MINTBROOK DEVELOPERS, LLC v. GROUNDSCAPES, LLC AND FOREST GOLD, LLC; FOREST GOLD, LLC, GRACE LIM AND JAMES LIM v. MINTBROOK DEVELOPERS, LLC
Record No. 0474-22-4; Record No. 0499-22-4
COURT OF APPEALS OF VIRGINIA
DECEMBER 20, 2022
STUART A. RAPHAEL
PUBLISHED. Prеsent: Judges Athey, Chaney and Raphael. Argued at Winchester, Virginia.
FROM THE CIRCUIT COURT OF FAUQUIER COUNTY
Stephen E. Sincavage, Judge
David W. Shreve (James H. Higginbotham, II, on briefs), for Mintbrook Developers, LLC.
James P. Downey (James P. Downey, P.C., on briefs), for Forest Gold, LLC, Grace Lim and James Lim.
No brief or argument
We consider here whether an agreement to extend Lafayette Avenue to Route 28—in an area of Fauquier County called Bealeton—required Mintbrook Developers, LLC or Forest Gold, LLC to perform certain road improvements on Route 28 that were required by Fauquier County and by the Virginiа Department of Transportation
BACKGROUND
This case comes to us following a bench trial in which the circuit court ruled that Mintbrook, not Forest Gold, was responsible for the Route 28 road improvements at issue. On that question, we review the facts in the light most favorable to Forest Gold, the prevailing party below. See Sidya v. World Telecom Exch. Commc‘ns, LLC, 301 Va. 31, 37 (2022).1
In 2003 and 2007, Grace and James Lim acquired about 8.3 acres in Bealeton, where Route 28 (running southwest-northeast) intersects with Highway 17 (running north-south). The Lims’ property was in the northwest quadrant of that intersection. The Lims believed that the property would be ideal for a gas station or convenience store. The project required Fauquier County to rezone the proрerty, a process that took until 2015.
Mintbrook owned land to the north of the Lims’ property and west of Highway 17. Grace Road runs southwest to northeast (parallel to Route 28), dividing the Lims’ property to the south from Mintbrook‘s to the north. Mintbrook developed its property into residential lots and an apartment complex for seniors. Lafayette Avenue, running north-south, divides the residential lots to the west from the apartment complex to the east.
As originally laid out, Lafayette Avenue extended sоuth of Grace Road, but not all the way to Route 28. As part of their development plans, the Lims acquired the strip of land needed to extend Lafayette Avenue to Route 28. Both Mintbrook and the Lims stood to benefit from completing that connection. The Lims needed it for their development plans. And without that connection, there would be no southern access from Route 28 to Mintbrook‘s residential lots or to its apartment complex; the access would have been from the eаst, where Grace Road meets Highway 17.
In 2014, Mintbrook proposed that, if the Lims dedicated the road parcel, Mintbrook would extend Lafayette Avenue to Route 28. The parties exchanged various drafts of an agreement. In the final “Development Agreement,” entered into as of April 14, 2014, Mintbrook agreed to extend Lafayette Avenue to Route 28 and to complete the interconnection between the two roads.
When the parties signed that agreement, they did not know what requirеments would be imposed by VDOT as a condition of building the road extension and intersection. One possibility that later emerged was a traffic circle or “roundabout.” The ultimate determination by VDOT would depend on the outcome of a traffic-impact analysis. Mintbrook also did not know what improvements would be built on the Lims’ property.
In 2015, Fauquier County approved the commercial rezoning of the Lims’ land. The rezoning required the construction of improvements to connect Lafayette Avenue to Route 28, the details of which would be based on the traffic study.
In 2017, Mintbrook sent the Lims what Mintbrook called a “comfort letter,” reassuring them that Mintbrook intended “to plan, permit and construct” the extension of Lafayette Avenue to Route 28. Mintbrook noted that it was “required to update our traffic study . . . since this road segment was not part of Mintbrook‘s original plan,” and Mintbrook would “then get an access permit from VDOT.” Mintbrook‘s principal, Russell Marks, admitted at trial that Ms. Lim would “understand from this letter that we were going to do what was necessary for this road segment.”
