Opinion by Justice WILLIAM C. MIMS.
In this appeal, we consider whether Code § 38.2-209(A) requires a trial judge, rather than a jury, to determine whether an insurer committed a bad faith breach of an insurance contract warranting an award of attorney's fees to the insured.
In 2000, REVI, LLC ("REVI") purchased a five-acre parcel of residential property along the Potomac River in Fairfax County (the "Property"). At that time, REVI also purchased a title insurance policy from Chicago Title Insurance Company ("Chicago Title"), which insured against "loss or damage" caused by "[a]ny defect in or lien or encumbrance on the title," among other risks.
In 2004, REVI discovered that the Property was subject to a number of restrictions contained in a stipulation arising out of a condemnation action filed by the United States in 1963. These restrictions prohibited tree removal except in limited circumstances, prescribed permissible building heights, and provided that the property could be developed only in accordance with a "master plan" approved by the United States Secretary of the Interior. Upon learning of the restrictions, REVI filed a claim with Chicago Title.
In 2005, Chicago Title accepted the claim and began negotiations with the National Park Service, a division of the United States Department of the Interior, seeking a release of the restrictions. The negotiations resulted in a new agreement (the "Release and Easement Agreement"), which recognized that REVI could subdivide the Property and construct five residences in accordance with the original stipulation without the consent of the United States. The Release and Easement Agreement modified slightly the prohibition on tree removal, allowing REVI to request
Subsequently, Chicago Title informed REVI that the restrictions contained in the Release and Easement Agreement did not diminish the value of the Property, and as a result, REVI had not suffered a compensable loss under the policy. However, Chicago Title invited REVI to submit an updated Proof of Loss.
In April 2012, REVI submitted an updated Proof of Loss, claiming that the restrictions contained in the Release and Easement Agreement had diminished the value of the property by $1.6 million. Chicago Title reiterated its position that the restrictions contained in the Release and Easement Agreement did not diminish the value of the Property, and it denied REVI's claim.
On April 2, 2013, REVI filed a complaint in the Circuit Court of Fairfax County, alleging that Chicago Title had breached the title insurance policy. REVI also alleged that Chicago Title had acted in bad faith, and it requested an award of attorney's fees and costs pursuant to Code § 38.2-209. REVI demanded a jury trial "on all counts so triable."
Chicago Title filed a motion seeking to bifurcate the trial and seeking to have the trial judge, rather than the jury, consider the issues of bad faith and attorney's fees under Code § 38.2-209(A). Chief Judge Dennis J. Smith ordered the trial to be bifurcated, but he also ruled that Code § 38.2-209(A) permitted the jury to determine whether Chicago Title had breached the insurance contract in bad faith, and accordingly, permitted the jury to award attorney's fees.
Judge Brett A. Kassabian presided over the jury trial. The jury found that Chicago Title had breached the contract and awarded REVI $1,241,000 in damages. Then, the jury found that Chicago Title had acted in bad faith and awarded REVI $442,000 in attorney's fees and costs.
After receiving the verdicts, Judge Kassabian sua sponte suspended the final order. He then asked the parties to submit post-trial briefs on whether Code § 38.2-209(A) permits a jury to determine whether an insurer breached an insurance contract in bad faith and award attorney's fees and costs.
Upon further consideration, Judge Kassabian vacated the jury's award of attorney's fees and costs, ruling that Code § 38.2-209(A) requires a judge, not a jury, to determine whether an insurer committed a bad faith breach of an insurance contract warranting an award of attorney's fees. Judge Kassabian then reconsidered the evidence de novo and concluded that the evidence was insufficient to prove that Chicago Title had acted in bad faith.
REVI filed a petition for appeal challenging (1) the ruling that only a judge, not a jury, may determine whether an insurer breached an insurance contract in bad faith, and accordingly, award attorney's fees and costs to the insured pursuant to Code § 38.2-209(A) and (2) the factual finding that Chicago Title did not act in bad faith. We awarded REVI an appeal only on its first assignment of error.
