Cangiano v. Lsh Bldg. Co., L.L.C., Record No. 050699.

• Decision Date: 13 January 2006
• Docket Number: Record No. 051031.,Record No. 050699.
• Citation: 623 S.E.2d 889
• Parties: Salvatore CANGIANO v. LSH BUILDING COMPANY, L.L.C.
• Court: Virginia Supreme Court

623 S.E.2d 889

Salvatore CANGIANO v. LSH BUILDING COMPANY, L.L.C.

Record No. 050699.

Record No. 051031.

Supreme Court of Virginia.

January 13, 2006.

COPYRIGHT MATERIAL OMITTED

John R. Walk (Christopher E. Gatewood; Jeffrey M. Zwerdling, Richmond; Hirschler Fleisher; Zwerdling and Opperman, on briefs), for appellant.

John K. Burke, Jr., (Bryan M. Haynes; Troutman Sanders, on briefs), Richmond, for appellee.

Present: All the Justices.

OPINION BY Justice DONALD W. LEMMONS.

In these appeals, we consider whether the trial court erred in granting specific performance of a real estate purchase agreement and awarding attorney's fees. For the reasons discussed below, we will affirm the judgment of the trial court in both appeals.

I. Facts and Proceedings Below

On August 20, 2003, LSH Building Company, L.L.C. ("LSH") and Salvatore Cangiano ("Cangiano") signed a "Purchase Agreement" wherein Cangiano agreed to sell an approximately 1,898-acre tract of land known as Lower Magnolia Green in Chesterfield County to LSH for 39 million dollars. LSH planned to develop Lower Magnolia Green by constructing 2,370 single-family units, 1,180 multi-family units, a golf course, and a 212-acre commercial center.

As part of the "Warranties of Seller" in the Purchase Agreement, Cangiano warranted and represented "to the best of his knowledge and belief" in Paragraph 15(h) that he will have purchased/settled on all additional land and easements required for all offsite utilities, road widenings, turn lanes and any other offsite improvements required of this project. All land and easements to be transferred to [LSH] at "settlement."

In the event of default by Cangiano, Cangiano agreed in Paragraph 18 of the Purchase Agreement that

[LSH] shall be entitled to all remedies available to [LSH] at law or in equity, including specific performance, all of such remedies shall be cumulative and not exclusive of each other. Further[,] in the event of default hereunder, the defaulting party shall be liable for all costs incurred by the non-defaulting party in enforcing this Agreement through court action or otherwise, including a reasonable attorney's fee.

After entering into the Purchase Agreement, a dispute arose between Cangiano and LSH concerning the number of easements Cangiano was required to acquire and convey to LSH pursuant to Cangiano's "Warranties of Seller." Cangiano contended that he agreed only to acquire and convey easements necessary for the development of an initial phase consisting of 200 lots. Cangiano then informed LSH that he was declaring their agreement null and void because LSH failed to provide, pursuant to Paragraph 16 of the Purchase Agreement, "proof of ability to perform financing."

LSH filed a bill of complaint seeking declaratory judgment, specific performance, damages resulting from breach of contract, and attorney's fees and costs pursuant to Paragraph 18 of the Purchase Agreement. Prior to trial, LSH withdrew its claim for breach of contract and the case proceeded on LSH's claims for declaratory judgment, specific performance, and attorney's fees and costs. The parties agreed, and obtained the approval of the trial court, to bifurcate the issues and try LSH's claims for declaratory judgment and specific performance, and then try LSH's claims for attorney's fees and costs post-trial, if necessary. See Lee v. Mulford, 269 Va. 562, 567-68, 611 S.E.2d 349, 352 (2005).

During its opening statement to the trial court, LSH framed the issues before the trial court as follows:

We believe the evidence will show that LSH is entitled to a declaratory judgment, that the contract is in full force and effect, and that Mr. Cangiano is obligated to perform his obligations under the contract, including his obligation to not only convey the property, but to convey additional property and easements, if necessary, for the development of the property. LSH is also entitled, we submit, to a decree of specific performance requiring Mr. Cangiano to specifically perform his obligations.

During Cangiano's opening statement to the trial court, he maintained that LSH failed to provide proof of financing, and raised for the first time his contention that the Purchase Agreement was unenforceable because there was neither a meeting of the minds nor an offer and acceptance:

And I believe not only is the contract void, it never really was in fruition, but there was never a meeting of the minds; there was never a true offer and acceptance because of the difference of the attachments with this contract; and that the contract should fail, and that the [parties] should go their own ways.

