Shepherd v. Davis

Present: All the Justices

WILLIAM R. SHEPHERD, JR.,

v. Record No. 020188

RICHARD F. DAVIS, ET AL. OPINION BY
JUSTICE CYNTHIA D. KINSER
January 10, 2003
JOHN T. HENNING, ET AL.

v. Record No. 020189

RICHARD F. DAVIS, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Edward W. Hanson, Jr., Judge

These consolidated appeals concern a parcel of real

estate that is subject to a lease agreement granting the

lessee both a fixed-price option to purchase the tract of

real estate and a right of first refusal. Such provisions

are generally referred to as a “dual option.” One of the

issues presented in this appeal concerns the interplay

between those two provisions when a third party offered to

purchase the subject property and the lessee failed to

exercise the right of first refusal, attempting instead to

invoke the fixed-price option. Additional questions are

whether the third-party offeror was entitled to specific

performance and, if not, what amount of damages was

appropriate. Because we find no error in the chancellor’s

decrees holding that the lessee forfeited his contractual
rights by failing to exercise the right of first refusal,

and awarding only nominal damages to the third-party

offeror, we will affirm those decrees.

I. MATERIAL FACTS AND PROCEEDINGS

Richard F. and Amelia D. Davis (the Davises) entered

into a contract with George J. Parker (Parker or the Parker

Estate) in 1981 to purchase a parcel of real estate located

a short distance south of Virginia Beach Boulevard in the

City of Virginia Beach. Under the terms of the purchase

contract and a separate indenture agreement between the

parties, the Davises would receive title to the property

upon payment in full of the deferred purchase price. The

final amortized payment was not due until April 2015. 1

Notably, the purchase contract contained neither an

acceleration clause nor a provision allowing prepayment of

the purchase price. The contract also prohibited the

Davises from conveying their interests in the real estate

or assigning the purchase contract without the prior

consent of Parker, but provided that they could, with

Parker’s consent, assign their interests in the contract to

“an assignee of adequate financial capability.”

1
In 1990, the Davises borrowed additional money, which
increased the amount of their deferred obligation and
extended the payments to 2015.

2
 In July 1993, the Davises leased this same parcel of

real estate to William R. Shepherd, Jr. (Shepherd), for an

initial term of five years. The lease agreement contained

provisions granting Shepherd both a fixed-price option to

purchase and a right of first refusal. 2 This dual option

pertained not only to the leased parcel of real estate

(referred to as “Parcel 1” in the lease agreement), but

also to an adjacent parcel of real estate owned by the

Davises (referred to as “Parcel 2” in the lease agreement)

(collectively designated the “Property”). The relevant

sections of the lease creating the dual option state the

following:

23. OPTION TO PURCHASE AND RIGHT OF FIRST
REFUSAL

23.1. Option. Upon compliance with the
provisions of this Section 23, Tenant shall have
the sole and exclusive Option to purchase the
Property pursuant to the terms of this Agreement
for the continuous period of time commencing on
the Commencement Date and ending on the date the
lease terminates. If the Option is properly and
timely exercised, as provided in this Agreement,
a contract shall then exist between Landlord and
Tenant pursuant to which Landlord agrees to sell
and Tenant agrees to buy the Property upon the
terms and conditions specified in this Section
23.

2
A “Memorandum of Option” was allegedly recorded in
the Clerk’s Office of the Circuit Court of the City of
Virginia Beach. That document is not part of the record in
this case.

3
 23.2. Exercise of Option. The Option may
be exercised, subject to the terms of paragraph
23.8, by Tenant at any time prior to the
expiration of the Lease, which shall be midnight
of the last day this lease is in effect. Tenant
shall exercise the Option by sending written
notice to Landlord prior to the expiration date
of the Option specifying Tenant’s desire to
exercise the Option.

23.3. Purchase Price. The purchase price
(“Purchase Price”) to be paid by Tenant to
Landlord for the Property shall be ONE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS
($150,000.00)[.]

23.4. Title. Landlord shall convey to Tenant,
at Closing, good, indefeasible and marketable title
to the Property, free and clear of all liens,
encumbrances and easements, other than those to
which the Tenant fails to object . . . .
. . . If Landlord is unwilling or unable to
correct such objections within [thirty days,]
Tenant shall have the option of taking such title
as Landlord can give without abatement of the
Purchase Price, or terminating this Agreement[.]