We review questions of statutory interpretation de novo. Eberhardt v. Fairfax Cnty. Emps. Ret. Sys., 283 Va. 190, 194, 721 S.E.2d 524, 526 (2012). We look to the words of the statute to determine its meaning, and we consider the entire statute to "place its terms in context." Id. "[I]t is our duty to interpret the several parts of a statute as a consistent and harmonious whole so as to effectuate the legislative goal." VEPCO v. Board of Cnty. Supervisors, 226 Va. 382, 387-88, 309 S.E.2d 308, 311 (1983).
Code § 38.2-209(A) states:
(Emphasis added.) REVI argues that the meaning of "court," as used in Code § 38.2-209(A), is ambiguous. REVI contends that the word "court" when used in the Code sometimes includes a "jury" and may refer to either the judge or the jury in this statute. To support its argument, REVI draws an analogy between Code § 38.2-209(A) and a common law bad faith claim. REVI argues that a determination of bad faith is a factual finding, and it asserts that the common law entitled litigants to a jury trial on questions of fact. REVI concludes that interpreting "court" to exclude a jury alters the common law rule, ignores canons of statutory construction, and violates its constitutional right to have a jury decide whether bad faith exists. We disagree.
Code § 38.2-209 traces its origins to former Code § 38.1-32.1, enacted in 1982. 1982 Acts ch. 576. As enacted, former Code § 38.1-32.1 (Cum. Supp. 1982) provided that the insured could recover "costs and such reasonable attorney fees as the trial judge after verdict may award if it is determined by such trial judge in such case that the insurer has not in good faith either denied coverage or failed or refused to make payment to the insured under such policy." (Emphasis added.).
Two years later, the General Assembly directed the Virginia Code Commission to study Title 38.1 of the Code, consisting of the Commonwealth's insurance laws, and "report its findings in the form of a revision." H.J. Res. 1, Va. Gen. Assem. (Reg. Sess. 1984). The Commission submitted its report to the General Assembly in 1986. Virginia Code Commission, Report to the Governor and General Assembly of Virginia [The Revision of Title 38.1 of the Code of Virginia] (Jan. 1986), H. Doc. No. 17 (1986). Subsequently, the General Assembly enacted 1986 Acts ch. 562 (the "Recodification Act"), titled "An Act to amend the Code of Virginia by adding a title numbered 38.2 ... and to repeal Title 38.1 of the Code of Virginia ... so as to revise, rearrange, amend and recodify the insurance laws of Virginia generally." The Recodification Act enacted the text currently codified as Code § 38.2-209(A).
REVI invokes the "presumption that the General Assembly, in amending a statute, intended to effect a substantive change in the law." West Lewinsville Heights Citizens Ass'n v. Board of Supervisors, 270 Va. 259, 265, 618 S.E.2d 311, 314 (2005) (citations omitted). It contends that the term "trial judge" clearly excluded a jury. Therefore, it argues that the substitution of "court" for "trial judge" leads to the conclusion that "court" refers to either a judge or a jury. However, "there is [also] a presumption that a recodified statute does not make substantive changes in the former statute unless a contrary intent plainly appears in the recodified statute." Waldrop v. Commonwealth, 255 Va. 210, 214, 495 S.E.2d 822, 825 (1998) (citing State Farm Mut. Auto. Ins. v. Major, 239 Va. 375, 378, 389 S.E.2d 307, 309 (1990)). Thus, we turn to the language of the entire Recodification Act to determine whether the General Assembly intended to make a substantive change. See Eberhardt, 283 Va. at 194-95, 721 S.E.2d at 526 (courts may reference the Acts of Assembly as the "authoritative text" of a single legislative enactment).
