Opinion ID: 1058593
Heading Depth: 2
Heading Rank: 3

Heading: Joint or Common Liability

Text: Nizan also contends the circuit court erred by determining Wells Fargo was entitled to more than one recovery of the amounts due under the Note because Mr. Nizan and UBS did not have joint or common liability to Wells Fargo. Neither the Amended Final Order nor the Protective Order recite that holding; however, the Protective Order recites as a basis for the order the reasons set forth from the bench on . . . February 22, 2006. The Amended Final Order references the language of the Protective Order. At a hearing on February 22, 2006, during which the circuit court concluded that Nizan was precluded, as a matter of law, from arguing the defense of double recovery, the court stated from the bench, I have been particularly persuaded by the [ Cyrus ] case from the bankruptcy court. . . . It appears the rationale set forth there would seem to indicate there's no right to share in how they distribute the money. They still owe the debt. The court then stated my conclusion is that this case really sets forth the principal [sic] in the [ Cyrus ] case and the reason that should be and will be applied to this case. At its subsequent hearing in which the parties argued Nizan's amended motion for reconsideration and the language to be included in a final order, the circuit court affirmed that its ruling was based, in part, on a lack of common liability between Nizan and UBS and the rationale of Cyrus. The circuit court stated the following: I indicated that I thought Cyrus was persuaded [sic], and I think still think it's persuaded [sic], although not controlling. In their terminology of solidary liability in my reading of it, while it's not inconsistent with Virginia law  in fact, the bankruptcy court referred to it as a common law version of joint liability, and that's in its language. Nizan was not a party to this settlement, it was not made on his behalf, and there is no common liability. You've argued that common liability does not apply, but there is no common liability. This suit by Wells Fargo against UBS was because of their misrepresentation of the value of those loans. That's a separate issue. And I agree with Wells Fargo's analysis as to Katzenberger's applicability, and [ Cox ]. I do not find that they really deal with the specifics of this case or the underlying laws as it relates to this case. UBS or the guarantors did not have any common liability to Wells Fargo. And for all the reasons stated in plaintiff's brief and for the reasons I've so stated, I do grant the motion in limine, and I will enter judgment for the plaintiff. To the extent the circuit court based its judgment that Nizan could not assert a claim of double recovery against Wells Fargo because Nizan had no common liability with UBS as to the Note, the circuit court erred. Our jurisprudence is clear that the defense of double recovery arises from a claim as to the same damages, not the same basis of liability for the damages. We return to our analysis in Katzenberger to amplify this point. As noted above, the Katzenbergers bought real property that did not have the access as represented by the sellers. Their closing attorney failed to detect this defect in his title examination. The Katzenbergers brought successive suits against the sellers for breach of warranty of title and against the attorney for malpractice for a defective title examination. In both actions, the Katzenbergers asserted as damages the diminution in value of the property because of the defects in title. The Katzenbergers entered into a settlement agreement with the sellers of the property but continued their action against the attorney seeking a full recovery. We recognized that [the sellers] and the [attorney] were not joint tortfeasors, they were not in privity one with the other and they were not acting in concert in any manner. Their acts which gave rise to the claims against them were separate, different and distinct. If the [purchasers] were wronged, it was because the [sellers] separately breached their covenant that they had the right to convey the land and because the [attorney] separately breached his duty to use due care in examining the title to the property. The [sellers] were strangers to the wrong allegedly committed by the [attorney] and he a stranger to the wrong allegedly committed by them. Katzenberger, 206 Va. at 85, 141 S.E.2d at 676. The Katzenbergers thus had separate and distinct causes of action against the sellers and the attorney based on each defendant's conduct, but for the same injury. We concluded that [w]hile the plaintiffs, by settling their contract action against the [sellers] were not barred from seeking further recovery in their tort action against the [attorney], they were not entitled to secure a double recovery. While they had two separate causes of action and were entitled to seek compensation in each, they were, nonetheless, estopped from collecting the full amount in the second action if they were partially paid therefor in the first. Id. (emphasis added). Katzenberger establishes that what is dispositive to a defense of double recovery is whether the damages claimed, on whatever theory of liability, are the same damages. If the element of damages is the same, it makes no difference that the potential payors are not joint tortfeasors or jointly and severally liable under the same theory of liability. The circuit court's reliance on Cyrus is thus inapposite. In Cyrus, the bankruptcy court applied Louisiana law which encompasses the concept of `solidary liability'. `An obligation is solidary for the obligees when it gives each obligee the right to demand the whole performance from a common obligor. When obligations are independent, Louisiana law does not allow the settlement of one independent obligation to affect liability on the other.' Cyrus, slip op. at 3 (citation omitted). Consequently, the bankruptcy court concluded that there is no solidary liability here because UBS . . . and the Debtors did not have a common liability . . . under Louisiana law. Id., slip op. at 4. This concept of solidary liability under Louisiana law has no nexus to a claim of double recovery in Virginia and is not an element of that defense. To the extent the circuit court based its judgment on the view that common liability was a required element of a double recovery defense, that ruling was in error. In order to assert the defense of double recovery against Wells Fargo, Nizan must prove that the damages Wells Fargo received from UBS and what it seeks from Nizan are the same, not that Nizan and UBS are jointly liable under a common basis of liability or through the same cause of action.