* * * *

23.11. Right of First Refusal.
Notwithstanding anything contained in this
Agreement to the contrary, if Landlord shall
receive from a third party (“Offeror”) a bona
fide written offer to purchase the Property, or
any part of it, Landlord shall send to Tenant a
copy of the proposed offer (“Offer”), with
notification that Landlord intends to accept the
Offer. Tenant shall have the right within ten
(10) days thereafter to exercise the Option to
purchase the Property, or such part of it
described in the Offer, pursuant to the terms and
conditions contained in the Offer. If Tenant
does not elect to purchase the Property or such
part of it described in the Offer, within such
five (5) day period, Landlord may sell the
Property or the part described in the Offer to
the Offeror. If Landlord does not sell the

4
 Property or any part of it, according to the
Offer, then Tenant’s right of first refusal shall
remain in full force.

Almost five years later, in March 1998, John T.

Henning and David J. Cross (Henning/Cross), who jointly

owned a parcel of real estate adjoining the Property to the

west, offered to buy the Property for $175,000. As

specified in the ensuing agreement between Henning/Cross

and the Davises, the purchase of the Property was

contingent upon vacation of the lot line between the

Property and the Henning/Cross parcel. The terms of the

agreement also acknowledged that Shepherd had an option to

purchase and a right of first refusal with respect to the

Property. Accordingly, the Davises, through their

attorney, transmitted the Henning/Cross offer (the “Offer”)

to Shepherd in accordance with the requirements of

Paragraph 23.11 of their lease with Shepherd. Shepherd

elected not to exercise his right of first refusal because

the terms of the Offer were not acceptable to him.

Instead, he attempted to exercise his fixed-price option to

purchase the Property.

Despite repeated demands from both Shepherd and

Henning/Cross, the Davises refused to close on either

5
agreement. 3 Consequently, Shepherd and Henning/Cross filed

separate bills of complaint for specific performance of

their respective agreements with the Davises. The Davises

defended both suits on the basis that it was impossible for

them to perform under the terms of either agreement

because, pursuant to their purchase contract with Parker,

they did not yet own marketable title to Parcel 1.

The matters were consolidated and referred to a

commissioner in chancery for presentation of evidence and

the submission of a report to a chancellor. The issues

before the commissioner were: (1) whether Shepherd could

purchase the Property pursuant to his fixed-price option or

whether, having failed to exercise his right of first

refusal, Shepherd lost that option; (2) whether

Henning/Cross were entitled to specific performance of

their agreement with the Davises; (3) whether the Davises

were excused from fulfilling their obligations under either

agreement based on the defense of impossibility; (4)

whether the Davises’ rights under the purchase contract

with Parker could be assigned; and (5) whether either

Shepherd or Henning/Cross were entitled to damages and an

award of attorney fees, and if so, in what amounts.

3
The Parker Estate apparently had refused to accept
prepayment of the purchase price by the Davises.

6
 After hearing evidence, the commissioner issued his

report, finding that the “first refusal clause [was]

obviously intended to override the option clause, since it

[began] with the language ‘[n]otwithstanding anything

contained in this Agreement to the contrary . . . .’ ”

Concluding that the Henning/Cross Offer to purchase the

Property was a “ ‘bona fide offer’ ” not made for any

improper purpose, the commissioner determined that

“Shepherd was required to respond to the right of first

refusal, and was not entitled to ignore it by preferring

the option.” 4

The Commissioner further concluded that, although the

Henning/Cross agreement was “valid and facially

enforceable” and had been breached by the Davises, the

agreement could not be specifically enforced because it was

presently impossible for the Davises to convey marketable

title. Their purchase contract with Parker did not contain

an acceleration clause or provision allowing prepayment of

the purchase price. Nor did it allow an assignment of the

Davises’ interests without Parker’s consent, and there was

no evidence of such consent. Thus, the commissioner

4
Shepherd and the Davises entered into a lease
amendment one day after the lease expired. The
commissioner found that this document “conferred no further

7
declined to recommend an assignment of the Davises’

interests under their purchase contract with Parker.

However, the commissioner stated that “while

impossibility is a defense to specific performance, it is

no defense to liability for contractual damages.”

Consequently, the commissioner recommended an award of

damages in the amount of $376,430 to Henning/Cross as well

as attorney fees and costs. The commissioner also

recommended a reimbursement of certain sums paid by

Shepherd to the Davises in his attempt to exercise his

fixed-price purchase option and to protect his position.