From the Recodification Act, the provision subsequently codified as Code § 38.2-807 stated:
1986 Acts ch. 562 (emphasis added).
Significantly, Code § 38.2-807 — like Code § 38.2-209 — regulates the court's authority to award attorney's fees and costs to the insured when an insurer breaches an insurance contract, limiting its authority to instances of bad faith. We construe "all statutes in pari materia in such a manner as to reconcile, if possible, any discordant feature which may exist, and make the body of the laws harmonious." Lucy v. County of Albemarle, 258 Va. 118, 129-30, 516 S.E.2d 480, 485 (1999); Eberhardt, 283 Va. at 195, 721 S.E.2d at 526 ("[W]hen a term is used in different sections of a statute, we give it the same meaning in each instance unless there is a clear indication the General Assembly intended a different meaning."). In light of the relationship between the two sections in this single enactment, we conclude that "court," as used in Code § 38.2-209(A), means "judge." Accordingly, the judge, not the jury, must determine whether the insurer breached the insurance contract in bad faith before it may award attorney's fees and costs to the insured pursuant to Code § 38.2-209(A).
Our conclusion is consistent with the commonly accepted definition of "court," which is "[a] tribunal constituted to administer justice [or t]he judge or judges who sit on such a tribunal." Black's Law Dictionary 430 (10th ed.2014); see Alexandria Gazette Corp. v. West, 198 Va. 154, 162, 93 S.E.2d 274, 281 (1956) ("[T]he word `court' refers sometimes to the judicial institution, at other times to the judicial officer, and still at other times to the place where a court is being held.").
The case relied upon by REVI, Beasley v. Bosschermuller, 206 Va. 360, 143 S.E.2d 881 (1965), is not to the contrary. In that case, we considered a different statutory provision requiring "courts" to take judicial notice of the statutory tables of speed and stopping distances of vehicles. Id. at 366, 143 S.E.2d at 886 (quoting provisions currently codified at Code § 46.2-880). Given the context of the statute, we reasoned that the General Assembly intended "to include juries within the meaning of the word `courts'" and concluded that courts could instruct juries "as to the contents of the statute which are pertinent to the issues in a particular case." Id. Nothing in Code § 38.2-209 or the Recodification Act suggests that the General Assembly intended to include juries within the meaning of "court" in this context.
We also observe that the General Assembly plainly stated its intent behind the Recodification Act. When the legislature directed the Commission to study former Title 38.1, it recited that the provisions of former Title 38.1 had become rife with "inconsistencies both in style and substance." H.J. Res. 1, Va. Gen. Assem. (Reg. Sess. 1984). The General Assembly further recited that the provisions of former Title 38.1 needed to be reorganized and revised for "grammar, clarity and purpose," and that substantive changes were required to account for developments in the industry. Id.
The Commission addressed these concerns in its report, identifying the principal changes in the introduction and additional substantive changes at the beginning of each chapter, and providing drafting notes
The Recodification Act "was the legislative implementation" of the Commission's report on the revision of former Title 38.1. Eberhardt, 283 Va. at 196, 721 S.E.2d at 527. The General Assembly enacted the Commission's recommendations with few amendments, and no amendments to the recommended language now codified as Code § 38.2-209. Therefore, we accept the report as "persuasive authority" that the General Assembly did not intend to make a substantive change in Code § 38.2-209. Newberry Station Homeowners Ass'n v. Board of Supervisors, 285 Va. 604, 617, 740 S.E.2d 548, 555 (2013).
We find no merit in REVI's argument that Code § 38.2-209 denies it the right to a jury trial under the Constitution of Virginia. Article I, Section 11 of the Constitution of Virginia provides "[t]hat in controversies respecting property, and in suits between man and man, trial by jury is preferable to any other, and ought to be held sacred." Yet, the right to a jury trial does not apply "to those proceedings in which there was no right to jury trial when the Constitution was adopted." Stanardsville Volunteer Fire Co. v. Berry, 229 Va. 578, 583, 331 S.E.2d 466, 469 (1985) (citing Bowman v. Virginia State Entomologist, 128 Va. 351, 372, 105 S.E. 141, 148 (1920)).
