Opinion ID: 1057749
Heading Depth: 2
Heading Rank: 1

Heading: conflicts of interest requiring

Text: RECUSAL UNDER CODE § 15.2-852(A) In its first assignment of error, Newberry Station asserts that the circuit court erred in sustaining the Board’s demurrer because Supervisors Hudgins and McKay each had a conflict of interest and therefore was ineligible under Code § 15.2-852(A) to participate and vote during the Board’s consideration of the Application. 3 The circuit court ruled that the supervisors did not have conflicts within the meaning of the statute. This is a question of statutory interpretation which we review de novo. Manchester Oaks Homeowners Ass'n v. Batt, 284 Va. 409, 427, 732 S.E.2d 690, 701 (2012). 3 Newberry Station no longer asserts that the circuit court erred in sustaining the Board’s demurrer as to Supervisor Cook. Consequently, Newberry Station’s appeal now challenges only 2 votes of the 3-vote majority which approved the special exception. Nevertheless, Code § 15.2-852(A) disqualifies members with conflicts of interest from not only voting but also from “participat[ing] in any way.” Newberry Station alleged both that Supervisors Hudgins and McKay participated extensively in preliminary proceedings and that their participation tainted the Board’s entire consideration of the Application. Because this issue was decided on demurrer, we must accept these allegations as true. Schilling v. Schilling, 280 Va. 146, 147, 695 S.E.2d 181, 182 (2010). 4 Code § 15.2-852(A) provides in relevant part that: Each individual member of the board of supervisors . . . in any proceeding . . . involving an application for a special exception . . . shall, prior to any hearing on the matter or at such hearing, make a full public disclosure of any business or financial relationship which such member has, or has had within the 12-month period prior to such hearing, (i) with the applicant in such case, or (ii) with the title owner, contract purchaser or lessee of the land that is the subject of the application . . ., or (iii) if any of the foregoing is a trustee (other than a trustee under a corporate mortgage or deed of trust securing one or more issues of corporate mortgage bonds), with any trust beneficiary having an interest in such land, or (iv) with the agent, attorney or real estate broker of any of the foregoing. For the purpose of this subsection, “business or financial relationship” means any relationship (other than any ordinary customer or depositor relationship with a retail establishment, public utility or bank) such member, or any member of the member’s immediate household, either directly or by way of a partnership in which any of them is a partner, employee, agent or attorney, or through a partner of any of them, or through a corporation in which any of them is an officer, director, employee, agent or attorney or holds 10 percent or more of the outstanding bonds or shares of stock of a particular class, has, or has had within the 12-month period prior to such hearing, with the applicant in the case, or with the title owner, contract purchaser or lessee of the subject land . . ., or with any of the other persons above specified. For the purpose of this subsection “business or financial relationship” also means the receipt by the member, or by any person, firm, corporation or committee in his behalf from the applicant in the case or from the title 5 owner, contract purchaser or lessee of the subject land . . ., or from any of the other persons above specified, during the 12-month period prior to the hearing in such case, of any gift or donation having a value of more than $100, singularly or in the aggregate. If at the time of the hearing in any such case such member has a business or financial interest with the applicant in the case or with the title owner, contract purchaser or lessee of the subject land . . ., or with any of the other persons above specified involving the relationship of employee-employer, agent-principal, or attorney-client, that member shall, prior to any hearing on the matter or at such hearing, make a full public disclosure of such relationship and shall be ineligible to vote or participate in any way in such case or in any hearing thereon. Newberry Station argues that the statute defines “business or financial interest” as any relationship (other than any ordinary customer or depositor relationship with a retail establishment, public utility or bank) such member . . . either directly or by way of a partnership in which any of them is a partner, employee, agent or attorney, or through a partner of any of them, or through a corporation in which any of them is an officer, director, employee, agent or attorney or holds 10 percent or more of the outstanding bonds or shares of stock of a particular class, has, or has had within the 12-month period prior to