881 S.E.2d 657
Va. Ct. App.2022Background:
- The Lims owned 8.3 acres in Bealeton and sought commercial rezoning; Mintbrook owned adjacent residential property and agreed in a 2014 Development Agreement to extend Lafayette Avenue to Route 28.
- Paragraph 1(G) of the Agreement required Mintbrook to construct the “entirety of Lafayette Avenue,” including work described in Exhibits A/B and “all measures required to release all bonds and to dedicate Lafayette Avenue to the Virginia Department of Transportation (VDOT).”
- After a traffic study, Fauquier County/VDOT required additional Route 28 improvements in a 2019 Public Improvement Plan (PIP) (e.g., accel/decel lanes), which Mintbrook refused to perform, claiming its obligation was limited to a flare-out design shown in Exhibits A/B.
- Forest Gold (owned by the Lims) contracted with Groundscapes to perform the PIP work; Groundscapes sued Forest Gold for the unpaid balance; Forest Gold filed a third-party complaint against Mintbrook seeking indemnification and attorney fees under the Development Agreement.
- The trial court held Forest Gold liable to Groundscapes but found Mintbrook—per the Agreement—required to indemnify Forest Gold for the costs; the trial court denied Forest Gold’s attorney-fee claim under Rule 3:25 as waived.
- On appeal, the Court of Appeals affirmed Mintbrook’s indemnity/liability but reversed the denial of attorney fees, remanding for a determination of reasonable fees and costs.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Development Agreement unambiguously required Mintbrook to perform the Route 28/VDOT-required improvements | Forest Gold: romanette (ii) obligates Mintbrook to perform “all measures required to release all bonds and to dedicate Lafayette Avenue” to VDOT, which includes the PIP improvements | Mintbrook: obligation limited to the flare-out shown in Exhibits A/B (romanette (i)); PIP required work beyond that scope; prior drafts show parties removed explicit Route 28 obligations | Court: Agreement unambiguous; romanette (ii) requires completion of all measures necessary for VDOT dedication and bond release; affirms judgment for Forest Gold against Mintbrook |
| Whether Forest Gold waived its attorney-fee claim under Rule 3:25 by failing to plead the specific contractual basis (paragraph 2(D)) | Forest Gold: amended third-party complaint referenced the contract and sought indemnification and fees; Mintbrook knew the fee claim was premised on the indemnity clause; no prejudice or surprise | Mintbrook: complaint did not identify paragraph 2(D) as the basis for fees; Rule 3:25(b) requires identifying the basis, so fees are waived | Court: Close question, but Mintbrook conceded it knew fees were sought under the indemnification clause; applying that concession and precedent, the court reversed the denial and remanded for determination of fees |
Key Cases Cited
- Sidya v. World Telecom Exch. Commc’ns, LLC, 301 Va. 31 (2022) (standard for reviewing factual findings in favor of the prevailing party below)
- Nextel Wip Lease Corp. v. Saunders, 276 Va. 509 (2008) (contract ambiguity is a question of law reviewed de novo)
- Collins v. First Union Nat’l Bank, 272 Va. 744 (2006) (bench-trial factual findings given same weight as jury verdict)
- Worsham v. Worsham, 74 Va. App. 151 (2022) (parol-evidence rule bars extrinsic evidence when contract is unambiguous and fully integrated)
- Prospect Dev. Co. v. Bershader, 258 Va. 75 (1999) (general rule: attorney fees not recoverable absent statute or contract)
- Online Resources Corp. v. Lawlor, 285 Va. 40 (2013) (a defendant’s concession during litigation that it knew the basis for an attorney-fee claim can defeat a Rule-based pleading objection)
- Owen v. Shelton, 221 Va. 1051 (1981) (party forced to defend a third-party suit may recover reasonable attorney fees under certain contract/indemnity principles)
- Fidelity Nat. Title Ins. Co. v. S. Heritage Title Ins. Agency, Inc., 257 Va. 246 (1999) (limits on recovering attorney fees for litigation between contracting parties)