The Virginia Supreme Court decided unanimously on 16 September 2010 that attorney malpractice arising out of the division of retirement rights in a marital settlement agreement runs from the date of document execution, even if the injured party does not know the mistake was made, and no damages exist at the time of the error. I am troubled by the reasoning supporting this decision, for reasons I will explain.
In Van Dam v. Gay, Record No. 091659, Wife’s counsel failed to properly safeguard his client’s entitlement to Federal survivor benefits. Husband died more than three years after the faulty agreement had been incorporated into the final decree. When Wife approached the U.S. Government about benefits, they pronounced the language of the agreement insufficient and refused to pay.
Wife sued former counsel. He defended by asserting that the limitations period commenced when both parties signed; so that by the time Husband died the period had expired.
Wife countered that the limitations period could not have begun when the agreement was signed because Husband was still living. If he had survived Wife, she would receive no retirement from him at all. In other words, her interest in his retirement had not vested yet; it was contingent on her surviving him. The Supreme Court disagreed with Wife and sided with former counsel, concluding that it was too late for Wife to complain; her three-years in which to allege attorney malpractice had already run.
The Court reached its decision on the basis that retirement rights were rendered non-contingent by Virginia’s equitable distribution statutes. Those statutes provide for dividing retirement at time of divorce even if the money being apportioned is only accessible in the future if ever at all. Since the contingent or conditional character of the retirement expectancy was eliminated by statute, the Court explains, damages to a wronged spouse begin accruing the moment a defective agreement is signed.
I believe this rationale is faulty for several reasons:
1. The Virginia Legislature may have intended that retirements be treated as non-contingent only to allow for their division upon divorce and not for other purposes such as the one inferred here — allowing a presumption of immediate damage in legal malpractice.
2. A general rule of statutory construction is that laws mean exactly what they say, and do not carry other meanings that might have been intended but were not specifically stated.
3. In Van Dam dictum, the Supreme Court reaffirms the rule that “[N]o cause of action [exists] until some injury or damage was sustained as a result of the malpractice”. Inexplicably the Court fails to apply that rule here. In the facts of this case, Wife suffered no material harm until Husband passed away. She had no damages – and no cause of action – before he died.
4. The provision of the parties’ agreement that entitled Wife to Husband’s survivor benefit was a contingent property interest. If Wife had passed away first, she would have received nothing from Husband’s retirement regardless of her counsel’s drafting error. Contrary to the view expressed by this Court, a potential share in a retirement is not significantly different from a bequest that a testator might delete before death. Both are inherently, ineluctably conditional.
The Van Dam opinion turns defective property settlement agreements into ticking time bombs. It allows bad drafting to blow up in the face of an innocent spouse, potentially – as in this case – long after a right of recourse has expired.
This problem begs for the legislative remedy called equitable tolling. This kind of statute, which exists in many other jurisdictions, prevents a limitations period from starting to run until you know or should have known about the misfortune that befell you. Its absence in Virginia will only benefit incompetent professionals and their insurance carriers at the expense of hapless divorcées.