CREAGERLAW FIRM, PLLC

2800 N~}RTH PARHAM ROAD , St~t’rt~ 205A , RICHMOND, VIRGINIA 23294 ¯ PIIONE: 804 405-1450 , WW\v.CRF.AGf{RL_\W[:IF~.\I.COM

August 31, 2010

B!~ E-MailRoger W. Mullins, EsquireRoger W. Mullins, PLLCP.O. Box 647Tazewell, VA 24651Email: rmullins@rwmullinslaw.com

Re: Boyd Graves Special Appearance Subcommittee

Dear Roger:

By e-mail dated May 13, 2010, you asked me to Chair a subcommittee to study "whether toabolish the rule requiring a special appearance to challenge personal jurisdiction and the traps thiscreates for unwary practitioners." The members you appointed to this subcommittee were:

The Hon. Dennis J. SmithStuart A. RaphaelJoseph C. KearfottSandra M. RohrstaffD. Alan RudlinRoger T. Creager, Chairman

Our subcommittee members unanimously decided to recommend enactment of a newstatute which is set forth just below. This proposed new statute clarifies (and perhaps revises)some of the current law on this issue and thus, it is hoped, will serve to eliminate some of the"traps for unwary practitioners." Our proposed statute clarifies what types of litigation conductdo and do not waive an objection to personal jurisdiction or defective process, and provides asfollows:

[Proposed New Statute]

§ 8.01-277.1. Objections to personal jurisdiction or defective process; what constituteswaiver.

A. Except as provided in § 8.01-277, a person waives any objection to personaljurisdiction or defective process if the person engages in conduct related to adjudicating themerits of the case, including:

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; or4. Actively participating in proceedings related to determining the merits of the

case. [Proposed new statute continued on next page. ]

Letter to Roger W. Mullins, Esq.August 31, 2010Page 2 of 3

B. A person does not waive any objection to personal jurisdiction or defective process ifthe person engages in conduct unrelated to adjudicating the merits of the case, including:

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; or6. Removing the case to federal court.

C. The fact that a person fails to state that the appearance is a special appearance doesnot constitute a waiver of any objection to personal jurisdiction or defective process,provided the person’s conduct is consistent with seeking to adjudicate the objection.

Since the proposed statute refers to existing Virginia Code Section 8.01-277, theConference members will want to have that existing statute in front of them for convenientreference and so I am providing it here now.

Existing Virginia Code Section 8.01-277 [which would remain unchanged] provides:

§ 8.01-277. Defective process; motion to quash; untimely service; motion todismiss

A. A person, upon whom process to answer any action has been served, maytake advantage of any defect in the issuance, service or return thereof by a motion toquash filed prior to or simultaneously with the filing of any pleading to the merits.Upon sustaining the motion, the court may strike the proof of service or permitamendment of the process or its return as may seem just.

B. A person, upon whom process has not been served within one year ofcommencement of the action against him, may make a special appearance, whichdoes not constitute a general appearance, to file a motion to dismiss. Upon findingthat the plaintiff did not exercise due diligence to have timely service and sustainingthe motion to dismiss, the court shall dismiss the action with prejudice. Upon findingthat the plaintiff did exercise due diligence to have timely service and denying themotion to dismiss, the court shall require the person filing such motion to file aresponsive pleading within 21 days of such ruling. Nothing herein shall prevent theplaintiff from filing a nonsuit under § 8.01-380 before the entry of an order grantinga motion to dismiss pursuant to the provisions of this section. Nothing in thissubsection shall pertain to cases involving asbestos.

Letter to Roger W. Mullins, Esq.August 31, 2010Page 3 of 3

By copy of this letter, I am thanking the outstanding members of this subcommittee for theirfine work on this topic. I want in particular to thank Stuart A. Raphael for the outstandin~Committee Report to the Conference which he researched and wrote, a copy of which isprovided as Attachment A to this letter. Stuart’s report and the in-depth research itincludes is an excellent example of why we all find our Conference books to be a valuableresearch source long after each year’s Conference.

Please note that for the convenience of the Conference in discussing our proposed newstatute a draft copy of the new statute (Section 8.01-277.1) which is unanimously recommendedto the Conference by our Committee is attached as Attachment 1 in "bill" format so that itcontains numbered lines. This should facilitate discussion of any particular provisions of thestatute since Conference members will be able to refer to particular language by the line numbersassigned in the left margin.

