West Square v. Communication Technologies

Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons,
and Agee, JJ., and Lacy, S.J.1

WEST SQUARE, L.L.C.

v.   Record No. 062303 OPINION BY JUSTICE CYNTHIA D. KINSER
                                     September 14, 2007
COMMUNICATION TECHNOLOGIES, INC.

          FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY
                  Herman A. Whisenant, Jr., Judge


      This appeal involves litigation that arose out of a

commercial real estate lease entered into between West

Square, L.L.C. (West Square), as landlord, and

Communication Technologies, Inc. (ComTek), as tenant.       As

relevant to the issues before us, the lease in question

contained a “Costs and Attorney’s Fees” clause that

provided:

           In any litigation between the parties
      arising out of this Lease, and in connection with
      any consultations with counsel and other actions
      taken or notices delivered, in relation to a
      breach of the provisions herein, the non-
      prevailing party shall pay to the prevailing
      party all expenses and court costs, including
      reasonable attorney’s fees incurred by the
      prevailing party in preparation for and (if
      applicable) at trial, and on appeal, and
      reasonable attorney’s fees in identifying and
      resolving any breach of this Lease. Such
      attorney’s fees and costs shall be payable upon
      demand.



      1
       Justice Lacy participated in the hearing and decision
of this case prior to the effective date of her retirement
on August 16, 2007.
         The primary issue before us is whether the circuit

court abused its discretion in determining the amount of

reasonable attorneys’ fees to award to West Square as the

prevailing party in litigation arising from a breach of the

lease.    We conclude that the circuit court did not abuse its

discretion as to the award of attorneys’ fees.      The circuit

court did, however, abuse its discretion by refusing to award

West Square certain costs and expenses.

                I. RELEVANT FACTS AND PROCEEDINGS

         Approximately nine months after the parties executed

 the subject lease, West Square filed a three-count motion

 for judgment against ComTek.    In the first count asserting

 breach of the lease by ComTek, West Square sought a

 judgment awarding it possession of the leased premises and

 monetary damages for past-due rent and other payments, as

 well as an award of attorneys’ fees and costs.     The other

 two counts involved a contractor’s alleged claim against

 ComTek for services and materials provided to construct

 improvements to the interior of the leased premises.     The

 contractor had assigned its claim to West Square, and West

 Square sought monetary damages against ComTek on a breach

 of contract theory, or alternatively, on a quantum meruit

 theory.    In response, ComTek filed an answer, pleas in bar,

 a demurrer to the quantum meruit claim, and a counterclaim


                                 2
for West Square’s alleged “unauthorized construction of the

interior of the [leased p]remises” and breach of its

covenant of quiet enjoyment.

     The circuit court overruled ComTek’s demurrer, and the

case proceeded to trial.   At the beginning of the second

day of trial, West Square non-suited the two construction

claims assigned to it by the contractor.      Finding that

ComTek had, in fact, breached the lease, the circuit court

ruled in favor of West Square on its remaining claim for

breach of the lease and also on ComTek’s counterclaim

(collectively, the lease dispute).      The court awarded

damages to West Square in the amount of $35,442.78 plus

interest.2

     Pursuant to an agreed pretrial order bifurcating the

determination of attorneys’ fees and the trial on the

merits, West Square then filed an application for

attorneys’ fees and expenses.       West Square attached to the

application an affidavit from its lead attorney, which,

among other things, summarized the hours of legal services

provided to West Square by seven of the law firm’s

attorneys along with their respective hourly rates.      The

hours of legal services rendered and the hourly rates

     2
       ComTek did not challenge, by cross-error or
otherwise, the circuit court’s award of damages to West
Square.

                                3
charged ranged from 162.8 hours at the rate of $325 per

hour to 0.6 hours at the rate of $165 per hour.   The

affidavit also listed 1.4 hours of paralegal services

billed at the rate of $85 per hour.

