Present: All the Justices
BRENDA P. CUMMINGS,
T/A KALEIDOSCOPE
v. Record No. 000115 OPINION BY JUSTICE BARBARA MILANO KEENAN
January 12, 2001
JEAN S. FULGHUM
FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY
Timothy J. Hauler, Judge
In this appeal, we consider whether a plea of recoupment
under Code § 8.01-422 is subject to a statute of limitations
defense raised by a plaintiff in an action to enforce payment of
a note.
The following facts are undisputed. On December 3, 1997,
Jean S. Fulghum filed a motion for judgment against Brenda P.
Cummings to enforce payment of a promissory note secured by a
deed of trust. Cummings and her late husband, Kenneth V.
Cummings, Jr., had executed the note pursuant to a March 1987
contract between the Cummingses and a construction contractor,
Larry W. Primm (Primm), and his corporation, Larry W. Primm
Construction, Inc. (Primm Construction). Under the terms of the
contract, the Cummingses agreed to purchase from Primm
Construction a parcel of land on which Primm agreed to construct
certain improvements. The contract provided that $45,000 of the
purchase price for the land was to be secured by a deed of trust
on the property, accompanied by a note made payable to Primm.
On December 21, 1987, the Cummingses executed the deed of
trust and a note made payable "to Larry W. Primm, or order." In
the note, the Cummingses agreed to make monthly payments of
interest only for a term of six years, beginning on the date of
"completion of the improvements on the property," with the
principal balance and any unpaid interest due at the end of this
six-year term. Primm later assigned the note to Fulghum and her
late husband, Arthur T. Fulghum, III. A building was
constructed on the property and on October 11, 1990, the County
of Chesterfield issued a certificate of occupancy permitting use
of the building.
Fulghum's motion for judgment alleged that Cummings was in
default under the terms of the note. Fulghum asserted that this
default occurred based on Cummings's alleged failure to pay the
principal sum due on October 11, 1996, six years after the date
the certificate of occupancy was issued, and failure to make
monthly interest payments from November 1990 through November
1997. Fulghum sought payment of the principal sum due plus
interest owed under the terms of the note.
On December 30, 1997, Cummings filed a grounds of defense
in which she alleged that Primm, the original note holder, had
breached his contract with her, causing her to suffer damages in
an amount greater than the amount Fulghum was seeking to
recover. Cummings requested that the action against her be
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dismissed. In response, Fulghum filed a "Plea of Statute of
Limitations" stating that Cummings's "claim of damages" was
barred by the statute of limitations.
After hearing argument on the nature of Cummings's
pleadings, the trial court concluded that Cummings had pleaded
recoupment under Code § 8.01-422. The trial court held that
Cummings's statutory recoupment plea was subject to the statute
of limitations plea asserted by Fulghum and was time-barred. In
articulating its ruling, the trial court expressly relied on
Neely v. White, 177 Va. 358, 14 S.E.2d 337 (1941). After
further proceedings on the merits of the motion for judgment,
the trial court entered final judgment in favor of Fulghum and
ordered Cummings to pay the principal amount due on the note,
with interest as specified in the judgment order.
On appeal, Cummings argues that a plea of recoupment
asserted under Code § 8.01-422 is not subject to a plea of the
statute of limitations. She contends that our decision in Neely
does not resolve this issue because Neely was decided under
statutes that differ substantially from the provisions of Code
§ 8.01-422. She asserts that "as a result of the substantive
changes made to the statutes by the General Assembly in 1954,
this Court's holding in Neely has become one of historical
interest only."
3
In response, Fulghum argues that a statutory recoupment
plea has the characteristics of an action at law that
effectively is initiated when the plea is filed. Therefore, she
contends that the five-year statute of limitations of Code
§ 8.01-246 applicable to written contracts bars Cummings's
statutory recoupment plea. Fulghum asserts that although the
statutes we considered in Neely have been amended, Code § 8.01-
422 should be applied in the same manner as its predecessor
statute was applied in Neely, because Code § 8.01-422 is "almost
identical" to that former statute. We disagree with Fulghum's
arguments.