All the parties filed exceptions to the commissioner’s

report. Upon considering those exceptions, the chancellor

confirmed the commissioner’s findings except those

concerning the reimbursement of certain payments to

Shepherd, the award of damages to Henning/Cross, and the

issue of attorney fees. The chancellor re-referred those

matters to the commissioner.

After hearing additional evidence, the commissioner

submitted a supplemental report. Having learned for the

first time that the Davises actually owned Parcel 2 of the

Property, the commissioner addressed not only the question

rights, and failed to resurrect those which had been
forfeited.”

8
whether either Shepherd or Henning/Cross was entitled to an

award of damages but also the question whether specific

performance could be ordered as to Parcel 2. With regard

to the latter question, the commissioner concluded that

specific performance was not appropriate because Parcel 2,

by itself, is “landlocked” and because an order directing

the Davises to convey solely that parcel would be

tantamount to creating a new contract for the parties.

On the issue of damages, the commissioner recommended

no award of damages to Shepherd because the commissioner

concluded that, having first failed to exercise his right

of first refusal, Shepherd forfeited his other contractual

rights. As to Henning/Cross, the commissioner recommended

an award of only “nominal damages” to include their costs

and attorney fees related to this litigation and any other

“out of pocket expenses which would be ‘restitutionary.’ ”

Relying on this Court’s decisions in Davis v. Beury, 134

Va. 322, 114 S.E. 773 (1922), and Chesapeake Builders, Inc.

v. Lee, 254 Va. 294, 492 S.E.2d 141 (1997), the

commissioner reasoned that, in order to recover damages for

the “ ‘benefit of the bargain,’ ” Henning/Cross had to

prove one of the following elements: (1) that the Davises

acted in bad faith; (2) that the Davises voluntarily

rendered themselves unable to complete the conveyance on or

9
before the time fixed for closing; or (3) that the Davises

were able to complete the conveyance but neglected or

refused to so do. Although Henning/Cross argued that the

Davises had acted in bad faith, the commissioner concluded

otherwise and, accordingly, decided that Henning/Cross were

not entitled to damages based on the benefit of their

bargain.

After considering exceptions to the commissioner’s

supplemental report, the chancellor confirmed the report

and entered judgment against the Davises in favor of

Henning/Cross in the amount of $20,040.48. 5 We awarded

separate appeals to Shepherd and Henning/Cross but

consolidate them for purposes of this opinion. In the

Henning/Cross appeal, we also accepted assignments of

cross-error filed by the Davises.

II. ANALYSIS

A. STANDARD OF REVIEW

On appeal, we affirm a chancellor’s decree approving a

commissioner’s report unless the decree is plainly wrong or

without evidence to support it. Snyder Plaza Properties,

Inc. v. Adams Outdoor Advertising, Inc., 259 Va. 635, 641,

528 S.E.2d 452, 456 (2000); Lim v. Choi, 256 Va. 167, 171,

5
This sum included $5,761.48 for expenses and $14,279
for attorney and paralegal fees.

10
501 S.E.2d 141, 143 (1998). A chancellor should sustain a

commissioner’s factual findings if supported by the

evidence, but this principle does not apply to a

commissioner’s conclusions of law. Chesapeake Builders,

254 Va. at 299, 492 S.E.2d at 144. Similarly, we are not

bound by a chancellor’s interpretation of a contract

because we have the same opportunity as the chancellor to

consider the contract language. C.F. Garcia Enterprises,

Inc. v. Enterprise Ford Tractor, Inc., 253 Va. 104, 107,

480 S.E.2d 497, 498-99 (1997); Langman v. Alumni Ass’n of

the Univ. of Virginia, 247 Va. 491, 498, 442 S.E.2d 669,

674 (1994).

B. SHEPHERD APPEAL

The primary issue in Shepherd’s appeal concerns the

relationship between the provisions in the lease with the

Davises establishing Shepherd’s fixed-price option to

purchase the Property and his right of first refusal.

Shepherd argues, based on our decision in Cities Service

Oil Co. v. Estes, 208 Va. 44, 49, 155 S.E.2d 59, 63 (1967),

that a right of first refusal benefits a lessee and must,

therefore, be interpreted with that purpose in mind.

