Board of Supervisors v. Davenport & Co. LLC

Va.4/18/2013
View on CourtListener

AI Case Brief

Generate an AI-powered case brief with:

📋Key Facts
⚖️Legal Issues
📚Court Holding
💡Reasoning
🎯Significance

Estimated cost: $0.10–$0.50 per brief, depending on opinion length and retries

Full Opinion

[[COURTLISTENER_SUBOPINION {"id":"1057754","type":"010combined","part":"opinion","author":null,"source_field":"html_with_citations"}]]
PRESENT: All the Justices

BOARD OF SUPERVISORS OF FLUVANNA COUNTY
                                            OPINION BY
v.   Record No. 121191            JUSTICE LEROY F. MILLETTE, JR.
                                          APRIL 18, 2013
DAVENPORT & COMPANY LLC


            FROM THE CIRCUIT COURT OF FLUVANNA COUNTY
             Benjamin N. A. Kendrick, Judge Designate

      In this appeal, we consider whether the circuit court

erred when it sustained a demurrer to a complaint filed by the

Board of Supervisors of Fluvanna County (the Board) against a

private financial advisor on the basis that the separation of

powers doctrine prevented the court from resolving the

controversy because the court would have to inquire into the

motives of the Board's legislative decision making.     An inquiry

into the relationship between the separation of powers doctrine

and the motivation of legislators necessarily implicates

legislative immunity.    For the reasons set forth below, we hold

that the Board effectively waived its common law legislative

immunity from civil liability and the burden of litigation, and

therefore reverse the circuit court judgment sustaining the

demurrer filed by Davenport & Company LLC (Davenport).

                          I.   Background

      The Board filed a complaint against Davenport in the

Circuit Court of Fluvanna County.   The complaint included

allegations of breach of fiduciary duty (Count I), actual fraud
(Count II), gross negligence (Count III), constructive fraud

(Count IV), unjust enrichment or disgorgement (Count V), breach

of contract (Count VI), and breach of the Virginia Securities

Act (Count VII).

     In its complaint, the Board claimed that Davenport has

continuously served as the financial advisor to the Board for

more than fifteen years, during which David P. Rose (Rose),

Davenport's Senior Vice President and Manager of Davenport

Public Finance, served as the Board's principal contact person.

The Board asserted that Davenport, as financial advisor, made

knowingly false representations and used its fiduciary position

to persuade the Board to hire Davenport as an advisor regarding

the financing of the construction of a new high school (the

Project).

     The Board claimed that Davenport made a presentation to

the Board in August 2008 in which it represented the estimated

borrowing cost for stand alone bonds to be 4.87 percent, with

the estimated borrowing cost for the pool of bonds offered by

the Virginia Public School Authority (pool bonds) at 4.81

percent.    The Board also alleged that Rose specifically

represented that Fluvanna County could not refinance the bonds

if it participated in the pool bonds, which representation was

made knowingly and was materially false.   The Board asserted




                                 2
that it reasonably relied upon these representations when it

voted in favor of issuing stand alone bonds.

     When the school bonds were issued in December 2008, the

stand alone bonds had reached an interest rate of 5.95 percent.

The pool bonds, issued three weeks earlier, however, carried an

interest rate of 4.75 percent.   The Board alleged that

Davenport also breached its fiduciary duty when it failed to

disclose the significant difference between the interest rates

of the stand alone and pool bonds in August 2008 and the bonds'

interest rates in December 2008, when the bonds were ultimately

issued.   The Board claimed that the County incurred nearly $18

million in excess interest payments on the stand alone bonds as

a result of Davenport's malfeasance.   It requested

consequential damages in the amount of $18.5 million, $350,000

in punitive damages, attorneys' fees and costs, and

disgorgement of all fees paid to Davenport.

