Title: Cummings v. Fulghum

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
BRENDA P. CUMMINGS, 
T/A KALEIDOSCOPE 
 
v.  Record No. 000115   OPINION BY JUSTICE BARBARA MILANO KEENAN 
 
 
 
January 12, 2001 
JEAN S. FULGHUM 
 
 
FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY  
Timothy J. Hauler, Judge 
 
 
 
In this appeal, we consider whether a plea of recoupment 
under Code § 8.01-422 is subject to a statute of limitations 
defense raised by a plaintiff in an action to enforce payment of 
a note. 
 
The following facts are undisputed.  On December 3, 1997, 
Jean S. Fulghum filed a motion for judgment against Brenda P. 
Cummings to enforce payment of a promissory note secured by a 
deed of trust.  Cummings and her late husband, Kenneth V. 
Cummings, Jr., had executed the note pursuant to a March 1987 
contract between the Cummingses and a construction contractor, 
Larry W. Primm (Primm), and his corporation, Larry W. Primm 
Construction, Inc. (Primm Construction).  Under the terms of the 
contract, the Cummingses agreed to purchase from Primm 
Construction a parcel of land on which Primm agreed to construct 
certain improvements.  The contract provided that $45,000 of the 
purchase price for the land was to be secured by a deed of trust 
on the property, accompanied by a note made payable to Primm. 
 
On December 21, 1987, the Cummingses executed the deed of 
trust and a note made payable "to Larry W. Primm, or order."  In 
the note, the Cummingses agreed to make monthly payments of 
interest only for a term of six years, beginning on the date of 
"completion of the improvements on the property," with the 
principal balance and any unpaid interest due at the end of this 
six-year term.  Primm later assigned the note to Fulghum and her 
late husband, Arthur T. Fulghum, III.  A building was 
constructed on the property and on October 11, 1990, the County 
of Chesterfield issued a certificate of occupancy permitting use 
of the building. 
 
Fulghum's motion for judgment alleged that Cummings was in 
default under the terms of the note.  Fulghum asserted that this 
default occurred based on Cummings's alleged failure to pay the 
principal sum due on October 11, 1996, six years after the date 
the certificate of occupancy was issued, and failure to make 
monthly interest payments from November 1990 through November 
1997.  Fulghum sought payment of the principal sum due plus 
interest owed under the terms of the note. 
 
On December 30, 1997, Cummings filed a grounds of defense 
in which she alleged that Primm, the original note holder, had 
breached his contract with her, causing her to suffer damages in 
an amount greater than the amount Fulghum was seeking to 
recover.  Cummings requested that the action against her be 
 
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dismissed.  In response, Fulghum filed a "Plea of Statute of 
Limitations" stating that Cummings's "claim of damages" was 
barred by the statute of limitations. 
 
After hearing argument on the nature of Cummings's 
pleadings, the trial court concluded that Cummings had pleaded 
recoupment under Code § 8.01-422.  The trial court held that 
Cummings's statutory recoupment plea was subject to the statute 
of limitations plea asserted by Fulghum and was time-barred.  In 
articulating its ruling, the trial court expressly relied on 
Neely v. White, 177 Va. 358, 14 S.E.2d 337 (1941).  After 
further proceedings on the merits of the motion for judgment, 
the trial court entered final judgment in favor of Fulghum and 
ordered Cummings to pay the principal amount due on the note, 
with interest as specified in the judgment order. 
 
On appeal, Cummings argues that a plea of recoupment 
asserted under Code § 8.01-422 is not subject to a plea of the 
statute of limitations.  She contends that our decision in Neely 
does not resolve this issue because Neely was decided under 
statutes that differ substantially from the provisions of Code 
§ 8.01-422.  She asserts that "as a result of the substantive 
changes made to the statutes by the General Assembly in 1954, 
this Court's holding in Neely has become one of historical 
interest only." 
 
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In response, Fulghum argues that a statutory recoupment 
plea has the characteristics of an action at law that 
effectively is initiated when the plea is filed.  Therefore, she 
contends that the five-year statute of limitations of Code 
§ 8.01-246 applicable to written contracts bars Cummings's 
statutory recoupment plea.  Fulghum asserts that although the 
statutes we considered in Neely have been amended, Code § 8.01-
422 should be applied in the same manner as its predecessor 
statute was applied in Neely, because Code § 8.01-422 is "almost 
identical" to that former statute.  We disagree with Fulghum's 
arguments. 
 
