Defense lawyers are accustomed to the aggravation of a nonsuit. They know what it’s like when plaintiffs apply the brakes on the eve of a scheduled trial.
The shoe was on the other foot in a case handed down today by the Supreme Court of Virginia. In McNally v. Rey, defense attorney John McNally’s corporate client filed a bankruptcy petition the day before the client was set to be in Norfolk Circuit Court to defend a contract action. Homeowners had sued the business on a contract to remove lead-based paint from their home.
When lawyers for both sides appeared before Norfolk Circuit Court Judge Chuck Griffith, who recently lost his bid for another eight-year term, the defense lawyer informed the court about the bankruptcy petition. The plaintiffs’ lawyer got mad. He promptly asked Griffith for attorney’s fees and costs, dismissal of the defendant’s counterclaim with prejudice and, for good measure, a bench warrant against the client for unspecified criminal charges.
A month later, without holding a hearing, Griffith ordered sanctions totaling just over $14,000 against McNally.
A unanimous Supreme Court said that was an abuse of discretion. Writing for the court, Chief Justice Leroy Hassell said McNally had no obligation to inform the plaintiffs’ lawyer about a possible bankruptcy filing, and that McNally’s filing of a witness and exhibit list, required by the trial court’s own pretrial order, did not violate Va. Code § 8.01.271.1.