Ranney v. Nelson , 176 F. App'x 405 ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1128
TIMOTHY R. RANNEY,
Plaintiff - Appellant,
versus
PRISCILLA D. NELSON,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, District
Judge. (CA-04-1274-1)
Argued: February 2, 2006 Decided: April 19, 2006
Before MOTZ, TRAXLER, and DUNCAN, Circuit Judges.
Affirmed in part, reversed in part, and remanded by unpublished per
curiam opinion.
ARGUED: Raymond Donald Battocchi, GABELER, BATTOCCHI, GRIGGS &
POWELL, P.L.L.C., McLean, Virginia, for Appellant. Matthew Allan
Ranck, ECCLESTON & WOLF, P.C., Washington, D.C., for Appellee. ON
BRIEF: Tracie N. Wesner, ECCLESTON & WOLF, P.C., Washington, D.C.,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellant Timothy R. Ranney appeals from the order of the
district court dismissing his action against Appellee Priscilla D.
Nelson for professional malpractice and conspiracy. We affirm in
part, reverse in part, and remand.
I.
In July 2000, Ranney’s wife Carol began individual therapy
sessions with Nelson, a licensed professional counselor. On a
number of occasions, Ranney also joined Carol for therapy sessions
with Nelson. Ranney alleges that during this time, while Carol was
alone with Nelson, Nelson learned that Carol had been married four
times prior to marrying Ranney–-a fact of which Ranney was unaware
at the time he married Carol. Ranney alleges further that Carol
told Nelson that Ranney “would not have married [her] had he known
about her four prior marriages,” and directed Nelson not to
disclose this information to Ranney “because if he learned of them
he would promptly separate from Carol, and she would not receive
any of [Ranney’s] separate property.” J.A. 6. Prior to marrying
Carol, Ranney received substantial stock options in Network
Solutions, Inc., his employer, and Ranney alleges that proceeds
from these stock options account for the majority of the $6.3
million he earned during the marriage. In September 2000, Nelson
informed Ranney that she could no longer counsel him as a patient;
2
however, Carol’s therapy with Nelson continued on an individual
basis. Ultimately, according to Ranney, despite the joint and
individual therapy sessions with Nelson, his marriage to Carol
continued to deteriorate until April 2002, when they separated.
Carol subsequently filed an action for divorce in Fairfax County,
Virginia, and Carol identified Nelson as a potential witness on her
behalf. Ranney alleges that Nelson routinely took handwritten
notes during the individual and joint sessions. During divorce
proceedings, Ranney obtained Nelson’s purported joint therapy
session notes pursuant to a subpoena. Ranney alleges, however,
that the typewritten notes produced by Nelson were fabricated and
that Nelson shredded her original notes, which were handwritten,
immediately before complying with the subpoena. Ranney asserts
further that the Commissioner in Chancery determined that Nelson
destroyed her original handwritten notes and produced redacted,
typewritten notes. Ultimately, “all of the assets that were
purchased with proceeds from the sale of stock options . . . [were
classified] as marital . . . property.” Ranney v. Ranney, 608
S.E.2d 485, 493 (Va. Ct. App. 2005).
As the divorce proceedings wound down, Ranney began a series
of three civil actions against Carol and Nelson. In March 2003,
Ranney filed a civil suit in Virginia state court against Carol,
alleging fraud in the inducement of marriage and defamation of
character. The primary factual allegation was that Carol falsely
3
told Ranney that she had been married only once before. In
November 2003, Ranney brought another civil action in the Circuit
Court for Fairfax County -- this time naming both Nelson and Carol
as defendants. Ranney asserted five claims against Nelson: (1)
that Nelson violated the Virginia Consumer Protection Act, see Va.
Code Ann. § 59.1-200.14; (2) that Nelson breached a general legal
duty to produce genuine documents pursuant to the subpoena issued
by Ranney in the divorce proceedings; (3) that Nelson fraudulently
concealed her genuine session notes during the divorce proceedings;
(4) that Nelson breached professional duties owed to Ranney as his
licensed therapist and therefore committed malpractice; and (5)
that Nelson engaged in a conspiracy with Carol to produce false
documents and conceal genuine documents. Nelson filed a general
demurrer to all counts asserted by Ranney, which the court
sustained except as to the cause of action for professional
malpractice. The court granted Ranney leave to replead the
malpractice cause of action in accordance with the technical
requirements of Va. Code § 8.01-271.1.
In October 2004, while the malpractice claim was still pending
in state court, Ranney brought the present action against Nelson in
federal court. Ranney’s federal action includes claims for “injury
to property and property interests,” “continuing malpractice and
concealment,” and “conspiracy to injure property.” J.A. 9-11.
