Kirin Brewery of America, LLC v. Virginia Imports, Ltd.

COURT OF APPEALS OF VIRGINIA
Present: Judges Kelsey, Petty and Senior Judge Fitzpatrick
Argued at Alexandria, Virginia
VIRGINIA IMPORTS, LTD.
v. Record No. 2400-06-4
KIRIN BREWERY OF AMERICA, LLC AND
VIRGINIA ALCOHOLIC BEVERAGE
CONTROL BOARD OPINION BY
JUDGE D. ARTHUR KELSEY
KIRIN BREWERY OF AMERICA, LLC SEPTEMBER 18, 2007
v. Record No. 2464-06-4
VIRGINIA IMPORTS, LTD. AND
VIRGINIA ALCOHOLIC BEVERAGE
CONTROL BOARD
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jane Marum Roush, Judge
Walter A. Marston, Jr. (Kevin R. McNally; Reed Smith LLP, on
briefs), for Virginia Imports, Ltd.
Warwick R. Furr, II (Thomas M. Brownell; Holland & Knight LLP,
on briefs), for Kirin Brewery of America, LLC.
Carla R. Collins, Assistant Attorney General (Robert F. McDonnell,
Attorney General; Francis S. Ferguson, Deputy Attorney General, on
brief), for the Virginia Alcoholic Beverage Control Board.
These consolidated appeals arise out of a franchisor-franchisee dispute governed by the
Beer Franchise Act, Code §§ 4.1-500 to 4.1-517. Like most other franchise statutes, the Beer
Franchise Act grants franchisees legal rights beyond those consensually conferred by the
franchise agreement. Among those statutory rights is a prohibition on breweries “unilaterally”
terminating the agreement without proper “notice” under Code § 4.1-506 and “good cause”
under Code § 4.1-505. Disputes over the notice and good cause requirements are resolved, at
least in the first instance, by the Virginia Alcoholic Beverage Control Board. Appeals of the
ABC Board’s rulings proceed under the Administrative Process Act, Code § 2.2-4000 et seq.,
first to the circuit court and then to the appellate courts.
This particular dispute has run its full course once already. In Virginia Imports, Ltd. v.
Kirin Brewery of America, LLC, 41 Va. App. 806, 589 S.E.2d 470 (2003) (Virginia Imports I),
we reversed in part and remanded the circuit court’s ruling which, in turn, had reversed the ABC
Board’s ruling. On remand from Virginia Imports I, the circuit court referred the continuing
dispute to the ABC Board for further proceedings consistent with our opinion. The ABC Board
rendered another decision; both sides appealed the ABC Board’s decision to the circuit court;
and both sides have appealed the circuit court’s decision to us.
We now affirm.
I.
Kirin Brewery of America, LLC had a distributor agreement with Virginia Imports,
Limited, a Virginia beer wholesaler, for over twenty years. Kirin notified Virginia Imports in
1999 of its intent to terminate the agreement because Virginia Imports allegedly had failed to
comply with Kirin’s policy of beer freshness, improperly sold Kirin beer outside the contractual
sales territory, and exhibited substandard sales and service performance. As required by the Beer
Franchise Act, Kirin sent a copy of the termination notice to the ABC Board. See Code
§ 4.1-506(A). According to statute, the notice had to be given at least 90 days prior to Kirin’s
“intended” termination. Id.
The Beer Franchise Act allowed the wholesaler-franchisee, Virginia Imports, to render
the brewery’s termination notice “void and without legal effect” by curing the conditions
supporting the notice and by giving a written response to the termination notice letter within 60
days with a copy of the response letter mailed to the ABC Board. See Code § 4.1-506(B).
Virginia Imports sent Kirin its response letter a day after the expiration of the 60-day deadline
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but neglected to send a copy to the ABC Board. Kirin, however, requested a hearing seeking a
determination from the ABC Board that it had good cause to terminate the agreement.
