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ROSEN v. SMITH


ROSEN v. SMITH


June 6, 1997
Record No. 961766

RYAN E. SMITH, BY HER NEXT
FRIEND AND PARENT, NINA ROSEN

v.

WILLIAM C. SMITH

OPINION BY JUSTICE LEROY R. HASSELL, SR.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY

Arthur B. Vieregg, Jr., Judge
Present: All the Justices


I.

The primary issue in this appeal is whether the plaintiff’s
evidence was sufficient to establish a claim for alleged
conversion of funds under Code ? 31-38,
which is a part of the Virginia Uniform Transfers to Minors Act.

II.

Ryan E. Smith, by her next friend and parent, Nina Rosen,
filed her motion for judgment against William C. Smith. Plaintiff
alleged that the defendant, who is Ryan’s father, converted
proceeds from the sale of bonds that he had placed in a custodial
account with Merrill, Lynch, Pierce, Fenner & Smith, Inc.,
"pursuant to the former Uniform Gift[s] to Minors Act,
former Virginia Code ? 31-26,
et seq. and now ? 31-37
as amended." The defendant filed a grounds of defense
admitting that he had purchased certain bonds for the benefit of
the plaintiff, but denying that he had committed any unlawful
acts.

The plaintiff filed a pretrial motion for summary judgment and
requested that the trial court enter judgment on her behalf. The
trial court refused to do so, holding that there were genuine
issues of fact in dispute and that summary judgment was premature
at that stage of the proceedings.

On the morning of a bench trial, the defendant moved to
dismiss the plaintiff’s action on the basis that the court lacked
subject matter jurisdiction. The defendant asserted that the
evidence would show that the Uniform Transfers to Minors Act
"could not apply because none of the prerequisites for [the] application of the Act under . . . Code ? 31-38 were met by the
alleged transfer." Code ? 31-38,
which is a part of the Virginia Uniform Transfers to Minors Act,
states in relevant part[1]:

"This chapter applies to any transfer that refers to
the Uniform Transfers to Minors Act or this chapter in the
designation under ? 31-45
A by which the transfer is made if, at the time of the
transfer, the transferor, the minor, or the custodian is a
resident of this Commonwealth or the custodial property is
located in this Commonwealth. The custodianship so created
remains subject to this chapter despite a subsequent change
in residence of a transferor, the minor, or the custodian, or
the removal of custodial property from the Commonwealth.

. . . .

A transfer that purports to be made and which is
valid under the Uniform Transfers to Minors Act, the Uniform
Gifts to Minors Act, or a substantially similar act of
another state is governed by the law of the designated state
and may be executed and is enforceable in the Commonwealth
if, at the time of the transfer, the transferor, the minor,
or the custodian is a resident of the designated state or the
custodial property is located in the designated state
."
(Emphasis added).

The plaintiff objected, contending that the trial court should
not consider such motion on the morning of trial. The trial court
offered the plaintiff a continuance and cautioned her that
"this is a matter either of granting you a continuance,
which I would readily do under these circumstances, or
alternatively, trying the case. . . ." The
plaintiff’s counsel, after consulting with plaintiff, declined
the court’s offer of a continuance. The trial court took the
defendant’s motion under advisement and the plaintiff proceeded.

The plaintiff’s mother testified that she, the plaintiff, and
the defendant lived in the District of Columbia in September
1984, when the bonds were allegedly transferred. The plaintiff’s
mother also testified that the bonds were maintained in the
District of Columbia at the offices of Merrill, Lynch, Pierce,
Fenner & Smith, Inc.

Plaintiff called the defendant as an adverse witness. The
defendant testified that when he established the account at
Merrill, Lynch, Pierce, Fenner & Smith, Inc., he did not make
a gift to plaintiff and that he explicitly told his broker
"not to do anything with respect to a gift or any sort of
gift act." Rather, the defendant stated that he had directed
his broker to purchase the bonds and structure the transaction so
that the bonds would be taxed at his daughter’s lower rate of
income taxation.

