Opinion ID: 3152258
Heading Depth: 2
Heading Rank: 3

Heading: the trial court’s belated “bad faith” finding

Text: The no-contest provision withdraws the finality of the trustee’s determination if the trustee was guilty of bad faith, fraud, or dishonesty. In this case, the trial court’s letter opinion 47 said nothing about bad faith and instead adopted the theory limiting the scope of the no-contest provision only to attacks on the September 2012 amendment. After the trustee’s counsel filed and argued a motion to reconsider, the court announced for the first time that the trustee was guilty of “bad faith.” Id. at 131. On appeal, the trustee argues that the trial court sua sponte injected the bad-faith issue into the case and that the sons did not plead bad faith in their complaint. This was the very point, the trustee insists, that she made at her unsuccessful demurrer hearing. The sons’ response, at the time of the demurrer, was that their allegations raised “the specter of bad faith” but that they were not attempting to plead or prove bad faith (or dishonesty or fraud) because, to obtain a court order nullifying the trustee’s determination, it was “enough” for them “to simply establish that the Trustee ‘got it wrong.’” Id. at 74. Consequently, the sons argued that “they did not have to allege bad faith.” Appellee’s Br. at 14. To be sure, even on appeal, the sons continue to maintain that the “trial court erred in ruling that the Trust was governed by the bad faith standard of the No Contest Clause.” Id. at 13; see also id. at 19 (arguing that “[the] bad faith standard should not apply”). Few axioms of Virginia law are better settled than our view that a litigant’s “[p]leadings are as essential as proof, and no relief should be granted that does not substantially accord with the case as made in the pleading.” Ted Lansing Supply Co. v. Royal Aluminum & Constr. Corp., 221 Va. 1139, 1141, 277 S.E.2d 228, 229-30 (1981) (quoting Bank of Giles Cty. v. Mason, 199 Va. 176, 180, 98 S.E.2d 905, 907 (1957)). Therefore, “[n]o court can base its decree upon facts not alleged, nor render its judgment upon a right, however meritorious, which has not been pleaded and claimed.” Id. at 1141, 277 S.E.2d at 230 (quoting Potts v. Mathieson Alkali Works, 165 Va. 196, 207, 181 S.E. 521, 525 (1935)). The trial court erred in holding that the 48 trustee acted in bad faith because nothing in the sons’ complaint (as the demurrer hearing confirmed) made that allegation. See Oral Argument Audio at 16:55 to 17:15 (concession by sons’ counsel that “we did not expressly allege bad faith [in any pleading]”). On this point, I acknowledge the concerns expressed by the sons’ counsel on appeal. He suggests that, in the context of a trustee’s duties, the concept of bad faith may have a different meaning than the one generally recognized in law. In many contexts, bad faith implies “not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . . [I]t contemplates a state of mind affirmatively operating with furtive design or ill will.” Black’s Law Dictionary 139 (6th ed. 1990); see, e.g., Logan v. Commonwealth, 279 Va. 288, 293 n.3, 688 S.E.2d 275, 278 n.3 (2010) (noting that, “in the civil context,” bad faith “connotes the ‘conscious doing of a wrong’” (citation omitted)). I need not hypothesize whether an allegation of bad faith connotes something different in a trust case than it does in any other civil case. Nor do I see the need to address whether any evidence in this record would be sufficient to prove an allegation of bad faith — because there never was any allegation of bad faith in this case. See Hoffman v. First Va. Bank, 220 Va. 834, 836, 842, 263 S.E.2d 402, 404, 408 (1980) (affirming the trial court’s sustaining of a demurrer and noting that the “amended bill of complaint contained no allegation of fraud, bad faith, or conflict of interest on the part of the Trustee”). 15 From the beginning of this litigation until now, 15 See also Trout, 106 Va. at 441, 56 S.E. at 168 (noting that “he who invokes the aid of the court to regulate and control the [broad] discretion with which the [trustee] was clothed must set forth facts and circumstances which will call into activity the power of the court to regulate the broad discretion conferred upon the trustee — must show that the trustee has acted in bad faith”); Virginia-Carolina Chem. Co. v. Carpenter & Co., 99 Va. 292, 293, 38 S.E. 143, 144 (1901) (stating that “a charge of fraud or bad faith must be clearly and distinctly proven”). 49 the sons have consistently maintained that they did not need to plead bad faith. Based on that view, they never did. 16