The Secretary of the ABC Board, unaware that Virginia Imports had responded (albeit a
day late) to Kirin’s termination notice, wrote Kirin a letter. “Our records indicate,” the Secretary
advised Kirin, that “your company gave notice to Virginia Imports, Ltd., of your intent to
terminate your agreement” with Virginia Imports. “More than ninety days have now passed
since that notice, and we have received neither a notice from the wholesaler that it has taken
action to rectify the conditions constituting the reason for the termination, nor a request for a
hearing on the issue of reasonable cause.” As a consequence, the Secretary concluded, the
agreement “was effectively terminated” ninety days after Kirin’s termination notice. The
Secretary ended his letter with the assurance that “Kirin is free to appoint other distributors” in
place of Virginia Imports.
The day after receiving the Secretary’s letter, Kirin entered into a new franchise
agreement with another distributor. Kirin did not notify the ABC Board of Virginia Imports’s
response letter. Nor was Virginia Imports informed of its mistake in not sending a copy of its
response letter to the ABC Board.
After receiving the Secretary’s letter, Virginia Imports requested reinstatement of the
distributor agreement based upon the mistake. The ABC Board refused to reinstate the franchise
but held nonetheless that no good cause justified Kirin’s termination of the agreement. Based on
that finding, the ABC Board ordered Kirin to compensate Virginia Imports for the value of the
terminated agreement. See Code § 4.1-508(A) (authorizing monetary remedies in addition to
reinstatement). Finding Kirin to have acted in “bad faith,” the ABC Board also ordered Kirin to
pay Virginia Imports’s attorney fees. See Code § 4.1-509.
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Kirin appealed to the circuit court pursuant to the Virginia Administrative Process Act,
Code § 2.2-4026. In a cascading series of alternative rulings, the circuit court held first that the
ABC Board had no authority to decide the case. It lacked authority because Virginia Imports
failed to mail its response letter to the ABC Board within 60 days or to request a hearing within
90 days as the notice statute required. That procedural default, the circuit court held, precluded
the ABC Board from adjudicating any aspect of the dispute.
“Even if the Board were authorized to adjudicate the matter,” the circuit court further
held, it “erred in determining that Kirin terminated the agreement.” Kirin Brewery of Am., LLC
v. Va. Imps, Ltd., 60 Va. Cir. 151, 157-58 (Fairfax County 2002) (emphasis added). The
franchise was “terminated by operation of law,” id., the court stated, just as the Secretary’s letter
implied. “Kirin itself did not terminate or cancel its agreement with Virginia Imports,” id., the
court concluded.
“Even if Kirin had terminated” the agreement, the circuit court again held in the
alternative, the administrative record did not support the ABC Board’s determination that no
good cause existed to terminate the agreement. Id. at 158 (emphasis added). The court found
that the ABC Board’s decision focused only on one good-cause allegation (the stale-beer
complaint) and ignored the other grounds Kirin asserted in its notice of termination.
Finally, the circuit court rejected the ABC Board’s award of attorney fees. The record,
the court stated, could not support the conclusion that Kirin acted in bad faith because Kirin
merely relied on the Secretary’s letter, which correctly spoke of the distributor agreement being
“effectively terminated” as a matter of law. Kirin’s reliance on the Secretary’s letter, the court
reasoned, could not be characterized as bad faith.
Virginia Imports appealed. A panel of this Court held that Virginia Imports’s “failure to
mail a copy of its cure notice to the ABC Board under Code § 4.1-506(B) or request a hearing
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under Code § 4.1-506(D)” created no jurisdictional defect divesting the ABC Board of
jurisdiction. Virginia Imports I, 41 Va. App. at 826, 589 S.E.2d at 480. The panel agreed with
the circuit court that the ABC Board erred by addressing only one of Kirin’s purported causes for
termination (the stale-beer allegation). The panel concluded, however, that the proper remedy
was for the circuit court to remand the case back to the ABC Board for consideration of the other
good-cause grounds asserted by Kirin. Id. at 831-32, 589 S.E.2d at 482-83. Finally, on the issue
of attorney fees, the panel affirmed the circuit court’s holding that Kirin did not act in bad faith
in terminating the distributor agreement.