such hearing, with the applicant in the case, or with the title owner, contract purchaser or lessee of the subject land . . . . By contrast, the Board argues that this language defines a “business or financial relationship” and does not pertain to a 6 “business or financial interest.” According to the Board, the General Assembly used two distinct terms in the statute and Newberry Station incorrectly uses them interchangeably. The definition of “business or financial interest,” the Board continues, is defined in the second paragraph of Code § 15.2- 852(A) as an interest “involving the relationship of employeeemployer, agent-principal, or attorney-client.” Therefore, the Board concludes, the statute recognizes two distinct classes of conflict and imposes different obligations on members for each class: a member who has any qualifying “business or financial relationship” at the time of the hearing, or who has had such a relationship at any time within the 12 months preceding the hearing, must “make a full public disclosure” of the relationship; however, any member who has “a business or financial interest” at the time of the hearing not only must “make a full public disclosure of such relationship” but also “shall be ineligible to vote or participate in any way in such case or in any hearing thereon.” Code § 15.2-852(A) (emphasis added). Newberry Station responds that the Board’s interpretation is incorrect. It argues that the phrase “involving the relationship of employee-employer, agent-principal, or attorney-client” modifies only the phrase “any of the other persons above specified.” Thus, according to Newberry Station, 7 the second paragraph merely prohibits a business or financial interest with (1) the applicant, (2) the title owner, (3) the contract purchaser, (4) the lessee, or (5) “any of the other persons above specified involving the relationship of employeeemployer, agent-principal, or attorney-client.” It therefore does not, Newberry Station concludes, provide any independent definition of “business or financial interest.” It is well-settled that “we determine the General Assembly’s intent from the words contained in the statute.” Alger v. Commonwealth, 267 Va. 255, 259, 590 S.E.2d 563, 565 (2004). Accordingly, “[w]hen a statute is unambiguous, we must apply the plain meaning of that language.” Appalachian Power Co. v. State Corp. Comm’n, 284 Va. 695, 706, 733 S.E.2d 250, 256 (2012). “[W]hen the language of an enactment is free from ambiguity, resort to legislative history and extrinsic facts is not permitted because we take the words as written to determine their meaning.” Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87 (1985). However, a statute is ambiguous when its language is “capable of more senses than one, difficult to comprehend or distinguish, of doubtful import, of doubtful or uncertain nature, of doubtful purport, open to various interpretations, or wanting clearness of definiteness,” particularly where its words “have either no definite sense or else a double one.” 8 Ayres v. Harleysville Mut. Casualty Co., 172 Va. 383, 393, 2 S.E.2d 303, 307 (1939). We determine that the arguments advanced by both sides have some element of merit and that the phrase “business or financial interest” is undefined and ambiguous in light of its placement following the defined term “business or financial relationship.” We therefore will consider the meaning of the statute in light of the canons of construction and its legislative history. We begin by evaluating the Board’s argument that the statute defines “business or financial interest” as one “involving the relationship of employee-employer, agentprincipal, or attorney-client.” The relevant portion of the second paragraph of Code § 15.2-852(A) provides that [i]f at the time of the hearing in any such case such member has a business or financial interest with the applicant in the case or with the title owner, contract purchaser or lessee of the subject land . . ., or with any of the other persons above specified involving the relationship of employee-employer, agent-principal, or attorney-client, that member shall, prior to any hearing on the matter or at such hearing, make a full public disclosure of such relationship and shall be ineligible to vote or participate in any way in such case or in any hearing thereon. The question essentially is whether the phrase “involving the relationship of employee-employer, agent-principal, or attorney-client” modifies the noun “persons” in “any of the other persons above specified” or the noun “interest” in 9 “business or financial interest.” The Board adopts the first of these possible constructions. Under this argument, the phrase “involving the relationship of employee-employer, agentprincipal, or attorney-client” applies to each of the preceding entities: the applicant, the title