Roger, as always I look forward to seeing you and the other Conference members at ourannual meeting in Williamsburg on October 22-23, 2010. Please let me know if I can be of anyfurther assistance.

Sincerely yours,

/s/

Roger T. Creager

Cc: Committee Members (listed above) (by e-mail)

Attachment A

MEMORANDUM

TO: Boyd-Graves Conference

FROM: Committee to Study Special Appearance Rule[Committee.Report Researched and Written by Smart A. Raphael]

DATE: August 16, 2010

Our committee was asked to study "whether to abolish the rule requiring a specialappearance to challenge personal jurisdiction and the traps this creates for unwary practitioners."

We concluded that, while the special appearance rule should not be entirely abrogated, itshould be modified by statute to eliminate several traps for practitioners. We propose a newstatute- Code § 8.01-277.1 (Attachment 1)- to clarify what actions constitute a generalappearance and what actions do not waive a party’s objection to personal jurisdiction ordefective process.

I. Virginia’s "Special Appearance" Rule.

A "special appearance" is a defensive "pleading that either claims that the court lackspersonal jurisdiction over the defendant or objects to improper service of process." Black’s LawDictionary 114 (9th ed. 2009). It can also refer to a "defendant’s showing up in court for the solepurpose of contesting the court’s assertion of personal jurisdiction over the defendant." Id.

Virginia courts construe the rule strictly and apply it quite rigidly. As the Supreme Courtput it in Gilpin v. Joyce, 257 Va. 579, 515 S.E.2d 124 (1999):

"An appearance for any other purpose than questioning thejurisdiction of the court - because there was no service of process,or the process was defective, or the action was commenced in thewrong county, or the like - is general and not special, althoughaccompanied by the claim that the appearance is only special."Norfolk and Ocean View Railway Co. v. Consolidated TurnpikeCo., 111 Va. 131, 136, 68 S.E. 346, 348 (1910) .... A generalappearance "is a waiver of process, equivalent to personal serviceof process, and confers jurisdiction of the person on the court."Nixon v. Rowland, 192 Va. 47, 50, 63 S.E.2d 757, 759 (1951).

Id. at 581,515 S.E.2d at 125 (emphasis altered).

"Virginia steadfastly adheres to the traditional general and special appearance doctrine.’’I

As one circuit court has observed, "practically any activity that is not a direct challenge to the

I Xyrous Commc ’ns, LLC v. Bulgarian Telecomm. Co., No. 1:09-cv-396, 2009 WL2877084 (E.D. Va. Sept. 4, 2009).

jurisdiction of the court is a general appearance.’’2

Some actions that constitute a general appearance are obvious; others are less so. Theless obvious ones create procedural traps for practitioners.

A. Actions that Obviously Constitute a General Appearance.

Actions that fairly obviously constitute a general appearance include:

¯ filing a pleading that goes to the merits of the case, including a demurrer or answer3,or even answering a co-defendant’s cross-claim4;

¯ entering a general appearance without objecting to jurisdiction;5 and

¯ conducting general discovery.6

2 Gilmore v. Wise Co., 72 Va. Cir. 353,354 (Portsmouth, 2006).

3 E.g., Lyren v. Ohr, 271 Va. 155,623 S.E.2d 883 (2006) (holding that defendant who

filed an answer and grounds of defense, in reliance on plaintiff’s representation that service wastimely, nonetheless waived his objection to untimely service); Kiser v. Amalgamated ClothingWorkers, 169 Va. 574, 591,194 S.E. 727, 734 (1938) ("Of course pleading the general issue,demurring, or filing an affidavit of substantial defense amount to a general appearance.")(quoting Burks’ Pleading and Practice (3d Ed.), sec. 51, p. 107); Norfolk & Ocean View Ry. v.Consolidated Turnpike Co., 111 Va. 131,136-37, 68 S.E. 346, 348 (1910) ("When the plaintiffin error appeared and moved the court to vacate the proceedings had in the cause and to dismissit, it did so upon grounds which went to the sufficiency of the petition of the receivers. A motionto vacate proceedings in a cause, or to dismiss or discontinue it, because the plaintiff’s pleadingdoes not state a cause of action, is equivalent or analogous to a demurrer and amounts to ageneral appearance.").