     Davenport filed its amended demurrer, plea in bar, answer,

and affirmative defenses with the circuit court.   In its

amended demurrer, Davenport argued that the court should

dismiss the complaint, with the exception of the claim for

unjust enrichment (Count V), as it violated the separation of

powers doctrine because the elements of the claims and

Davenport's defenses required the court to adjudicate issues

not properly before the judiciary.   The circuit court,


                                 3
following a hearing on the amended demurrer, agreed with

Davenport and held that the separation of powers doctrine

prohibited the court from resolving the dispute because to do

so would require inquiry into the motives of the Board.    The

court sustained the demurrer with prejudice and refused to

allow the Board the opportunity to amend the pleadings.    The

Board subsequently filed its timely appeal.

                        II.   Discussion

                      A. Standard of Review

     The standard of review applicable to the circuit court's

sustaining of a demurrer is well established:

          A demurrer tests the legal sufficiency of a
          [complaint] and admits the truth of all
          material facts that are properly pleaded.
          The facts admitted are those expressly
          alleged, those that are impliedly alleged,
          and those that may be fairly and justly
          inferred from the facts alleged. The trial
          court is not permitted on demurrer to
          evaluate and decide the merits of the
          allegations set forth in a [complaint], but
          only may determine whether the factual
          allegations of the [complaint] are
          sufficient to state a cause of action.

          A trial court's decision sustaining a
          demurrer presents a question of law which we
          review de novo. Furthermore, like the trial
          court, we are confined to those facts that
          are expressly alleged, impliedly alleged,
          and which can be inferred from the facts
          alleged.

Harris v. Kreutzer,
271 Va. 188, 195-96
,
624 S.E.2d 24, 28
(2006) (internal citations and quotation marks omitted).


                                4
                   B.        Issue of First Impression

       In reviewing these arguments, we acknowledge that the

particular issue presented regarding Constitutional and common

law legislative immunity is one of first impression.        In 1979,

the United States District Court for the Eastern District of

Virginia recognized the lack of precedent on the issue, stating

that "the Virginia Supreme Court has not had occasion to

construe the scope of the Virginia speech or debate clause."

Greenberg v. Collier,
482 F.Supp. 200, 202
(E.D. Va. 1979).         In

the absence of any Virginia precedent on the issue, the court

turned to the "considerable authority applying and interpreting

the speech or debate clause of the United States Constitution"

in other jurisdictions.
Id.
It did so because "state and

federal immunities are very similar in their wording[, and]

they appear to be based upon the same historical and public

policy considerations."
Id.
Today, the Court has occasion to

evaluate the scope of the Constitutional legislative immunity

and its counterpart in common law.        We, as the court in

Greenberg, will do so in reliance on state and federal case

law.

                        C.     Separation of Powers

       The Board first assigns error to the circuit court's

dismissal of the complaint based on the separation of powers

doctrine.   It argues that the controversy at bar is not one


                                      5
that would require the circuit court to interfere with other

branches of government.   The Board claims that the court would

not be evaluating legislative motivation for the purpose of

overturning or invalidating legislation, but would instead be

receiving evidence of the motivations solely to assist in

establishing the elements of professional duty, reliance, and

damages caused by Davenport's breach.   The Board asks the Court

to reverse the ruling of the circuit court and allow the case

to proceed.

     Davenport disagrees, pointing out that elements of the

Board's claims, such as reliance and damages, would require an

evaluation of the motivation behind legislative action.

Davenport argues that the circuit court correctly dismissed the

case in its entirety because to prove or defend elements of the

claims involved requires an evaluation of the Board members'

motivations in voting for the issuance of stand alone bonds.

Davenport contends that such inquiry would violate the

separation of powers doctrine.

1.   Constitutional Legislative Immunity

     Article III, Section 1 of the Constitution of Virginia

mandates that "legislative, executive, and judicial departments

shall be separate and distinct, so that none exercise the

powers properly belonging to the others."   The principles of

separation of powers generally "preclude[] judicial inquiry


                                 6
into the motives of legislative bodies elected by the people."