The panel’s ruling briefly addressed the circuit court’s alternative holding that Kirin
never terminated the agreement because it was extinguished by operation of law. The subject,
however, came up only in the portion of the opinion addressing the ABC Board’s authority to
examine Kirin’s good-cause reasons for issuing its termination notice. As the panel noted:
Kirin argues the circuit court correctly held that, because Virginia
Imports failed to comply with the mailing requirement of Code
§ 4.1-506(B) or request a hearing under Code § 4.1-506(D), the
distributorship agreement between Kirin and Virginia Imports
ended by operation of law ninety days after Kirin sent its August 3,
1999 termination letter to Virginia Imports. Thus, Kirin argues,
the ABC Board did not have authority to hold hearings and render
a decision in this case.
Virginia Imports I, 41 Va. App. at 820, 589 S.E.2d at 477 (emphasis added).
Rejecting this thesis, the panel overturned the circuit court’s principal holding that the
ABC Board lacked authority to adjudicate the good-cause issue and ordered the ABC Board on
remand to examine the good-cause grounds asserted by Kirin that had not been previously ruled
upon in the administrative process. The panel opinion defines the scope of the remand this way:
Accordingly, we . . . remand this matter to the circuit court for
remand to the ABC Board with instructions to consider, upon the
existing evidentiary record, all of the deficiencies asserted by Kirin
in its August 3, 1999 letter, except the deficiency already
addressed and ruled upon relating to Kirin’s freshness policy, and
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to determine with respect to each of those previously unaddressed
deficiencies whether Kirin satisfied its burden of proving it had
good cause to terminate the subject distributorship agreement.
Virginia Imports I, 41 Va. App. at 831-32, 589 S.E.2d at 482-83 (emphasis added). The
conclusion of the opinion repeated the limited scope of the remand: “In sum, we . . . remand the
case to the circuit court for remand to the ABC Board for further proceedings consistent with this
opinion.” Id. at 834-35, 589 S.E.2d at 484. Similarly, the mandate stated that “this matter is
remanded to the trial court for remand to the ABC Board for further proceedings consistent with
the views expressed in the written opinion of this Court.” (Emphasis added.)
Seeking an en banc as well as a panel rehearing, Kirin asserted the panel overlooked the
operation-of-law termination point. Because it could be liable only for unilaterally terminating
the agreement (and not for being a mere bystander to a termination by operation of law), Kirin
claimed the panel’s decision ordered a futile evidentiary remand. “Because Kirin did not
terminate the agreement,” Kirin argued, “regardless of cause, there is nothing for the ABC Board
to adjudicate.” Kirin’s Pet. for Reh’g at 4-5 (No. 2751-02-4). Both the en banc Court and the
panel declined to rehear the appeal. 1
About the same time as the panel decision and the denial of Kirin’s rehearing request, the
United States District Court for the Eastern District of Virginia issued a ruling in a fraud suit
filed by Virginia Imports against Kirin arising out of the same distributor termination episode.
See Virginia Imps, Inc. v. Kirin Brewery of Am. LLC, 296 F. Supp. 2d 691 (E.D. Va. 2003).
The district court granted summary judgment to Kirin, finding the applicable statute of
limitations barred Virginia Imports’s fraud allegations.
1
In Virginia Imports I, Kirin’s appellate brief couched the termination by operation of
law argument as a rationale for why the ABC Board had no authority to hear the case — not as
an alternative holding which, by itself, mooted all other issues. The panel answered the
argument exactly as Kirin presented it on brief.
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On remand to the circuit court, Kirin objected to any further remand to the ABC Board,
claiming the circuit court’s prior ruling (that Kirin did not unilaterally terminate) survived the
appellate panel’s decision. That undisturbed circuit court ruling, Kirin contended, mooted every
issue in the case and rendered any further remand illusory. As Kirin put it to the circuit court:
“Because Kirin did not terminate the agreement (regardless of whether it had ‘good cause’ to do
so), there is nothing for the ABC Board to adjudicate. In fact, it is precluded from doing so by
law of the case, and any decision to the contrary would be reversible error.” Kirin’s Mot. to
Dismiss/Plea in Bar Br. at 10. Kirin’s argument, in other words, was that the law-of-the-case
doctrine has the anomalous effect of requiring the circuit court to disobey the panel’s mandate in
Virginia Imports I.
