novo, but “will uphold the trial court‘s factual findings in accepting or rejecting the defense unless they are plainly wrong or without credible supporting evidence.” Id.
That statute provides:
When the filing of an action is obstructed by a defendant‘s (i) filing a petition in
bankruptcy or filing a petition for an extension or arrangement under the United States Bankruptcy Act or (ii) using any other direct or indirect means to obstruct the filing of an action, then the time that such obstruction has continued shall not be counted as any part of the period within which the action must be brought.
(Emphasis added.)
Although none of our cases have expressly held that an obstructive act prior to accrual can trigger
prevent, and which does prevent, the discovery of the cause of action.” Culpeper Nat. Bank, 119 Va. at 83-84 (quoting 2 H.G. Wood & Dewitt C. Moore, Limitation of Actions at Law and in Equity 1422 (4th ed. 1916)). The requisite obstruction “must consist of some trick or artifice preventing inquiry, or calculated to hinder a discovery of the cause of action by the use of ordinary diligence.” Id. (quoting 2 Wood & Moore, supra, at 1422). Interpreting a similar Indiana statute,2 the United States Supreme Court observed:
The fraud and deceit which enable the offender to do the wrong may precede its perpetration. The length of time is not material, provided there is the relation of design and its consummation. Concealment by mere silence is not enough. There must be some trick or contrivance intended to exclude suspicion and prevent inquiry.
Wood v. Carpenter, 101 U.S. 135, 143 (1879) (emphasis added) (quoted with approval in Culpeper Nat. Bank, 119 Va. at 83).
From these authorities, it is apparent that the focus of
Similarly, the federal district court in Evans held in a products liability case that the manufacturer‘s failure to seek regulatory approval of certain changes to guardrail design while seeking approval for others constituted a misrepresentation sufficient to trigger tolling under the
statute. 137 F. Supp. 3d at 882-84. Although that court recognized that no Virginia court had addressed whether the statute applies when “the alleged concealment occurred prior to the injury in question and was not directed at obstructing the particular plaintiff‘s claims,” it opined that “to interpret the statute to allow only concealment after an injury would essentially prevent plaintiffs in products liability actions from ever asserting the doctrine of fraudulent concealment to toll the statute of limitations.” Id. at 883-84.
The Evans decision is distinguishable from the case at bar in that it involved a pretrial motion for judgment on the pleadings and was particularized to a products-liability fact pattern involving concealment of design changes from federal regulators. Id. at 879-80. Nevertheless, its reasoning evinces sound policy. It would be illogical to interpret
In light of these principles, we hold that
B. Code § 8.01-229(D) ‘s Effect in this Case
Mackey contends that he did not intentionally misrepresent represent the stock‘s value, so the statute should not apply to toll the limitations period. He further argues that if his conduct did toll the limitations period, it only did so as to the Viar estate because none of his actions or statements were directed toward the Dodson or Pence estates.
Whether the evidence was sufficient to prove that Mackey used “direct or indirect means to obstruct the filing of an action” is a question for the trier of fact, who is “present in the courtroom to observe witnesses’ demeanor and hear their testimony as they undergo rigorous cross-examination.” Dennis v. Commonwealth, 297 Va. 104, 126 (2019). For this reason we will defer to the trial court‘s factual findings and will not set them aside “unless it appears from the evidence that [its] judgment is plainly wrong or without evidence to support it.” Id. (quoting
Ample evidence in the record supports the trial court‘s conclusion that Mackey‘s misrepresentation about the stock‘s value was the reason Quinn and Mrs. Viar did not look into the stock further or contact the other estates. The trial court found that Quinn was a disinterested party who exhibited a pattern of inquiring about the stock and asking Mackey for updates until Mackey told him “the stock was essentially worthless.” Once that happened, Quinn “suddenly stopped” asking about the stock. The trial court found that Mackey‘s testimony, including his denial of the misrepresentation, was not credible, but found Quinn‘s testimony that he trusted Mackey and relied on his statements “both compelling and persuasive.”