In 2018, the Lims conveyed their property to Forest Gold, a limited liability company that they had formed. The parties subsequently treated Forest Gold as succeeding to
In 2019, after the traffic study was completed, Fauquier County approved a Public Improvement Plаn (PIP) for the project that required the construction of specific roadway improvements on Route 28 at the planned intersection with Lafayette Avenue. See Joint Exhibit 8. The parties did not make a clear record about exactly what those improvements entailed. In opening statements and closing argument, Mintbrook‘s counsel referred to the required improvements as including acceleration and deceleration lanes. Because the precise details of the roadwork do not affect the outcome here, we assume that Mintbrook‘s characterization is correct.2
Mintbrook refused to perform that work, which Mintbrook claimed exceeded the scope of its obligations under the Development Agreement. Mintbrook asserted that it agreed to build the intersection using a “flare-out” design shown on Exhibits A and B to the 2014 Development Agreement, not the more elaborate requirements specified in the 2019 PIP.
As a result, Forest Gold contractеd with Groundscapes, LLC to perform the required roadwork. Groundscapes charged a flat fee of $407,479.71, for which Forest Gold made an initial payment of $70,000. The Lims, through a related entity, posted the bond required by VDOT to secure performance of the PIP work.
When Forest Gold failed to pay Groundscapes, Groundscapes sued Forest Gold for the balance due: $337,479.71. Forest Gold filed a third-party complaint against Mintbrook, claiming that Mintbrook was responsible for the work and had to indemnify Forest Gоld. Mintbrook craved oyer of the contract, and Forest Gold filed the Development Agreement with the court. Forest Gold and the Lims then filed an amended third-party complaint against Mintbrook, seeking indemnification and attorney fees.
After a two-day bench trial, the circuit court found that Forest Gold breached its contract with Groundscapes and was liable for the outstanding balance, $337,479.71. The court also held that the Development Agreement unambiguously required Mintbrook to perform that wоrk, making Mintbrook liable to Forest Gold and the Lims in the same amount. The court, however, denied Forest Gold‘s claim for attorney fees. While the indemnification provision of the Development Agreement provided for the recovery of attorney fees, Forest Gold had waived its fee claim under Rule 3:25, the court reasoned, because the amended third-party complaint did not plead that the indemnification provision was the basis for the fee claim. The court acknowledged that this was a “technicality” but said that “we live in a world of technicalities when we are dealing with the law.”
Mintbrook appealed the adverse judgment against it, and Forest Gold and the Lims appealed the trial court‘s ruling denying them attorney fees.
ANALYSIS
A. The Development Agreement unambiguously required Mintbrook to perform the disputed work.
We begin with Mintbrook‘s claim that the trial court erred in finding that the Development Agreement unambiguously required Mintbrook to perform the Route 28 work that was required by the 2019 PIP. “Whether contractual provisions are ambiguous is a question of law and not of fact, and we do not on appeal accord the circuit court‘s resolution any deference since we are afforded the same opportunity to consider the provisions.” Nextel Wip Lease Corp. v. Saunders, 276 Va. 509, 515 (2008). “Contractual provisions are ambiguous if they may be understood in more than one way or if they may be construed to refer to two or more things at the same time. The ambiguity, if it exists, must appear on the face of the instrument itself.” Id. at 516 (сitation omitted). To resolve that question, “we conduct a de novo review.” Id. at 515-16. By contrast,
[w]e give the findings of fact made by a trial court that heard the evidence and evaluated the credibility of the witnesses at a bench trial the same weight as a jury verdict. Those factual findings will not be disturbed on appeal unless they are plainly wrong or without evidence to support them.
Collins v. First Union Nat‘l Bank, 272 Va. 744, 749 (2006).