owner, the contract purchaser, the lessee, or any of the other persons listed in the first paragraph of the subdivision. That construction contravenes the rule of the last antecedent. Under that rule, “[r]eferential and qualifying words and phrases, where no contrary intention appears, refer solely to the last antecedent. The last antecedent is ‘the last word, phrase, or clause that can be made an antecedent without impairing the meaning of the sentence.’” Alger, 267 Va. at 259, 590 S.E.2d at 565-66 (quoting 2A Norman J. Singer, Sutherland on Statutory Construction § 47.33 (6th rev. ed. 2000)). Applying the rule to the operative sentence here, the phrase “involving the relationship of employee-employer, agentprincipal, or attorney-client” modifies only the immediately preceding antecedent: “any of the other persons above specified.” The phrase does not apply to the applicant, the title owner, the contract purchaser, or the lessee. 4 It 4 In Alger, we also noted the preferred procedure for clarifying whether modifying language is intended to modify all preceding antecedents or only the final one. 267 Va. at 260 & n.3, 590 S.E.2d at 566 & n.3. The General Assembly is presumed to be aware of that decision, see Barson v. Commonwealth, 284 10 similarly does not modify “business or financial interest,” thereby defining that phrase to be distinct from “business or financial relationship.” 5 We now turn to Newberry Station’s argument. We have repeatedly said that, “[w]hen interpreting and applying a statute, we ‘assume that the General Assembly chose, Va. 67, 74, 726 S.E.2d 292, 296 (2012), and it has made no corresponding amendment to Code § 15.2-852(A). 5 Only two words separate the phrase “involving the relationship of employee-employer, agent-principal, or attorney-client” from “persons” in “any of the other persons above specified.” By comparison, 53 words separate it from “interest” in the phrase “business or financial interest.” Had the General Assembly intended the phrase “involving the relationship of employee-employer, agent-principal, or attorney-client” to modify “interest,” it would have written the prohibition to apply when a “member has a business or financial interest involving the relationship of employeeemployer, agent-principal, or attorney-client with the applicant,” and so forth. It did not. Similarly, we are not persuaded that the phrase “any of the other persons above specified” is legislative shorthand intending simply to bring the entities identified by clauses (iii) and (iv) of the first paragraph within the reach of the second paragraph. The second paragraph explicitly recites in full the entities identified by clauses (i) and (ii) of the first paragraph. “[I]t is a ‘settled principle of statutory construction that every part of a statute is presumed to have some effect and no part will be considered meaningless unless absolutely necessary.’” Brown v. Commonwealth, 284 Va. 538, 544, 733 S.E.2d 638, 641 (2012). We therefore must conclude that the General Assembly acted deliberately when it treated the clause (i) and (ii) entities differently compared to the clause (iii) and (iv) entities. If it intended only to resort to legislative shorthand, the General Assembly would have abbreviated the second paragraph considerably by writing the prohibition to apply when a “member has a business or financial interest involving the relationship of employee-employer, agent-principal, or attorney-client with any entity identified in clauses (i) through (iv) above.” Again, it did not. 11 with care, the words it used in enacting the statute, and we are bound by those words.’” Kiser v. A.W. Chesterton Co., 285 Va. 12, 19 n.2, 736 S.E.2d 910, 915 n.2 (2013) (quoting Halifax Corp. v. First Union Nat'l Bank, 262 Va. 91, 100, 546 S.E.2d 696, 702 (2001)); accord Rives v. Commonwealth, 284 Va. 1, 3, 726 S.E.2d 248, 250 (2012). Therefore, “‘when the General Assembly has used specific language in one instance, but omits that language or uses different language when addressing a similar subject elsewhere in the Code, we must presume that the difference in the choice of language was intentional.’” Id. (quoting Zinone v. Lee’s Crossing Homeowners Ass’n, 282 Va. 330, 337, 714 S.E.2d 922, 925 (2011)). Applying these principles to this case could lead to the conclusion that the General Assembly deliberately chose the phrase “business or financial relationship” in the first paragraph of Code § 15.2-852(A) and “business or financial interest” in the second paragraph intending the two phrases to have different meanings. However, the legislative history of this specific statute reveals a contrary purpose. When the statute originally was enacted and codified as former Code § 15.1-73.4, and for nearly thirty years thereafter, the phrase “business or financial interest” was followed by the phrase “as above defined,” indicating that the General Assembly intended that phrase to have the meaning set 12 forth in preceding language. 