Under basic rules of statutory construction, we examine a 
statute in its entirety, rather than by isolating particular 
words or phrases.  Earley v. Landsidle, 257 Va. 365, 369, 514 
S.E.2d 153, 155 (1999); Ragan v. Woodcroft Village Apartments, 
255 Va. 322, 325, 497 S.E.2d 740, 742 (1998); Buonocore v. C&P 
Telephone Co., 254 Va. 469, 472-73, 492 S.E.2d 439, 441 (1997).  
When the language in a statute is clear and unambiguous, we are 
bound by the plain meaning of that language.  Earley, 257 Va. at 
370, 514 S.E.2d at 155; Ragan, 255 Va. at 326, 497 S.E.2d at 
742; Harrison & Bates, Inc. v. Featherstone Assoc., 253 Va. 364, 
368, 484 S.E.2d 883, 885 (1997).  We must determine the General 
Assembly's intent from the words appearing in the statute, 
unless a literal construction of the statute would yield an 
 
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absurd result.  Earley, 257 Va. at 369, 514 S.E.2d at 155; 
Ragan, 255 Va. at 325-26, 497 S.E.2d at 742; Abbott v. Willey, 
253 Va. 88, 91, 479 S.E.2d 528, 530 (1997). 
 
In a contract action, the pleading of statutory equitable 
defenses, including the defense of statutory recoupment, is 
governed by Code § 8.01-422, which provides: 
 
In any action on a contract, the defendant may file a 
pleading, alleging any matter which would entitle him to 
relief in equity, in whole or in part, against the 
obligation of the contract; or, if the contract be by deed, 
alleging any such matter arising under the contract, 
existing before its execution, or any such mistake therein, 
or in the execution thereof, or any such other matter as 
would entitle him to such relief in equity; and in either 
case alleging the amount to which he is entitled by reason 
of the matters contained in the pleading.  If the amount 
claimed by the defendant exceed the amount of the 
plaintiff's claim the court may, in a proper case, give 
judgment in favor of the defendant for such excess. 
 
The language of this statute is clear and unambiguous.  We 
review its plain language in conjunction with our holding in 
Neely to determine whether that holding is applicable to a 
recoupment plea under Code § 8.01-422. 
 
In Neely, we considered whether a plea of statutory 
recoupment under former Code § 6145, a predecessor statute to 
Code § 8.01-422,1 was subject to a plea of the statute of 
limitations.  We observed that the "entire subject of statutory 
                     
 
1Former Code § 6145 was recodified in 1950 as former Code 
§ 8-241, which was amended in 1954.  Code § 8.01-422 represents 
the 1977 recodification of former Code § 8-241, as amended in 
1954. 
 
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recoupment" was at that time "embraced in Chapter 255 of the 
Code," which included both former Code §§ 6145 and 6149.  177 
Va. at 364, 14 S.E.2d at 339. 
 
Former Code § 6145 provided, in material part: 
 
In any action on a contract, the defendant may file a plea, 
alleging . . . [any] matter as would entitle him . . . to 
relief in equity, in whole or in part, against the 
obligation of the contract. . . . 
 
Pleas asserted under this provision were subject to defenses 
allowed by former Code § 6149, which provided, in material part: 
 
A defendant who files a plea . . . under this chapter shall 
be deemed to have brought an action, at the time of filing 
such plea . . . against the plaintiff[;] . . . the 
defendant's claim shall be open to the same ground of 
defense to which it would have been open in any action 
brought by him thereon. 
 
 
After considering the language of former Code §§ 6145 and 
6149, we held in Neely that these statutes treated a statutory 
recoupment plea as an "action" subject to the same defenses as 
any other action, including a plea of the statute of 
limitations.  177 Va. at 364, 14 S.E.2d at 340.  We stated that 
"[b]y [former] Code § 6149, the defendant filing a special plea 
under this chapter is put on the footing of a plaintiff and is 
deemed to have brought an action against the plaintiff at the 
time of filing his plea."  Id.  Thus, our holding in Neely, that 
a plea of statutory recoupment under former Code § 6145 was 
subject to a plea of the statute of limitations, was based 
directly on former Code § 6149. 
 