Code § 38.2-209(A) does not create an independent cause of action for an insurer's bad faith breach of an insurance contract. See Code § 38.2-209(B) ("Nothing in this section shall be deemed to grant a right to bring an action against an insurer by an insured who would otherwise lack standing to bring an action."); see also 1982 Acts ch. 576 (codified as former Code § 38.132.1). Thus, it is not a cause of action separate from REVI's claim for breach of contract, nor is it a codified version of the common law claim for bad faith. See CUNA Mut. Ins. Soc'y v. Norman, 237 Va. 33, 38, 375 S.E.2d 724, 726-27 (1989); State Farm Mut. Auto. Ins. Co. v. Floyd, 235 Va. 136, 142, 366 S.E.2d 93, 96 (1988). Rather, the section authorizes the court to award attorney's fees and costs after the insured establishes coverage under the disputed policy, and the court finds that the insurer denied coverage in bad faith. It is a vehicle for shifting attorney's fees and costs where otherwise such costs would not be recoverable.
Virginia follows the "American Rule," which states that "[g]enerally, absent a specific contractual or statutory provision to the contrary, attorney's fees are not recoverable by a prevailing litigant from the losing litigant." Mullins v. Richlands Nat'l Bank, 241 Va. 447, 449, 403 S.E.2d 334, 335 (1991) (citations omitted). In Virginia, the right to recover attorney's fees and costs has been regulated by statute since the colonial era.
In 1761, the General Assembly enacted "An Act for Regulating the Practice of Attornies," prescribing the fees that an attorney could charge for his services. 1761 Acts ch. 3, § 11. Subsequently, the General Assembly authorized the clerks of court to tax the prescribed attorney's fee upon recovery in the bill of costs. See 1778 Acts ch. 14, § 5; 1765 Acts ch. 52, § 3; 1764 Acts ch. 15, § 3; see also 1745 Acts ch. 1, § 15 (directing the clerk of court to tax an attorney's fee in the bill of costs for certain actions). These acts demonstrate that when Article I, Section 11 was adopted, an attorney's fee award was a ministerial matter, closely regulated by the General Assembly, and not a question for the jury. Moreover, no provision or cause of action analogous to the fee-shifting provision of Code § 38.2-209(A) existed when the Constitution was adopted. Accordingly, Article I, Section 11 does not apply to proceedings under Code § 38.2-209(A). REVI has no right to a jury trial on the issue of bad faith or the corresponding award of attorney's fees and costs.
For these reasons, we conclude that the word "court," as used in Code § 38.2-209(A), means "judge." A judge, not a jury, must determine whether an insurer "has either denied coverage or failed or refused to make payment to the insured under the policy" in bad faith. We also conclude that Code § 38.2-209(A) does not implicate the right to a jury trial under Article I, Section 11 of the Constitution of Virginia. Therefore, we affirm the judgment of the circuit court.
Affirmed.
Justice McCLANAHAN, concurring.
I agree with the dissent that the legislative history of Code § 38.2-209(A) is not determinative and that, when in doubt, a trial by jury should be preferred. In a vacuum, the term "court" can be understood to include both judge and jury. But in the context of a statute providing for a finding or determination to be made by "the court," the General Assembly has consistently used the term "court" to refer to the trial judge.
For these reasons, I concur in the result reached by the majority.
Justice KELSEY, dissenting.
The majority holds that a trial judge, not a jury, must determine whether an insurer committed a bad-faith breach of contract justifying an award of attorney's fees under Code § 38.2-209(A). I recognize the well-worn path taken by the majority, but I cannot follow. The specific legal question presented by this case, while seemingly narrow, touches on far broader issues — and the answer given by the majority adds weight to a
REVI, LLC filed a first-party breach of contract claim against Chicago Title Insurance Company (the insurer). REVI claimed that the insurer had breached, in bad faith, its contractual obligation to pay REVI's claim on the insurer's policy of title insurance. At a bifurcated trial, a jury agreed with REVI, awarding REVI $1,241,000 in benefit-of-the bargain damages and $442,000 in attorney's fees.
