‘Voluntary payment’ could block appeal

An appeal bristling with issues of attorney-client privilege, perilous surveillance technology and the scope of a Virginia “revenge porn” law could be dead in its tracks because the appellant paid off the trial court judgment.

The Supreme Court of Virginia said the “voluntary payment” issue that emerged after trial is so critical that the trial court should explore whether the appellant’s payoff was legally “voluntary.”

If the judgment payoff – as part of the sale of the appellant’s home – is deemed voluntary, the appeal is moot. If not, the court could take up whether a divorcing wife can be liable for giving revealing surveillance photos to her lawyer for use at a deposition of her husband’s girlfriend.

The Supreme Court’s Nov. 25 opinion, written by Justice D. Arthur Kelsey, is Sheehy v. Williams (VLW 020-6-071).

Home surveillance video

The underlying facts are a cautionary tale about modern technology. The divorcing couple had shared access to web-based home security applications. After the couple separated, the husband’s girlfriend allowed the husband to access the girlfriend’s home technology. The divorcing wife discovered that – through her account – she suddenly had access to a camera in the girlfriend’s home.

The wife made recordings of the girlfriend in the nude, posing for the husband on deployment. The wife’s lawyer used screen shots to question the girlfriend at a deposition. The lawyer contended the depictions of suggestive nudity were relevant to child custody issues.

Surprised and embarrassed at being confronted with the photos at her deposition, the girlfriend sued the wife under a Virginia “revenge porn” law passed in 2014. Circuit Judge James C. Lewis heard the case without a jury and decided the display of the photos violated Va. Code § 18.2-386.2 barring malicious dissemination of nude images. He imposed a damages award of $20,000 and a fee award of nearly $31,000.

The wife appealed. The girlfriend did not undertake any collection effort.

The payoff

The divorce case settled and the wife apparently wanted to move. She arranged to sell her house, but the judgment against her acted as a lien on the property. To certify a clear title to the property, the title insurance company required the lien be satisfied.

The buyers’ attorney, apparently acting as the closing attorney, asked the girlfriend’s counsel for payoff information. The girlfriend’s lawyer – Kevin Martingayle – sent a letter saying the balance due was $54,673.19.

Two days later, Martingayle received a copy of the letter back with a check attached in the exact payoff amount. On the copy of the letter, the payoff amount was circled and initialed, apparently by the wife.

At oral argument before the Supreme Court, the wife’s attorney, Brandon H. Zeigler, was asked if his client authorized the payment.

“As I sit here today, I do not know that. I was not involved in that real estate transaction in any regard, nor made aware of it,” Zeigler said, as quoted by the court in its opinion.

Wife’s intent tested

Under the facts available, the court could not decide whether the wife’s appeal was torpedoed by the “voluntary payment” doctrine, a legal concept with a “rich history in Virginia law,” according to the court’s opinion.

“In the appellate context, the voluntary-payment doctrine recognizes that at some point, reviewing courts should declare litigation to be at an end when the litigants themselves — by their own voluntary actions — have effectively ended it. Despite the clarity of the concept, the line-drawing necessary to apply it has proven to be elusive,” Kelsey wrote.

The girlfriend argued the payment was “nothing more than a voluntary payment made by a seller seeking to convey clean title to a buyer,” the court said. But the wife portrayed the payment as being made on behalf of the buyers and not made by her or on her behalf.

The court decided to remand the case to the circuit court for findings on eight questions, including whether the wife expressly or impliedly authorized the issuance of the payoff check.

Martingayle said he thinks the answer may lie in the settlement statement for the real estate transaction. He said he only recently reviewed the statement and it shows the wife signing off on all of the disbursements, including the payoff to his law firm.

Martingayle said he is seeking agreement on a stipulation to answer the Supreme Court’s questions. “I don’t think a hearing is necessary,” he said.

Zeigler, representing the wife, declined to comment, citing the pending posture of the appeal.

Ethical implications

The court indicated there could be ethical implications for a closing attorney paying off judgment liens. Kelsey cited a handbook chapter written by Richmond attorney Leslie A.T. Haley.

Commenting Dec. 2, Haley said the court’s factual inquiries don’t reach those ethical questions, but the case itself highlights the legal perils.

“Let’s hope the buyer’s attorney had the necessary authority to issue that check and Ms. Sheehy was well advised about all aspects of granting such authority and any resulting implications. Lots of unanswered questions that involve ethical obligations in what could be a law exam scenario crossing legal and ethical boundaries,” Haley said.

If the payment does not derail the wife’s appeal, the court could address issues including whether the wife is protected by privilege in sharing the revealing photos with her lawyer and whether the lawyer acted properly in what Martingayle described as a deposition “ambush.”

Updated Dec. 9 to correct that suggestive nudity, not sexual activity, was depicted in the screenshots.