PRESENT: All the Justices
PALMER & PALMER COMPANY, LLC,
T/A PALMER & COMPANY
v. Record No. 071373 OPINION BY
JUSTICE S. BERNARD GOODWYN
WATERFRONT MARINE CONSTRUCTION, June 6, 2008
INC.
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Thomas S. Shadrick, Judge
In this appeal, we consider whether the trial court erred
in its interpretation of a contract between Palmer & Palmer
Company, LLC (“Palmer”) and Waterfront Marine Construction,
Inc. (“Waterfront”) and in its imposition of liability on
Palmer for damage resulting from Waterfront’s crane falling
into an abandoned, disconnected septic tank on Palmer’s
property.
Waterfront filed a complaint alleging breach of contract
against Palmer and seeking damages primarily related to repair
of its crane. Palmer and Waterfront filed joint stipulations
as to the facts of the case, agreed that no material issues of
fact remained in dispute, and submitted the matter for the
trial court’s consideration on competing motions for summary
judgment. The trial court denied Palmer’s motion for summary
judgment and, holding that Palmer breached the contract,
granted Waterfront’s motion for summary judgment. The trial
court awarded Waterfront damages plus attorneys’ fees. Palmer
appeals to this Court.
The facts are undisputed. Waterfront, a marine
construction and pile driving company, and Palmer, the owner
of the property and the general contractor for construction of
a house on 856 South Atlantic Avenue, Virginia Beach (“Lot
2”), entered into a contract. The contract specified that
Waterfront would drive foundation piles into the ground on
Lot 2.
On August 5, 2004, an employee of Waterfront was
operating a crane owned by Waterfront on Lot 2 when the crane
fell into a buried septic tank and was damaged. The septic
tank was empty and covered with approximately four to ten
inches of sand. Prior to the accident, neither Waterfront nor
Palmer was aware of the existence of the septic tank. The
house previously located on Lot 2 had been demolished before
Palmer bought the property; however, the house utilized the
City of Virginia Beach public sewage system from at least
1990. No recorded plat, survey, or drawing disclosed a septic
tank on the property. Also, the Department of Public Health
for the City of Virginia Beach, which is the agency that keeps
records of private septic systems in the City of Virginia
Beach, had no record of any septic system or tank as having
been located on the subject property.
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Waterfront sought damages from Palmer on a purely
contractual basis because of the damage to Waterfront’s crane
and other expenses related thereto. The relevant provisions
of the contract are as follows:
2.1 EXCLUSIONS: . . . Waterfront . . .
assumes no responsibility for the following:
. . . .
2. Removal of underground or overhead
obstructions.
. . . .
2.2 WORK AND/OR SERVICES TO BE PERFORMED BY
OWNER PRIOR TO PILE DRIVING:
. . . .
6. Location, protection, and removal of all
utilities in area.
7. Protection of existing structures.
. . . .
4.1 ADDITIONAL WORK: Should additional work
such as, but not limited to, underground
obstructions such as trees, stumps, rocks, debris,
etc. be encountered, an extra charge for equipment,
labor, overhead and profit will be charge [sic] at
$250.00/hour for removal or augering.
The trial court concluded that Palmer was liable based on
the court’s combined reading of sections 2.1(2) and 4.1,
reasoning that reading those provisions together indicates
that Palmer was responsible for removal of underground
obstructions. Additionally, the trial court found that the
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septic tank was either a utility or an existing structure that
Palmer was responsible for under sections 2.2(6) or 2.2(7) of
the contract. On March 30, 2007, the trial court awarded
Waterfront damages in the amount of $22,696.05 plus attorneys’
fees in the amount of $11,006.55.
Palmer argues that the trial court erred in interpreting
the contract and imposing liability and damages. Focusing on
the language of the contract, Palmer contends that the
contract does not reflect an agreement that Palmer would
remove or locate an abandoned septic tank. According to
Palmer, the trial court created a duty that was not
memorialized in the contract.