Ames v. Painter,
239 Va. 343, 349
,
389 S.E.2d 702, 705
(1990);

see also Bogan v. Scott-Harris,
523 U.S. 44, 55
(1998).    Chief

Justice Marshall recognized the danger of such an inquiry more

than a hundred years ago when he wrote:

          It may well be doubted how far the validity
          of a law depends upon the motives of its
          framers, and how far the particular
          inducements, operating on members of the
          supreme sovereign power of a state, to the
          formation of a contract by that power, are
          examinable in a court of justice. If the
          principle be conceded, that an act of the
          supreme sovereign power might be declared
          null by a court, in consequence of the means
          which procured it, still would there be much
          difficulty in saying to what extent those
          means must be applied to produce this
          effect.

Fletcher v. Peck,
10 U.S. 87, 130
(1810).

     Chief Justice Marshall's concerns are recognized in

Article IV, Section 9 of the Constitution of Virginia, which

grants "[m]embers of the General Assembly . . . , in all cases

except treason, felony, or breach of the peace . . .

privilege[] from arrest during the sessions of their respective

houses; and for any speech or debate in either house [such

members] shall not be questioned in any other place."    This

provision, which is derived from the Speech or Debate Clause of

the United States Constitution, affords General Assembly

members with immunity that protects them from being called into



                               7
an outside forum to defend their legislative actions.     See U.S.

Const., art. I, § 6.

     By its terms, the Speech or Debate Clause of the United

States Constitution, although similar in content to Article IV,

Section 9 of the Constitution of Virginia, does not apply to

the states.   Lake Country Estates, Inc. v. Tahoe Reg'l Planning

Agency,
440 U.S. 391, 404
(1979).   The immunity provided under

the terms of Article IV, Section 9 of the Constitution of

Virginia is also restricted in application, providing immunity

only to the General Assembly.   See Doe v. Pittsylvania County,
842 F.Supp.2d 906, 916
(W.D. Va. 2012).   As a result, members

of a board of supervisors, legislators of a municipality, are

outside the scope of both federal and state Constitutional

legislative immunity provisions.

2.   Common Law Legislative Immunity

     Despite the inapplicability of Constitutional legislative

immunity to the case at bar, state and local legislators have

nevertheless been found to be protected because "common law

legislative immunity . . . protect[s] the integrity of the

legislative process by [e]nsuring the independence of

individual legislators."   Miles-Un-Ltd. v. Town of New

Shoreham,
917 F.Supp. 91, 98
(D.N.H. 1996) (quoting United

States v. Brewster,
408 U.S. 501, 507
(1972)); see also Steiner

v. Superior Court,
58 Cal.Rptr.2d 668, 677
(Cal. Ct. App. 1996)


                                8
(stating that "[t]hese corollaries of the separation of powers

doctrine regarding legislative acts apply to local government

bodies, including boards of supervisors, when they act in a

legislative capacity"); Montgomery Cnty. v. Schooley,
627 A.2d

69, 73
(Md. Ct. Spec. App. 1993) (applying to members of local

legislative bodies as a matter of "common law doctrine of

official immunity").   The United States Supreme Court has held

that local legislators are protected under common law

legislative immunity to the same extent as legislators

protected under Constitutional legislative immunity provisions

because "[t]he rationales for according absolute legislative

immunity to federal, state, and regional legislators apply [to

local legislators] with equal force."   Bogan,
523 U.S. at 52
.

     The immunity provided by common law is "similar in origin

and rationale to that accorded Congressmen under the Speech or

Debate Clause," and was adopted to safeguard the performance of

legislative duties from "fear of outside interference."

Supreme Court of Va. v. Consumers Union of the U.S., Inc.,
446

U.S. 719, 731-32
(1980).   Thus, it "is much more than

protection against liability."   Lewis v. Legislature of the

Virgin Islands,
44 V.I. 162, 166
(V.I. Terr. Ct. 2002).

It "prevent[s] legislators from having to testify regarding

matters of legislative conduct, whether or not they are

testifying to defend themselves," Schlitz v. Virginia,
854 F.2d


                                 9
43, 46
(4th Cir. 1988), and "frees legislators from the costs

of litigation."   Lewis,
44 V.I. at 166
.

