Effective July 1, 2011, the Virginia General Assembly has increased the jurisdictional limit of General District Court civil cases from $15,000 to $25,000, exclusive of interest and, where available, attorney’s fees. A jurisdictional limit is the maximum amount of money that a person or entity may sue for in a particular court. As a result of the new law, a person or entity with a civil claim may now sue for up to $25,000 in a Virginia General District Court. In comparison, civil suits for more than $25,000 must be filed in one of Virginia’s Circuit Courts.
Plaintiffs usually prefer to litigate in General District Court for two reasons: low cost and quick timing. For example, General District Court filing fees are lower than those charged by the Circuit Court. In addition, General District Courts limit discovery (the fact-finding process in which the parties to a lawsuit engage prior to trial) to issuing subpoenas duces tecum, a document that requires the opposing party and/or a third-party to produce documents or tangible things that may be used as evidence. In contrast, Circuit Courts allow for extensive discover, including, but not limited to, written discovery and depositions. Finally, a General District Court case can usually be tried within two months of filing. By contrast, many Circuit Court cases are litigated for a year or more before trial.
However, the $25,000 General District Court limit does not apply in unlawful detainer actions (cases involving the wrongful possession of the real property of another) where the leased premises are used by the occupant primarily for “business, commercial or agricultural purposes” and the claim is for “damages sustained or rent proved to be owing.” This means that, with certain exceptions, a commercial landlord may sue a tenant for an unlimited amount in a General District Court.
Nonetheless, the landlord must ensure that possession of the leased premises is at issue in order to take advantage of this Code provision. For example, its unlikely that a General District Court judge will allow a commercial landlord to avail itself of this exception where the landlord has already recovered possession of the leased premises by a “self-help” lockout. Similarly, a commercial landlord may not be allowed to avail itself of this provision in the event that the tenant has abandoned the leased premises. In both situations, the General District Court judge may determine that the landlord has already retaken possession of the leased premises and that the matter is actually a breach of contract action that should have been brought as a Warrant In Debt (a General District Court lawsuit seeking a judgment for money). Where the tenant is no longer in possession of the premises, the tenant may argue that the landlord’s claim is limited to the General District Court’s $25,000 maximum.
The increase in the General District Court’s jurisdictional limit will benefit commercial landlords who seek a judgment for unpaid rent and other sums owing under a lease but who do not wish to recover possession of the leased premises. Given this increase, and assuming that the lease does not provide otherwise, a landlord may now file a Warrant in Debt seeking up to $25,000 in money damages for breach of the lease in what is typically the preferred venue for such lawsuits: Virginia’s speedier, cheaper General District Court.
The new $25,000 jurisdictional limit may also give commercial landlords an advantage where a lease is personally guaranteed by a third party. Lease guaranties -- agreements by which a third party agrees to perform a tenant’s obligations -- are increasingly common in the commercial context. However, a commercial landlord must be cautious when it comes to filing suit against a guarantor for a tenant’s breach. The Code provision that provides that the $25,000 limit does not apply in unlawful detainer actions is worded broadly and appears to include all parties who owe under such a lease, including guarantors. However, a guarantor may argue that the relief sought against him (or it, as the case may be) is actually a claim for contract damages and that, as such, it is governed by the $25,000 General District Court cap. Where unpaid rent and related damages do not exceed $25,000, a landlord may consider filing an unlawful detainer against the tenant and a breach of contract action against the guarantor in General District Court. The increase in the jurisdictional limit benefits the landlord in that the landlord can bring both actions in General District Court. However, in the event that unpaid rent and related damages exceed $25,000, a landlord may need to file an unlawful detainer action against the tenant in General District Court and a breach of contract action against the guarantor in Circuit Court.
