An appeal from district to circuit court can only address the specific "case" that was appealed, and not a counterclaim that had been filed but not appealed separately, the Virginia Supreme Court rules in a case originally from General District Court, The Robert & Bertha Robinson Family LLC v. Allen (3/1/18). The district court had dismissed the plaintiff's filing, which was a warrant in debt, and the counterclaim. The plaintiff filed a notice of appeal, but the defendant did not file one, nor any pleadings in circuit court, except for a sanctions motion. The plaintiff later withdrew the appeal, and the circuit court sanctioned the plaintiff for $10,000 in attorney's fees and awarded the defendant the return of the security deposit, which the original counterclaim had asked for, without hearing any evidence about it.
Counterclaim and De Novo Appeal
... Tenants argue that their unsuccessful counterclaim was appealed, though unwittingly, by the landlord when it filed its own notice of appeal. The tenants claim that this “piggyback” approach to GDC appeals is the customary view among some circuit courts. See Appellees' Br. at 13-15 (quoting Boyce v. Athey, 4 Va. Cir. 19, 19-21 (1980)) The landlord disagrees and adds that, regardless of accepted custom, the “piggyback” approach is wrong as a matter of law. See 1 Kent Sinclair, Virginia Practice and Procedure 40 (2010) (concluding that “where a counterclaim has been filed there must be a specific appeal of the counterclaim from the General District Court” and that an appeal by a plaintiff “does not automatically bring the counterclaim before the circuit court”).
A leading scholar of Virginia procedural law, Judge J.R. Zepkin, observed years ago that, in GDC cases involving consolidated claims by several parties, “[t]here is no clear guidance on what happens ․ if one of multiple losing parties wishes to appeal.” J.R. Zepkin, The Rules of Court for the General District Courts of Virginia, 23 U. Rich. L. Rev. 809, 829 n.43 (1989).
Common law provided no right, custom or practice of "appeal" in any now-recognizeable form, the Court explains, but only appeals from law to equity, and writs of error. Therefore,
... “In case after case” involving appeals from courts not of record, “we have in clear, unequivocal, and emphatic language repeatedly said that ‘[t]he right of appeal is statutory and the statutory procedural prerequisites must be observed.’ ” Covington Virginian, Inc., 182 Va. at 543, 29 S.E.2d at 409 (citation omitted). “The right of appeal is statutory,” Brooks v. Epperson, 164 Va. 37, 40, 178 S.E. 787, 788 (1935), because it is “a process of civil law origin,” Tyson, 116 Va. at 252, 81 S.E. at 61 (citation omitted).
... Absent a statutory authorization or a constitutional mandate, no party has a right to a de novo appeal of the GDC's judgment in the circuit court. Customary practices, by themselves, cannot create this right. The tenants do not assert a constitutional basis for their “piggyback” theory of appeal. Consequently, without a clear statutory basis for it, the GDC's adverse judgment on their counterclaim was not properly before the circuit court.
And the statutory language contemplates de novo appeals of specific actions of a court, by specific parties, not a general appeal of the whole situation:
Code § 16.1-106 addresses appeals and grants “an appeal of right” to a litigant from “any order entered or judgment rendered in a court not of record in a civil case” when the “matter in controversy” exceeds $20. Code § 16.1-107 states that no appeal “shall be allowed unless and until the party applying for the same” provides an appropriate bond “sufficient to satisfy the judgment of the court in which it was rendered.” Code § 16.1-107 also requires the “party applying for appeal” to pay a writ tax to the circuit court.
The tenants argue that these statutes imply that a notice of appeal filed by one litigant appeals the entire case on behalf of all other litigants in the GDC case, even the claims of those litigants against whom the appealing party prevailed. In other words, an appeal by one party converts all other parties into de facto appellants on every adverse ruling of the GDC. We do not see any textual basis for this statutory inference.
