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Ramifications from the Repeal of the Removal Statutes

Ramifications from the Repeal of the Removal Statutes

Prior to April 2007, attorneys had the right to remove a case filed in General District Court to Circuit Court if certain criteria were met. More specifically, Va. Code § 8.01-127, 127.1 and 16.1-92 (the “Removal Statutes”) permitted a defendant to remove a case to Circuit Court if:

1.         The amount in controversy exceeded: (a) $500 in an unlawful detainer case or if the unlawful detainer case does not involve a default in rent in a residential tenancy; (b) $1,000 exclusive of interest, attorney’s fees and costs in an action based upon the Virginia Tort Claims Act; or (c) $4,500 in all other cases (exclusive of interest, attorney’s fees and costs;

            2.         The request to remove was made on or within ten days after the initial return date;

3.         The defendant has a substantial defense to the cause of action, exclusive of the sole issue of the amount or computation of damages;

4.         The defendant pays the costs accrued to date, writ tax and costs to the court to which the case is removed; and

5.         In any unlawful detainer case where the amount in controversy exceeds the sum of $500, removal is conditioned upon the tenant giving security for all rent which has and may accrue (but for not more than one year’s rent total).

The Removal Statutes allowed attorneys to exercise their own judgment to determine whether their clients’ needs would best be met in General District Court or Circuit Court. Some instances that justified removal included the following: (1) amount in controversy; (2) access to more discovery options in Circuit Court; (3) complexity of the case; (4) right to a jury trial in Circuit Court; (5) taking away a plaintiff’s automatic right of appeal from General District Court; and (6) providing the parties more time to prepare for trial.

In 2007, the Removal Statutes were repealed by the General Assembly. As a result of the repeal of the Removal Statutes, judicial economy and fairness to the litigants may have suffered. The following two hypothetical cases demonstrate how the repeal of the Removal Statutes can have negative consequences to litigants:

When a landlord files an unlawful detainer (i.e. a lawsuit seeking possession of real property), the normal jurisdictional limit of the General District Court (i.e., $15,000.00) is inapplicable. As a result, it is possible to be sued for hundreds of thousands of dollars (if not more) in General District Court. For purposes of this hypothetical, assume a commercial tenant was leasing an office space for $5,000.00 per month. The lease agreement contains an acceleration of rent provision. Just a few months into the lease term, the tenant vacates the leased premises, and the landlord (assuming the lease allows it) accelerates the rent against the tenant for the remainder of the three year lease term and alleges damages to the premises. The landlord’s claim for rent alone is approximately $180,000.00. The landlord proceeds to file an unlawful detainer in General District Court seeking damages of $180,000.00 for rent and $50,000.00 in damages to the property

As the law stands right now, the tenant cannot remove this case to Circuit Court. The tenant’s discovery options are severely limited. The only form of discovery permitted in General District Court is a subpoena duces tecum (i.e. a request for production of documents). More problematic is the fact that if the tenant loses in General District Court, an appeal bond must be posted.[1] The bond is usually (but not always) in the amount of the judgment, plus costs and writ tax in order to perfect an appeal to Circuit Court. In short, the tenant could have to post a bond of almost a quarter of a million dollars. However, if the landlord loses, the landlord would be required to only pay costs and writ tax (less than $100) for the case to be heard de novo (i.e. brand new) in Circuit Court. 

A plaintiff sues a defendant in General District Court for $8,500 resulting from a physical altercation at a bar. The defendant not only has a good faith defense of self defense, but also has a meritorious counterclaim for his extended stay in the hospital. The only reason the defendant did not file suit first is because he is still in the hospital recovering from his injuries sustained during the altercation. The defendant’s counterclaim exceeds the jurisdictional limit of the General District Court because he was hospitalized for several weeks. In addition, defendant wishes to have his counterclaim decided by a jury.

In this hypothetical, the defendant is faced with having to file a separate action in Circuit Court to recover his damages, as they exceed $15,000.00. In the alternative, the defendant could file a counterclaim in General District Court, but his damages would be capped at $15,000.00. As the law stands right now, there is no way for the initial suit filed in General District Court to be removed to Circuit Court or for it to be consolidated with the second suit. The defendant is left with two options: (1) artificially reduce his damages and file a counterclaim for only $15,000; or (2) file a separate cause of action in Circuit Court and have two different causes of action pending simultaneously.

The repeal of the Removal Statutes in such circumstances negatively affects judicial economy and fairness to the litigants. Assuming the Removal Statutes are not reenacted, the General Assembly should contemplate capping the bond a defendant must post to appeal a case to the jurisdictional limit of $15,000.00, or in the alternative, one year’s rent. In addition, proper measures should be taken to allow for consolidation of a Circuit Court case and a General District Court case if either party has a claim that exceeds $15,000.00. 

In conclusion, enacting such changes would enhance judicial economy by avoiding situations that could result in piece-meal litigation. Furthermore, the aforementioned proposals would enhance fairness among the parties to an unlawful detainer action, that could involve hundreds of thousands of dollars, if not more, by providing litigants with access to more discovery options and a jury trial.