Under basic rules of statutory construction, we examine a
statute in its entirety, rather than by isolating particular
words or phrases. Earley v. Landsidle, 257 Va. 365, 369, 514
S.E.2d 153, 155 (1999); Ragan v. Woodcroft Village Apartments,
255 Va. 322, 325, 497 S.E.2d 740, 742 (1998); Buonocore v. C&P
Telephone Co., 254 Va. 469, 472-73, 492 S.E.2d 439, 441 (1997).
When the language in a statute is clear and unambiguous, we are
bound by the plain meaning of that language. Earley, 257 Va. at
370, 514 S.E.2d at 155; Ragan, 255 Va. at 326, 497 S.E.2d at
742; Harrison & Bates, Inc. v. Featherstone Assoc., 253 Va. 364,
368, 484 S.E.2d 883, 885 (1997). We must determine the General
Assembly's intent from the words appearing in the statute,
unless a literal construction of the statute would yield an
4
absurd result. Earley, 257 Va. at 369, 514 S.E.2d at 155;
Ragan, 255 Va. at 325-26, 497 S.E.2d at 742; Abbott v. Willey,
253 Va. 88, 91, 479 S.E.2d 528, 530 (1997).
In a contract action, the pleading of statutory equitable
defenses, including the defense of statutory recoupment, is
governed by Code § 8.01-422, which provides:
In any action on a contract, the defendant may file a
pleading, alleging any matter which would entitle him to
relief in equity, in whole or in part, against the
obligation of the contract; or, if the contract be by deed,
alleging any such matter arising under the contract,
existing before its execution, or any such mistake therein,
or in the execution thereof, or any such other matter as
would entitle him to such relief in equity; and in either
case alleging the amount to which he is entitled by reason
of the matters contained in the pleading. If the amount
claimed by the defendant exceed the amount of the
plaintiff's claim the court may, in a proper case, give
judgment in favor of the defendant for such excess.
The language of this statute is clear and unambiguous. We
review its plain language in conjunction with our holding in
Neely to determine whether that holding is applicable to a
recoupment plea under Code § 8.01-422.
In Neely, we considered whether a plea of statutory
recoupment under former Code § 6145, a predecessor statute to
Code § 8.01-422, 1 was subject to a plea of the statute of
limitations. We observed that the "entire subject of statutory
1
Former Code § 6145 was recodified in 1950 as former Code
§ 8-241, which was amended in 1954. Code § 8.01-422 represents
the 1977 recodification of former Code § 8-241, as amended in
1954.
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recoupment" was at that time "embraced in Chapter 255 of the
Code," which included both former Code §§ 6145 and 6149. 177
Va. at 364, 14 S.E.2d at 339.
Former Code § 6145 provided, in material part:
In any action on a contract, the defendant may file a plea,
alleging . . . [any] matter as would entitle him . . . to
relief in equity, in whole or in part, against the
obligation of the contract. . . .
Pleas asserted under this provision were subject to defenses
allowed by former Code § 6149, which provided, in material part:
A defendant who files a plea . . . under this chapter shall
be deemed to have brought an action, at the time of filing
such plea . . . against the plaintiff[;] . . . the
defendant's claim shall be open to the same ground of
defense to which it would have been open in any action
brought by him thereon.
After considering the language of former Code §§ 6145 and
6149, we held in Neely that these statutes treated a statutory
recoupment plea as an "action" subject to the same defenses as
any other action, including a plea of the statute of
limitations. 177 Va. at 364, 14 S.E.2d at 340. We stated that
"[b]y [former] Code § 6149, the defendant filing a special plea
under this chapter is put on the footing of a plaintiff and is
deemed to have brought an action against the plaintiff at the
time of filing his plea." Id. Thus, our holding in Neely, that
a plea of statutory recoupment under former Code § 6145 was
subject to a plea of the statute of limitations, was based
directly on former Code § 6149.