4 Gilmore v. Wise Co., 72 Va. Cir. 353,354 (Portsmouth 2006) (holding that when thedefendant responded to the co-defendant’s cross-claim, it waived its personal jurisdictionobjection to the plaintiff’s claim).

s MarylandCas. Co. vo ClintwoodBank, Inc., 155 Va. 181,186, 154 S.E. 492,494 (1930)("Service of a notice of general retainer or appearance, or filing such notice with the clerk after acomplaint has been filed, constitutes a general appearance in actions at law.") (quoting 3 Cyc.504); but see 4 Am. Jur., Appearance, § 2 (2010) ("filing a notice of appearance by counsel doesnot constitute a waiver of personal jurisdiction.") (citing Mason v. Hunton, 816 So. 2d 234 (Fla.Dist. Ct. App. 2002)).

6 Marsinko v. Burwell, No. CL07001070-00, 2008 Va. Cir. LEXIS 125 (Roanoke CountyOct. 1, 2008) (holding that defendant’s issuance of subpoena duces tecum, before filing itsmotion to dismiss for lack of personal jurisdiction, was a general appearance that waived theobjection); Doles v. Doles, 51 Va. Cir. 403,405 (Loudoun 2000) (same).

B. Actions that, Less Obviously, Can Constitute a General Appearance.

Less obvious actions that Virginia courts have said constitute a general appearanceinclude:

¯ seeking or agreeing to a continuance or extension of time;v

¯ opposing the plaintiff’s motion to consolidate two cases;s

¯ initiating discovery, even if it is limited to the ]uestion of personal jurisdiction, andeven if it purports to be by special appearance;

¯ sending a letter to the trial court requesting a stay;1°

¯ removing the case to federal court;ix

7 See New River Mineral Co. v Painter, 100 Va. 507, 509, 42 S.E. 300, 301 (1902)

("Before the defendant made its motion to quash, it had appeared and consented to a continuanceof the case. Objections which do not go to the substance of an action are treated as waived if notmade when the occasion for them arises. It is a well-established rule of practice that byappearing to the action the defendant waives all defects in the process and in the service thereof.The decisions go further and imply such a waiver from the defendant’s taking or consenting to acontinuance as fully as they do from his pleading to the action. The object of the writ is toapprise the defendant of the nature of the proceeding against him. His taking or agreeing to acontinuance is evidence of his having made himself a party to the record, and of his havingrecognized the case as in court. It is too late for him afterwards to say that he has not beenregularly brought into court."); Kiser v. Amalgamated Clothing Workers, 169 Va. 574, 591,194S.E. 727, 734 (1938) ("granting or accepting a continuance, or a motion to quash for otherreasons than defects in the process or return, amount to a general appearance.") (quoting Burks’Pleading and Practice (3d Ed.), sec. 51, p. 107); New Life Christian Church v. Dynabilt Tech.Int ’l Corp., 59 Va. Cir. 399, 402 (Norfolk 2002) ("Defendant made a general appearance when itappeared, by counsel, to request an extension of time for filing responsive pleadings.");Herrington Corp. v. ICON Int’l, Inc., 31 Va. Cir. 253 (Fairfax 1993) (same); but see FrankMgmt. Inc. v. Joel, 19 Va. Cir. 267, 269 n.1 (Richmond 1990) ("The court finds no merit inplaintiff’s contention that Joel made a general appearance, thus consenting to this court’sjurisdiction, when he moved the court for an extension of time in which to answer, respond, orotherwise plead.").

8 Dolan v. Dyer, 61 Va. Cir. 650, 651 (Alexandria 2002) ("by appearing before this courtand arguing against the motion to consolidate, the defendants have entered a general appearanceand have waived objection to personal jurisdiction").

9 Emeritus Commc ’ns, Inc. v. Benedictine College, 58 Va. Cir. 61, 61 (Fairfax 2001)("Defendant argued that the discovery was sought under its special appearance, strictly for thepurpose of determining the jurisdictional issue .... [A]lthough Defendant asserted a specialappearance, the discovery request constituted a general appearance in this case.").

lo Jones v. Caldwell, 61 Va. Cir. 408, 412-15 (Winchester 2003).