Interpreting the right of first refusal in that manner,

Shepherd contends that the parties’ reason for including

the dual option was to allow him to purchase the Property

11
pursuant to whichever provision was more favorable to him

at the time based on a comparison of the terms of his

fixed-price option with those presented in a third-party

offer. In Shepherd’s view, the fixed-price option set a

ceiling on the purchase price of the Property, and the

right of first refusal allowed him to buy the Property at a

lower figure by matching a third-party offer.

With regard to the prefatory language

“[n]otwithstanding anything contained in this Agreement to

the contrary,” Shepherd posits that this phrase means that,

notwithstanding the fact that he had a fixed-price option,

he also had the right to purchase the Property at the price

set forth in a bona fide third-party offer. The terms of

the dual option, says Shepherd, are not contradictory.

Instead, the two provisions are separate and distinct,

creating two ways in which he can elect to purchase the

Property. According to Shepherd, the fixed-price option

remains in effect throughout the term of the lease even if

he elects not to exercise his right of first refusal and

the Davises sell the Property to a third party.

We agree that generally a fixed-price option is

included in a lease to benefit the lessee, see id., but

that principle does not control our interpretation of the

provisions at issue. In Cities Service Oil, this Court

12
addressed a dual option in a lease, but the issue was

whether the right of first refusal contained in that

particular lease applied to a public judicial sale. Id. at

45, 155 S.E.2d at 60. We were not called upon in that

case, as we are here, to decide whether either provision

took precedence over the other.

There is a split in authority on this issue. Some

courts have held that a lessee may exercise a fixed-price

option without regard to a right of first refusal. See

e.g. Gulf Oil Corp. v. Chiodo, 804 F.2d 284, 286 (4th Cir.

1986); Amoco Oil Co. v. Snyder, 478 A.2d 795, 798-99 (Pa.

1984); Butler v. Richardson, 60 A.2d 718, 722 (R.I. 1948);

Crowley v. Patterson, 306 N.W.2d 871, 875 (S.D. 1981).

Other courts have concluded that a lessee forfeits the

right to purchase under a fixed-price option when the

lessee refuses to exercise a right of first refusal after

being presented with a third-party offer. See e.g. Shell

Oil Co. v. Blumberg, 154 F.2d 251, 252-53 (5th Cir. 1946);

Northwest Racing Ass’n v. Hunt, 156 N.E.2d 285, 288 (Ill.

App. Ct. 1959); Tarrant v. Self, 387 N.E.2d 1349, 1353

(Ind. Ct. App. 1979); M & M Oil Co. v. Finch, 640 P.2d 317,

320-21 (Kan. Ct. App. 1982). However, courts agree that

the interpretation of dual-option provisions turns upon the

particular language used and that a decision construing a

13
dual option in one agreement will not necessarily be

persuasive or controlling in a case involving a different

agreement. Chiodo, 804 F.2d at 286; Bobali Corp. v. Tamapa

Co., 340 A.2d 485, 490 (Pa. Super. Ct. 1975); Crowley, 306

N.W.2d at 873.

We find the terms of the dual-option provisions in

this case to be clear and unambiguous. Thus, we construe

those terms according to their plain meaning. Golding v.

Floyd, 261 Va. 190, 192, 539 S.E.2d 735, 736 (2001); Winn

v. Aleda Const. Co., 227 Va. 304, 307, 315 S.E.2d 193, 194-

95 (1984). In doing so, we do not treat any word or phrase

as meaningless if a reasonable meaning can be given to it.

Dominion Saving Bank, FSB v. Costello, 257 Va. 413, 417,

512 S.E.2d 564, 567 (1999); Winn, 227 Va. at 307, 315

S.E.2d at 194-95.

Applying these principles to the dual-option

provisions at issue, we are persuaded that the prefatory

language modifies the fixed-price option and gives the

right of first refusal precedence. The fixed-price option

is the only provision in the lease that, by its terms, is

“contrary” to Shepherd’s right of first refusal. We agree

with the Davises’ argument that “the use of the term

‘contrary’ suggests the terms being overridden are not

complementary.” The phrase “[n]otwithstanding anything

14
. . . to the contrary” means irrespective of the fixed-

price option. To read this phrase as Shepherd suggests

would render meaningless not only the prefatory language

but also two other sentences found in Paragraph 23.11,

which created the right of first refusal.