     Common law legislative immunity applies to municipal

legislators when they are "acting [with]in the sphere of

legitimate legislative activity."    Baker v. Mayor of Baltimore,
894 F.2d 679, 681
(4th Cir. 1990).   Legislative actions

include, but are not limited to, "delivering an opinion,

uttering a speech, or haranguing in debate; proposing

legislation; voting on legislation; making, publishing,

presenting, and using legislative reports; authorizing

investigations and issuing subpoenas; and holding hearings and

introducing material at Committee hearings."   Fields v. Office

of Johnson,
459 F.3d 1, 10-11
(D.C. Cir. 2006) (internal

quotation marks and footnotes omitted).

     In the present case, it is clear that the motivations of

and discussions between Board members surrounding their vote on

the stand alone bonds fall within the scope of legislative

immunity.   In a trial between the Board and Davenport, the

fraud claims, Counts II and IV, would require proof of the

element of reasonable reliance for the Board to establish the

claims.   The claims of breach of fiduciary duty (Count I),

gross negligence (Count III), unjust enrichment (Count V),

breach of contract (Count VI), and breach of the Virginia

Securities Act (Count VII) would require the Board to prove


                                10
that it reasonably relied upon Davenport and that this

reasonable reliance resulted in provable damages.   An

evaluation of whether the Board members relied upon Davenport's

allegedly misleading statements in their discussions concerning

the bonds requires testimonial probing into the basis for the

Board's vote on the bond issue.    As a result, the circuit court

correctly held that the separation of powers doctrine was

implicated.

3.   Waiver of Board's Legislative Immunity

     The circuit court erred, however, in dismissing the claim

because the Board effectively waived the protection of

legislative immunity.   Legislative immunity can be waived only

by an "explicit and unequivocal renunciation of the

protection."   United States v. Helstoski,
442 U.S. 477, 491
(1979).   The Board fulfilled this requirement by: (1) declining

to assert legislative immunity, (2) voluntarily filing a

complaint that, due to the Board's burden of proof, involves

issues protected by legislative immunity, and (3) making an

unequivocal waiver of protection from inquiry into legislative

motivation in the text of its complaint.

     The first action evidencing the Board's voluntary waiver

is its failure to assert the protection of legislative

immunity.   When legislators are protected under the scope of

legislative immunity, the legislators must "at a proper time,


                                  11
and in a proper manner, claim the benefit of [the] privilege."

Geyer's Lessee v. Irwin,
4 U.S. 107, 107-08
(1790).     In Geyer's

Lessee, the defendant's attorney failed to raise the

defendant's privilege when he was tending to public business as

a member of the state legislature.
Id. at 107
.   In the case at

bar, the Board has not asserted legislative immunity at any

time during the proceedings and, in fact, is asking for leave

to pursue its claim.

     The action of the Board in filing its complaint, which

initiated litigation on matters surrounding its legislative

actions, also supports a waiver of legislative immunity.

Legislative immunity will not "protect [legislators] when they

step outside the function for which their immunity was

designed."   May v. Cooperman,
578 F.Supp. 1308, 1317
(D.N.J.

1984).   In May, New Jersey legislators interjected themselves

into a lawsuit as defendants when they were not originally

named as such.
Id.
By choosing to participate in the

proceeding, the legislators waived the protection of

legislative immunity.
Id.
Similarly, the Board filed suit

against Davenport and voluntarily undertook a course of action

that will require the Board to address issues concerning

motivation of the legislators that are ordinarily immune from

legislative functions.   Thus, the Board, like the legislators

in May, effectively waived its immunity.


                                  12
     Finally, the Board waived legislative immunity by its

unequivocal rejection of the protections of the privilege.    In

Kingman Park Civic Ass'n v. Williams,
348 F.3d 1033, 1039
(D.C.

Cir. 2003), the defendant mayor, a city official, effectively

waived legislative immunity when his counsel "disavowed any

claim to legislative immunity" before the district court.