Kirin also argued the federal district court’s summary judgment order barred any further
litigation over the entire dispute. The fraud claim and the statutory action under the Beer
Franchise Act, Kirin claimed, were essentially the same. Asserting claim preclusion principles
of res judicata, Kirin contended the federal district court’s statute-of-limitations ruling barred
both the circuit court and the ABC Board from exercising any further jurisdiction.
The circuit court nonetheless remanded the case to the ABC Board for further
proceedings as directed by the Virginia Imports I mandate. On remand, the ABC Board
reviewed Kirin’s evidence of good cause and found (as it had already with respect to the stale-
beer allegation) none of it convincing. The ABC Board, however, refused to address the
question of bad faith and thus declined to make an award of attorney fees — reasoning that
Virginia Imports I had ended any further inquiry into that issue. On appeal to the circuit court,
the ABC Board’s decision was upheld despite Kirin’s continued assertion that the case should
have never been remanded to the ABC Board in the first place.
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Kirin now appeals the circuit court’s decision affirming the ABC Board’s finding that
Kirin did not have good cause to terminate the distributor agreement. Virginia Imports appeals
the circuit court’s decision affirming the ABC Board’s refusal to award attorney fees against
Kirin for bad faith. We consolidated both appeals for purposes of oral argument and decision.
II.
A. KIRIN’S APPEAL OF NO-GOOD-CAUSE-TERMINATION HOLDING
Kirin challenges the circuit court’s affirmance of the ABC Board’s finding that Kirin
terminated the agreement without good cause. For three reasons, Kirin argues, we should
reverse this finding:
(i) The circuit court was right all along — Kirin did not unilaterally terminate
the agreement; that happened by operation of law. Because Virginia
Imports I did not address this issue, the law-of-the-case doctrine required
the circuit court to either disobey the remand mandate or, failing that, to
reverse the ABC Board for deciding the case against Kirin on remand.
(ii) The Beer Franchise Act, Code § 4.1-517(B), implies in law a
“reasonableness” qualification on “every term and provision” of the
distributor agreement. The ABC Board’s decision, affirmed by the circuit
court, violated this provision.
(iii) Under claim preclusion principles of res judicata, the federal district
court’s summary judgment in the fraud action barred any remand
proceedings before the ABC Board and precludes any award against Kirin
under the Beer Franchise Act.
We find no legal merit in any of these arguments.
(i) Unilateral Termination & Law of the Case
Kirin’s first argument employs this tiered syllogism: The circuit court previously held
(as one of its three alternative holdings) that Kirin did not unilaterally terminate the distributor
agreement — that happened by operation of law. Virginia Imports did not appeal that specific
issue, choosing instead only to contest the circuit court’s other two holdings. Virginia Imports I
thus never ruled on the point, making the circuit court’s ruling binding law of the case. Thus, the
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ultimate conclusion: Because Kirin did not unilaterally terminate the distributor agreement, it
does not matter whether Kirin had good cause to do something it never did. 2
The problem with Kirin’s argument is that, if true, it proves too much. If law of the case
precludes us from doing anything other than reversing the circuit court and entering final
judgment in Kirin’s favor, then, for exactly the same reason, it would have precluded Virginia
Imports I from issuing a wholly meaningless mandate requiring the ABC Board to further
examine Kirin’s allegations of good cause. To be sure, if Kirin were right, Virginia Imports I
would have stated that the whole termination dispute is simply beside the point because the
circuit court held Kirin never terminated the distributor agreement and Virginia Imports never
challenged that holding.
