COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Dec ker, Judges Petty and Huff Argued at Richmond, Virginia

WALKER W. WARE, IV, A/K/A W. WALKER WARE, IV MEMORANDUM OPINION * BY v. Record No . 1458-18-2 JUDGE W ILLIAM G. PETTY OCTOBER 1, 2019 COMMONWEALTH OF VIRGINIA

FROM THE CIRCUIT COURT OF NEW KENT COUNTY Charles J. Maxfield, Judge Designate Anthony G. Spencer (Law Office of Anthony G. Spencer, on brie fs), for appellant. Eugene Murphy, Senior Assistant Attorney General (Mark R. Herring, Attorney General, on brief), for appellee.
Walker W. Ware, IV, challenges on appeal his convictions of at tempted extortion in violation of Code §§ 18.2-59, 18. 2-26 and embezzlement in viola tion of Code § 18.2-111. Ware argues the evidence was insuffici ent to convict him of these tw o charges. We agree and reverse.
I. BACKGROUND We view the facts in the light most favorable to the prevailing party below, granting to it the benefit of any reasonable i nferences. Hall v. Commonwealth , 55 Va. App. 451, 453 (2009). In 2004, Ware subdivided a parcel of land and recorded subdivis ion documents, including a “Road Dedication and Mainten ance Agreement” and Addendum 1 (A greement). The Agreement provided that each lot owner would “be assessed $200 per year for the maintenance and upkeep of this right-of-way.”

* Pursuant to Code § 17.1-413, this op inion is not designated fo r publication.UNPUBLISHED- 2 - Thereafter, several of the lots sold, including two lots to Ste phen and Susan Cabiroy as trustees of a family trust (Cabi roy). Each year, the lot owner s paid Ware in response to an invoice sent on Ware’s business letterhead. Ware established a bank account separate from his business account into which he de posited the yearly fees. Ware had sole control over both bank

accounts. From the sale of the first lot in 2006 until 2014, Ware provide d what the lot owners described as “minimal” maintenance. The maintenance consisted of cutting grass, weeds, and small trees in the right-of-wa ys. Although Ware collected fees from 2007 to 2014 and provided this “minimal” maintenance, no with drawal was made from the seg regated account prior to 2014. In 2014, Ware transferred $3,000 from the segregated account to Ware’s business account. The memo line stated “Road repair GHL [Good Hope Landing Subdivisio n].” It is this $3,000 that the Commonwealth argues was embezzled by Ware. Ware unilaterally modified t he Agreement in 2009 by executing a nd recording Addendum 2. Addendum 2 increased the annual assessment from $2 00 to $5,000 and provided that “all property owners payi ng on time shall receive a discou nt of [$4,800].” It provided that where a payment was more than th irty days late, the entire $5,0 00 plus interest and late fees would be due. Invoices with the ne w provisions were sent on Wa re’s business letterhead to Cabiroy for 2010, 2011, 2012, and 2013. 1 The record indicates Cabir oy and the other lot owners paid $200 per lot during each of the se years; Cabiroy paid a to tal of $400 each year for his two lots. In 2014 Cabiroy sent as his annual payment a check for $356.10, which was the amount left after deducting the co st of gravel he put on the road. Wa re returned the partial payment and

