Title: EE Mart F.C., LLC v. Delyon

State: virginia

Issuer: Virginia Supreme Court

Document:

PRESENT: Lemons, C.J., Goodwyn, Millette, Mims, McClanahan, and 
Powell, JJ., and Koontz, S.J. 
 
EE MART F.C., L.L.C. 
 
 
 
OPINION BY 
v.  Record No. 140708 
JUSTICE CLEO E. POWELL 
 
 
 
FEBRUARY 26, 2015 
SUZANNE DELYON, ET AL. 
 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Brett A. Kassabian, Judge 
 
 
EE Mart F.C., L.L.C. (“EE Mart”), appeals the judgment of 
the trial court ordering it to pay sanctions under Code § 8.01-
271.1.  Specifically, EE Mart takes issue with the trial court’s 
award of attorney’s fees that were incurred as a result of 
actions filed by EE Mart in other jurisdictions. 
I.  BACKGROUND 
 
EE Mart is a Virginia limited liability company that owned 
and operated an international grocery store in Merrifield, 
Virginia.  Suzanne Delyon (“Delyon”) is the former chief 
financial officer of EE Mart.  She is also the owner of SDES, 
LLC; Expo Emart, LLC; Expo Emart I, LLC; and Expo Emart III, LLC 
(collectively the “Other LLCs”). 
 
On May 24, 2010, EE Mart brought an action against Delyon 
and the Other LLCs in Fairfax County Circuit Court alleging 
wrongful conversion and other claims (the “Original Action”).  
These claims related to insurance proceeds paid to Delyon by 
 
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Traveler’s Insurance Company (“Traveler’s”).  On the eve of 
trial, EE Mart nonsuited the case. 
 
In October 2011, EE Mart brought an action against 
Traveler’s in the Circuit Court of Carroll County, Maryland (the 
“Maryland Action”).  This action related to Traveler’s payment 
of the insurance proceeds to Delyon.  Traveler’s subsequently 
removed the case to federal court.  After the case was removed 
to federal court, EE Mart amended its complaint to add Delyon 
and the Other LLCs as defendants.  The claims brought by EE Mart 
against Delyon and the Other LLCs were, for the most part, the 
same as the claims it brought against them in the Original 
Action.  However, EE Mart also brought a civil RICO claim 
against Delyon and the Other LLCs to avoid losing federal 
jurisdiction over the matter because of a lack of diversity.  
Delyon and the Other LLCs filed a motion to dismiss the RICO 
claim, and the motion was sustained by the district court.  The 
case was transferred back to the Circuit Court of Carroll 
County, where it is still pending. 
 
On June 15, 2012, Delyon and the Other LLCs filed the 
present action in Fairfax County Circuit Court (the “Present 
Action”), seeking to enjoin EE Mart from proceeding with the 
Maryland Action and seeking declaratory judgment that the 
Maryland Action was without merit.  On November 6, 2012, EE Mart 
filed a counterclaim against Delyon and the Other LLCs, 
 
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reasserting the same claims it had pled in the Original Action.  
In their answer to the counterclaim, Delyon and the Other LLCs 
sought sanctions under Code § 8.01-271.1 on the grounds that the 
assertions in the counterclaim were frivolous and based on false 
statements. 
 
On August 23, 2013, EE Mart’s attorneys were granted leave 
to withdraw from the case.  EE Mart failed to engage new 
attorneys.  As a result, EE Mart did not file a witness list or 
exhibit list prior to trial or otherwise participate in pretrial 
activities.  Accordingly, the trial court determined that EE 
Mart had abandoned its counterclaim.  After hearing the evidence 
presented by Delyon and the Other LLCs, the trial court ruled in 
their favor.  The trial court also entered a judgment order 
dismissing EE Mart’s counterclaim with prejudice, finding that 
the counterclaim was “frivolous and without support in law or 
fact.” 
 
Delyon and the Other LLCs then made an oral application for 
sanctions against EE Mart, claiming that the Original Action, 
Maryland Action and the counterclaim to the Present Action were 
frivolous.  In their motion, they sought the total amount of 
attorney’s fees that they had expended in defending against the 
Original Action and the Maryland Action, as well as the 
attorney’s fees expended in the Present Action.  Relying on Code 
 
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§ 8.01-271.1, the trial court granted the motion and awarded 
$25,550 in attorney’s fees.1 
 
EE Mart subsequently retained an attorney and timely filed 
a motion for reconsideration.  In its motion for 
reconsideration, EE Mart argued that its various litigation 
filings were not frivolous and that the calculation of the 
attorney’s fees was in error.  The trial court denied the motion 
for reconsideration. 
 
