The Virginia Supreme Court recently issued a ruling that clarifies that under the Virginia Uniform Power of Attorney Act, trial courts may award monetary damages against an agent under a power of attorney, but may not issue an injunction directing that the agent must return money.
The issue arose due to language contained in the Virginia Uniform Power of Attorney Act, Section 64.2-1615(1), which provides that agents under powers of attorneys are “liable to the principal or the principal’s successors in interest for the amount required to [r]estore the value of the principal’s property to what it would have been had the violation not occurred.” At issue in the case (Mangrum v. Chavis, 18 Va. S. Ct. UNP 160782 (2018)) was whether this language provides that the agent under a power of attorney who is being sued for alleged financial improprieties may be forced by court order to restore money to the estate of the deceased principal under the power of attorney, or whether it provides merely that a money judgment may be entered against the agent.
The plaintiff argued that the language of the statute (focusing on the word “restore”) permitted the trial court to order that the defendant be enjoined to return funds to the estate. The defendant argued that the statute (with its reference to “is liable”) merely establishes a basis for a monetary judgment to be entered against him (as opposed to the equitable remedy of an injunction). On appeal, the Virginia Supreme Court held that the language “permits the circuit court to award a judgment for money damages against the attorney-in-fact to his or her principal, or to the principal’s successors-in-interest, not to enjoin or to decree specific performance that a res be returned.”
This ruling is significant for several reasons. First, it clarifies the remedies that a litigant must plead in a lawsuit when asserting claims against an agent under a power of attorney.
Second, it makes the job of a litigant a bit more challenging in recovering on a judgment compared to if the Virginia Supreme Court had accepted the plaintiff’s position. In light of the ruling, a successful plaintiff who has obtained a judgment against an agent under a power of attorney must undertake efforts to try to collect on the judgment if the judgment is not paid (those efforts could include conducting debtor’s interrogatories, garnishing wages, garnishing bank accounts, etc.). If the agent does not have adequate assets from which to satisfy the judgment, the plaintiff will effectively be out of luck until a day comes when the agent acquires some assets.
If the Court had accepted the plaintiff’s position, an agent under a power of attorney would be subject to a trial court’s contempt power if he didn’t restore the money he was ordered to, and therefore the agent could be subject to fines or imprisonment by the court for failing to comply. This would have provided a more powerful remedy for a successful plaintiff (compared to a mere monetary judgment).
[i] William W. Sleeth III, Esq. (email@example.com) is a partner at the law firm of LeClairRyan, where he leads the firm’s national Estate and Trust Litigation Practice Team.