Although the trial court acknowledged that Quinn had the necessary information to look up the stock‘s value at any time, it nevertheless found that Quinn‘s reliance on Mackey‘s
The trial court‘s conclusions are consistent with our prior characterization of actions that will toll the limitations period. Mackey‘s misrepresentation that the stock was not worth pursuing when he knew the shares were worth tens of thousands of dollars was an act that “involved moral turpitude” and had “the effect of debarring or deterring” Quinn or Mrs. Viar from looking into the matter further. Newman, 270 Va. at 298 (quoting Culpeper Nat. Bank, 119 Va. at 83). It thus went beyond “mere silence” and amounted to an “artifice preventing inquiry, or calculated to hinder [the eventual] discovery of the cause of action by the use of ordinary diligence.” Culpeper Nat. Bank, 119 Va. at 83 (quoting 2 Wood & Moore, supra, at 1422).
Mackey‘s misrepresentation, however, was directed only to Quinn, who represented Mrs. Viar. Our cases interpreting
Accordingly, the trial court correctly held that Mackey‘s misrepresentation to Quinn tolled the limitations period as to the Viar estate but erred in extending that tolling to the Dodson and Pence estates.
C. Sufficiency of Conversion Claim
Mackey‘s remaining arguments challenge the trial court‘s conclusion that his actions constituted conversion. Conversion is “any wrongful exercise or assumption of authority . . . over another‘s goods, depriving him of their possession; [and any] act of dominion wrongfully exerted over property in denial of the owner‘s right, or inconsistent with it.” United Leasing Corp. v. Thrift Ins. Corp., 247 Va. 299, 305 (1994) (quoting Universal C.I.T. Credit Corp. v. Kaplan, 198 Va. 67, 75 (1956)). Although a cause of action for conversion typically applies only to tangible property, this Court has recognized the conversion of intangible property rights that “arise from or are merged with a document, such as a valid stock certificate, promissory note, or bond.” Id. To establish a conversion of intangibles, however, the plaintiff must have both a property interest in and “be entitled to immediate possession” of the documented intangible property. Id. For this reason, this Court has refused to recognize a conversion claim “for interference with undocumented intangible property rights.” Id. at 306. Only “a clear, definite, undisputed, and obvious property right in a thing to which [the plaintiffs] are entitled to immediate possession [is] sufficient to support a claim for conversion.” Id.
1. Mackey‘s Right to Possess the Stock
Mackey first asserts that he had a right to immediate possession of the stock because Trigon issued the shares in the name of “Dodson, Pence, Viar, Woodrum, & Mackey” and did so based on the firm‘s insurance payment made at least partially during his tenure at the firm. Because the shares were a partnership asset, Mackey argues, he had an immediate possessory interest in them. This contention is procedurally defaulted because he did not present the argument he makes on appeal to the trial court. Rule 5:25.
The closest Mackey came to raising this argument at trial occurred during his motion to strike when he argued that he would have a right to immediate possession of the stock as a surviving partner of Dodson, Pence,
The provisions of the applicable Virginia Uniform Partnership Act and the inapplicable Virginia Revised Uniform Partnership Act are materially different. Former
2. Mrs. Viar‘s Right to Possess the Stock
Mackey next argues that the executors lacked a current possessory interest in the stock. The trial court concluded that the executors had proven their conversion claim, citing
The stock constituted documented intangible property because it was evidenced by stock certificates and other documentation. It was distributed to a partnership in which only Dodson, Pence, and Viar were partners. Because each of the partners are deceased, there is no surviving
partner to hold the assets in trust pending a determination of the partnership‘s debts and liabilities. See Hoover v. Bowers, 146 Va. 84, 88 (1926). Viar‘s interest in the stock proceeds is readily ascertainable. Upon Viar‘s death, his executor had a duty to resolve the estate‘s outstanding debts and assets. Mrs.
III. CONCLUSION
For these reasons, we affirm the trial court‘s rulings as to Mrs. Viar, reverse as to the other executors, and remand for further proceedings consistent with this opinion.
Affirmed in part,
reversed in part,
and remanded.