After receiving both verdicts, the trial judge sua sponte vacated the jury's award of attorney's fees, holding that Code § 38.2-209(A) provides that the issue of bad faith in breach of contract actions can only be decided by a judge, not a jury, because the statute provides that "the court," and not the "jury," may make the award. The trial judge then reconsidered the evidence de novo and held that the insurer had not committed a bad-faith breach warranting an award of attorney's fees.
REVI filed a petition for appeal challenging (i) the trial judge's holding that only a judge, not a jury, could decide the bad-faith issue and (ii) the trial judge's de novo factual finding that the insurer did not commit a bad-faith breach of the insurance contract. We awarded REVI an appeal on its first, but not its second, assignment of error.
On appeal, REVI argues that the reference to "the court" in Code § 38.2-209(A) is ambiguous and should be interpreted to include a jury. I agree.
Code § 38.2-209(A) authorizes "the court" to determine whether an insurer commits a bad-faith breach of contract and to award attorney's fees.
The traditional meaning of the term "court," as Sir Edward Coke defined it, is simply "a place where justice is judicially administered." 1 Edward Coke, The First Part of the Institutes of the Laws of England, or, a Commentary upon Littleton § 73, at 58 (10th ed. 1703).
While it is true that the term "[c]ourt is frequently used as a metonymic substitute for judge," Bryan A. Garner, A Dictionary of Modern Legal Usage 231 (3d ed.2011) (emphasis omitted), that meaning, some say, can be attributed to "the sometimes-strange jargon of jurists," id. (quoting John A. Jenkins, The Litigators 165 (1989)). The more traditional view, widely recognized by our Founders, declares that "[j]uries form, with a few exceptions, another constituent part of courts." 2 The Works of the Honourable James Wilson 305 (Bird Wilson ed., 1804);
Fifty years ago, we applied the traditional view in Beasley v. Bosschermuller, 206 Va. 360, 143 S.E.2d 881 (1965). Specifically, we held that a statute authorizing "courts" to take judicial notice of the statutory tables of speed and stopping distances of vehicles must be understood "to include juries within the meaning of the word `courts.'" 206 Va. at 366, 143 S.E.2d at 886. We came to this conclusion because "in cases triable by a jury the word `court' employed in a statute includes the jury as a constituent part." Id.
The majority holds that the traditional view must give way when the statutory context suggests otherwise. I could not agree more. There are countless examples of this. See, e.g., Ingram v. Commonwealth, 62 Va.App. 14, 24, 741 S.E.2d 62, 67 (2013) (holding that "court," used in the context of a statute governing involuntary treatment orders under Code § 37.2-1101(A), means a court sitting without a jury). But nothing in the Code of Virginia or, more specifically, Title 38.2, provides the contextual support for the interpretation the majority imputes to Code § 38.2-209(A).
In dozens of statutes throughout the Code, the General Assembly speaks of the "court" sitting "without a jury."
Suffice it to say, the host of discordant uses of these statutory terms — particularly the inconsistent usage of the term "court" within Title 38.2 — is alone enough to dissuade me from accepting the majority's conclusory assertion that the term "court" has a "commonly accepted definition" that necessarily excludes juries. See Ante at ___, 776 S.E.2d at 812-13. The majority implicitly concedes the point by relying heavily on the legislative history of Code § 38.2-209 in an unorthodox effort to vouch for this "commonly accepted definition." Ante at ___, 776 S.E.2d at 812-13.