Paragraph 1(G) of the Development Agreement defined the “Road Segment” work that Mintbrook needed to perform:
“Road Segment” means the portion of Lafayette Avenue that lies within the Road Parcel and extends from the boundary of the Mintbrook Property through the Road Parcel and joins with Route 28. Notwithstanding the foregoing, the intent of this Road Segment language is that Mintbrook shall, at Mintbrook‘s sole cost and expense, construct the entirety of Lafayette Avenue, including but not limited to, (i) all road improvements required at Lafayette Avenue‘s intersection with Route 28 per the approved Mintbrook Code of Development Site Plans, the relevant sections of which are detailed in Exhibits “A” and “B“, and (ii) all measures required to release all bonds and to dedicate Lafayette Avenue to the Virginia Department of Transportation (VDOT).
(Emphasis added.) Mintbrook contends that, under the Mintbrook Code of Development Site Plans and Exhibits A and B—referenced in romanette (i)—Mintbrook agreed to connect Lafayette Avenue to Route 28 using a flare-out design, but not to perform additional roadwork like the construction of acceleration and deceleration lanes. On the other hand, Forest Gold relies on romanette (ii), which required Mintbrook to construct everything necessary for VDOT to accept the dedication of the extension of Lafayette Avenue to Route 28 and to cause all bonds to be released.
We agree with the trial court that romanette (ii) unambiguously required Mintbrook to perform the broader scope of work. Romanette (ii) required Mintbrook to perform “all measures required to release all bonds and to dedicate Lafayette Avenue.” VDOT‘s representative testified that the roadwork performed by Groundscapes to connect Lafayette Avenue to Route 28 was the work required by the 2019 PIP. He further testified that VDOT would not have accepted the road dedication and would not have released the performance bond if that work had not been completed. Indeed, Mintbrook does not contest the trial court‘s faсtual finding—amply supported by the record—that “the evidence is clear . . . that[,] without that work[,] Lafayette Avenue would not have been dedicated.”
We disagree with Mintbrook that paragraph 1(G) is ambiguous in defining the Road Segment work. Mintbrook focuses almost exclusively on the more limited Route 28 work described in romanette (i), which incorporated the flare-out design anticipated in the “Mintbrook Code of Development Site Plans, the relevant sections of which are detailed in Exhibits ‘A’ and ‘B‘” of thе Development Agreement. But paragraph 1(G) makes clear that “the intent of this Road Segment language is that Mintbrook shall, at Mintbrook‘s sole cost and expense, construct the entirety of Lafayette Avenue, including but not limited to” the work described in romanette (i) “and” in romanette (ii). (Emphasis added.) It does not matter that Mintbrook did not know in 2014 what type of improvements VDOT would ultimately require at the intersection of Lafayette Avenue and Route 28. Whatever that might be, Mintbrook promised in romanettе (ii) to construct “all measures required to release all bonds and to dedicate Lafayette Avenue” to VDOT.