The first of those sentences provides that, if the

Davises receive a third-party offer to purchase the

Property (designated in the lease as the “Offer”), Shepherd

has the right to “exercise the Option to purchase the

Property [defined in the recital section of the lease as

Shepherd’s ‘option to purchase . . . Parcels 1 and 2’], or

such part of it described in the Offer, pursuant to the

terms and conditions contained in the Offer.” (Emphasis

added.) This sentence means that, when the Davises

communicated the Henning/Cross Offer to Shepherd, his

fixed-price option became subject to the terms of the

Offer, despite the fact that those terms were “contrary” to

the terms contained in the fixed-price option. Shepherd no

longer had the right to purchase the Property for the

amount established in the fixed-price option.

The second sentence is found at the conclusion of

Paragraph 23.11. That sentence provides that, if the

Davises do not sell the Property in accordance with the

Offer, Shepherd’s right of first refusal remains in effect.

15
Noticeably absent is any statement that, in those

circumstances, the fixed-price option to purchase also

remains in effect. Contrary to Shepherd’s argument, his

fixed-price option does not survive in that situation. 6

Thus, we conclude that, upon receipt of the

Henning/Cross Offer, Shepherd had the right to purchase the

Property but only pursuant to the terms and conditions of

the Offer. He no longer could purchase the Property under

the terms of his fixed-price option.

As an alternative argument, Shepherd contends that he

was not obliged to exercise the right of first refusal

because the Henning/Cross Offer was not “bona fide” as

required by the terms of Paragraph 23.11. He enumerates

two reasons for this contention: (1) the Offer “contained a

‘poison pill’ making it unreasonable for Shepherd to accept

it[,]”; and (2) the terms of the Offer “required far more

than the mere purchase of the [Property].” Both of these

reasons turn on the fact that the Henning/Cross Offer was

contingent upon vacation of the lot line between the

6
Our conclusion is not altered by Shepherd’s assertion
that a “Memorandum of Option” was recorded in the land
records for the City of Virginia Beach. See Code §§ 55-
57.1 and -57.2. Shepherd’s rights vis-à-vis the Davises
are determined by the lease agreement.

16
Property and the parcel of real estate owned by

Henning/Cross. 7

Shepherd asserts that this contingency was a “poison

pill” for him because, if he exercised the right of first

refusal, he would have to eliminate the lot line between

the Property and an adjacent parcel of real estate situated

to the north and owned by Lynnhaven Realty, L.L.C.

(Lynnhaven Realty). Although Shepherd acknowledged that he

owned Lynnhaven Realty, he, nevertheless, claimed that he

7
Henning testified before the commissioner that the
purpose of vacating the lot line was to unify the title
between the two parcels so that an easement for the benefit
of the Property across the Henning/Cross parcel could be
eliminated. That easement provided access to the Property
from Parker Lane, which in turn accessed Virginia Beach
Boulevard. Henning further agreed that vacating the lot
line and unifying the title would end the reason for the
then pending litigation involving the easement.
That easement has been the subject of ongoing
litigation between the same parties that are before us in
these two appeals. In Davis v. Henning, 250 Va. 271, 277,
462 S.E.2d 106, 109 (1995), we held that an easement by
necessity exists over the Henning/Cross property for the
benefit of the parcel referred to in this opinion as Parcel
1. Subsequently, when Henning/Cross allegedly blocked the
easement, Shepherd and the Davises each commenced suits
against Henning/Cross. According to the answer filed by
the Davises in the present suit, the purpose of their
agreement with Henning/Cross was to settle that second
round of litigation. After the execution of the agreement
between the Davises and Henning/Cross, the Circuit Court of
the City of Virginia Beach ruled that Henning/Cross could
not block the easement or interfere with either Shepherd’s
or the Davises’ use of it. This Court refused to award
Henning/Cross an appeal from that decree. Davis v.
Henning, No. 982364 (Feb. 18, 1999).

17
could not fulfill that requirement because two different

entities would own the parcels, unless he took title to the

Property in the name of Lynnhaven Realty, and vacating the

lot line would leave the Property landlocked. 8 Shepherd

also admitted that paying an additional $25,000 for the

Property was not acceptable to him.

We are not persuaded by Shepherd’s argument. The term

“bona fide” is defined as “[m]ade in good faith; without

fraud or deceit.” Black’s Law Dictionary 168 (7th ed.

1999). Like the commissioner, we find no evidence that the

Henning/Cross Offer was made for any improper purpose. The

fact that acceptance of the Offer would have resolved

pending litigation about the easement does not mean that it

was made in bad faith or was to perpetrate a fraud.