1968 Acts ch. 774; accord 1970 Acts ch. 654; 1988 Acts ch. 879. Yet no definition of “business or financial interest” was provided there; the only definition set forth was the one provided for a “business and financial relationship.” Id. This supports an interpretation that the legislature at that time intended the terms “business or financial relationship” and “business or financial interest” to be synonymous. However, the General Assembly subsequently struck the phrase “as above defined” from the statute when it was recodified as Code § 15.2-852. 1997 Acts ch. 587. The Board argues this amendment reflects legislative intent that the two phrases thenceforth would have two distinct meanings. We disagree. As an enactment to recodify an existing title of the Code of Virginia, the underlying legislation was prepared by the Virginia Code Commission (“the Commission”) at the direction of the General Assembly, Senate J. Res. 2, 1994 Acts, at 2600, and it was accompanied by a drafting report. Senate Doc. No. 5, Virginia Code Commission, Report on the Recodification of Title 15.1 of the Code of Virginia at 173-74 (1997). The drafting report proposed the elimination of “as above defined” after the phrase “business or financial interest.” Id. at 174. The 13 drafting note for this amendment also states that the proposal was not intended to effect a substantive change. Id. The Commission’s report on the recodification is the impetus of the underlying legislation at issue here. 6 The General Assembly expressly instructed the Commission “to study Title 15.1” and report back a revision of the title. Senate J. Res. 2, 1994 Acts, at 2600. The General Assembly then enacted into law the proposals contained in the report with few amendments, and no amendments at all to the recommended language of the provision that is now codified as Code § 15.2- 852(A). We therefore accept the report’s drafting note as persuasive authority that the General Assembly did not intend to effectuate a substantive change to the definition of “financial or business interest” with the 1997 recodification. As previously noted, from the time of its original enactment in 1968 to the 1997 recodification the operative language of the second paragraph began, “[i]f at the time of the hearing . . . a member . . . has a business or financial 6 It has been noted that neither the single voice of one contemporaneous legislator nor a chorus of voices from a subsequent session composed of later-elected legislators may authoritatively state the legislature’s intent in enacting legislation. Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 117-18 (1980). But the Commission report is neither of these and, as Chief Justice John Marshall noted, “‘[w]here the mind labours to discover the design of the legislature, it seizes every thing from which aid can be derived.’” Id. at 118 n.13 (quoting United States v. Fisher, 6 U.S. 358, 386 (1805)). 14 interest, as above defined . . . .” Former Code § 15.1-73.4 (emphasis added). However, the phrase “business or financial interest” was not defined in the preceding language; only the phrase “business or financial relationship” was defined. We therefore conclude that the phrase “business or financial interest” was intended to have the same meaning as “business or financial relationship.” Separating the meaning of “business or financial interest” as used in the second paragraph from “business or financial relationship” as used in the first paragraph would have effectuated a substantive change. That expressly was not the intention of the Commission in proposing the amendment and there is no evidence that the General Assembly enacted the proposal with a different intent. Accordingly, “business and financial interest” has the same meaning as “business and financial relationship.” As defined in the statute, “business or financial relationship” means, in relevant part, 7 any relationship (other than any ordinary customer or depositor relationship with a retail establishment, public utility or bank) such member . . . either directly or by way of a partnership in which any of them is a partner, employee, agent or attorney, or through a partner of any of them, or through a corporation in which any 7 Newberry Station does not contend that Supervisors Hudgins or McKay received any gift or donation exceeding $100 in value. The definition of “business or financial relationship” encompassing such gifts or donations therefore is not relevant here. 15 of them is an officer, director, employee, agent or attorney or holds 10 percent or more of the outstanding bonds or shares of stock of a particular class, has, or has had within the 12-month period prior to such hearing, with the applicant in the case, or