Mintbrook argues that we should look past that language to find the parties’ true intent from their exchange of an earlier version of the agreement. In March 2014, the
Mintbrook‘s argument, however, is barred by the parol-evidence rule, “sometimes called ‘the “plain meaning” rule.‘” Worsham v. Worsham, 74 Va. App. 151, 165 (2022) (quoting Berry v. Klinger, 225 Va. 201, 208 (1983)). When, as here, “the contract is unambiguous, extrinsic evidence of prior or contemporary discussions, understandings, or agreements, is inadmissible ‘to contradict or vary the plain language of the instrument itself.‘” Id. at 165-66 (quoting Utsch v. Utsch, 266 Va. 124, 130 (2003)). Instead, “the writing [is] the sole memorial of that contract, and it is conclusively concluded that the writing contains the whole contract, and is the sole evidence of the agreement.” Id. at 165 (alteration in original) (quoting Jim Carpenter Co. v. Potts, 255 Va. 147, 155 (1998)). As in Worsham, “[n]o one has suggested” here that the Development Agreement “is anything but a complete integration” of the parties’ agreement. Id. at 166. “For a complete integration,” the parol-evidence rule bars extrinsic evidence, whether it is offered to contradict or to “add to or explain the terms of a cоmplete, unambiguous, unconditional, written instrument.” Id. at 166 (quoting Godwin v. Kerns, 178 Va. 447, 451 (1941)). The Development Agreement also contains an integration clause providing that the document reflects “the entire agreement among the parties” and “supersede[s] all other prior agreements and understandings, both written and oral.” Russell Marks, Mintbrook‘s representative, acknowledged that clause at trial, agreeing that the relevant agreement is “the one that got signed, and not any prior drafts.” “Here, the parol evidence relied on . . . directly contradicts” the parties’ final agreement. Worsham, 74 Va. App. at 173 (alteration in original) (quoting Anden Grp. v. Leesburg Joint Venture, 237 Va. 453, 458 (1989)). Thus, the earlier draft cannot be considered. In short, the trial court correctly ruled that Mintbrook was responsible for the Route 28 improvements. We therefore affirm the judgment in favor of Forest Gold.3
B. The trial court erred in denying attorney fees.
“The general rule in this Commonwealth is that in the absence of a statute or contract to the contrary, a court may not award attorney‘s fees to the prevailing party.” Prospect Dev. Co. v. Bershader, 258 Va. 75, 92 (1999). Forest Gold bases its fee claim on paragraph 2(D) of the Development Agreement, where Mintbrook promised to “[i]ndemnify and save harmless [the Lims] from and against any and all suits, actions, legal proceedings, claims, demands, damages, liability, costs and expenses (including attorney‘s fees) arising out of or in connection with the Performance of Road Segment Work due to . . . breach of this Agreement . . . .”
In their separate appeal, Forest Gold and the Lims argue that the trial court erred in finding that they waived their attorney-fee claim under Rule 3:25. “A lоwer court‘s interpretation and application of the Rules of the Supreme Court . . . presents a question of law that we review de novo.” Cousett v. Commonwealth, 71 Va. App. 49, 57 (2019); see also LaCava v. Commonwealth, 283 Va. 465, 469-70 (2012) (same).
Rule 3:25 requires that “[a] party seeking to recover attorney fees must demand them in the complaint . . ., counterclaim . . ., third-party pleading . . ., or in a responsive pleading.”
Forest Gold insists that its pleading met the disclosure requirements of
We find it a close question whether the amended third-party complaint—viewed in isolation—adequately pleaded that the attorney-fee claim was based on paragraph 2(D) of the Development Agreement. A reasonable litigant in Mintbrook‘s position could have thought there were three possibilities: the attorney-fee request was boilerplate; the fee request was based on the indemnification provision in the Development Agreement; оr the fee request invoked the third-party-litigation exception to the general rule precluding the recovery of attorney fees.8
CONCLUSION
The trial court correctly found that the Development Agreement unambiguously required Mintbrook to construct the Route 28 improvements necessary for VDOT to release the performance bond and accept the dedication of Lafayette Avenue. The court thus correctly required Mintbrook to indemnify Forest Gold for the moneys paid to Groundscapes to complete that work after Mintbrook breachеd its obligation to build those improvements. We affirm that portion of the judgment.
But the trial court erred in denying attorney fees under the indemnification provision of the Development Agreement. We remand the case for the trial court to determine an appropriate award of attorney fees and costs incurred at trial and on appeal. We note that it is unclear which of the third-party plaintiffs is entitled to that recovery. The Lims signed the Development Agreement that contаins the indemnification provision. Yet the parties have litigated the case as if the Lims and Forest Gold are interchangeable. See supra note 3. We leave it to the trial court to sort out on remand which is the correct party to receive the fee award.
Record No. 0474-22-4—Affirmed.
Record No. 0499-22-4—Reversed and remanded.