     West Square also included with its application

summaries of the qualifications of each attorney who

provided legal services to West Square, a synopsis

detailing the legal services represented to have been

rendered to West Square regarding the lease dispute, a list

of costs and expenses incurred by West Square, and copies

of the itemized billing statements sent to West Square

showing all the legal fees West Square incurred in its

disputes and litigation with ComTek.   According to West

Square, the itemized billing statements demonstrate that it

excluded from the attorneys’ fee application the legal

services rendered with regard to the non-suited claims.

West Square requested an award of attorneys’ fees in the

amount of $64,578.00 for approximately 223.30 hours of

legal services and an award for costs and expenses in the

amount of $5,074.70.3



     3
       The costs and expenses included $4,390.60 for
depositions, $150.00 for a court reporter at the trial,
$175.00 for serving witness subpoenas, $93.00 for filing
the motion for judgment, and $266.10 for miscellaneous
expenses.

                             4
     ComTek filed a memorandum opposing West Square’s

application for attorneys’ fees and expenses.   ComTek

centered its objection on West Square’s failure to

segregate its requested attorneys’ fees and expenses

associated with the lease dispute from those incurred with

regard to the non-suited claims.   Relying on this Court’s

decision in Ulloa v. QSP, Inc., 271 Va. 72, 83, 624 S.E.2d

43, 50 (2006), ComTek asserted that “[w]here multiple

claims exist, only one of which permits the recovery of

attorney’s fees, the party requesting attorney’s fees must

fairly and reasonably separate out its attorney’s fees with

specificity.”

     In its opposition papers, ComTek submitted its own

tabulation of West Square’s time and work entries found in

the detailed billing records that were produced as part of

the fee application.   ComTek allocated the items according

to its interpretation of the claims to which the activity

was related and argued that only about 32.90 hours of legal

services, representing attorneys’ fees of $8,828.00, were

separately and specifically identified in West Square’s

application as relating solely to the lease dispute.     In

contrast, according to ComTek, the bulk of the time entries

contained no delineation between the lease dispute and the

non-suited claims.   ComTek further asserted that about 17


                              5
hours were billed to West Square for multi-lawyer

conferences, which ComTek claimed did not pertain solely to

the lease dispute and/or were a duplication of effort.

     In furtherance of its position that the amount of

requested attorneys’ fees was unreasonable, ComTek pointed

out that, prior to trial, the parties had filed only three

pleadings in the case, that only one motion, ComTek’s

demurrer, was heard by the circuit court, and that the

demurrer was not related to the lease dispute.   ComTek also

noted that only two of the eleven interrogatories it

propounded and only three of its thirty-seven requests for

production of documents pertained solely to the lease

dispute.   The attorneys’ fees application, according to

ComTek, also did not take into account the complexity of

the non-suited claims versus the simplicity of the lease

dispute.   ComTek asserted that West Square’s alleged

damages for ComTek’s breach of the lease “involved a

straightforward calculation of $2,000 per month rent,

approximately $300 per month in common area maintenance

charges, a late charge, interest and a leasing commission

of $5,583.48,” and “required one witness’s testimony

. . . , the admission of [the lease], and one or two other

documents related to common area maintenance charges.”

ComTek asked the circuit court to compare the case at bar


                              6
where, “[a]s evidenced by the pleadings and the total

absence of any contentious pre-trial motions, the lease

dispute did not require complicated or extensive effort,”

with the situation in Chawla v. BurgerBusters, Inc., 255

Va. 616, 499 S.E.2d 829 (1998), “where[, according to

ComTek,] more than 300 pleadings were filed, 15 to 20

depositions were taken, . . . approximately 50 distinct

motions were filed[, and t]hirty separate court hearings

were conducted, including a seven-day trial.”

     ComTek challenged the requested costs and expenses for

similar reasons.   For example, ComTek claimed that the

depositions dealt with matters pertaining to all the claims

asserted by West Square, not just the lease dispute.    It

further asserted that, as with the attorneys’ fees, West

Square failed to specify those costs and expenses incurred

solely in relation to the lease dispute.