with the title owner, contract purchaser or lessee of the subject land . . . . Code § 15.2-852(A). Although this is the definition Newberry Station favors, our analysis is not concluded. Rather, we must determine whether Supervisors Hudgins and McKay had such a relationship. Newberry Station argues that such a relationship existed because (a) WMATA was the contract purchaser of the land subject to the Application and (b) WMATA is a corporation and Supervisors Hudgins and McKay were members of its board of directors. Although it does not dispute that WMATA was the contract purchaser, the Board responds that WMATA is a governmental agency, not a private corporation, and therefore is not a corporation within the meaning of Code § 15.2-852(A). Having recently addressed a similar issue, we agree with the Board. WMATA is a government agency created in corporate form by interstate compact between Virginia, Maryland, and the District of Columbia. The Washington Metropolitan Area Transit Regulation Compact of 1966, as amended by 2009 Acts chs. 771 and 828 (“the Compact”) states: 16 There is hereby created, as an instrumentality and agency of each of the Signatory parties hereto, the Washington Metropolitan Area Transit Authority which shall be a body corporate and politic, and which shall have the powers and duties granted herein and such additional powers as may hereafter be conferred upon it pursuant to law. (Emphasis added.) The words “body corporate and politic” create a corporation. See Dunningtons v. President & Dir. N. W. Turnpike Road, 47 Va. (6 Gratt.) 160, 170 (1849); Chapline v. Overseers of the Poor, 34 Va. (7 Leigh) 231, 233 (1836). However, WMATA is also “an instrumentality and agency of” the Commonwealth. See Short Pump Town Ctr. Cmty. Dev. Auth. v. Hahn, 262 Va. 733, 742 & n.10, 554 S.E.2d 441, 445 & n.10 (2001) (language creating a “public body corporate and politic” or creating a “body corporate and politic” and a “political subdivision” creates a governmental agency). In Cuccinelli v. Rector & Visitors of the University of Virginia, 283 Va. 420, 722 S.E.2d 626 (2012), we were called upon to determine whether the University of Virginia, which like WMATA is a governmental agency in corporate form, 8 was a “person” for the purposes of the Virginia Fraud Against Taxpayers Act, Code § 8.01-216.1 et seq. We noted that a 8 The university is a corporation by operation of statute. Code § 23-69. Nevertheless, it is also an agency of the Commonwealth. Rector & Visitors of the Univ. of Va. v. Carter, 267 Va. 242, 245, 591 S.E.2d 76, 78 (2004) (citing James v. Jane, 221 Va. 43, 51, 282 S.E.2d 864, 868 (1980)). 17 “corporation” was included in the definition of “person” provided in Code § 8.01-216.2 for that Act. 283 Va. at 426, 722 S.E.2d at 630. However, we also noted that the term “corporation” appeared alongside the terms “firm, association, organization, partnership, limited liability company, business or trust. Id. Applying the canon of noscitur a sociis, 9 we concluded that the term “‘corporation’ should be understood as a similarly oriented private sector entity, and not as encompassing an agency of the Commonwealth.” Id. at 432, 722 S.E.2d at 633. In applying the canon to Code § 15.2-852(A), the related words and phrases from which the precise meaning of “corporation” should be ascertained are “retail establishment,” “public utility,” “bank,” and “partnership.” These words accompanying “corporation” in Code § 15.2-852(A) relate to entities oriented to financial gain just as the words accompanying “corporation” do in Code § 8.01-216.2. As used in Code § 15.2-852(A), the words illustrate that in enacting the 9 Under the canon of noscitur a sociis, the precise meaning intended by the legislature of a word susceptible to multiple meanings is ascertained “by reference to [its] association with related words and phrases” in the statute. Cuccinelli, 283 Va. at 432, 722 S.E.2d at 633 (quoting Andrews v. Ring, 266 Va. 311, 319, 585 S.E.2d 780, 784 (2003)). Where general words and specific words occur together, “the general words are limited and qualified by the specific words and will be construed to embrace only objects similar in nature to those objects identified by the specific words.” Id. (quoting Andrews, 266 Va. at 319, 585 S.E.2d at 784). 18 statute the General Assembly intended to prevent members of the Board from acting on public business from which they may receive a financial benefit, either directly or through a household member. Because WMATA is a governmental agency organized in corporate form, it affords no opportunity for financial benefit to its unpaid directors. 10 It therefore is not a “corporation” within the meaning of the statute. Accordingly, the circuit court did not err in sustaining the Board’s demurrer. We therefore will affirm this portion of its judgment.