When deciding to expand the I-81 corridor through Virginia, the Federal Highway Administration and the Virginia Department of Transportation had begun the standard “tiered” review process required for large and complex projects with potential environmental impacts. After studying both the sufficiency of meeting transportation needs alongside the environmental drawbacks, the Agencies published the results of the first tier of its plans in an Environmental Impact Statement and noted that all NEPA claims must be brought within 180 days.

            Several environmental activist organizations filed suit alleging that the agencies violated NEPA by publishing and completing their first tier without waiting for a rail freight study to be completed and violated Due Process by publishing their final intentions after Tier 1, effectively making objections to Tier 2’s site-specific plans impossible because of the 180-day statute of limitations. The district court granted summary judgment to the agencies. It found that the agencies had already done studies on the effectiveness of using rail systems rather than expanding the roadway and that the requirements for the statute of limitations had been met.

            The activist organizations appealed, but the Fourth Circuit dismissed. The court noted that the organizations misunderstood both the law and the district court’s opinion. Though the large-scale first tier for the project had been completed, the second tier requires evaluating site-specific alternatives for each part of the highway sought to be expanded. At that time, the organizations may be able to contest the agencies’ alternatives; however, “given the lack of an actual dispute, this case [was] not justiciable” and the appeal had to be dismissed.

 

Full Opinion

 

-C. Alexander Cable

            Former employees of a local Wachovia branch started a new office with a competitor company. Wachovia brought an arbitration action against the former employees claiming breach of contractual and common law duties: namely misappropriating confidential Wachovia information and stealing former Wachovia clients. The former employees responded by calling the matter frivolous and bringing several counterclaims; they did not, however, bring a claim for attorneys fees under South Carolina’s Frivolous Civil Proceedings Act. Toward the end of hearings, the arbitrators revisited the issue of attorneys’ fees and the employees finally made a claim for them under FCPA. Despite Wachovia’s objections and pleas of surprise, the panel rejected all Wachovia’s claims and awarded damages to the former employees—including attorneys’ fees under the FCPA.

            The district court confirmed the award and rejected Wachovia’s arguments for vacatur, finding that the panel did not manifestly disregard the law, decide issues not before them, or fail to hold necessary hearings. On appeal, the Fourth Circuit affirmed. The court held that arbitrators have broad discretion when applying procedural rules of law not explicitly agreed to by the parties and that the panel appropriately handled the matter of attorneys’ fees with necessary fact finding and hearings. 

 

Full Opinion

 

-C. Alexander Cable

             C.L.P., Inc., a seller and manufacturer of tobacco products, was found guilty of several violations of the Contraband Cigarette Trafficking Act. The United States sought to receive forfeited assets from the company in order to pay the assessed penalties. One source of assets, because C.L.P. was a not a member of the noted Master Settlement Agreement, were funds in an escrow account and subaccounts held by all the states where C.L.P. sold its products. The United States moved to access a percentage of the funds’ principal balances but the states argued that the government, by placing itself in the shoes of C.L.P. for the purposes of forfeiture actions, was able only to recover interest and return on investments that the escrow account and subaccounts had gained.

            The district court agreed with the states and the United States appealed. The Fourth Circuit held that though legal title to the funds in escrow remained with C.L.P.—and therefore the United States—under North Carolina law, the states still had standing to press claims on the funds as obligees of the accounts. However, the states’ interest in the funds was not vested and not superior to C.L.P.’s—and therefore not superior to the United States’ interest. The district court’s order, then, was vacated and the matter was remanded to issue a new forfeiture order.

 

Full Opinion

 

-C. Alexander Cable

            Charles Stanley, Jr., who had been operating a service center and gas station under a direct lease from BP, elected to purchase the property from BP rather than continue to operate under a lease from BP’s “jobber,” Eastern Petroleum. The purchase agreement for the property contained a fifteen-year restrictive covenant requiring, among other things, that no petroleum products not produced by BP be sold on the property. However, Stanley complained that BP was selling its products at a commercially unreasonable price and began offering a competitor’s gasoline. BP sued, seeking monetary relief and an injunction; Stanley countersued and asked the court to declare that BP was selling its gasoline at unreasonable prices and that the covenant invalid as overbroad. The district court found in favor of Stanley.