     In a reply memorandum, West Square appended a

supplemental affidavit from its lead attorney.   In that

affidavit, West Square’s attorney stated that, upon further

review of the challenged billing entries, he concluded that

the amount of $7,320.00 should be deducted from the

original total sum of attorneys’ fees requested in the

application because that amount was not clearly related to

the lease dispute.   At the same time, however, West Square


                              7
contended that it was entitled to recover the additional

sum of $8,860.15 for attorneys’ fees incurred subsequent to

filing the original application for attorneys’ fees and

expenses.    West Square thus sought attorneys’ fees and

expenses for the amended sum of $71,380.70.4

     Following oral argument by counsel, the circuit court

first noted that West Square had been awarded approximately

$35,000 on the merits of the case.   The court then stated

that “the total cost, which is over $80,000 in attorneys’

fees, over $5,000 in expenses, is certainly a figure that

is too high for this case.   I would be remiss not to go on

the record saying that.”   The circuit court found the

amount of attorneys’ fees and costs requested by West

Square “to be exorbitant . . . consider[ing] the amount

sued for.”   The court explained: “It’s called ‘reasonable

attorneys’ fees.’   It doesn’t say ‘attorneys’ fees,’ but

‘reasonable.’ ”

     In reaching its decision, the circuit court indicated

that it had considered the cases cited by West Square’s


     4
       West Square also submitted with the reply memorandum
an affidavit from Timothy M. Purnell, who opined as an
expert on the issue of attorneys’ fees in commercial
landlord-tenant litigation. Purnell stated that, in his
opinion, the requested attorneys’ fees and expenses “were
customary, reasonable and necessary to prosecute the breach
of lease case and to defend against the counterclaim of the
tenant.”

                               8
counsel, along with “the type of case” and “the amount sued

for.”    The court concluded that “reasonable attorneys’ fees

for this case, in the time that we could have tried the

case, [was] $10,000.”    The circuit court further ruled that

it was not awarding any costs or expenses to West Square.

This appeal ensued.

                           II. ANALYSIS

        On appeal, West Square asserts that the circuit court

erred by awarding it “only a small fraction of the

attorney’s fees and none of the expenses and court costs

incurred by the prevailing party.”    On appeal, we will set

aside a trial court’s determination of the amount of

attorneys’ fees to be awarded only if the court abused its

discretion.    Schlegel v. Bank of America, 271 Va. 542, 550,

628 S.E.2d 362, 366 (2006); Holmes v. LG Marion Corp., 258

Va. 473, 479, 521 S.E.2d 528, 533 (1999).    We will first

discuss the circuit court’s award of attorneys’ fees to

West Square and then turn to its decision to award no

amount for costs and expenses.

                        A. Attorneys’ Fees

        “Under the so-called ‘American rule,’ a prevailing

party generally cannot recover attorneys’ fees from the

losing party.”    Ulloa, 271 Va. at 81, 624 S.E.2d at 49

(citing Lee v. Mulford, 269 Va. 562, 565, 611 S.E.2d 349,


                                9
350 (2005)).   This rule, however, does not prevent parties

to a contract from adopting provisions that shift the

responsibility of attorneys’ fees to the losing party in

disputes involving the contract.   See id.; Mullins v.

Richlands Nat’l Bank, 241 Va. 447, 449, 403 S.E.2d 334, 335

(1991).   Here, the “Costs and Attorneys’ Fees” clause at

issue was such a contractual provision.   It provided that,

in the event of litigation arising out of the lease, the

“non-prevailing party” would have to pay all expenses,

costs, and reasonable attorneys’ fees incurred by the

“prevailing party.”   Since West Square was the prevailing

party on the lease dispute, see Sheets v. Castle, 263 Va.

407, 413, 559 S.E.2d 616, 620 (2002) (a “prevailing party”

is the “party in whose favor a judgment is rendered,

regardless of the amount of damages”), the circuit court

correctly awarded attorneys’ fees to West Square.   The

question before us, however, is whether the court abused

its discretion in determining the amount of reasonable

attorneys’ fees.