Shepherd suggests on brief that the terms of the Offer were

designed to make it unreasonable for him to purchase the

Property. However, neither his displeasure with those

terms nor the fact that they were more burdensome for

Shepherd than the terms of his fixed-price purchase option

changes our conclusion that the Henning/Cross Offer was

bona fide.

8
We note that Lynnhaven Realty did not acquire title
to its property until sometime between January and June
1998, when Shepherd deeded the property to it. During that
time frame, Henning/Cross offered to purchase the Property.

18
 Thus, we hold that there is no error in the decree of

the chancellor confirming the commissioner’s findings that

the Henning/Cross Offer was bona fide and that Shepherd

forfeited his contractual rights to purchase the Property

by failing to exercise his right of first refusal upon

receipt of the Offer. Having forfeited those contractual

rights, Shepherd was not entitled to either specific

performance or damages. 9

C. HENNING/CROSS APPEAL

The assignments of error in the appeal awarded to

Henning/Cross can be narrowed to two questions: (1) whether

the chancellor erred by failing to award specific

performance to Henning/Cross; and (2) whether, having

denied specific performance, the chancellor erred by

awarding only “nominal” damages to Henning/Cross rather

than damages based on the “benefit of the bargain.” 10 We

will address the questions seriatim.

1. SPECIFIC PERFORMANCE

9
It is not necessary to address Shepherd’s remaining
assignments of error.
10
The Davises assert on brief that Henning/Cross
failed to assign error to the commissioner’s finding that
it was impossible for the Davises to convey fee simple
title to Parcel 1. That assertion is correct, but we still
must address whether the chancellor erred by refusing to
order an assignment of the Davises’ interests in Parcel 1.

19
 Henning/Cross assert that they were entitled to

specific performance of their contract with the Davises

with an abatement of the purchase price. In particular,

they claim that they demanded and were willing to accept an

assignment of the Davises’ rights under their purchase

contract with Parker as to Parcel 1 and a deed from the

Davises conveying Parcel 2 to Henning/Cross, with an

appropriate abatement of the purchase price. At the

hearing before the commissioner, Henning confirmed that he

and Cross were still willing to accept an assignment of the

Davises’ contractual rights on the terms previously

outlined in a letter to the Davises’ attorney. In that

letter, Henning/Cross advised that they were ready,

willing, and able to close on the purchase of the Property,

and that, if necessary, they would “pay the full purchase

price less the provable assumption balance” and take an

assignment of the Davises’ contractual rights under their

agreement with Parker.

As Henning/Cross argue, we recognize, as a general

rule, that “when there is a deficiency in title, quantity,

or quality of an estate, the purchaser has the option to

require the seller to convey such part as the seller is

able, with an abatement of the purchase price for any

deficiency.” Chesapeake Builders, 254 Va. at 300-01, 492

20
S.E.2d at 145 (citing Turner v. Holloway, 146 Va. 827, 834,

132 S.E. 685, 687 (1926); Millman v. Swan, 141 Va. 312,

322, 127 S.E. 166, 169 (1925)); accord Firebaugh v.

Hanback, 247 Va. 519, 526, 443 S.E.2d 134, 137 (1994);

Hawks v. Sparks, 204 Va. 717, 720, 133 S.E.2d 536, 539

(1963). However, the rule is not absolute; we have

recognized exceptions. “[S]pecific performance of a

contract is not a matter of right, but rests in the

discretion of the trial court to be granted or refused

according to established principles and the facts of each

case.” Hawks, at 720, 133 S.E.2d at 539 (citing Raney v.

Barnes Lumber Corp., 195 Va. 956, 970, 81 S.E.2d 578, 586

(1954); Griscom v. Childress, 183 Va. 42, 47-48, 31 S.E.2d

309, 312 (1944); Darling v. Cumming’s Ex’or, 92 Va. 521,

525, 23 S.E. 880, 881 (1896)); accord Firebaugh, 247 Va. at

526, 443 S.E.2d at 137.