1 The record indicates that all t hree lot owners paid the annual fees for these years, but only Cabiroy’s invoices were introduced into evidence.- 3 - claimed that since the full road maintenance fee of $400 had no t been timely paid, Cabiroy now owed $10,000 for the two lots. C abiroy did not pay the 2014 ro ad maintenance fees. On September 2, 2015, Ware sent Cabiroy a letter on his company ’s letterhead. It said, Please be advised that 10 (te n) days from the postmarked date of this correspondence I will file the enclosed MEMORANDUM OF LIEN at the clerk’s office in New Kent County. Also Enclosed is your 2015 invoice for road maintenanc e fees and past due account. The letter noted four infractio ns of the subdivision restrictio ns that Cabiroy purportedly had committed. The letter concluded, There are actions and conseque nces that come with your decision s to disregard the rules of the subdivision. Be advised that unl ess you come to some agreement with the Development Manager, Walker Ware IV, we will seek additional action, against you. Govern yourself accordingly. Attached to the notice was a draf t of a “Memorandum of Lien for Assessments” requested “pursuant to Va. Code Sectio n: 55-516” and an itemized invoice. The invoice included the $10,000 maintenance fees from 2014, along with interest and pen alties accrued during the year, and the additional $10,000 fees for 2015. The invoice totaled more than $30,000. The Commonwealth argues that this le tter from Ware threatening to f ile a memorandum of lien against Cabiroy’s property was a threat against the title of Cabiroy’s property and was thereby attempted extortion.
II. ANALYSIS Ware argues that the evidence was insufficient to submit the e mbezzlement and attempted extortion charges to a j ury; he thus argues the trial court erred in denying his motion to strike. “A motion to strike challe nges whether the evidence is sufficient to submit the case to the jury.” Lawlor v. Commonw ealth, 285 Va. 187, 223-24 (2013). “W hat the elements of the offense are is a question of law that we review de novo . Whether the evidence adduced is- 4 - sufficient to prove each of those elements is a factual finding , which will not be set aside on appeal unless it is plainly wrong.” Id. A. Embezzlement Ware argues that the evidence wa s insufficient to “establish be yond a reasonable doubt that the money was wrongfully a ppropriated, that the money was converted to Ware’s own use or benefit, or that Ware acted w ith a fraudulent purpose and not u nder a bona fide claim of right.” These arguments hinge on the question of whether Ware was entru sted with another’s money. “To establish the statutory crime of embezzlement under Code § 18.2-111, it is necessary to prove that the accused wrongfully appropriated to [his] use or benefit, with the intent to deprive the owner thereof, the property entrust ed to [him] by v irtue of [his] employment or office.” Waymack v. Commonwealth, 4 Va. App. 547, 549 (1987). “Although the Commonwealth need not establish t he existence of a formal fiduc iary relationship, it must prove that the defendant was entrust ed with the property of another.” Rooney v. Commonwealth, 27 Va. App. 634, 644 (1998). A defendant w rongly appropriates the entrusted property of another “when he exercises ‘unauthor ized and wrongful . . . dominion an d control over [it], to the exclusion of or inconsistent with [ the] rights of the owner.’” Dove v. Commonwealth, 41 Va. App. 571, 577-78 (2003) (quoting B lack’s Law Dictionary 300 (5th ed. 1979)). In Rooney, this Court reversed a n embezzlement conviction. In that case, a cemetery owner received payments for pr eneed burial services and failed to put them in trust accounts as required by statute; the owner put the funds in his normal