6
Former Code § 6149, however, was substantially amended in
1954 after being recodified as former Code § 8-244. These
amendments limited the application of former Code § 8-244 to
counterclaims and cross-claims, as set forth in relevant part:
A defendant who pleads a counterclaim or cross-claim
shall be deemed to have brought an action at the time
he files such pleading, provided that if the subject
matter of the counterclaim arises out of the same
transaction or occurrence upon which the plaintiff's
claim is based, the statute of limitations with
respect to such counterclaim shall be tolled by the
commencement of the plaintiff's action.
Former Code § 8-244 was recodified in 1977 as Code § 8.01-
233, which retained the substance of former Code § 8-244 and
contained a new provision including cross-claims in its
statutory tolling provision. 2 Therefore, Code § 8.01-233 has no
bearing on the statute of limitations issue before us, because a
recoupment plea asserted under Code § 8.01-422 is not a
counterclaim or a cross-claim within the meaning of Code § 8.01-
233.
Based on this statutory history, we examine our holding in
Neely in light of the General Assembly's later actions. When a
2
Code § 8.01-233 provides:
A. A defendant who pleads a counterclaim or cross-claim
shall be deemed to have brought an action at the time he files
such pleading.
B. If the subject matter of the counterclaim or cross-
claim arises out of the same transaction or occurrence upon
which the plaintiff's claim is based, the statute of limitations
with respect to such pleading shall be tolled by the
commencement of the plaintiff's action.
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statute or a group of statutes has been revised, and the General
Assembly has omitted provisions formerly enacted, the parts
omitted may not be revived by construction, but must be
considered as annulled. Richmond-Ashland Ry. Co. v.
Commonwealth, 162 Va. 296, 305, 173 S.E. 892, 896 (1934);
Western Assurance Co. v. Stone, 145 Va. 776, 785, 134 S.E. 710,
713 (1926). A contrary holding would impute to the General
Assembly gross carelessness or ignorance, which is wholly
impermissible. Western Assurance, 145 Va. at 785, 134 S.E. at
713. Thus, to depart from the meaning expressed by the language
of a revised statute or group of statutes is to change the
statutes, to legislate and not to interpret. See Greenberg v.
Commonwealth, 255 Va. 594, 600, 499 S.E.2d 266, 269 (1998);
Faulkner v. Town of South Boston, 141 Va. 517, 524, 127 S.E.
380, 382 (1925).
Under former Code § 6149, certain equitable defenses,
including the defense of statutory recoupment, were subject to
"the same ground[s] of defense" ordinarily asserted in actions
at law. That restriction on equitable defenses was removed by
the General Assembly when it deleted from the successor statutes
to former Code § 6149 the provision that statutory equitable
defenses shall be deemed an "action" and be subject to any
grounds of defense applicable in an action at law.
8
In the absence of this statutory restriction, the language
of Code § 8.01-422 is clear and unambiguous. That language does
not contain any provisions subjecting equitable pleas of
statutory recoupment to defenses available in an action at law
such as the statute of limitations. Moreover, no other statute
has revived the provision of former Code § 6149 allowing such
defenses to equitable pleas asserted pursuant to statute. Thus,
based on the statutory changes enacted after Neely, we conclude
that our holding there is inapplicable to a plea of statutory
recoupment under Code § 8.01-422. Accordingly, we hold that a
plea of recoupment under Code § 8.01-422 is not subject to a
statute of limitations defense, and that the trial court erred
in holding that Cummings's recoupment plea under Code § 8.01-422
was time-barred. 3
For these reasons, we will reverse the trial court's
judgment, and remand the case for further proceedings based on
the parties' pleadings. 4
3
We recognize that Code § 8.01-422 allows a defendant
asserting a recoupment plea to claim an amount in excess of the
plaintiff's claim, and that the statute provides that the court
"may, in a proper case, give judgment in favor of the defendant
for such excess." However, in view of the statutory changes
discussed above, we are not at liberty to use this language to
revive by construction the provision of former Code § 6149,
treating statutory recoupment pleas as "actions," that the
General Assembly chose to delete.
4
Based on our holding, we do not reach Fulghum's assignment
of cross-error regarding the trial court's computation of
interest.
9
Reversed and remanded.
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