12* removing the case to the circuit court from the general district court;

¯ opposing a motion for a temporary injunction by contesting the merits;~3

¯ objecting to personal jurisdiction by demurrer, rather than by motion to quash or todismiss;~4 and

¯ moving to set aside a default judgment for fraud on the courtJ5

C. Virginia’s Partial Modification of the Special Appearance Rule.

Virginia has partially modified the "special appearance" rule in two places.

First, Code § 8.01-286.1, recommended by the Boyd-Graves Conference, was added in2005.~6 This statute, modeled on Fed. R. Civ. P. 4, enables a party to waive formal service ofprocess without waiving an objection to personal jurisdiction. This spares the plaintiff the costof service and provides additional time for the defendant to respond (60 days after the waiverrequest, or 90 days if the defendant’s address is outside of Virginia). A defendant who fails towaive service of process is liable for the service costs, unless good cause is shown for the failure.

11 Salomonsky v. BrandaidMktg. Corp., 66 Va. Cir. 24, 24-25 (Richmond 2004) (holdingthat defendant’s removal to federal court was a general appearance that, upon remand, waived itsobjection to personal jurisdiction, even though the defendant moved to dismiss for lack ofpersonal jurisdiction before the unsuccessful removal); Agbey v. Sati, 69 Va. Cir. 330, 333(Fairfax 2005) ("Defendants’ action in removing this case to federal court was a generalappearance and has waived any claim for lack of personal jurisdiction.").

12 Cross ~. Whitehurst, 29 Va. Cir. 306 (Loudoun County 1992) ("By removing thepresent case from General District Court to Circuit Court, rather than defending the case on themerits and seeking a de novo appeal of all the issues, including service of process, the Defendanttook an affirmative action submitting him to the general jurisdiction of the Court.").

13 Dials v. v. Lee’s Hill P ’ship, 41 Va. Cir. 214 (Spotsylvania 1996) ("Although thedefendant noted in open court and in its memorandum that it was making a ’special appearance’in opposition to the motion for temporary injunction, its opposition was not based on lack ofservice.., or on any other jurisdictional ground. Instead, the defendant proceeded to defend therequest for a temporary injunction on the merits.").

14 Herrington Corp. v. ICONInt’l, Inc., 31 Va. Cir. 253 (Fairfax 1993) ("A demurrer isnot the proper mechanism to raise the issue of lack of personal jurisdiction in this case ....Byfiling a demurrer, the Defendants have admitted factual allegations that the Defendants are doingbusiness in Virginia and/or are deriving substantial revenue from doing business in Virginia.");but see Mueller v. Dyncorp, 20 Va. Cir. 47, 48 n.2 (1989) ("personal jurisdiction is a question oflaw, not a fact which Kellogg admitted by demurring").

~5 Xyrous Commc ’ns, LLC v. Bulgarian Telecomm. Co., No. 1:09-cv-396, 2009 WL

2877084 (E.D. Va. Sept. 4, 2009).~6 2005 Va. Acts ch. 866 (SB 1123).

Code § 8.01-287(B). Subsection F protects a defendant who wishes to object to personaljurisdiction: "A defendant who waives service of process pursuant to this section does notthereby waive any objection to venue or to the jurisdiction of the court over the person of thatdefendant, or to any other defenses or objection other than objections based on inadequacy ofprocess or service of process." Code § 8.01-287(F).

Virginia also modified the special appearance doctrine in Code § 8.01-277, which"changes the common law.’’17 Subsection A allows a party to object to defective processsimultaneously with pleading to the merits of the case. Subsection B specifies how a defendantwho has not been served within one year may enter a special appearance to seek dismissal of theaction with prejudice. The statute provides:

§ 8.01-277. Defective process; motion to quash; untimely service;motion to dismiss.

A. A person, upon whom process to answer any action has beenserved, may take advantage of any defect in the issuance, serviceor return thereof by a motion to quash filed prior to orsimultaneously with the filing of any pleading to the merits. Uponsustaining the motion, the court may strike the proof of service orpermit amendment of the process or its return as may seem just.

B. A person, upon whom process has not been served within oneyear of commencement of the action against him, may make aspecial appearance, which does not constitute a generalappearance, to file a motion to dismiss. Upon finding that theplaintiff did not exercise due diligence to have timely service andsustaining the motion to dismiss, the court shall dismiss the actionwith prejudice. Upon finding that the plaintiff did exercise duediligence to have timely service and denying the motion to dismiss,the court shall require the person filing such motion to file aresponsive pleading within 21 days of such ruling. Nothing hereinshall prevent the plaintiff from filing a nonsuit under § 8.01-380before the entry of an order granting a motion to dismiss pursuantto the provisions of this section. Nothing in this subsection shallpertain to cases involving asbestos.

