2.2 Section 8.01-271.1 of the Virginia Code

• Library: Attorney Fees and Sanctions - Virginia and Federal Courts (Virginia CLE) (2016 Ed.)

2.2 SECTION 8.01-271.1 OF THE VIRGINIA CODE

2.201 In General. Section 8.01-271.1 provides:

[E]very pleading, written motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in his individual name . . .

The signature of an attorney . . . constitutes a certificate by him that (i) he has read the pleading, motion, or other paper, (ii) to the best of his knowledge, information and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and (iii) it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

. . .

If a pleading, motion, or other paper is signed or made in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed the paper or made the motion, a represented party, or both, an appropriate sanction, which may include an order to pay to

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the other party or parties the amount of the reasonable expenses incurred . . . including a reasonable attorney's fee.

2.202 Purpose of Statute. With regard to the acts of attorneys, the manifest purpose of the statute is to hold attorneys, who are officers of the court, responsible for specified failures involving the integrity of the documents that they have signed. ⁹

A. Policy Considerations. The ability of a court to impose sanctions serves a number of important policy considerations. The possibility of sanctions prevents litigants from filing frivolous or meritless lawsuits and prevents innocent defendants from having to bear the considerable financial and mental burdens associated with the defense of such claims. ¹⁰

However, when determining whether sanctions are warranted in a given matter, a court should be careful not to "stifle counsel in advancing novel legal theories or asserting a client's rights in a doubtful case." ¹¹ The underlying policy considerations behind the use of sanctions are related to the protection of the parties and the courts. ¹²

B. Second Paragraph of Section 8.01-271.1. An attorney is subject to sanctions for failure to comply with any one of the three provisions in the second paragraph of section 8.01-271.1. Written in the conjunctive, an attorney's signature to a pleading certifies compliance with all three clauses. The attorney is subject to sanctions for failure to comply with any one of them. ¹³

Courts consider whether "after reasonable inquiry, [counsel] could have formed a reasonable belief that the pleading[s] [were] well grounded in fact, warranted by existing law or a good faith argument for extension, modification, or reversal of existing law, and not interposed for an improper purpose." ¹⁴

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Section 8.01-271.1 provides the basis for sanctions such as attorney fees against a party litigant or counsel when oral motions are made in violation of that section. ¹⁵

2.203 General Considerations. The mere fact that demurrers were sustained did not necessarily mean that the plaintiff's claims were not objectively reasonable under existing law so as to permit an award of sanc-tions. ¹⁶ Any doubts are resolved in favor of the party so charged; the court must eschew the wisdom of hindsight. ¹⁷ "An award of attorney's fees as a sanction should never be 'a routine matter.'" ¹⁸

The threat of sanctions "should not be used to stifle counsel in advancing novel legal theories or asserting a client's rights in a doubtful case." ¹⁹ The decision to impose sanctions should be made only after the most sober consideration. ²⁰

The court should not award sanctions because contrary inferences may be drawn from the facts or because counsel or the represented party might not prevail on the merits of the cause. ²¹

A court is not limited to the record in the present case but may consider any relevant and admissible evidence tending to show the attorney's knowledge at the relevant time. ²² A violation of any of the certifications of section 8.01-271.1 must result in a sanction. ²³

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"[T]he moving parties in seeking sanctions, bear the burden of proving by a preponderance of the evidence facts establishing misconduct . . . war-rant[ing] an award of sanctions." ²⁴

The fact that a plaintiff takes a nonsuit as a matter of right is not a concession that it has asserted a position without reasonably determining it to be well grounded in fact. ²⁵

2.204 Pleading Must Be Grounded in Fact. Litigants are required to plead only those claims that have factual support. ²⁶ In determining whether or not litigants and attorneys, after reasonable inquiry, could have formed a reasonable belief that their pleadings were well grounded in fact, courts must use an objective standard of reasonableness. ²⁷

A. Standard of Reasonableness. An objective standard of reasonableness requires consideration of several factors, including whether the attorney was employed near the deadline of a statute of limitations so that the attorney had no choice but to rely on the client or a defendant coming to counsel at the last minute before a response to a pleading is required. ²⁸

B. Reasonable Inquiry. Litigants cannot make baseless allegations in a pleading hoping to get support after discovery. ²⁹ Arguments that rely on speculation or are inherently not well grounded in facts give rise to a claim for sanctions. ³⁰ In determining whether attorney had knowledge formed after reasonable inquiry when signing the pleading, "the trial court is not limited to the record but could properly consider any relevant and admissible evidence tending to show the attorney's state of knowledge at the time in question." ³¹

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In Williams & Connolly, LLP v. PETA, ³² the court found that counsel's factual basis for a motion to recuse was not well grounded in fact as three of five salient facts were inaccurate, other facts could not be construed to have been attributable to the judge, and other factual allegations relied solely on speculation.

In Gray Diversified Asset Management, Inc. v. Canellis, ³³ it was impossible for the attorney to have conducted a reasonable inquiry into the facts and law without at least reviewing the court's file in detail and reviewing the trial transcript.

"The duty of reasonable inquiry does not require an investigation into the facts be carried to the point of absolute certainty . . . . The investigation need merely be reasonable under the circumstances." ³⁴ Whether an appropriate amount of prefiling investigation was done is a fact-bound inquiry that requires judicial discretion and inevitably is a judgment call. ³⁵

In Parsch v. Massey, ³⁶ the court found that

The duty of inquiry should be regarded as non-delegable but capable of being satisfied by [counsel's] acquisition of the product of inquiry conducted by others. . . . Thus if the client...