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Shifflett v. Latitude Properties, Inc.

Supreme Court of Virginia

December 14, 2017

ELIZABETH SHIFFLETT, ET AL.
v.
LATITUDE PROPERTIES, INC., ET AL.

         FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY Thomas J. Wilson, IV, Judge

          PRESENT: All the Justices

          OPINION

          CLEO E. POWELL, JUSTICE

         In this appeal, we consider whether a judgment creditor may obtain a lien by writ of fieri facias on monies from future income tax refunds when a debtor has yet to file his or her income tax returns.

         I. BACKGROUND

         The facts are undisputed. Latitude Properties, Inc. and Shen Valley Band Instrument Service, Inc. (collectively, "Creditors") obtained separate judgments against Rodney and Elizabeth Shifflett and Cassandra Deane (collectively, "Debtors").[1] Creditors issued to Debtors writs of fieri facias along with summonses to answer interrogatories. Upon the return date for the writs, January 5, 2016, based on the answers to the interrogatories, the Harrisonburg/Rockingham General District Court ("general district court") entered transfer orders in favor of Creditors requiring Debtors turn over their 2015 income tax refunds to Creditors upon receipt of funds or to demonstrate that a refund would not be received. The transfer orders were appealed to the Circuit Court of Rockingham County (hereinafter "circuit court").

         In circuit court, upon motions for summary judgment, Debtors argued that the general district court lacked subject matter jurisdiction to enter the transfer orders as it was undisputed that Debtors had not filed their 2015 income tax returns as of the return date of the writ. Debtors argued their expected 2015 income tax refunds were contingent interests in property not subject to a lien under Code § 8.01-501. In a letter opinion dated May 13, 2016, the circuit court ruled in favor of Creditors, finding that Debtors

held a fixed property interest in their 2015 tax refunds as of midnight of December 31st of 2015. Consequently, the liens of fieri facias attached to those funds. Additionally, [] Code § 8.01-507 authorized the General District Court to enter the transfer orders, irrespective of that lien.

         The circuit court also found that "[a] tax refund is an intangible 'under the control of the debtor, ' as the debtor makes the ultimate decision on whether to file a tax return." By joint order incorporating its letter opinion, the circuit court dismissed Debtors' appeals with prejudice.

         Debtors moved for reconsideration arguing that an intangible personal estate contemplated by Code §§ 8.01-501 and -507 does not include an income tax refund if the taxpayer has not filed a tax return. The circuit court denied the motion. This appeal followed.

         II. ANALYSIS

         On appeal, Debtors argue that the circuit court erred in dismissing their appeals with prejudice and applying the orders of the general district court levying upon their potential 2015 income tax refunds because both courts lacked authority to exercise any power under Code §§ 8.01-501 and -507. Debtors assert that they were not entitled to a refund within the meaning of Code § 8.01-501 and lacked "possession" or "control, " as required by Code § 8.01-507, over their 2015 income tax refunds as they had yet to file 2015 income tax returns.

         Creditors respond that the circuit court properly granted summary judgment and dismissed the appeals. Creditors argue that Debtors' 2015 income tax refunds were intangible property interests that vested as of the close of the 2015 tax year, December 31, 2015, regardless of whether Debtors had filed their 2015 income tax returns.

         "[S]ummary judgment 'shall not be entered' unless no 'material fact is genuinely in dispute' on a controlling issue or issues and the moving party is entitled to such judgment as a matter of law." Mount Aldie, LLC v. Land Trust of Va., Inc., 293 Va. 190, 196, 796 S.E.2d 549, 553 (2017) (quoting Rule 3:20). "Thus, in an appeal of a decision awarding summary judgment, the trial court's determination that no genuinely disputed material facts exist and its ...


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