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Former Code § 6149, however, was substantially amended in 
1954 after being recodified as former Code § 8-244.  These 
amendments limited the application of former Code § 8-244 to 
counterclaims and cross-claims, as set forth in relevant part: 
A defendant who pleads a counterclaim or cross-claim 
shall be deemed to have brought an action at the time 
he files such pleading, provided that if the subject 
matter of the counterclaim arises out of the same 
transaction or occurrence upon which the plaintiff's 
claim is based, the statute of limitations with 
respect to such counterclaim shall be tolled by the 
commencement of the plaintiff's action. 
 
 
Former Code § 8-244 was recodified in 1977 as Code § 8.01-
233, which retained the substance of former Code § 8-244 and 
contained a new provision including cross-claims in its 
statutory tolling provision.2  Therefore, Code § 8.01-233 has no 
bearing on the statute of limitations issue before us, because a 
recoupment plea asserted under Code § 8.01-422 is not a 
counterclaim or a cross-claim within the meaning of Code § 8.01-
233. 
 
Based on this statutory history, we examine our holding in 
Neely in light of the General Assembly's later actions.  When a 
                     
 
2Code § 8.01-233 provides: 
 
A.  A defendant who pleads a counterclaim or cross-claim 
shall be deemed to have brought an action at the time he files 
such pleading. 
 
B.  If the subject matter of the counterclaim or cross-
claim arises out of the same transaction or occurrence upon 
which the plaintiff's claim is based, the statute of limitations 
with respect to such pleading shall be tolled by the 
commencement of the plaintiff's action. 
 
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statute or a group of statutes has been revised, and the General 
Assembly has omitted provisions formerly enacted, the parts 
omitted may not be revived by construction, but must be 
considered as annulled.  Richmond-Ashland Ry. Co. v. 
Commonwealth, 162 Va. 296, 305, 173 S.E. 892, 896 (1934); 
Western Assurance Co. v. Stone, 145 Va. 776, 785, 134 S.E. 710, 
713 (1926).  A contrary holding would impute to the General 
Assembly gross carelessness or ignorance, which is wholly 
impermissible.  Western Assurance, 145 Va. at 785, 134 S.E. at 
713.  Thus, to depart from the meaning expressed by the language 
of a revised statute or group of statutes is to change the 
statutes, to legislate and not to interpret.  See Greenberg v. 
Commonwealth, 255 Va. 594, 600, 499 S.E.2d 266, 269 (1998); 
Faulkner v. Town of South Boston, 141 Va. 517, 524, 127 S.E. 
380, 382 (1925). 
 
Under former Code § 6149, certain equitable defenses, 
including the defense of statutory recoupment, were subject to 
"the same ground[s] of defense" ordinarily asserted in actions 
at law.  That restriction on equitable defenses was removed by 
the General Assembly when it deleted from the successor statutes 
to former Code § 6149 the provision that statutory equitable 
defenses shall be deemed an "action" and be subject to any 
grounds of defense applicable in an action at law. 
 
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In the absence of this statutory restriction, the language 
of Code § 8.01-422 is clear and unambiguous.  That language does 
not contain any provisions subjecting equitable pleas of 
statutory recoupment to defenses available in an action at law 
such as the statute of limitations.  Moreover, no other statute 
has revived the provision of former Code § 6149 allowing such 
defenses to equitable pleas asserted pursuant to statute.  Thus, 
based on the statutory changes enacted after Neely, we conclude 
that our holding there is inapplicable to a plea of statutory 
recoupment under Code § 8.01-422.  Accordingly, we hold that a 
plea of recoupment under Code § 8.01-422 is not subject to a 
statute of limitations defense, and that the trial court erred 
in holding that Cummings's recoupment plea under Code § 8.01-422 
was time-barred.3
 
For these reasons, we will reverse the trial court's 
judgment, and remand the case for further proceedings based on 
the parties' pleadings.4
                     
 
3We recognize that Code § 8.01-422 allows a defendant 
asserting a recoupment plea to claim an amount in excess of the 
plaintiff's claim, and that the statute provides that the court 
"may, in a proper case, give judgment in favor of the defendant 
for such excess."  However, in view of the statutory changes 
discussed above, we are not at liberty to use this language to 
revive by construction the provision of former Code § 6149, 
treating statutory recoupment pleas as "actions," that the 
General Assembly chose to delete. 
 
4Based on our holding, we do not reach Fulghum's assignment 
of cross-error regarding the trial court's computation of 
interest. 
 
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Reversed and remanded. 
 
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