One such exception arises when a purchaser is not

asking for specific performance of a contract “ ‘as far as

the vendor is able.’ ” Reid v. Allen, 216 Va. 630, 633,

221 S.E.2d 166, 169 (1976) (quoting Robinson v. Shepherd,

137 Va. 687, 695, 120 S.E. 265, 267-68 (1923)). In Reid,

the purchasers sought to require a conveyance of a seller’s

undivided one-half interest in a certain tract of real

estate in exchange for payment of one-half of the contract

21
price with an abatement to be determined by the court. Id.

at 631, 221 S.E.2d at 168. We concluded that the

purchasers, “in effect, [sought] to convert an agreement to

sell the whole estate into one for a sale of one of the

undivided shares[,]” amounting to a “substitution of an

agreement which the parties had not contracted for.” Id.

at 633-34, 221 S.E.2d at 169. Thus, because the evidence

supported the commissioner’s finding that the parties never

intended to sell less than the whole estate, we denied

specific performance. Id.; see M’Cann v. Janes, 40 Va. (1

Rob.) 256, 261 (1842) (“plaintiff in a bill for specific

performance must not . . . call upon the other party to do

an act which he is not lawfully competent to do”).

As pointed out by the commissioner in the present

case, the purchase contract between the Davises and Parker

contains a provision explicitly prohibiting a conveyance or

assignment of the Davises’ interests in the contract and

the Property without Parker’s consent. There is no

evidence of such consent in this record. In fact, Michael

J. Parker, trustee of a testamentary trust established by

Parker, who was Michael’s father, testified before the

commissioner that, while the purchase contract with the

Davises could have been terminated or amended if all the

parties agreed, there had not been any such agreement.

22
Michael Parker also stated that no offer had been presented

to the Parker Estate “that would be a sufficient incentive”

to allow the Davises to prepay their obligation under the

purchase contract and “to tear up this contract and
11
substitute something else for it.”

Thus, Henning/Cross are not asking for specific

performance “as far as the [Davises] are able.” Reid, 216

Va. at 633, 221 S.E.2d at 169. The Davises cannot perform

as requested. An assignment of their interests in the

purchase contract with Parker would constitute a breach of

that contract. We agree with the commissioner; action

should not be ordered that would violate the contract.

We also agree with the commissioner’s finding that

specific performance should not be granted with regard to

only Parcel 2. Such relief would leave Parcel 2 landlocked

because the easement across the property of Henning/Cross

runs only to Parcel 1. Davis v. Henning, 250 Va. 271, 277,

462 S.E.2d 106, 109 (1995).

11
In a letter dated August 24, 1998, from an attorney
representing the Parker Estate to the Davises’ attorney,
the Parker Estate indicated that it “would, subject to
certain conditions and affirmations, permit an assignment
to Sans Souci with a full irrevocable payment and
performance guarantee by Mr. Shepherd.” However, when
Michael Parker testified, he stated that, in light of the
fact that a year and a half had passed since that letter
had been written, he did not presently have a position on

23
 Given the facts of this case, we cannot say that the

chancellor abused his discretion by refusing to award

specific performance in favor of Henning/Cross with an

abatement of the purchase price. As we stated earlier, the

decision whether to award specific performance of a

contract rests in the sound discretion of a trial court; it

is not a matter of right. Hawks, 204 Va. at 720, 133

S.E.2d at 539.

2. DAMAGES

As an alternative argument, Henning/Cross assert that,

assuming specific performance was properly denied, they are

entitled to recover damages based on the loss of their

bargain. They ask this Court to reverse the chancellor’s

finding that they were entitled to only “restitutionary”

damages and to award them damages in the amount of $376,430

as recommended by the commissioner in his first report.

That figure was based on Henning’s valuation of the

Property. As an additional alternative position,

Henning/Cross claim that they should at least be awarded

loss-of-bargain damages in the amount of $315,000 based on

expert appraisal testimony at the second hearing before the

commissioner.

whether Shepherd’s guarantee would constitute adequate
financial capability.

24
 “The general rule in Virginia is that the measure of

damages for failure of the vendor to convey as agreed is

the purchase price, or any part thereof, paid by the

vendee, with interest from date of payment.” Williams v.

Snider, 190 Va. 226, 228, 56 S.E.2d 63, 64 (1949); accord

Chesapeake Builders, 254 Va. at 299-300, 492 S.E.2d at 145;

Davis v. Beury, 134 Va. at 339, 114 S.E. at 777. However,

a purchaser of real estate may recover damages beyond the

return of the purchase price with interest, i.e. damages

for loss of the bargain, if the purchaser proves that the

seller

either acted in bad faith in originally undertaking to
convey such title [as was contracted to be conveyed],
or that, since the undertaking and on or before the
time fixed for the completion of the contract, he has
voluntarily disabled himself from making the
conveyance, or that he was able at such time to make
the conveyance contracted for and willfully neglected
or refused to do so.