Likewise, the Board in the present case waived its immunity

when it supported its complaint with statements of reliance on

Davenport's alleged misrepresentations in the Board's vote for

the stand alone bonds, which will necessarily require inquiry

into its motivations in passing the legislation:

          The Board reasonably relied on Davenport's
          written and verbal representations in
          selecting Davenport. It later learned that
          many of these representations were knowingly
          false and were made solely for the purpose
          of securing Fluvanna County's business and
          enriching Davenport and Rose.

                             . . . .

          At Rose's urging, the Board issued stand
          alone bonds to finance the Project . . .
          rather than participating in the pool of
          bonds . . . offered by the Virginia Public
          School Authority.

                            . . . .

          Rose intended that the Board rely on all of
          his statements and the Board reasonably did
          so.
                             . . . .




                               13
             Fluvanna County has been financially damaged
             by Davenport's actions and inactions.

                                . . . .

             Davenport has breached the . . . contract
             and proximately caused Fluvanna County's
             damages.

Through the language of its complaint, which will necessarily

require inquiry into its motivations, the Board has rejected the

protection that legislative immunity provides from inquiry into

legislative motivation.

        Thus, by failing to assert legislative immunity, by filing

its complaint, and by including statements in support of the

complaint that of necessity waive protection from inquiry, the

Board has waived legislative immunity and the burden of

litigation.    Because the Board has explicitly and unequivocally

waived its privilege of legislative immunity, the circuit court

erred in sustaining Davenport's demurrer and dismissing the

Board's complaint.

                          D.   Other Issues


        In light of this conclusion and the circuit court's final

order, we will not reach assignments of error two, three, and

four.    Assignment of error three contends that the specific

arguments Davenport raised in support of its demurrer are

without merit, specifically that: (1) Counts II, III and IV of

the Board's complaint were barred by the economic loss rule,



                                  14
and (2) Count V did not allege a substantive cause of action.

Because the circuit court did not base its ruling on these

portions of Davenport's demurrer, any "opinion we might express

at this time would be premature and merely advisory."   Mosher

Steel-Virginia, Inc. v. Teig,
229 Va. 95, 105
,
327 S.E.2d 87,

94
(1985).   We need not reach the merits of assignment of error

two, arguing that the trial court improperly considered

documents outside the complaint on demurrer, or four,

contending that the trial court erred by denying the Board

leave to amend the complaint, because our conclusion regarding

assignment of error one is dispositive.


                          III. Conclusion

     For the foregoing reasons, we will reverse the decision of

the circuit court and remand the case for further proceedings.



                                            Reversed and remanded.



JUSTICE McCLANAHAN, concurring.

     While I agree that the circuit court erred in sustaining

Davenport's demurrer, I would hold that the separation of powers

doctrine is not implicated by the claims made in this action.

     In my view, the majority opinion conflates the concepts of

legislative immunity and separation of powers by invoking




                                  15
legislative immunity to conclude the complaint implicates the

separation of powers doctrine and holding that waiver of

legislative immunity would alleviate any separation of powers

issues.    The Constitution of Virginia explicitly sets forth the

structure of the branches of the Commonwealth and the exclusive

powers of each branch while also granting protections to

legislators who seek to prevent interference with their duties.

The Board has not invoked legislative immunity on behalf of its

members.   Rather, the question presented in this case, and

unanswered by the majority, is whether, by adjudicating the

case before it, the circuit court would impermissibly be

exercising legislative power in direct violation of this

constitutional structure.   Because the circuit court would not

be exercising legislative power to adjudicate the case before

it, I would answer this question in the negative.

            I. DISTINCTION BETWEEN SEPARATION OF POWERS
                      AND LEGISLATIVE IMMUNITY

     Although legislative immunity may act as a corollary to

the separation of powers doctrine, legislative immunity lies

outside the patent statement of the separation of powers found

in the Constitution, and each concept protects a different

entity and its interests.   Article I, Section 5 of the

Constitution of Virginia states that "the legislative,

executive, and judicial departments of the Commonwealth should



                                 16
be separate and distinct."   Our Constitution iterates this idea

in Article III, stating that "[t]he legislative, executive, and

judicial departments shall be separate and distinct, so that

none exercise the powers properly belonging to the others, nor

any person exercise the power of more than one of them at the

same time."