The defendant testified that he redeemed the bonds and
utilized the funds for various purposes, including payment of the
plaintiff’s private school tuition and child support.
Additionally, the proceeds from the sale of one of the bonds,
which the defendant had used as collateral for a business loan,
was forfeited.

At the conclusion of the plaintiff’s evidence, the defendant
renewed his motion to dismiss the plaintiff’s case on the basis
that the court lacked subject matter jurisdiction. The trial
court agreed with the defendant, dismissed the action, and
entered a judgment in his favor.

Subsequently, the trial court, sua sponte,
reconsidered its ruling. The trial court held that the
plaintiff’s evidence showed that the purported designation and
gift could not have been made pursuant to the Virginia Uniform
Transfers to Minors Act because the plaintiff failed to prove
that either the gift or the parties had any nexus to Virginia
when the gift was purportedly made. Amending its earlier ruling,
the trial court held that it did have subject matter jurisdiction
to consider the plaintiff’s cause of action. The court entered an
order which stated in part:

"ADJUDGED, ORDERED and DECREED that Defendant’s
Motion to Strike be and hereby is GRANTED on the ground that
Plaintiff’s evidence was insufficient to support the claim
for relief sought herein, for the reason that Plaintiff’s
evidence showed that the alleged designation and gift was not
made under the Virginia Uniform Transfers to Minors Act and
therefore Defendant owed no fiduciary duties to Plaintiff
under the Virginia Act."

The plaintiff then filed a motion requesting that the trial
court vacate its judgment and permit her to amend her pleadings
to conform with the evidence. The trial court denied that motion
and the plaintiff appeals.

III.

In response to the plaintiff’s requests for admission, the
defendant admitted the following: he purchased and transferred
bonds to his daughter under the Virginia Uniform Gifts to Minors
Act, Code ? 31-26,
et seq., now the Virginia Uniform Transfers to
Minors Act, Code ? 31-37,
et seq.; he held the bonds in a custodial account
for her; he sold seven of the bonds and deposited the proceeds of
$58,093.03 in his personal checking account; and he forfeited a
bond, in the amount of $11,282, which he had used as collateral
for a loan. The plaintiff argues that the defendant’s responses
to her requests for admission demonstrate that she is entitled to
judgment as a matter of law and, therefore, the trial court erred
by denying her motion for summary judgment. We disagree.

We have stated that "the decision to grant a motion for
summary judgment is a drastic remedy which is available only
where there are no material facts genuinely in dispute." Slone
v. General Motors Corp., 249 Va. 520, 522, 457 S.E.2d 51,
52 (1995) (quoting Turner v. Lotts, 244 Va.
554, 556, 422 S.E.2d 765, 766 (1992)). Additionally, "[i]n
our discovery rules, we have cautioned that discovery ordinarily
should not supplant the taking of evidence at a
trial. . . ." Carson v. LeBlanc,
245 Va. 135, 137, 427 S.E.2d 189, 190 (1993).

In denying the plaintiff’s motion, the trial court stated:

"I think there are genuine issues of fact that
preclude the court from granting summary judgment. I think
the legal issues are very novel and I think that they have
been well presented. But I think that it would be premature
to make a judgment about the merits of any of the legal
issues."

The record reveals that there were factual issues in dispute.
For example, the defendant denied that he had committed any
illegal or unlawful acts against the plaintiff. The defendant
also disputed the plaintiff’s allegation that he used the
proceeds from the sale of the bonds for his personal use. Rather,
the defendant asserted that he had purchased the bonds to insure
that he would have funds to satisfy his contractual obligations
under a separation and property settlement agreement with the
plaintiff’s mother. Thus, we hold that the trial court properly
denied plaintiff’s motion for summary judgment.

IV.

Plaintiff argues that the trial court abused its discretion
"in permitting the [d]efendant to recant on the morning of
trial, [his] prior written admission that the custodial property
was created under the Virginia Uniform Gifts to Minors Act."
The plaintiff says that the defendant did not file a motion to
withdraw or amend his responses to requests for admission and,
therefore, plaintiff was prejudiced "by the court’s
allowance of the ‘withdrawal.’"