oper ating account and used them to pay routine business expenses. Rooney, 27 Va. App. at 639. Th is Court held that the funds paid by customers “were not ‘entrusted’ to the [owner] with the expe ctation that the [owner] would return the monies or deliver them to a third person.” Id. at 6 44. Rather, the money was given to the owner “as consideration for property or services that the [ owner] would provide the- 5 - purchaser in the future.” I d. at 645. This Court reversed the owner’s embezzlement conviction on the basis that when the funds w ere paid to the cemetery owne r, they became the owner’s funds, not the funds of another entr usted to the cemetery owner . The payments were made with the expectation that the payment was for past or future service s; the payments were not the entrusted property of another. Id. Likewise, this Court reversed an embezzlement conviction in Dov e. In Dove, a gas station operator collected the proc eeds from gas sales and was supposed to remit a percentage of the sales to the station o wner. Dove, 41 Va. App. at 575. The re was no evidence the agreement between the operator and the ow ner specified how the operator w as to handle the proceeds. Id. The operator deposited the proceeds into his personal bank acco unt, used them for expenses, and failed to remit the required amount. Id. This Court reasoned that the operator’s dominion and control over the funds was not “ unauthorized and wrongful” when he deposited them in his own account. Id. at 579. The proceeds possessed by the operator w ere his property and not that of the owner; the proceeds thus did not constitute the entrusted p roperty of another. Id. This Court concluded that although the “evid ence establishe[d] that [the o perator] used, for his own purposes, money owed to [the owne r] by virtue of their business dealings, [that] standing alone [was] not sufficient to sustain a conviction for embezzlement.” Id. (“A debtor-creditor relationship is an insufficient basis upon which to premise an embezzlement charge and conviction.”). Here, the annual road maintenance fees were paid to Ware, but not entrusted to him. The evidence showed, and the Commonwealth conceded to this Court du ring oral argument, the lot owners paid the road maintenance fees to Ware and expected from Ware his future service in- 6 - maintaining the road. 2 See Rooney, 27 Va. App. at 645. Mor eover, nothing in the rec ord suggests the lot owners expecte d Ware to “return the monies or deliver them to a third person.” Id. at 644. As in Dove, we see not hing in the record restricti ng use of or requiring particular handling of the fees. See D ove, 41 Va. App. at 575. Thus, whe ther Ware deposited the fees in his business or personal acc ount, as in Rooney and Dove, or cre ated a segregated account, Ware’s dominion and control over t he money was not unauthorized or wrongful. See id. at 579; Rooney, 27 Va. App. at 645. The fees paid to Ware became his p roperty and were not “property of another” for purposes of emb ezzlement. Contrary to the Comm onwealth’s argument, Ware’s transfer of $3,000 from one of his bank accounts to another was not embezzlement because Ware had unrestricted dominion and control over both accounts. The question of whether the lot owners got a “good deal” for their money is an issue of contrac t law and not embezzlement. 3
Even if the “evidence establishe [d] that [Ware] used, for his o wn purposes, money [to be used on behalf of the lot owners] by virt ue of their business dealings, [that] standing alone [was] not sufficient to sustain a conviction for embezzlement.” Dove, 41 Va. App. at 579. Because the road maintenance fees were not t he entrusted property of anothe r, the court erred in denying Ware’s motion to strike the embezzlement charge.