Code § 16.1-106 does not require the appealing party to appeal every adverse ruling of the GDC but, rather, provides an “appeal of right” for “any order entered or judgment rendered.” Under the tenants' contrary view, a party cannot appeal a loss on one claim without forfeiting his wins on other claims against other parties. So, if a plaintiff asserts claims against two defendants, prevailing against one defendant and losing to the other, he cannot appeal the adverse judgment without sacrificing the favorable judgment. Similarly, if we assume that the losing defendant in the GDC files a notice of appeal but neither the plaintiff nor the winning defendant do, under the tenants' view of the appellate process, the winning defendant loses his victory even though the losing plaintiff never appealed that loss.
This actually makes practical sense when we remember what counterclaims are, in the first place. They are not necessary defenses, they are potentially separate cases which the courts consider within the same litigation for the sake of judicial economy:
The law encourages counterclaims “in an effort to avoid a multiplicity of lawsuits and the danger of inconsistent judgments,” W. Hamilton Bryson, Bryson on Virginia Civil Procedure § 6.04[1], at 6-85 (5th ed. 2017), but they nevertheless may be asserted in an “independent action,” Sinclair & Middleditch, supra, § 9.10[A], at 748.
And that language about "the party applying" filing a bond also provides a practical and moral reason not to allow the non-appealed counterclaim: Why should only one party have to pay an appeal bond, if his appeal is also his opponent's appeal?
If his notice of appeal implicitly appeals his opponent's unfavorable rulings as well as his own, must he post an appeal bond on his opponent's behalf for the implicit appeal? Surely not. It would be equally odd to allow a non-appealing party to get the benefit of the appeal — a reprieve from the enforcement of the GDC judgment — with no duty to post an appeal bond at all.
Sanctions
On sanctions, the Circuit Court said that "filing of a lawsuit without all evidence in hand" violates the sanctions statute, Code § 8.01-271.1, and the “duty to have all evidence upon which it planned to rely on before ever filing suit.” This was wrong and the sanctions were an abuse of discretion, the Supreme Court says.
The statute does not, as the circuit court ruled, place a “duty” on a claimant “to have all evidence upon which it planned to rely on before ever filing suit.” J.A. at 275 (emphasis added). Nor is it “a per se violation” of the statute to file “a lawsuit without all evidence in hand.” Id. at 275-76 (emphasis added). When filed, a claim must be “well grounded in fact,” Code § 8.01-271.1, not exhaustively supported with every conceivable fact that the party may plan to use at trial.
. . . Unless an expected defense is so irrefutable as to render a claimant's theory of relief frivolous, “claims which are recognized under Virginia law, and as to which the essential elements were pled, are not sanctionable even if they do not prevail on the merits.” Kent Sinclair & Leigh B. Middleditch, Jr., Virginia Civil Procedure § 11.8, at 900 (6th ed. 2014).
The tenants also cited “the protracted history of the litigation" as a reason for the sanctions. The Court first points out that the Circuit Court never said that, but:
We recognize that an “appellee is free to defend its judgment on any ground” supported by the record, “whether or not that ground was relied upon, rejected, or even considered by the [circuit] court” so long as additional factual findings are unnecessary. Perry v. Commonwealth, 280 Va. 572, 581, 701 S.E.2d 431, 437 (2010) (alteration and citation omitted).
But it rejects that argument on its merits:
Protracted litigation is a regrettable reality in the modern adversarial process. Assuming that the present dispute became protracted because the landlord exercised its right to a nonsuit and to a de novo appeal of the GDC's judgment, these circumstances, whether considered alone or together, are not intrinsic badges of bad faith. To be sure, it is conceivable that a litigant could initiate litigation, nonsuit and refile the claim, and then fight to the bitter end, all for the singular purpose of harassing an opponent and depleting his resources. If that were the case, it would not matter that the litigant's “pleadings were ‘well grounded in fact’ and ‘warranted by existing law’ ” because even facially legitimate pleadings cannot be filed for “an improper purpose.” Kambis, 290 Va. at 467, 778 S.E.2d at 121 (quoting Code § 8.01-271.1). The record in this case, however, does not warrant the inference that the landlord acted with an improper purpose.