            On appeal, the Fourth Circuit reversed in part and vacated in part. Applying Virginia law, the court observed that restrictive covenants on land use are considered less restrictive than covenants in the employment context. Land use restrictions need only “afford a fair protection to the interests of the party in favor of whom it is given, and [be] not so large as to interfere with the interests of the public.” Noting that Stanley’s inability to sell a competitor’s gasoline in only this location does not have an adverse effect on public interest, the court held that the restriction was not overbroad and not invalid. The court also held, agreeing with BP, that the restriction did not prevent Stanley from operating a repair center on the property so long as the same property does not also sell non-BP gasoline products.

            Judge Floyd filed a dissenting opinion. He would find that the covenant restricted more than necessary to protect BP’s legitimate business interests and was therefore overbroad. He also noted the disfavor of “blue penciling” overbroad agreements to remove offending language. Because BP is a sophisticated multi-national corporation, he argues, allowing it to draft overbroad restrictions that are judicially adjusted only when challenged by its retailers is detrimental to the principles of contract law and the public interest. 

 

Full Opinion

 

-C. Alexander Cable

The Fourth Circuit affirmed avoidance of SunTrust’s lien on a tract of land owned by debtor John McCormick. SunTrust contended that even though recordation of the lien on the tract was deficient, the Trustee was imputed with constructive knowledge of the lien because he either had constructive knowledge of the deed of trust that was properly recorded as to an adjacent tract of land, which by its terms also created a lien on the contested tract of land; or because the deed was recorded in an unofficial index in Orange County and a careful and prudent title examiner would have found the lien on Tract I in that index. The Fourth Circuit held that the Trustee’s status vis-à-vis the title of Tract I is, under § 544(a)(3), that of a bona fide purchaser under North Carolina law, and North Carolina law allows a purchaser to rely exclusively on the official recordation index of the county to discover liens, regardless of what other independent knowledge that purchaser might have.  Therefore, SunTrust’s lien was avoided and the bankruptcy court’s decision was affirmed.

 

Full Citation

 

-Sara I. Salehi

            Michael R. Boitnott brought a claim against his employer, Corning Incorporated under the Americans with Disabilities Act, asserting that his inability to work more than eight hours per day and rotate day/night shifts as a result of physical impairment rendered him disabled under the ADA. Boitnott alleged that Corning violated the ADA by failing to provide him a reasonable accommodation for his disability. Corning contended that because Boitnott was physically able to work a normal forty hour work week and he had not demonstrated that his impairments significantly restricted the class of jobs available to him, he could not establish that he had a “substantial” limitation upon which to base a claim of disability under the ADA. The Fourth Circuit affirmed the district court’s grant of summary judgment for Corning. To be a covered disability, the disability must substantially limit a major life activity. Being able to work overtime does not substantially limit the major life activity of working. Therefore, Boitnott’s inability to work overtime did not mean that he was disabled under the ADA.
 

Full Opinion

 

-Sara I. Salehi

            On behalf of his three stepsons, Ghulam Nabi Sarwari prepared, signed and submitted applications for United States passports and listed himself as the child’s father, when in fact, Sarwari is neither the birth father nor the adoptive father of any of the children. A jury convicted Sarwari of three counts of willfully and knowingly making a false statement on a passport application. Sarwari appealed. The Fourth Circuit affirmed, noting that the word “father” is not so “fundamentally ambiguous” that Sarwari’s answer could not provide the basis for a false statement conviction. Further, the Court held that the district court did not err in failing to instruct the jury regarding the lack of a statutory definition of the word “father.”