Ranney premised these claims on the theory that Nelson had a duty,
4
as his counselor, to inform him or to “strongly urge Carol to
inform” Ranney of the undisclosed prior marriages, or to terminate
further services to either spouse if Carol refused to do so,
because “Nelson was in a conflict of interest position.” J.A. 6.
Ranney contends that had Nelson properly discharged her
professional duty, he would have ended his marriage to Carol sooner
which, in turn, would have “reduc[ed] the estate from which Carol
could claim an interest by virtue of the marriage.” J.A. 7. The
factual predicate for these claims, in contrast to Ranney’s claims
against Nelson in state court, began with Nelson’s alleged
misconduct during the summer of 2000 when Ranney and Carol were
both receiving counseling from Nelson. Ranney’s previous claims
against Nelson in state court focused only on Nelson’s conduct
during the divorce proceedings in 2003.
The district court dismissed the “injury to property” and
“continuing malpractice” claims on statute of limitations grounds,
and dismissed the “conspiracy to injure property” claim as well
based on principles of res judicata. Ranney appeals, contending
that the district court applied the wrong statute of limitations
and therefore erroneously dismissed the malpractice and injury to
property claims as time-barred. He also challenges the district
court’s application of res judicata to the conspiracy count.
5
II.
Virginia law imposes a general two-year limitations period for
bringing actions for personal injuries: “Unless otherwise provided
in this section or by other statute, every action for personal
injuries, whatever the theory of recovery, . . . shall be brought
within two years after the cause of action accrues.” Va. Code Ann.
§ 8.01-243.A. By contrast, Virginia law imposes a more generous
five-year limitations period for the filing of an action alleging
“injury to property,” Va. Code Ann. § 8.01-243.B, such as
diminution of property value caused by the operation of a nearby
industrial plant. See Adams v. Star Enters., 851 F. Supp. 770, 771
(E.D. Va. 1994). When the claim arises from duties rooted in a
written contract, the applicable limitations period is five years.
See Va. Code Ann. § 8.01-246.2. In an action based upon an oral
contract, the limitations period is three years. See Va. Code Ann.
§ 8.01-246.4. For most causes of action under Virginia law, the
limitations period begins to run when the defendant commits the
wrong as opposed to when the wrong is or should have been
discovered. See Va. Code Ann. § 8.01-230 (“[T]he right of action
shall be deemed to accrue and the prescribed limitations period
shall begin to run from the date the injury is sustained in the
case of injury to the person or damage to property . . . .”).
The district court determined that the two-year limitations
period for personal injuries applied to both Ranney’s claim for
6
“injury to property” and his claim for malpractice. The district
court concluded that, because both claims were premised on Nelson’s
alleged breach of her duties to Ranney, both causes of action
should be characterized as personal injury claims. With respect to
the “injury to property” claim, the district court explained that
the essence of Ranney’s claim was that Nelson breached duties she
owed him -- resulting in a personal injury -- not that she injured
his property. Because Nelson’s alleged misconduct occurred well
over two years before Ranney filed this action, the district court
concluded the claim was time-barred. As for Ranney’s “continuing
malpractice” claim, the district court treated it as one for
medical malpractice, which falls within the two-year period
applicable to personal injury claims. See Castillo v. Emergency
Medicine Assocs., 372 F.3d 643, 646 (4th Cir. 2004). The district
court also afforded Ranney the benefit of the one-year extension
that Virginia law permits when “fraud, concealment or intentional
misrepresentation prevented discovery of the injury within the two-
year period” for filing a medical malpractice claim. Va. Code Ann.
§ 8.01-243.C.2. Nevertheless, the district court held that
Ranney’s claim was time-barred because Ranney “discovered the
injury in May 2003 when he received a copy of [Nelson]’s notes” but
did not file his complaint until October 22, 2004. J.A. 104.
On appeal, Ranney argues that the district court applied the
wrong statute of limitations. In Ranney’s view, the appropriate
7
limitations period for both of these claims is the five-year period
prescribed for claims alleging injury to property. See Va. Code
Ann. § 8.01-243.B. First, Ranney suggests that his “injury to
property” claim is properly characterized, as Nelson’s alleged acts
and omissions caused him to lose substantial proceeds from his
stock options in the divorce. We cannot agree. The mere fact that
Ranney characterized his claim as one for injury to property does
not control our analysis for purposes of identifying the
appropriate statute of limitations. It is “the object of the
litigation and not its form [that] determines the applicability of
a statute of limitations.” Richmeade, L.P. v. City of Richmond,
594 S.E.2d 606, 608-09 (Va. 2004). Section 8.01-243.B applies when
the alleged wrongdoing was “aimed at the property” itself. Id. at
609. Ranney, however, seeks to recover based on Nelson’s alleged
breach of duty to him individually; the resulting loss of property
he alleges merely flows as a consequence of his alleged injury.