     Furthermore, the Constitution establishes that our form of

government and its strictures arise from the people and act for

the benefit of the people.   Article I, Section 2 states that

"all power is vested in, and consequently derived from, the

people, that magistrates are their trustees and servants, and

at all times amenable to them."    See also Carter v.

Commonwealth,
96 Va. 791, 812
,
32 S.E. 780, 784
(1899) ("In our

system of government all power and authority are derived from

the people.    They have seen fit by organic law to distribute

the powers of government among three great co-ordinate

departments - the executive, the legislative, and the

judicial.").   Additionally, Article I, Section 3 states that

the government is formed by the people and "[t]hat government

is, or ought to be, instituted for the common benefit,

protection, and security of the people, nation, or community,"

and that the right to "reform, alter, or abolish" the current

system of government, including the separation of powers,

resides with the people.   As James Madison recognized, the


                                  17
separation of powers protects against "[t]he accumulation of

all powers, [l]egislative, [e]xecutive, and [j]udiciary, in the

same hands, whether of one, a few, or many, and whether

hereditary, self-appointed, or elective, [that] may justly be

pronounced the very definition of tyranny."      The Federalist No.

47, at 266 (James Madison) (E.H. Scott ed. 1898).      All of these

passages emphasize the fact that the separation of powers

inherent in our form of government exists not "to protect the

other branches, but rather to protect the populace."      Martin H.

Redish & Elizabeth J. Cisar, "If Angels Were to Govern": The

Need for Pragmatic Formalism in Separation of Powers Theory,
41

Duke L.J. 449
, 486-87 (1991).

     A corollary to the separation of powers doctrine is the

concept of legislative immunity.       As the majority notes, this

concept is enshrined in Article IV, Section 9 of the

Constitution of Virginia.   However, rather than establishing

the form and structure of our government, this section ensures

that "legislators are not distracted from or hindered in the

performance of their legislative tasks by being called into

court to defend their actions."    Powell v. McCormack,
395 U.S.

486, 505
(1969).   The protection of legislative immunity lies

with the individual legislators "to insure that the legislative

function may be performed independently without fear of outside

interference."   Supreme Court of Va. v. Consumers Union of the


                                  18
U.S., Inc.,
446 U.S. 719, 731
(1980) (citing Eastland v. United

States Servicemen's Fund,
421 U.S. 491, 502-03
(1975)).   It is

a right held by each legislator in order that he or she may

independently and without interference conduct his or her

legislative duty.1

     Thus the separation of powers doctrine and legislative

immunity are distinct concepts lying with separate entities:

the first establishing our form of government and ensuring the

protection of the people against aggrandizement leading to

tyranny, and the second ensuring the independence of a

legislator.   One belongs to and is for the benefit of the

people while the other belongs to and is for the benefit of the

individual legislator.   For these reasons, while an individual

legislator may be able to waive his protective rights, no

individual or even entire branch of government has the power to

waive a protection for the benefit of the people.

     In this case, Davenport argues that the separation of

powers doctrine "makes this case non-justiciable."   According

to Davenport, "[t]his is a lawsuit for wrongful legislation"

     1
       I agree that legislative immunity can be waived in the
manner described in the majority opinion; however, any waiver
must be made on an individual basis in the circuit court and
not based solely on the Board's complaint and lack of asserting
legislative immunity. Since I believe the issue before us is
whether separation of powers precludes adjudication of the
Board's complaint, and I further believe that legislative
immunity has not been invoked in this case, I do not address
whether any members of the Board have waived its protection.