Subsection A allows a defendant to challenge defects in process "prior to orsimultaneously with the filing of any pleading to the merits." (Emphasis added.) So the objectionto process is not waived by joining it with a pleading going to the merits.

Subsection B was added in 2006. 2006 Va. Acts ch. 151. It deals with the situation thatarose in Gilpin v. Joyce, 257 Va. 579, 515 S.E.2d 124 (1999), where the defendant wanted totake advantage of Rule 3:3 - now Rule 3:5(e) - which prevents the entry of judgment against adefendant who has not been served with process within one year, unless the court finds that the

17 W. Hamilton Bryson, Bryson on Virginia Civil Procedure § 3.0312] at 3-29.

plaintiff exercised due diligence to effectuate service. The defendant in Gilpin had not beenserved with process. After more than a year elapsed, he filed a grounds of defense, acounterclaim, and a motion to dismiss for failure to serve process within the year. The SupremeCourt ruled that his general appearance waived his objection to the untimely service of process.The Court further ruled that his motion to dismiss for untimely service was not saved by Code§ 8.01-277 (as then written), because it permitted a defendant to object to defects in process onlyif the defendant was one "upon whom process to answer any action has been served." 257 Va. at582, 515 S.E.2d at 126 (quoting Code § 8.01-277). Since the defendant had not been served, hecould not take advantage of this statute. The Court strictly construed this statute because it was"in derogation of the common law." Id.

The 2006 amendment added Subsection B to allow an unserved defendant in thissituation to raise the one-year objection by "special appearance," except in cases involvingasbestos. The plaintiff, however, may take a nonsuit before the court dismisses the case withprejudice.

Note that the law is presently unclear whether Code § 8.01-277(A) permits a defendantwho has been served with process to file an objection to personal jurisdiction "simultaneously"with a pleading that addresses the merits. Professor Bryson says it does: "In modem Virginiapractice [citing Code § 8.01-277], if the objection to jurisdiction is made prior to orsimultaneously with a pleading to the merits, the objection is not waived but will be consideredby the judge first.’’~8 But at least one circuit court has disagreed with Prof. Bryson, despite"considerable pause." City of Portsmouth v. Buro Happoid Consulting Eng’rs, 69 Va. Cir. 397,399 (Portsmouth, 2005). That court ruled that Code § 8.01-277 does not apply to challenges tolack of personal jurisdiction but applies "only when a challenge is made to a technical defect inthe service." Id. The court said its disagreement with Prof. Bryson was "reinforced by the lastsentence of the statute, which provides that the court may ’ strike the proof of service or permitamendment of the process or its return as may seem just.’ Admittedly this is a strict construction

,, -- 19of the statute, but such is the direction of Gilpin. let.

The uncertainty whether Code § 8.01-277 applies to personal jurisdiction objections willprompt most lawyers to be cautious; they will file a motion to dismiss for lack of personaljurisdiction alone, by special appearance, and unaccompanied by any pleadings going to themerits.

II. Other Jurisdictions.

Virginia is one of few jurisdictions that retains the common law distinction between a"general appearance" and "special appearance."

1~ Bryson, supra, at 3-29 & n.191.

19 Another circuit court, without addressing Code § 8.01-277, ruled that a defendant

entered a general appearance when it simultaneously filed a motion craving oyer and motion toquash for lack of personal jurisdiction. BBS Holdings, Inc. v. Dennis Anderson ConstructionCorp., No. 177877, 1999 Va. Cir. LEXIS 723 (Fairfax Oct. 21, 1999).

The Federal Rules abolished the distinction in 1938. In federal court, a party raises anobjection to process or to personal jurisdiction by motion under Rule 12(b)(2), (4), or (5). Theobjection is waived unless raised with other Rule 12(b) motions or in the answer, if no motionunder Rule 12 is made. Fed. R. Civ. P. 12(h).