See Pigott v. Moran, 341 S.E.2d 179, 182 (Va. 1986); see also Brown
v. Am. Broad. Co., 704 F.2d 1296, 1303 (4th Cir. 1983) (applying
the two-year personal injury statute where the “injury to property”
claim asserted nothing more than “an indirect or consequential
injury” flowing from an alleged personal injury).
Nelson urges us to affirm the district court’s conclusion that
Ranney’s claims are time-barred; however, Nelson suggests that the
appropriate limitations period is the three-year period that
8
applies to actions based on unwritten contractual duties. See Va.
Code Ann. § 8.01-246.4. As the district court correctly observed,
both claims are premised upon the alleged breach of duties that
Nelson owed Ranney as his therapist, regardless of Ranney’s
characterization of the claims. Thus, Nelson contends, the duties
she allegedly breached arose, if at all, as a matter of contract or
agreement between counselor and client. Nelson points out that
Ranney does not allege that she breached any duty arising as a
matter of law, and in that respect Ranney’s claim (for statute of
limitations purposes) is much like one for legal malpractice. In
contrast to medical malpractice actions, professional malpractice
actions under Virginia law typically fall within the limitations
period applicable to contract actions. Compare Boone v. C. Arthur
Weaver Co., 365 S.E.2d 764, 766 (Va. 1988) (“[T]he contract statute
of limitations applies to an action to recover for the professional
negligence of an attorney, despite the fact that the motion for
judgment was framed in tort.”) with Castillo, 372 F.3d at 646.
We agree with the district court that Ranney’s allegations do
not state an “injury to property” for purposes of determining the
applicable limitations period. We need not decide, however,
whether the claims at bar are technically more akin to claims for
medical malpractice or breach of contract. In either case,
Ranney’s claims are time-barred. If we classify Ranney’s complaint
as asserting a cause of action for medical malpractice, his claims
9
are time-barred for the reasons stated by the district court in its
order of dismissal. Alternatively, Ranney’s claims are likewise
barred by the three-year limitations period applicable to claims
based on oral contracts. See Va. Code Ann. § 8.01-246(4).
Accordingly, we affirm the order of the district court to the
extent it dismisses Ranney’s “injury to property” and “continuing
malpractice” claims on statute of limitations grounds.
III.
The district court dismissed Ranney’s conspiracy claim on res
judicata grounds. Under Virginia law, “[t]he doctrine of res
judicata precludes parties from relitigating the same cause of
action when a valid, final judgment was previously entered.”
Scales v. Lewis, 541 S.E.2d 899, 901 (Va. 2001). A party seeking
to raise res judicata as a defense to a claim must establish: (1)
“identity of the remedy sought;” (2) “identity of the cause of
action”; “(3) identity of the parties;” and (4) “identity of the
quality of the persons for or against whom the claim is made.”
Davis v. Marshall Homes, Inc., 576 S.E.2d 504, 506 (Va. 2003).
Thus, under Virginia law, “res judicata only applies if the cause
of action a plaintiff asserts in the pending proceeding is the same
as the cause of action asserted in the former proceeding.” Id.The Virginia Supreme Court has explained, furthermore, that “[f]or
the purposes of res judicata, a cause of action may be defined
10
broadly as an assertion of particular legal rights which have
arisen out of a definable factual transaction.” Allstar Towing,
Inc. v. City of Alexandria, 344 S.E.2d 903, 905-06 (Va. 1986)
(internal quotation marks omitted).
Because the conspiracy claim alleged in Ranney’s federal
complaint appears to encompass conduct distinct from and occurring
prior to the conspiracy claim alleged in state court, we are unable
to conclude that the identity of the causes of action has been
established. Ranney’s federal conspiracy claim alleges that
“[b]eginning in or about 2000, and continuing to the present,
Nelson undertook and conspired with Carol to allow Carol to acquire
and spend Ranney’s property, and capture as much of it as possible
in a divorce case. Nelson also conspired with Carol to conceal her
malpractice from [Ranney].” J.A. 11. The factual predicate for
this claim involves Nelson’s actions during or near the time of the
joint therapy sessions in 2000. The prior conspiracy claim
disposed of by the state court focused on Nelson’s alleged
destruction or fabrication of facts and evidence during court
proceedings in 2003. Although both claims rest on a factual
predicate that is related in terms of subject matter, they do not
arise from the same factual transaction.
Accordingly, we conclude that Ranney’s conspiracy cause of
action is not barred by the doctrine of res judicata. We take no
position as to the viability of this claim otherwise.
11
IV.
For the reasons stated above, we affirm the dismissal of
Ranney’s claims for “injury to property” and “continuing
malpractice” as time-barred. We reverse the district court’s
application of res judicata to Ranney’s conspiracy claim, and
remand it to the district court for further proceedings.
AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED
12