For the same reason, if the law-of-the-case doctrine precluded the circuit court from
remanding the case to the ABC Board (as Kirin argued below), then the circuit court would have
had no option but to disobey our mandate — an appellate order specifically directing the circuit
court to remand the case to the ABC Board. Circuit courts have no such authority. “A trial court
has no discretion to disregard our lawful mandate. When a case is remanded to a trial court from
an appellate court, the refusal of the trial court to follow the appellate court mandate constitutes
reversible error.” Rowe v. Rowe, 33 Va. App. 250, 258, 532 S.E.2d 908, 912 (2000). 3
The mandate rule, itself an application of the law-of-the-case doctrine, forecloses further
litigation of “issues expressly or impliedly decided by the appellate court.” United States v. Bell,
5 F.3d 64, 66 (4th Cir. 1993). Even read in the most critical light, Virginia Imports I at least
“impliedly decided,” id., against Kirin on its termination-by-operation-of-law argument and
2
We agree with Kirin as to the proper interpretation of the circuit court’s alternative
holding. See supra at 4. It was not, as the circuit court later described it, a mere dictum taken
out of context by Kirin.
3
We acknowledge exceptions exist to this rule. See generally Invention Submission
Corp. v. Dudas, 413 F.3d 411, 414-15 (4th Cir. 2005). None apply in this case, however.
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similarly rejected the circuit court’s alternative holding on this ground. The law-of-the-case
doctrine, especially its mandate rule iteration, defeats rather than supports Kirin’s position.
For similar reasons, we do not read the text of Virginia Imports I to be as indifferent to
Kirin’s termination-by-operation-of-law argument as Kirin asserts. It is true, we admit, that
Virginia Imports I did not include a separate section in its analysis devoted solely to the circuit
court’s alternative holding that Kirin did not terminate the agreement. It is untrue, however, that
Virginia Imports I wholly ignored the issue. As previously noted, the panel opinion addressed
Kirin’s argument as one of the grounds supporting Kirin’s conclusion (accepted by the circuit
court and adopted as its principal holding) that the ABC Board had no authority to address the
termination dispute in the first place. The panel opinion necessarily rejected Kirin’s assertion
that it had not terminated the agreement by reversing the circuit court on this point and ordering
the court to remand the case to the ABC Board for further consideration of Kirin’s good-cause
allegations.
It strikes us as perfectly understandable that Virginia Imports I would summarily reject
(even if it did not more directly address) Kirin’s assertion that “the ABC Board (not Kirin)
effected the termination of the distribution agreement between Kirin and Virginia Imports.”
Kirin’s Opening Br. at 2 (No. 2464-06-4). The ABC Board does not terminate agreements; it
merely approves or disapproves terminations initiated by breweries. See generally 5 Gladys
Glickman, Franchising § 4(C) (2007) (stating the Virginia ABC Board “has the responsibility of
determining whether the termination provision of the statute has been violated”). Nor does the
Beer Franchise Act terminate agreements by operation of law. Nothing in the statute suggests
that distributor agreements automatically terminate of their own accord. The statute merely
authorizes breweries to terminate if they can satisfy certain conditions. If the ABC Board
Secretary’s letter could be fairly understood to suggest otherwise, it was simply mistaken.
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Kirin “unilaterally” terminated the distributor agreement, as that term is used in Code
§ 4.1-505, when it issued a termination notice and later (after receiving the Secretary’s letter)
treated the distributor agreement as a nullity. In the context of the Beer Franchise Act, the word
“unilateral” simply means the act of one — as opposed to both — of the contracting parties. The
term excludes bilateral terminations because they represent the consensual action of each of the
contracting parties, thus mooting any need for an elaborate administrative process to protect the
franchisee’s right to object to terminations lacking good cause. 4
(ii) The Implied Contractual Duty of Reasonableness
Kirin’s second argument claims the ABC Board’s decision violates “the statutory
requirement of ‘reasonableness.’” Kirin’s Opening Br. at 22 (No. 2464-06-4). We agree the
Beer Franchise Act rests upon the animating prop of reasonableness, both as a discrete
requirement for each contractual term, Code § 4.1-517(B), and as a limitation on any damage
award, Code § 4.1-508. Indeed, the good cause requirement for termination is itself an
adaptation of objective principles of reasonableness. See generally United States v. Myers, 294
F.3d 203, 206 (1st Cir. 2002) (noting good cause “depends on objective reasonableness”); see
also Umbarger v. Virginia Employment Comm’n, 12 Va. App. 431, 435, 404 S.E.2d 380, 383
(1991) (holding that courts “must first apply an objective standard to the reasonableness” of an
employee’s actions in order to assay “good cause”).