 

Full Opinion

 

-Sara I. Salehi

            James Mark McDaniel, Jr. and C. Richard Epes are former officers of EBW Laser, Inc., a company that entered bankruptcy in 2005. The court appointed Charles Ivey as trustee, and Ivey subsequently hired his law firm, IMGT, to prosecute an adversary proceeding against McDaniel and Epes alleging that they had preferentially transferred or fraudulently conveyed property belonging to EBW Laser worth hundreds of thousands of dollars and had also engaged in breaches of fiduciary duty and unfair and deceptive trade practices. McDaniel and Epes alleged that during discovery for the adversary proceeding, attorney Edwin Gatton of IMGT presented documents to certain deponents that he claimed were tax returns of EBW Laser, Inc., when Gatton in fact knew or should have known that the documents were not EBW Laser’s returns. The complaint further alleged that Gatton allowed expert witnesses to rely on those documents to conclude that Appellants had committed fraud in their capacity as EBW Laser’s officers. McDaniel and Epes asserted a cause of action for civil obstruction of justice on these grounds. The complaint further alleged that IMGT sought court orders to obtain McDaniel’s personal income tax records twice during the adversary proceeding and that both times the bankruptcy court denied IMGT’s request, ruling that the returns had no relevance to the proceeding. IMGT nevertheless obtained McDaniel’s tax returns from 1997 to 2001 without McDaniel’s knowledge or permission and Gatton refused McDaniel’s request to return them. On this basis, McDaniel and Epes asserted a cause of action for conversion. Finally, the complaint alleged that IMGT’s source for the aforementioned returns was Stanaland, who had obtained them from McDaniel to assist him in preparing McDaniel’s 2002 tax returns. McDaniel and Epes assert claims for invasion of privacy, breach of fiduciary duty, and civil conspiracy based on this fact. The claims against the IMGT Defendants were dismissed under the Barton doctrine. McDaniel and Epes appealed. The Fourth Circuit affirmed, concluding that the Barton doctrine was properly applied.

 

Full Opinion

 

-Sara I. Salehi

            Doctors diagnosed Lakia Roberts with lead poisoning from being exposed to lead in her home. Both the current owner of the property where Roberts lived and the former realty company were found liable by a jury. Though the insurance company only covered the home during roughly forty percent of the time that Roberts was exposed to lead, it was responsible for indemnifying the former realty company because it had been found jointly and separately liable for the entire amount. The insurer therefore brought a declaratory action in federal court arguing that it should only be liable to indemnify the realty company for the forty percent of the time it covered the property. The district court essentially agreed and found the insurer liable for 43.6% of the total damages.

            On appeal, the Fourth Circuit affirmed the pro rata reduction of the insurer’s liability because the policy, like any contract, must be interpreted to effect its terms and the insurer “cannot be held liable for periods of risk it never contracted to cover.” The court, however, reversed and remanded the actual determination of the pro rata percentage of damages assigned to the insurer. After the former realty company for Robert’s home sold the premises there was no evidence that the insurer intended to continue covering the home under new ownership. The amount of damages the insurer was liable for was therefore reduced to 40%.

 

Full Opinion

 

-C. Alexander Cable

            Christopher Mahin was convicted of two separate counts of possessing a firearm or ammunition while subject to domestic violence protection order. On appeal, the Fourth Circuit held that his convictions were not barred by the Second Amendment or the recent Supreme Court precedent in Heller. That case, the court noted, interpreted the protection to own firearms as applying for protection one’s hearth and home.

The Fourth Circuit, like a growing number of sister circuits, was not prepared to extend that right beyond the home and to those under domestic violence orders. Nonetheless, without deciding whether such a constitutional right should exist, the court held that were there a right it would fall under Intermediate Scrutiny and that given “the obvious fit between [the statute] and the substantial public interest in reducing domestic violence, the government has met its constitutional burden” and affirmed the conviction. However, the court held that it was error to convict Mahin of two counts of possessing a firearm or ammunition when he merely possessed both a gun and ammo at the same time.

 

Full Opinion

 

-C. Alexander Cable