Davis v. Beury, 134 Va. at 339, 114 S.E. at 777; accord

Chesapeake Builders, 254 Va. at 299-300, 492 S.E.2d at 145.

In this case, it is not necessary to decide which

category of damages Henning/Cross were entitled to recover

because either of the amounts they claimed as damages for

the loss of their bargain was too speculative in nature to

be sustainable. The calculation of both figures was

premised on the assumption that the Property could be

25
resold to a large, well-known, home and building supply

retailer. Henning testified at the first commissioner’s

hearing that he valued the Property at $8.25 per square

foot because that was the price at which Henning/Cross had

contracted to sell their adjoining property to this

retailer. Henning believed that he could sell the Property

to the same purchaser for the same price.

Similarly, at the second hearing, a commercial real

estate appraiser opined that, during the time frame of

October through December 1999, the Property was worth $9

per square foot “as a part of the adjoining properties.”

His valuation was premised on the Property being included

in the assemblage of surrounding parcels by a developer on

behalf of the same retailer and on the contract purchase

prices for those adjoining parcels.

The commissioner also received deposition testimony

from the real estate developer who, on behalf of that

retailer, had negotiated purchase contracts for the parcels

adjacent to the Property. While assembling those parcels

and negotiating the purchase contracts, the developer had

become familiar with the Property. He testified that he

would have been willing to purchase the Property for $9 per

square foot if “clear title” could have been conveyed.

However, he acknowledged that any such contract to purchase

26
the Property would have contained the same contingencies as

were included in the contracts to purchase the surrounding

parcels, including contingencies regarding rezoning.

As the plaintiffs in this suit, Henning/Cross had the

“burden of proving with reasonable certainty the amount of

damages and the cause from which they resulted; speculation

and conjecture cannot form the basis of the recovery.”

Carr v. Citizens Bank & Trust Co., 228 Va. 644, 652, 325

S.E.2d 86, 90 (1985) (citing Hale v. Fawcett, 214 Va. 583,

585, 202 S.E.2d 923, 925 (1974); Barnes v. Quarries, Inc.,

204 Va. 414, 418, 132 S.E.2d 395, 397-98 (1963)). Damages

based on uncertainties, contingencies, or speculation

cannot be recovered. Barnes, 204 Va. at 418, 132 S.E.2d at

397-98.

As argued by the Davises both before the commissioner

and this Court, the damages claimed by Henning/Cross fail

under this rule. All the evidence regarding the value of

the Property was speculative because the valuations hinged

on the assumption that the Property could be sold to a

large home and building supply retailer. Even the

developer admitted that, as of October 1999, the date upon

which damages were to be computed, the rezoning contingency

had not been fulfilled for any of the parcels under

27
contract. 12 Thus, the chancellor did not err in awarding

only nominal damages to Henning/Cross, which were

restitutionary in nature and included attorney fees. See

Kessler v. Commonwealth Doctors Hospital, Inc., 212 Va.

497, 504, 185 S.E.2d 43, 47 (1971) (judgment affirmed on

appeal when chancellor assigned the wrong reason for a

ruling but reached the correct result).

D. ASSIGNMENTS OF CROSS-ERROR

The Davises assign cross-error to the chancellor’s

award of attorney fees to Henning/Cross and to the

chancellor’s refusal to consider their “Special Exception”

to the commissioner’s supplemental report. In that

“Special Exception,” the Davises objected to the

commissioner’s finding that Henning/Cross were entitled to

an award of attorney fees. They also sought to amend their

answer to allege the defense of “unclean hands” in response

to the claim for attorney fees by Henning/Cross.

The chancellor, in his letter opinion, refused to

consider the “Special Exception” because it was not timely

filed. We find no abuse of discretion in that ruling. The

commissioner filed his supplemental report on January 12,

12
When the chancellor re-referred the damage issue to
the commissioner, he directed that damages be calculated as
of October 1999. No party assigned error challenging the
validity of that date.

28
2001. However, the Davises did not file the “Special

Exception” until May 7, 2001. Their exception to the

commissioner’s supplemental report was not timely under the

provisions of Code § 8.01-615.

III. CONCLUSION

For the reasons stated, we will affirm the

chancellor’s final decree in both suits. However, we will

remand the Henning/Cross appeal for further proceedings to

adjudicate their claim for additional attorney fees and

costs incurred in the appeal.

Record No. 020188 – Affirmed.
Record No. 020189 – Affirmed and remanded.

29