2 See Oral Argument Audio at 12 :57 to 13:08 (“[Judge:] [T]he ch ecks were made payable to him [Ware]. [Commonwealth:] Well that is corre ct, your Honor. No question about that. It seemed to me that th e money was provided to him to fu lfill [the road maintenance].”); id. at 11:14 to11:36 (“[Judge:] L et me ask you the basic question. Where is the entrustment here? . . . [T]he subdivision agreement requires effectively a prepay ment to the appellant, and he is required to do road maintenance.” [Commonwealth:] That is cor rect, your Honor.”).

3 We need not and do not consider the question of whether Ware p rovided $3,000 worth of road maintenance either befo re or after the money was transf erred. Each of the lot owners testified that some maintenance had been done. More over, there was no indication of wrongdoing in Ware’s use of the mon ey in the judicially-approve d settlement agreement for the civil suit, which allowed Ware to retain the money he had trans ferred from the segregated account and stated that the lot owners had no claims against Wa re.- 7 - B. Attempted Extortion Ware argues there was insufficient evidence to convict him of a ttempted extortion because providing legal notice of intent to file a memorandum o f lien was not a wrongful threat. We agree. “[T]he gravamen of extortion is wrongfully obtaining a benefit through coercion.” Strohecker v. Commonwea lth, 23 Va. App. 242, 257 (1996). Extor tion is “[t]o gain by wrongful methods; to obtain in an unlawful manner, as to compel payments by means of threats of injury to person, property, or reputat ion.” Id. at 256-57 (quoting St ein v. Commonwealth, 12 Va. App. 65, 69 (1991) (quoting Black’s Law Dictionary 525 (6th ed. 1990 ))); see Extortion, Black’s Law Dictionary (11th ed. 2019) (“The p ractice or an instance of obt aining something or compelling some action by illegal means, as by force or coercion.”). As t he above definitions demonstrate, the focus in determining if a benefit was wrongfully obtained i s the method employed to obtain the benefit. See Unite d States v. White, 810 F.3d 212, 223 (4t h Cir. 2016) (distinguishing between “legitimate economic thre ats” and “inherently wrongful” threats of violence); United States v. Coss, 677 F.3d 278, 287 (6th C ir. 2012) (reasoning th at threat to publish names of delinquent debtors was not a wr ongful enforcement action and th erefore would not constitute extortion). Thus, a threat to e xercise a lawful method of enfo rcement rights, without more, does not constitute extortion. The quintessential example of l awful and valid exercise of enf orcement rights is the use of the judicial process. “The prime object in having judicial tribunals is to provide a method whereby all citizens, whoever t hey may be, or whatever their st anding, may have their disputes settled in an orderly and peaceful manner.” People ex rel. Sti dger v. Horan, 86 P. 263, 263 (Colo. 1905). It is in the public i nterest for parties to util ize judicial proc ess, and parties therefore have an absolute privil ege in presenting their cases to the court through judicial- 8 - proceedings. See Donohoe Const. Co., Inc. v. Mount Vernon Asso ciates, 235 Va. 531, 537 (1988); see also Lindeman v. Lesnick, 268 Va. 532, 537 (2004) ( “Absolute privilege, sometimes called judicial privilege, is br oad in scope and applies to com munications made in proceedings pending in a court or before a quasi-judicial body. If the com munication is made in such a judicial proceeding, it need only be relevant and pertinent to the case to be protected by the privilege.”). The Supreme Court has considere d the issue of absolute privile ge in the context of enforcement rights through t he use of liens. Donohoe, 235 Va. 531. The developer in Donohoe had previously filed a memorandum of mechanic’s lien for an amo unt in excess of $350,000 against a property owner. Id. a t 535. At the time the lien wa s filed, the property owner had paid all bills from Donohoe. Although Donohoe had submitted a requi sition to the property owner for about $100,000 after the filing of t he lien, the amounts reques ted by Donohoe never approached the lien amount. Id. at 536. In the subsequent suit to enforc e by Donohoe, the court concluded the lien was invalid and awarde d damages to the property owner. Id. After resolution of the lien case, the property owner instit uted an action against Donohoe, arguing Donohoe had slandered the property’s title. Id. A jury found Donohoe liable and awa rded punitive and compensatory damages. Id. at 531. The Supreme Court reversed the jury’s decision. The Court rec ognized that “[i]t is well settled that ‘words spoken or written in a judicial proceeding that are relevant and pertinent to the matter under inquiry are absolut ely privileged.’” Id. at 537 ( quoting Darnell v. Davis, 190 Va. 701, 707 (1950)). “The reason for the r ule of absolute privile ge in judicial proceedings is to encourage unrestricted speech i n litigation.” Id. “The public interest is best served” when litigants have the freedom “to s peak fully on the issues relati ng to the controversy.” Id. One of the judicial proceedings covered by absolute privilege is the p rocess to perfect a lien, which- 9 - includes the filing in the clerk’s office of a memorandum of li en. Id. at 538 (“[T]he filing of the memorandum of . . . lien constitutes a judicial proceeding.”). The Court recognized that “[f]or a claimant to obtain the re medy provided by statute, he must perfect his lien and, thereafter, sue to enforce it. The two proceedings are inseparable.” Id. at 539. Thus, “relevant and pertinent” statements related to either part of the proceeding, the perfec ting of a lien or the enforcement of the lien, enjoy absolute privil ege. Id.; Titan Am., LLC v. Riv erton Inv. Corp., 264 Va. 292, 308 (2002) (“A statement made in the c ourse of a judicial proceedin g is absolutely privileged if it is material and relevant to the proceeding.”). Such statements, i f relevant and pertinent, cannot be the basis for a collateral action against the filer of the lien

. Here, the Commonwealth alleged t hat Ware’s noti ce of intent to place a lien on Cabiroy’s property was a wrongful threa t that constituted extortion. The trial court agreed and denied Ware’s motion to strike, reasoni ng that the let ter written to C abiroy might have been an “improper means to slander the title to collect money.” The co urt thus reasoned that Ware’s notice of intent to place a lien could be a wrongful method of collecting the money. This was error. See Strohecker, 23 Va. App. at 256. Here, Ware’s letter providing notice of intent to place a lien on Cabiroy’s property was part of a judicial proceeding. T he judicial proceeding include d both the perfecting of a lien on Cabiroy’s property and the en forcement of the lien. Donohoe, 2 35 Va. at 539. For Ware to perfect the lien for Cabiroy’s al leged unpaid assessments, Code § 55-516(C) required “a notice [to] be sent to the property ow ner . . . informing the property owner that a memorandum of lien will be filed in the circu it court clerk’s office.” 4 This notice had to be filed at least ten days prior