The defendant, relying upon TransiLift Equipment, Ltd.
v. Cunningham, 234 Va. 84, 360 S.E.2d 183 (1987), argues
that the plaintiff waived her right to rely upon any conclusive
effect of his responses to her requests for admission. We agree
with defendant.

Rule 4:11 permits a party to serve written requests for
admission upon any other party. Rule 4:11(b) states, "[a]ny
matter admitted under this Rule is conclusively established
unless the court on motion permits withdrawal or amendment of the
admission."

However, in Cunningham, we held that a defendant, who
failed to object to a plaintiff’s testimony, which was contrary
to the plaintiff’s responses to requests for admission, waived
any binding and conclusive effect of the responses to the
requests for admission. Id., at 92, 360 S.E.2d at 188.
Applying this rule, we hold that the plaintiff waived her right
to rely upon any binding and conclusive effect of the defendant’s
admissions because she failed to object to his testimony which
directly contradicted those admissions. As we mentioned in part
II of this opinion, the defendant testified without objection
that he did not give the bonds to plaintiff. Indeed, we observe
the plaintiff elicited the contradictory testimony from the
defendant during her direct examination of him.

V.

The plaintiff argues that the trial court erred by granting
defendant’s motion to strike her evidence. We disagree.

Code ? 31-38
specifies that a transfer which is valid under the Uniform
Transfers to Minors Act or the Uniform Gifts to Minors Act is
enforceable in Virginia if, at the time of the transfer, the
transferor, the minor, or the custodian is a resident of the
designated state or the custodial property is located in the
designated state. The plaintiff’s own uncontroverted evidence
established that the plaintiff, defendant, and custodian of the
account were residents of the District of Columbia when the
defendant purportedly transferred the bonds to her. The plaintiff
conceded at trial that Virginia is the designated state. Thus,
applying the plain meaning of the words in Code ? 31-38, the plaintiff
may not enforce any rights that she may have obtained as a result
of the alleged transfer because when the purported transfer
occurred, none of the specified parties was a resident of
Virginia and the custodial property was not located in Virginia.

VI.

Plaintiff contends that the defendant was allowed to create
and profit from a "variance" between the proof and the
pleadings and that the trial court abused its discretion by
failing to grant the plaintiff’s motion to amend its pleadings to
conform to the evidence as permitted by Code ? 8.01-377. We find no
merit in the plaintiff’s contentions.

Code ? 8.01-377
states:

"If, at the trial of any action, there appears to be
a variance between the evidence and the allegations or
recitals, the court, if it consider that substantial justice
will be promoted and that the opposite party cannot be
prejudiced thereby, may allow the pleadings to be amended, on
such terms as to the payment of costs or postponement of the
trial, or both, as it may deem reasonable. Or, instead of the
pleadings being amended, the court may direct the jury to
find the facts, and, after such finding, if it consider the
variance such as could not have prejudiced the opposite
party, shall give judgment according to the right of the
case."

We recently stated that Code ? 8.01-377 "should
not be interpreted in a manner inconsistent with its plain
language." Hensley v. Dreyer, 247 Va. 25, 30,
439 S.E.2d 372, 375 (1994); accord City of Richmond
v. Richmond Metropolitan Auth., 210 Va. 645, 648, 172
S.E.2d 831, 833 (1970). Code ? 8.01-377
authorizes a trial court to grant a variance "at the trial
of any action." Here, the plaintiff did not seek a variance
at the trial of her action. Rather, she made her motion nine days
after the trial court had granted the motion to strike her
evidence and concluded the case. We hold that the trial court
properly denied the motion because it was not made "at the
trial of any action."

VII.

In view of the foregoing, we need not consider plaintiff’s
remaining arguments. Accordingly, we will affirm the judgment of
the trial court.

Affirmed.

 

FOOTNOTES:

[1] The Uniform Gifts to Minors
Act, former Code ?? 3-26
through -36, was repealed by the General Assembly in 1988 and
replaced by the Virginia Uniform Transfers to Minors Act, Code ? 31-37 through -59.

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