                                19
and the Board is asking the court "to fix that legislation" in

violation of the doctrine of separation of powers.      Davenport

has not attempted to invoke the principle of legislative

immunity on behalf of the members of the Board or suggested

that it may invoke such immunity for its own benefit to

preclude the Board's claims.2

                II.     EXERCISE OF JUDICIAL POWER

     Therefore, the issue before us is whether the circuit

court was correct in holding that because "judges cannot

inquire into the motive of legislators and why they did what

they did," the case before it is not justiciable under the

separation of powers doctrine.    As noted above, the

Constitution of Virginia forbids one branch, in this case the

judicial, from exercising the powers of another branch, in this

case the legislative.    As such, the judicial branch would only


     2
       To be sure, Davenport has cited to the principle of
legislative immunity as one example of the "practical problems"
the circuit court may encounter if this case is determined to
be justiciable and a current or former member of the Board
"attempts to invoke immunity." Indeed, such "practical
problems" may occur in the circuit court if a member of the
Board chooses to invoke immunity. However, the potential
hurdles the Board may or may not face in trying to prove its
claims does not affect the determination of whether the Board
has stated a justiciable claim. Kurpiel v. Hicks,
284 Va. 347
,
353,
731 S.E.2d 921
, 925 (2012) (a demurrer tests the legal
sufficiency of the facts alleged not the strength of proof).
Nevertheless, even if Davenport was relying upon legislative
immunity to support its demurrer, such argument would
necessarily fail since only an individual protected by immunity
may invoke its protections.

                                 20
violate the separation of powers doctrine if it were to

exercise the legislative power held by the General Assembly.

Va. Const. art. IV, § 1.   But in the case before us, the

circuit court was presented with a question well within the

powers vested in the judiciary.    Va. Const. art. VI, § 1 ("The

judicial power of the Commonwealth shall be vested in a Supreme

Court and in such other courts of original or appellate

jurisdiction subordinate to the Supreme Court as the General

Assembly may from time to time establish.").

     Taking, as we must for the purposes of a demurrer, the

allegations of the complaint as true, Harris v. Kreutzer,
271

Va. 188, 195-96
,
624 S.E.2d 24, 28
(2006), Davenport committed

fraud and gross negligence, breached its contracts, fiduciary

duty, the Virginia Securities Act, and was unjustly enriched.

The Board is seeking monetary and punitive damages.   If the

circuit court were to find for the Board on all counts and

award the full damages sought by the Board, no legislative act

would occur.   It would be exercising "the essential function of

the judiciary -- the act of rendering judgment in matters

properly before it" and not "the function of statutory

enactment, a power unique to the legislative function."     Moreau

v. Fuller,
276 Va. 127, 136
,
661 S.E.2d 841, 846
(2008).

     Although the Board's claims involve the enactment of a

bond resolution as a factual matter, the circuit court has not


                                  21
been asked by the Board to repeal or alter that resolution; it

has only been asked to adjudicate whether Davenport has

committed the alleged acts to the detriment of the Board.   To

support its demurrer, Davenport has characterized the Board's

action as an attempt to undo the bond resolution.3   Once that

characterization is rejected, as it must be, it is evident that

the separation of powers doctrine is not implicated.    In short,

because the Board does not seek to invalidate its bond

resolution, the circuit court would not be exercising

legislative powers in violation of the separation of powers

doctrine by adjudicating the claims asserted in the Board's

complaint.   Therefore, the circuit court erred in sustaining

Davenport's demurrer on those grounds.




     3
       While Davenport principally relies upon the Court's
refusal to inquire into the motives of legislative bodies when
asked to determine the validity of legislation, no such
determination is involved here, notwithstanding Davenport's
efforts to characterize the action as an attempt to
"retroactively change the 2008 Board's bond Resolution." Cf.
Chesapeake & Potomac Tel. Co. v. City of Newport News,
196 Va.
627, 639-40
,
85 S.E.2d 345, 352
(1955) ("No principle of our
constitution is more firmly established than that this court
may not, in passing upon the validity of a statute, inquire
into the motives of Congress. Nor may the Court inquire into
the wisdom of the legislation. Nor may it pass upon the
necessity for the exercise of a power possessed, since the
possible abuse of a power is not an argument against its
existence.") (emphasis added) (internal quotation marks
omitted).

                                22

Case Information

Court
Va.
Decision Date
April 18, 2013
Status
Precedential