In 1944, the Third Circuit used colorful language to describe the ancient doctrine’sabandonment:

Rule 12 has abolished for the federal courts the age-old distinctionbetween general and special appearances. A defendant . . . is nolonger required at the door of the federal courthouse to intone thatancient abracadabra of the law, de bene esse, in order by its magicpower to enable himself to remain outside even while he stepswithin. He may now enter openly in full confidence that he willnot thereby be giving up any keys to the courthouse door which hepossessed before he came in. This, of course, is not to say thatsuch keys must not be used promptly. If the defense of lack ofjurisdiction of the person is not raised by motion before answer orin the answer itself it is by the express terms of paragraph (h) ofCivil Procedure Rule 12 to be treated as waived, not because of thedefendant’s voluntary appearance but because of his failure toassert the defense within the time prescribed by the rules.

Orange Theatre Corp. v. Rayherstz Amusement Corp., 139 F.2d 871,874 (3rd Cir. 1944).

In addition, most States appear to have abandoned the distinction, although ourcommittee did not conduct a 50-State survey.2°

III. Our Proposed Reform.

The Committee did not support abandoning the special appearance rule altogether. Somemembers felt that it made good sense to require a defendant to raise any objection to personaljurisdiction or defective process before addressing anything going to the merits of thecontroversy. One member preferred the federal approach but thought, nonetheless, that therewould be insufficient support in Virginia for such large-scale change.

The Committee unanimously agreed, however, that the rule as applied in Virginia sl~ouldbe further relaxed to eliminate its remaining "gotcha" aspects and to clarify which actionsconstitute a general appearance and which do not.

We recommend a new statute, Code § 8.01-277.1, included both in Attachment 1 andshown below. We are grateful to David Cotter, of the Division of Legislative Services, for his

20 See 4 Am. Jur. 2d, Appearance, § 4 (2010) (noting that "some states" retain the"special appearance" distinction, but citing cases only from California, Florida, Illinois andNebraska).

time reviewing our proposal and his many helpful suggestions that have been incorporated intoit.

§ 8.01-277.1. Objections to personal jurisdiction or defective process; whatconstitutes waiver.

A. Except as provided in § 8.01-277, a person waives any objection to personaljurisdiction or defective process if the person engages in conduct related toadjudicating the merits of the case, including:

1. Filing a demurrer, plea in bar, answer, counterclaim, cross-claim, orthird-part~ claim;

2. Conducting discovery, except as provided in subsection B;3. Seeking a ruling on the merits of the case; or4. Actively participating in proceedings related to determining the

merits of the case.B. A person does not waive any objection to personal jurisdiction or defectiveprocess if the person engages in conduct unrelated to adjudicating the merits of thecase, including:

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; or6. Removing the case to federal court.

C. The fact that a person fails to state that the appearance is a specialappearance does not constitute a waiver of any objection to personal jurisdiction ordefective process, provided the person’s conduct is consistent with seeking toadjudicate the objection.

The qualifier "[e]xcept as provided in § 8.01-277" - at the beginning of Subsection A -makes this new statute consistent with that Code section. Without this qualifier, a party couldnot file an objection to defective process "simultaneously" with a pleading on the merits,something that is expressly allowed by Code § 8.01-277.21

Subsections A and B define the opposite poles on the spectrum of conduct that mayconstitute a general appearance that waives objections to personal jurisdiction and defectiveprocess. The general test is whether the person has engaged in conduct related "to adjudicatingthe merits of the case."

21 The Committee discussed whether Code § 8.01-277 should be amended to clarifywhether it applies to objections to personal jurisdiction. There was no majority to do that. TheCommittee agreed that fixing the "gotcha" aspects of the special appearance rule by adding Code§ 8.01-277.1 was more important than amending Code § 8.01-277 to enable a party to file anobjection to personal jurisdiction simultaneously with pleadings going to the merits.

Subsection A identifies clear examples of such conduct, such as filing a pleading on themerits, conducting discovery, seeking a merits ruling, or actively participating in a proceeding todetermine the merits.

Subsection B, by contrast, identifies examples of conduct unrelated to adjudicating themerits of the case that should not waive an objection to personal jurisdiction or defective process.The most serious "gotchas" in the current law are corrected: requesting or agreeing to anextension of time; agreeing to a scheduling order; engaging in limited jurisdictional discovery ifauthorized by the court; observing or attending proceedings in the case; and removing the case tofederal court.

