Graham v. Community Management Corp.
2017 Va. LEXIS 145
| Va. | 2017Background
- Heather Graham was sued by Community Management Corporation (CMC) for alleged breach of a Confidentiality Agreement that included a contractual attorney-fee provision for the prevailing party.
- In the underlying suit CMC sought its attorney’s fees; Graham defended (filed demurrers, pleas in bar, answer) but did not plead a counterclaim or otherwise demand her own attorney’s fees in any responsive pleading.
- Graham prevailed at trial and obtained a defense verdict in the first action.
- After that verdict, Graham filed a separate action seeking recovery of the attorney’s fees she incurred defending the first suit.
- CMC demurred, arguing Rule 3:25 required Graham to demand attorney’s fees in the underlying action and her failure constituted a waiver; the trial court sustained the demurrer and dismissed Graham’s suit.
- The Virginia Supreme Court affirmed, holding Rule 3:25’s plain language bars an attorney-fee claim not timely pled in the underlying proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 3:25 required Graham to demand attorney’s fees in the underlying action | Graham argued she could not plead a recoverable fee claim until she prevailed; fee claim accrues only after final judgment | CMC argued Rule 3:25 requires a demand for attorney’s fees in the complaint or a responsive pleading and failure to do so is waiver | Court held Rule 3:25 plainly requires pleading a fee demand in the underlying action and Graham waived the claim by failing to do so |
| Whether the right to recover fees is a freestanding claim or ancillary and thus not subject to Rule 3:25 timing | Graham contended fee claim was not ripe until resolution of underlying case and therefore could be asserted later | CMC maintained pleading rules and Rule 3:25 apply regardless of characterization; defendants may plead such claims as counterclaims or in responsive pleadings | Court held characterization unnecessary: regardless whether ancillary or freestanding, Rule 3:25 mandates pleading the fee claim early |
| Whether Code § 8.01-230/statute of limitations or Rule 3:9 precludes Rule 3:25’s application | Graham relied on accrual concepts and limitations rules to argue fee claim could wait until accrual after verdict | CMC argued accrual/limitations do not change pleading requirements; Rule 3:25 and related statutes govern pleading obligations | Court held accrual for limitations purposes is distinct from pleading obligations; Rule 3:25 controls pleading timing |
| Whether failing to plead fees constituted impermissible claim-splitting or was barred by other equitable doctrines | Graham argued she did not split claims and had no factual basis to assert breach against CMC earlier | CMC argued Rule 3:25 expressly bars an unpled fee claim by waiver; claim-splitting doctrines are separate and not dispositive | Court held Rule 3:25’s waiver provision independently bars the claim despite claim-splitting analysis |
Key Cases Cited
- Amin v. County of Henrico, 286 Va. 231 (de novo review of legal questions and Rules interpretation)
- Online Res. Corp. v. Lawlor, 285 Va. 40 (interpreting Rule 3:25 waiver provision)
- Thorsen v. Richmond SPCA, 292 Va. 257 (distinction between right of action and cause of action for accrual/statute of limitations)
- Lee v. Mulford, 269 Va. 562 (prejudice of failing to plead fee claim; entitlement to jury on fees)
- Van Dam v. Gay, 280 Va. 457 (small injury suffices to trigger a claim)
- Allison v. Brown, 293 Va. 617 (pleading is the basis for recovery; relief must conform to pleadings)