4
We are unpersuaded by Kirin’s citation to Roman v. Dep’t of Corrections, 808 A.2d 304
(Pa. Commw. Ct. 2002), and Miller v. Hedlund, 813 F.2d 1344 (9th Cir. 1987). Roman
recognized that a party required by statute to do a certain act cannot be said to “unilaterally”
have done it. See Roman, 808 A.2d at 310. We fail to see the relevance of that point here.
Neither the Beer Franchise Act nor the ABC Board Secretary’s letter required Kirin to terminate
the distributor agreement. At no point did Kirin lose the legal capacity to withdraw its
termination notice or to continue its contractual relationship with Virginia Imports. Miller
provides even less support for Kirin’s assertion, as it recognized that a party could be “compelled
to comply unilaterally.” Miller, 813 F.2d at 1350-51 (contrasting “unilateral” versus “concerted”
activity under antitrust law). We need not accept or reject the reasoning of either case, however,
because the Beer Franchise Act does not codify any notion of compulsory termination.
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Kirin reasons that, because Virginia Imports I found Kirin did not act in bad faith and
thus could not be punished with an award of attorney fees, by that same logic Kirin cannot be
found to have terminated the distributor agreement without good cause. To us, this argument
does not follow. Code § 4.1-509 authorizes an award of attorney fees against a party that “has
acted in bad faith” in violating any provision of the Beer Franchise Act. One such provision is
the termination provision, which requires that the party terminating the agreement do so only for
“good cause” under Code § 4.1-505. Bad faith means more than merely the absence of good
cause. A franchisor can rely on a bad cause for terminating an agreement but still act in good
faith. Virginia Imports I adopted just that conclusion when it held Kirin’s reliance on the ABC
Board’s letter precluded a finding of bad faith but nonetheless remanded the case for further
review of Kirin’s allegations of good cause in its termination notice.
(iii) Res Judicata — Claim Preclusion
Finally, we need not examine Kirin’s res judicata argument in any detail. 5 A sufficient
reason, dispositive in itself, is that the federal district court had no subject-matter jurisdiction to
adjudicate the Beer Franchise Act statutory claim. 6 That claim can only be asserted before the
ABC Board with further adjudicatory review reserved solely for the state courts under the
Virginia Administrative Process Act. Unlike issue preclusion, a topic Kirin does not raise on
5
The point should be distinguished from the “primary jurisdiction” doctrine, which
authorizes a court to defer to certain agency adjudications. See The Country Vintner, Inc. v.
Louis Latour, Inc., 272 Va. 402, 411, 634 S.E.2d 745, 750 (2006). That doctrine has no
application to this appeal.
6
Under settled principles, the “effect of a final decree is not only to conclude the parties
as to every question actually raised and decided, but as to every claim which properly belonged
to the subject of litigation and which the parties, by the exercise of reasonable diligence, might
have raised at the time.” Smith v. Holland, 124 Va. 663, 666, 98 S.E. 676, 676 (1919) (emphasis
added). This could-have-litigated-should-have-litigated principle applies to the narrow “same
evidence” test employed by Davis v. Marshall Homes, Inc., 265 Va. 159, 166, 576 S.E.2d 504,
507 (2003), and to the broader transactional approach adopted by Rule 1:6 (promulgated to
supersede the holding in Davis, Kent Sinclair, Guide to Virginia Law & Equity Reform and
Other Landmark Changes § 11.01 et seq., at 245 (2006)).