The Committee added motions to transfer venue in subsection (B)(5) as an example of anon-merits based action that should not waive an objection to personal jurisdiction or defectiveprocess. A motion to transfer venue must be made within 21 days of service, or within theperiod of any extension of time fixed by the court. Code § 8.01-264(A). While the Committeewas unaware of any Virginia case in which a motion to transfer venue was filed simultaneouslYwith an objection to personal jurisdiction, a Virginia court applying the special appearance rulestrictly could find that doing both constitutes a general appearance, even if styled as "special."The Restatement offers that scenario as an example of an event that triggers a generalappearance.22 The Committee believed that a party should not have to abandon an objection tovenue as the price of preserving an objection to personal jurisdiction.

The examples in Subsections A and B are not exhaustive. That is made clear by using theword "including" before each list. See Code § 1-218 ("’Includes’ means including, but notlimited to.") The touchstone is whether the party’s conduct relates "to adjudicating the merits ofthe case." Courts can deal with scenarios not covered by the examples by applying this generalprinciple as illuminated by the examples listed.

Subsection C eliminates the "gotcha" situation that arises when a defendant’s initialappearance is consistent with seeking to object to personal jurisdiction or defective process butthe defendant fails to denominate the appearance as "special." This may occur, for example,when a defendant seeks an extension of time to respond to the initial pleading. The defendant’sfailure to invoke the mantra that the appearance is "special" should not by itself waive anobjection to personal jurisdiction or defective process. Of course, if the defendant undertakesother conduct related to adjudicating the merits of the case, then a waiver of the objection wouldoccur under Subsection A.

22 Restatement (Second) of Judgments § 10 illust. 1 (1982) ("P brings suit in State Xagainst D, a resident of State Y. Under the procedure of State X, the proper procedure forcontesting the validity of process is by special appearance. D makes an appearance "for the solepurpose of challenging jurisdiction" and asserts that "minimum contacts" were lacking betweenhim and State X, and also that the action properly should have been brought in another court inState X. D has made a general appearance and thereby lost his objection to territorialjurisdiction.").

Our committee unanimously recommends this proposal to the Conference.

Respectfully submitted,

The Hon. Dennis J. SmithJoseph C. KearfottStuart A. RaphaelSandra M. RhorstaffD. Alan RudlinRoger T. Creager, Chairman

Committee Report by Stuart A. Raphael

10

Attachment 1

SENATE BILL NO. HOUSE BILL NO.

1

2

A BILL to amend the Code of Virginia by adding a section numbered 8.01-277.1, relating to personal

jurisdiction; special appearance.

3 Be it enacted by the General Assembly of Virginia: ....

4 1. That the Code of Virginia is amended by adding a section numb~i’edS.01-277.1 as follows:

5 § 8.01-277.1. Objections to personal jurisdiction or defec.ti’~:.proces~i~:~hat constitutes waiver.

6 A. Except as provided in § 8.01-277, a person w..~jveS a~ objection to’~~!?al jurisdiction or

7 defective process if the person engages in condu~t~!g~gd to ~aj~dicating the ~’~~::~d~ the case,

8 including:

9 1. Filing a demu~er, plea in bar, answer, counterclaim, �~0g~:claim, or third-pa~ claim;

10 2. Conducting discover, except as prd~ided ~ subsection B;

11 3. Seeking a ruling on the merits of the case; or~::::~:;. ~:~::- .......:~ .....

12 4. Actively pa~icipating in proceedings related to dete~:~h~ the merits of the case.

13 B. A person does not waive .any objection m personal jurisdiction or defective process if the

14 person engages in conduct ~elated re.adjudicating the Nerits of the case, including:

15 1. Requesting 0r agreeing toan ei~niion6ffime;

16 2.’Agreeing to a ~ch~duling

17 32 C0nducting discover. :authorizedby the cou~ related to adjudicating the oNection;

18 4. ob?~: ~..,..,.~g or attendi6g~ proceedings in the case;

19 5. Filing a ~otion to..transfer venue pursuant to ~ 8.01-264 when such motion is filed

20 contemporaneously with:the0bjection; or

21

22

23

24

6. Removing th~"case to federal court.

C. The fact that a person fails to state that the appearance is a special appearance does not

constitute a waiver of any objection to personal jurisdiction or defective process, provided the person’s

conduct is consistent with seeking to adjudicate the objection.[End].

99900.07754 EMF US 31876305v2