Legislative Changes

Heather K. Bardot, Esquire
March 28th, 2011
By: Heather K. Bardot, Esquire

Less than a Year after Enactment, the General Assembly Amends Virginia Code Section 38.2-2206(L)

Less than a year after enacting Virginia Code Section 38.2-2206(L), which allows an underlying automobile insurer to make an irrevocable offer of settlement to a plaintiff in an effort to pass defense costs to the UM/UIM carrier, the General Assembly has amended the section. Effective July 1, 2011, the statute will read as follows:

L. If the liability insurer or insurers providing coverage to an underinsured motor vehicle owner or operator make an irrevocable offer in writing, which may be contingent upon waiver of subrogation, to pay the total amount of liability coverage available for payment with reference to a claim for property damage or bodily injury, 60 days following written notice of the offer to any insurer or insurers providing underinsured coverage that have been served pursuant to this section, the insurer or insurers providing liability coverage shall be relieved of the cost of defending the owner or operator incurred thereafter, including expenses as well as reasonable and necessary attorney fees, and the insurer or insurers providing the underinsured motorist coverage shall reimburse the liability insurer or insurers for the costs to defend the underinsured motor vehicle owner or operator to the date of the underinsured motorist insurer’s offer of its limit of coverage. The liability insurer or insurers shall nonetheless retain the duty to defend their insured. If underinsured motorist coverage is provided by more than one insurer, the cost to defend shall be assumed in the same order of priority as set forth in subsection B with regard to the payment of underinsured benefits upon the offer of each underinsured motorist insurer’s limit of coverage. This subsection, including the liability insurer’s irrevocable offer and the underinsured insurer’s liability for defense costs, shall not apply in the event of either a jury verdict being returned in an amount equal to or less than the total liability coverage available for payment or a dispositive ruling dismissing the plaintiff’s complaint, including but not limited to the plaintiff taking a voluntary nonsuit. This subsection shall not apply to costs incurred in connection with an appeal.

The effects of the amendments are: (1) An irrevocable offer may be contingent on waiver of subrogation by the UM/UIM carrier. This insures that the defendant is protected from excess exposure, a concern which previously made it difficult to utilize the statute given the ambiguity on whether an offer could be conditional and irrevocable at the same time. (2) If the plaintiff obtains a verdict less than or equal to the irrevocable offer, neither the offer nor the passing of defense costs are preserved. Instead, the underlying carrier would pay the verdict amount and be solely responsible for all defense costs it attempted to pass through to the UM/UIM carrier. (3) If the plaintiff nonsuits, the irrevocable offer is no longer in effect and the UM/UIM carrier is not obligated to pay any of the defense costs which the underlying carrier attempted to pass through by making the irrevocable offer.

Although the amendments clarify some issues which arose after passage of Virginia Code section 38.2-2206(L), there remain unanswered questions such as whether it applies to motor vehicle liability policies in effect before its initial enactment. Perhaps questions such as this will be clarified legislatively or through case law in the not too distant future.

Noteworthy Legislation Regarding Objections to Personal Jurisdiction or Defective Process Goes into Effect in Virginia on July 1, 2011
On July 1, 2011, the Virginia Code will contain a new section, 8.01-277.1 relating to personal jurisdiction. The section will state, as follows:
§ 8.01-277.1. Objections to personal jurisdiction or defective process; what constitutes waiver.

A. Except as provided in § 8.01-277, a person waives any objection to personal jurisdiction or defective process if he engages in conduct related to adjudicating the merits of the case, including, but not limited to:

1. Filing a demurrer, plea in bar, answer, counterclaim, cross-claim, or third-party claim;
2. Conducting discovery, except as provided in subsection B;
3. Seeking a ruling on the merits of the case; or
4. Actively participating in proceedings related to determining the merits of the case.
B. A person does not waive any objection to personal jurisdiction or defective process if he engages in conduct unrelated to adjudicating the merits of the case, including, but not limited to:
1. Requesting or agreeing to an extension of time;
2. Agreeing to a scheduling order;
3. Conducting discovery authorized by the court related to adjudicating the objection;
4. Observing or attending proceedings in the case;
5. Filing a motion to transfer venue pursuant to § 8.01-264 when such motion is filed contemporaneously with the objection; or
6. Removing the case to federal court.
The exception noted in paragraph (A) maintains a party’s right to challenge a defect in service or to challenge the plaintiff’s failure to serve within a year after commencement of the action by filing a timely motion. However, if a defendant goes further, i.e. by responding to the Complaint, seeking a decision on the merits, or engaging in discovery which goes to the merit of the case, any defect in process or objection to personal jurisdiction will be deemed waived.

The Jurisdiction of General District Courts in Virginia will Increase Significantly as of July 1, 2011

Effective July 1, 2011, Virginia Code section 16.1-77 will be amended to change the jurisdictional limits of courts in Virginia. With a few limited exceptions, the general district courts will have exclusive, original jurisdiction to hear claims where the amount sought is equal to or less than $4,500, exclusive of interest and any attorney’s fees contracted for by contract. General district courts will have concurrent jurisdiction with the circuit courts when the amount sought exceeds $4,500 but does not exceed $25,000, exclusive of interest and any attorney’s fees contracted for by contract.

Previously, the general district courts’ jurisdiction capped out at $15,000.00. With the increased jurisdiction, the inability to remove cases to circuit court, the almost non-existent discovery in general district court, and the inability to have cases tried by a jury in general district court, it is anticipated that the dockets in general district court will grow significantly after July 1, 2011.


This blog and the information provided has been prepared by Bancroft, McGavin, Horvath & Judkins, P.C. (“BMHJ”) for information purposes only and is not intended nor to be construed as legal advice. This blog may contain the opinions of the members and associates of this firm on various legal issues and is not legal advice. Read More