I do not see how the legislative history provides the majority with the confidence it seeks. If anything, I would think it would do just the opposite. The General Assembly amended and recodified the insurance laws (formerly Title 38.1) as Title 38.2 in 1986. See 1986 Acts ch. 562. Prior to that recodification, the predecessor statute to Code § 38.2-209 specifically provided that "the trial judge after verdict" should decide the bad-faith issue and that fees could be awarded "if it is determined by such trial judge in such case" that the insurer has not acted in good faith. 1982 Acts ch. 576 (as enacted, former Code § 38.1-32.1 (Cum. Supp. 1982), quoted in CUNA Mut. Ins. Soc'y v. Norman, 237 Va. 33, 38, 375 S.E.2d 724, 726 (1989)). The 1986 amendment deleted the phrases "the trial judge after verdict" and "if it is determined by such trial judge in such case,"
In Virginia, "a presumption exists that a substantive change in law was intended by an amendment to an existing statute," Commonwealth v. Bruhn, 264 Va. 597, 602, 570 S.E.2d 866, 869 (2002) (quoting Virginia-American Water Co. v. Prince William Cty. Serv. Auth., 246 Va. 509, 517, 436 S.E.2d 618, 622-23 (1993)), and thus, we should "assume that the General Assembly's amendments to the law are purposeful and not unnecessary or vain," Virginia-American Water Co., 246 Va. at 517, 436 S.E.2d at 623.
That presumption surely applies here. If "the court" means exactly the same thing as the phrase "the trial judge after verdict," then the 1986 amendment accomplished nothing except to make unclear what had previously been perfectly clear. See Appellant's Br. at 16-17. If we are to draw any inferences at all from the amendment, it should be toward giving the new language some meaning — as opposed to none at all. That is particularly true given our prior observation that "in cases triable by a jury the word `court' employed in a statute includes the jury as a constituent part." Beasley, 206 Va. at 366, 143 S.E.2d at 886.
The majority makes much over the fact that the Code Commission's Report to the General Assembly does not specifically call attention to the amendment as "substantive." Ante at ___, 776 S.E.2d at 813. But that is a peculiarly thin basis on which to rebut the judicial presumption to the contrary.
As useful as they may be, canons of construction are not infallible. "Canons of construction need not be conclusive and are often countered, of course, by some maxim pointing in a different direction." Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115,
Authored by George Mason, the 1776 Virginia Declaration of Rights declared that "the ancient trial by jury is preferable to any other" and thus "ought to be held sacred." Virginia's Declaration of Rights, § 11, 9 Hening's Statutes of Virginia 109, 111-12 (1776). This sacred, constitutional preference survives to this day as Article I, Section 11, of the Constitution of Virginia and constitutes a meta-canon recognizing the Commonwealth's venerated tradition of viewing the citizen jury as a constituent and essential part of the judiciary — "preferable" to any other. Id.
Our faith in this premise comes from the English common law, so deeply embedded in the Commonwealth's history,
The citizen jury was understood as "the `lower judicial bench' in a bicameral judiciary"
As the "democratical balance in the Judiciary power,"
Could we ask for a more worthy canon of construction than the constitutional bias in favor of the "ancient trial by jury" and the declared will of the People that it "is preferable to any other" manner of trial? Virginia's Declaration of Rights, § 11, 9 Hening's Statutes of Virginia 109, 111-12 (1776); see also Va. Const. art. I, § 11. Is there any better meta-canon to rule over the lesser canons of constructions that rely almost entirely on linguistics, syntax, and assumptions about ideal draftsmanship?
In short, I believe that the term "court" in Code § 38.2-209(A) is ambiguous because reasonable interpreters could read it to include a jury or, conversely, to exclude a jury. Picking solely from these opposing views seems to me to miss the forest for the trees. The legal timberland of the Commonwealth was planted by arborists who considered the citizen jury as sacred. If any reasonable statutory construction exists to preserve this "preferable" method of deciding disputes, Va. Const. art. 1, § 11, it should prevail over all the others. Only by following this interpretative path can we preserve "in the hands of the people that share which they ought to have in the administration of public justice." Blackstone, supra, at *380.
For these reasons, I respectfully dissent.