     A prevailing party who seeks to recover attorneys’

fees pursuant to a contractual provision such as the one

before us has the burden to present a prima facie case that

the requested fees are reasonable and that they were

necessary.   Chawla, 255 Va. at 623, 499 S.E.2d at 833; see


                              10
also Seyfarth, Shaw, Fairweather & Geraldson v. Lake

Fairfax Seven Ltd. P’ship, 253 Va. 93, 96, 480 S.E.2d 471,

473 (1997).   We have identified several factors that are

relevant to the determination of reasonableness:

     [A] fact finder may consider, inter alia, the
     time and effort expended by the attorney, the
     nature of the services rendered, the complexity
     of the services, the value of the services to the
     client, the results obtained, whether the fees
     incurred were consistent with those generally
     charged for similar services, and whether the
     services were necessary and appropriate.

Chawla, 255 Va. at 623, 499 S.E.2d at 833; accord Ulloa,

271 Va. at 82, 524 S.E.2d at 49; Mullins, 241 Va. at 449,

403 S.E.2d at 335.   Under a contractual provision like the

one at issue, however, a prevailing party “is not entitled

to recover fees for work performed on unsuccessful claims.”

Ulloa, 271 Va. at 82, 624 S.E.2d at 49 (citing Chawla, 255

Va. at 624, 829 S.E.2d at 833).

     West Square asserts that all its attorneys’ fees were

reasonable and necessary and that the circuit court should,

therefore, have awarded it the full amount requested.     In

the alternative, West Square argues that the circuit court

should have articulated its findings on the various factors

set forth in Chawla and identified the specific legal

services that were not reasonable and necessary.   West

Square claims that the circuit court, instead of performing



                              11
such an analysis, arbitrarily awarded it an amount of

attorneys’ fees that was less than one-third of the amount

of damages it recovered.   In doing so, the court, according

to West Square, considered only the large amount of

attorneys’ fees requested in relation to the type of case

and the amount for which West Square sued.     We do not agree

with West Square’s position.

     As both parties note, this Court has identified

several factors that a fact-finder “may consider” in

determining the amount of reasonable attorneys’ fees to be

awarded to a prevailing party.      Chawla, 255 Va. at 623, 499

S.E.2d at 833.   We have not, however, stated that a fact-

finder must consider all these factors in every situation.

See Connors v. Connors, 594 S.W.2d 672, 676 (Tenn. 1980)

(identifying factors to be used as “guides in fixing a

reasonable attorney’s fee”).   But see Barber v. Kimbrell’s,

Inc., 577 F.2d 216, 226 (4th Cir. 1978) (“[twelve] factors

must be considered by district courts in [the Fourth

Circuit] in arriving at a determination of reasonable

attorneys’ fees”) (emphasis added).     And, we decline to do

so today.   In the determination of reasonable attorneys’

fees, particular factors may have added or lessened

significance depending on the circumstances of each case.




                               12
     Nonetheless, the record demonstrates that both

West Square and ComTek, in arguing their respective

positions before the circuit court, presented and

discussed the several factors that may be considered

in determining reasonable attorneys’ fees.   When

announcing its decision, the circuit court stated that

it had considered the cases cited by West Square.    The

court also had before it West Square’s detailed

application for attorneys’ fees, along with ComTek’s

particularized objections to the reasonableness of the

amount requested, including the assertion that West

Square failed to segregate the legal services rendered

solely with regard to the lease dispute from the

services provided for the non-suited claims.    While

the circuit court may not have articulated a finding

with regard to each of the factors we identified in

our prior cases, see Chawla, 255 Va. at 623, 499

S.E.2d at 833; Mullins, 241 Va. at 449, 403 S.E.2d at

335, the court did, however, note the factors it found

relevant in deciding the reasonableness of West

Square’s requested attorneys’ fees.   As the fact-

finder, the circuit court had to determine “from the

evidence what [were] reasonable fees under the facts

and circumstances of [this] particular case.”