LSH objected to this change in position and argued that Cangiano had conceded that the Purchase Agreement was valid in Cangiano's answer and interrogatory responses.

After the presentation of evidence, LSH restated its request for declaratory judgment and specific performance. Cangiano responded:

So for all of those reasons, I don't believe this contract can stand. I believe that we are in equity here. They are asking for specific performance. I honestly don't know, if the Court feels this contract should be specifically performed, how many years it is going to take to get these easements and if they are going to be happy with the easements because. . . it's a changing situation.

Continuing, Cangiano concluded, "So for those reasons, I would ask that this contract be held to be unenforceable.... And I would ask that the plaintiff not be granted their relief...."

In announcing its ruling, the trial court held that Cangiano was bound by his statements in his answer and interrogatory responses that the Purchase Agreement was a valid contract. The trial court then held that the Purchase Agreement was unambiguous and granted declaratory judgment in favor of LSH and decreed specific performance. The trial court stated: "The Court's decision grants complete relief to the plaintiff as requested in the bill of complaint...."

The trial court instructed the attorneys for LSH to prepare the final decree and circulate it to the attorney for Cangiano. Subsequently, Cangiano obtained new counsel. Prior to the post-trial hearing on attorney's fees, a dispute arose concerning the wording of the final decree. Cangiano objected to the language employed by LSH in the draft version of the final decree, contending for the first time in the course of the litigation that LSH sought to have the trial court order Cangiano to perform "the impossible." Cangiano asked the trial court, referring to the language used in Paragraph 15(h) of the Purchase Agreement, to require him only to use his "best efforts" to obtain the additional easements. While LSH agreed to the insertion of Cangiano's "best efforts" language in the final decree, LSH objected to Cangiano's attempt to raise, for the first time and after the conclusion of the trial, the defense of impossibility. At the conclusion of the hearing, the trial court took the matter under advisement.

Upon further consideration of the briefs submitted by the parties, the trial court entered its final decree granting LSH's request for declaratory judgment and specific performance. The trial court held that LSH did not breach the Purchase Agreement, that Cangiano did not properly terminate the Purchase Agreement according to its terms, and that LSH "did provide sufficient proof of ability to perform financing." The final decree also ordered Cangiano

to use his best efforts to specifically perform his obligations under the Purchase Agreement, including but not limited to his obligation under [Paragraph] 15(h) of the Purchase Agreement to use his best efforts to acquire and convey at closing all additional land and easements required for all offsite utilities, road widenings, turn lanes, and any other offsite improvements required to develop the entire property being conveyed under the Purchase Agreement, time being of the essence.

On February 4, 2005, the trial court held a hearing on LSH's request for attorney's fees and costs pursuant to Paragraph 18 of the Purchase Agreement. Cangiano acknowledged that LSH "won" at trial, but argued that LSH's fees were unreasonable and that they should be no more than $120,000.00, double the attorney's fees Cangiano incurred. The trial court disagreed. In announcing its ruling, the trial court stated:

[I have] considered the fee application with reference to the language in the default provisions in the contract and based on any considerations that I believe I am obligated to take into account in making this determination. Those, I think, have been identified by the parties and include time and effort to have been expended, the nature of the services, the nature of the case, the complexity of the case, the value of the services to the client, the results, the skill and experience brought there by the attorneys involved, and the question of whether the rates charged were consistent with the rendering of similar services in the context of this area or this market.

In considering all of those circumstances, taking into account the arguments that have been adduced this morning, the [trial court] concludes that [LSH's] attorneys' fees are reasonable and cannot be categorized as unreasonable and will grant [LSH's] motion.

Pursuant to Paragraph 18 of the Purchase Agreement, the trial court awarded LSH $258,256.26 in attorney's fees and costs: $235,679.26 for those incurred in litigating the underlying dispute and $22,577.00 for its post-trial "Motion for Award of Attorneys' Fees and Costs."

Cangiano filed two appeals, which we granted. Cangiano maintains the trial court "erred in granting specific performance requiring the seller to convey what he did not own" and "erred in granting specific performance of a contract provision which was not an affirmative duty but rather a representation of current conditions, made `to the best of [the seller's] knowledge and belief.'" Cangiano further argues...