EE Mart appeals. 
II.  ANALYSIS 
 
In its appeal, EE Mart argues that the trial court abused 
its discretion in determining the amount of sanctions to award 
because it “overreached and exceeded the bounds of its 
jurisdiction.”  Specifically, EE Mart takes issue with the fact 
that the sanctions award included attorney’s fees that Delyon 
and the Other LLCs had incurred in suits that pre-dated the 
filing of the Present Action or were tried in other 
jurisdictions.  According to EE Mart, the proper procedure for 
seeking those sanctions would be a timely application in the 
actual action or court in which Delyon and the Other LLCs 
incurred those attorney’s fees. 
                     
 
1 This amount represented the full and exact amount Delyon 
and the Other LLCs sought to recover in attorney’s fees. 
 
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As an initial matter, it is important to note that EE Mart 
does not assign error to the fact that sanctions were awarded.  
Rather, it only assigns error to the trial court’s calculation 
of the attorney’s fees it ultimately awarded as a sanction.  
Accordingly, our analysis in the present case is limited to 
whether the trial court’s calculation of attorney’s fees was 
proper. 
 
Code § 8.01-271.1 expressly limits the amount that may be 
awarded to an appropriate sanction, which may include those 
attorney’s fees and expenses “incurred because of the filing of 
the pleading, motion, or other paper or making of the motion.”  
(Emphasis added.)  See Oxenham v. Johnson, 241 Va. 281, 289-90,  
402 S.E.2d 1, 6 (1991) (holding that an award of attorney’s fees 
is limited to fees incurred in responding to the sanctionable 
pleading in the present action).  The use of the phrase 
“incurred because of” clearly indicates that a court cannot 
award attorney’s fees or expenses for actions that occurred 
prior to the sanctionable act.  Cf. Cardinal Holding Co. v. 
Deal, 258 Va. 623, 632, 522 S.E.2d 614, 619 (1999) (permitting 
“a recovery of such fees and expenses incurred in defending 
against an unwarranted claim, but also a recovery of those fees 
and expenses incurred in pursuing a sanctions award arising out 
of such a claim”). 
 
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Furthermore, because a trial court’s authority to award 
sanctions under Code § 8.01-271.1 is triggered by the filing of 
a pleading, motion, or other paper or making of a motion in 
violation of the statute, while not expressly stated, the clear 
implication is that the filing or making of the motion must 
occur in the same action and same court that subsequently awards 
the sanctions.  To hold otherwise would contravene the finality 
guaranteed by Rule 1:1, because a trial court’s authority to 
award attorney’s fees as sanctions to related but previously 
litigated matters could be extended beyond 21 days after final 
judgment has been entered.  It could also effectively impose the 
requirements of Code § 8.01-271.1 on every litigant in every 
court in the country by allowing a party to seek sanctions in 
Virginia for filings or motions made elsewhere.2  Thus, under 
Code § 8.01-271.1, a trial court may only award attorney’s fees 
incurred because of a filing or motion made to the trial court 
in the matter then pending before the court; it may not award 
attorney’s fees incurred for a filing or motion made elsewhere. 
                     
 
2 That is not to say, however, that evidence of similar 
frivolous suits may not be considered in determining whether an 
award of sanctions is warranted.  Indeed, such evidence may be 
highly probative for such a purpose.  Rather, as discussed 
above, our holding today addresses only the principle that, when 
determining the amount of sanctions to award, a trial court is 
limited to the attorney’s fees incurred as a result of a filing 
or motion made in the case presently before it. 
 
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Here, it is undisputed that the sanctions award included 
attorney’s fees that were not “incurred because of” any filing 
or motion made in the Present Action.  Indeed, it is readily 
apparent that the sanctions award included attorney’s fees for 
actions that not only pre-dated any filing by EE Mart in the 
Present Action, but also actions that occurred in a different 
state.  Accordingly, the trial court erred in its calculation of 
the attorney’s fees it could award as a sanction. 
III.  CONCLUSION 
 
For the foregoing reasons, we will reverse the judgment of 
the trial court with regard to the amount of sanctions awarded 
and we will remand the matter to the trial court for further 
proceedings in accord with this opinion to calculate the proper 
amount of attorney’s fees to be awarded. 
Reversed and remanded.