                             13
Mullins, 241 Va. at 449, 403 S.E.2d at 335.   In light

of the record before the circuit court, we cannot say

that the court abused its discretion in consideration

of appropriate factors and in fixing the amount of

attorneys’ fees it awarded to West Square.

                   B. Costs and Expenses

     West Square also contends that the circuit court erred

in refusing to award it any costs or expenses.   We agree.

As we have already stated, West Square was the “prevailing

party” at trial.   Therefore, ComTek, as the “non-prevailing

party,” was required under the “Costs and Attorney’s Fees”

clause of the lease to pay West Square “all expenses and

court costs” in connection with “any litigation between the

parties arising out of” the lease.

     ComTek, however, contends West Square failed to

segregate its costs and expenses associated with the lease

dispute from those incurred with regard to the non-suited

claims.   Our holding in Ulloa regarding the burden to

specify attorneys’ fees associated with a particular claim

for which an award of attorneys’ fees is allowed applies

with equal force to a request for an award of costs and

expenses.   Even though claims may be intertwined and have a

common factual basis, West Square, as the party seeking an

award of costs and expenses, had “the burden to establish


                               14
to a reasonable degree of specificity” those costs and

expenses associated with the lease dispute.   Ulloa, 271 Va.

at 83, 624 S.E.2d at 50.   It did not do so with respect to

certain requested costs and expenses.

     Based on the record before us, we conclude that West

Square is entitled to recover from ComTek the filing fee of

$93.00, the process fees for serving witness subpoenas

totaling $175.00, and the court reporter expense of

$150.00.   With regard to the requested expenses for

depositions and miscellaneous items, West Square did not

“establish to a reasonable degree of specificity” what

portion of those expenses were incurred with regard to the

lease dispute, as opposed to the non-suited claims.    Id.

West Square “is not entitled to recover [expenses] for

. . . unsuccessful claims.”   Id. at 82, 524 S.E.2d at 49

(citing Chawla, 255 Va. at 624, 829 S.E.2d at 833).

Therefore, we hold that the circuit court abused its

discretion by refusing to award costs and expenses for the

filing fee, the service of process fees, and the court

reporter expense.   The circuit court did not abuse its

discretion in refusing to award West Square the remainder

of its requested costs and expenses.

                       III. CONCLUSION




                              15
     For these reasons, we will affirm the judgment of the

circuit court with regard to the amount of its award of

attorneys’ fees to West Square.    We will reverse the

judgment of the circuit court only with regard to its

refusal to award West Square its costs and expenses for the

filing fee, the service of process fees, and the court

reporter expense.   Because the dollar amounts of those

items are in the record before us and are not disputed, we

will enter final judgment here in favor of West Square in

the amount of $418.00.

     We must now address one final matter.    West Square

requests an additional award of attorneys’ fees, costs and

expenses under the terms of the “Costs and Attorney’s Fees”

clause allowing an award of “expenses and court costs,

including reasonable attorney’s fees incurred by the

prevailing party . . . on appeal.”   We hold that West

Square is not entitled to such an award because it is not

the “prevailing party” on appeal.    In Sheets, we stated

that in reaching an interpretation of the term “prevailing

party,” “[w]e need not go farther than Black’s Law

Dictionary for its common meaning: ‘A party in whose favor

a judgment is rendered, regardless of the amount of damages

awarded.’”   263 Va. at 413, 559 S.E.2d at 620.   On the

primary issue regarding the amount of the circuit court’s


                              16
award of attorneys’ fees, West Square is not the recipient

of a judgment in its favor on appeal.

     ComTek also requests an award of attorneys’ fees,

costs and expenses incurred in this appeal.    Unlike West

Square, ComTek is the prevailing party on the primary issue

before us.   Thus, we will remand this case to the circuit

court for a determination of reasonable attorneys’ fees,

costs and expenses incurred by ComTek in this appeal.

                                              Affirmed in part,
                                              reversed in part,
                                              and remanded.




                              17