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appeal, claim preclusion can never apply when the ostensibly barred claim falls outside the
subject-matter jurisdiction of the tribunal and thus could not have been adjudicated in the prior
action. See Lloyd v. Am. Motor Inns, Inc., 231 Va. 269, 271, 343 S.E.2d 68, 69 (1986); see
generally Restatement (Second) of Judgments § 26(1)(c) (1982).
In sum, we find no merit in the three arguments advanced by Kirin against the circuit
court’s decision to affirm the ABC Board’s finding that Kirin terminated the distributor
agreement without good cause.
B. VIRGINIA IMPORTS’S APPEAL OF BAD-FAITH HOLDING
Virginia Imports asserts on appeal that the ABC Board and the circuit court both
mistakenly ruled that Virginia Imports I precluded any further litigation over Kirin’s alleged bad
faith and thus unfairly precluded Virginia Imports from renewing its request for an award of
attorney fees. Though Virginia Imports I affirmed the circuit court’s reversal of the ABC
Board’s prior bad faith finding, Virginia Imports argues, the panel also remanded the case for
further factfinding on good cause. As a consequence, Virginia Import reasons, the panel
likewise contemplated within its mandate that the ABC Board would revisit the issue of bad faith
on any ground found to be insufficient good cause for termination on remand.
Virginia Imports’s argument is the inverse of the point made earlier by Kirin, when it
argued that the panel’s conclusion that Kirin did not act in bad faith necessarily meant it
terminated the agreement with good cause. Once again, we see the concepts as related but
analytically distinct. Virginia Imports I held Kirin did not act in bad faith and thus could not be
liable for attorney fees. The affirmance was unqualified. It did not figure into the panel’s
remand instructions or its mandate. The only way the bad-faith topic could be considered an
open issue is if it could be viewed as necessarily implied in the panel’s remand of the good-cause
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issue. We find no such implication and, thus, affirm the interpretation of Virginia Imports I
made by the ABC Board and circuit court.
Virginia Imports finds our reasoning inconsistent with Virginia Power v. Westmoreland-
LG&E Partners, 259 Va. 319, 323, 526 S.E.2d 750, 753 (2000), which states: “As explained in
Nassif v. Bd. of Supervisors of Fairfax County, 231 Va. 472, 481, 345 S.E.2d 520, 525 (1986),
‘[w]hen we limit issues on remand we do so with words of limitation or restriction.’” We see no
such inconsistency. The scope-of-remand principle noted in Nassif applies only when an
appellant prevails on one point (thereby succeeding in obtaining an appellate reversal and
remand on this point) and the appellee seeks to raise on remand alternative reasons (never ruled
on by the trial court) for a judgment in his favor. In such cases:
Unless we say otherwise, the slate is wiped clean, with the result
that on remand the parties begin anew. It would serve no useful
purpose, we think, to require a prevailing party [the appellee] to
assign error to his failure to win on all points in order to protect his
right to a full and complete trial should his apparent victory be
reversed and the case remanded.
Nassif, 231 Va. at 480-81, 345 S.E.2d at 525.
Put another way, the Nassif principle has no application where the appellant loses on a
particular point in circuit court and the appellate court affirms the circuit court on that point,
incidentally reversing in part on some other point — which is what happened here. Virginia
Imports I stated that it “[a]ffirmed, in part, and reversed and remanded, in part.” 41 Va. App. at
835, 589 S.E.2d at 484. We affirmed without qualification “the circuit court’s ruling that the
record does not contain substantial evidence to support the ABC Board’s finding that Kirin acted
in bad faith” in terminating the agreement. Id. at 834, 589 S.E.2d at 484. The part of the case
reversed and remanded was accompanied by “instructions to consider, upon the existing
evidentiary record,” the previously unaddressed good-cause allegations. Id. at 831-32, 589
S.E.2d at 482. Having limited our reverse-and-remand mandate to this discrete topic, we left
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open no opportunity for the litigants to continue litigating issues on which the circuit court had
been unqualifiedly affirmed.
III.
The circuit court did not err in affirming the ABC Board’s final decision in this case.
Neither Kirin nor Virginia Imports has presented any legally viable reason for holding otherwise.
Affirmed.
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