4 We need not and do not consider the merits of Ware’s civil cla im in the lower court nor whether Ware’s subdivision documents and Hope Landing Road Main tenance Association were valid for purposes of Code § 55-516. See Dogwood Valley Citize ns Ass’n, Inc. v. Winkelman, 267 Va. 7 (2004) (holding that litig ant was not a “property own ers’ association” as defined by the Property Owners’ Associ ation Act, Code §§ 55-508 through -5 16.2; rejecting litigant’s- 10 - to filing of the memorandum of lien. Code § 55-516(C). The no tice also had to contain seven enumerated items. 5 Code § 55-516(B). The notice Ware sent to Cabiroy stated, “P leased be advised that 10 (ten) days from the postmarked date of this cor respondence I will file the enclosed MEMORANDUM OF LIEN at t he clerk’s office in New Kent C ounty.” The letter included an itemized list of charges, totaling $30,247.10, that Ware alleged Cabiroy owed, and included a document labeled “Pu rsuant to Va. Code Section 55-51 6 Memorandum of Lien for Assessments.” The document enumerated seven items mirroring th e requirements of Code § 55-516. In sum, Ware’s notice to Cabiroy was a material and relevant statement related to a judicial proceeding and thereby e njoyed absolute privilege. Ti tan Am., 264 Va. at 308. To find otherwise would suggest that any creditor who says, “Pay me wha t you owe me, or I will sue you,” is guilty of attempted extortion. The Commonwealth argues that War e’s use of required statutory p rocedures does not negate the wrongful threat because Ware was not entitled to the sum he was seeking. It is for the courts to adjudicate the issue of entitlement. At the time War e sent the notice, he was utilizing the judicial process. No cour t had yet ruled on the merits reg arding his entitlement to the sum.

enforcement attempt; and declaring the purported deed covenants , agreements, and restrictions void). The lawful exercise of e nforcement through judicial pro cess is not contingent on whether a litigant ultimately wins or l oses. We note that the recorded documents related to road maintenance and assessments were not declared invalid until the settlement agreement in the civil suit was approved by t he judge on October 13, 2017, two y ears after Ware’s notice to Cabiroy.

5 The notice to the land owner inc ludes the following items list ed in the code section: (1) The name of the development; (2) A description of the lot; (3) The name or names of the persons constituting the owners of that lot; (4) The amount of unpaid assessments currently due or past due relative to such lot t ogether with the date when ea ch fell due; (5) The date of issuance of the memorandum; (6) The name of the association and the name and current address of the person to contact to arrange for pa yment or release of the lien ; and (7) A statement that the association is obtaining a lien in accordance with the provisio ns of the Virginia Property Owners’ Association Act as set forth in Chapter 26 (§ 55-508 et seq.) of Title 55.- 11 - Ware had a legal claim to the amount he sought until the point a court of competent jurisdiction ruled that he did not. 6
We conclude that Ware’s writt en notice to Cabiroy was part of the judicial process of perfecting a lien. The relevant and material statements in the notice were thereby covered by absolute privilege and were not a wrongful threat in the contex t of an extortion charge.
III. CONCLUSION The trial court erred in denyin g Ware’s motion to strike regar ding the embezzlement indictment because the evidence was insuffi cient to prove the m oney at issue was the property of another entrusted to Ware. The trial court also erred in denyi ng Ware’s motion to strike regarding the attempted extortion indictment because the notice of intent to file a lien, the only alleged threat, was made in the context of a judicial proceeding. Accordingly, we reverse both convictions and dismiss the indictments. In vie w of our decision, we need not address Ware’s fin al assignment of error arguing the civ il litigation had a preclusive effect on h is criminal conviction. Reversed and dismissed.

6 Where a plaintiff improperly litigates a claim, the judicial p rocess affords remedies. See Code § 8.01-271.1 (frivolous or harassment suits); Montgome ry v. McDaniel, 271 Va. 465, 469 (2006) (abuse of process). In f act, the trial court in the civil suit found Ware’s suit to be harassment and awarded the complaining witness, Cabiroy, sancti ons under Code § 8.01-271.1.