Waterfront argues that the trial court correctly
interpreted the contract. Waterfront states that Palmer is
liable under the contract for primarily three reasons. First,
Waterfront asserts that sections 2.1(2) and 4.1 demonstrate it
was Palmer’s responsibility to prepare the work site, which
included removing underground obstructions. Second, Palmer
failed to “locate and protect existing structures,
specifically the septic tank, as required by Paragraph
2.2(7).” Third, section 2.2(6) provides that Palmer was
responsible for the location and removal of “all utilities.”
Arguing that the septic tank is a utility, Waterfront contends
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that Palmer breached the contract by failing to comply with
section 2.2(6).
Interpretation of a contract is a question of law that is
reviewed de novo. PMA Capital Ins. Co. v. US Airways, Inc.,
271 Va. 352, 357-58, 626 S.E.2d 369, 372 (2006). When a
contract is clear and unambiguous, it is the court’s duty to
interpret the contract, as written. Winn v. Aleda Constr.
Co., 227 Va. 304, 307, 315 S.E.2d 193, 194 (1984). On appeal,
this Court is not bound by the trial court’s determinations
regarding the interpretation of an unambiguous contract.
Gordonsville Energy, L.P. v. Virginia Elec. & Power Co., 257
Va. 344, 353, 512 S.E.2d 811, 816 (1999).
In a breach of contract claim, the parties’ contract
becomes the law governing the case unless it is repugnant to
some rule of law or public policy. Winn, 227 Va. at 307, 315
S.E.2d at 194. This Court must construe the contract as it is
written. Christopher Assocs. v. J.C. Sessoms, Jr., 245 Va.
18, 22, 425 S.E.2d 795, 797 (1993). “The guiding light in the
construction of a contract is the intention of the parties as
expressed by them in the words they have used, and courts are
bound to say that the parties intended what the written
instrument plainly declares.” W.F. Magann Corp. v. Virginia-
Carolina Elec. Works, Inc., 203 Va. 259, 264, 123 S.E.2d 377,
381 (1962).
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We hold that sections 2.1(2) and 4.1 of the contract do
not subject Palmer to liability in this case. In section
2.1(2), the contract states that Waterfront assumed no
responsibility for the removal of underground obstructions.
The plain meaning of that provision is that the contract price
did not include the removal of underground obstructions.
Section 4.1 further confirms such an interpretation by stating
that Waterfront would charge $250 per hour for additional work
resulting from underground obstructions.
The contract indicates that the parties anticipated
underground obstructions might be encountered during the
project. The contract provides for payment to Waterfront for
the removal of any such obstructions. However, the contract
does not impose any obligation upon Palmer to remove such
underground obstructions or to be responsible for damages
caused thereby. Thus, contract sections 2.1(2) and 4.1,
whether considered together or separately, do not impose
contractual liability upon Palmer for damage to Waterfront’s
crane caused by a previously unknown underground obstruction.
Therefore, the trial court erred in granting Waterfront’s
motion for summary judgment based on a reading of sections
2.1(2) and 4.1.
Palmer also assigns error to the trial court’s ruling
that Waterfront is entitled to contractual damages because the
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septic tank was an existing structure. Under section 2.2(7)
of the contract, Palmer is responsible for protecting existing
structures. Assuming the septic tank is an existing
structure, section 2.2(7) clearly means that Palmer could not
hold Waterfront responsible for any damage to the septic tank.
However, section 2.2(7) does not make Palmer liable for damage
to Waterfront’s crane caused when the crane fell into the
septic tank. The trial court’s holding that the septic tank
was such an existing structure therefore does not provide a
contractual basis for imposing liability upon Palmer for
Waterfront’s damages.
Palmer further assigns error to the trial court’s holding
that the abandoned, disconnected septic tank could be the
basis for imposing liability upon Palmer, pursuant to section
2.2(6) of the contract. Section 2.2(6) states that Palmer was
responsible for the location, protection, and removal of all
utilities. This Court must therefore consider whether an
abandoned, disconnected septic tank is a utility. We hold
that it is not.
When the interpretation of a contract involves a term
that is clear and unambiguous, the term is given its plain
meaning. PMA Capital Ins. Co., 271 Va. at 358, 626 S.E.2d at
372. A contractual term, absent a definition in the contract,
is construed according to its usual, ordinary, and popular
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meaning. See Christopher Assocs., 245 Va. at 23, 425 S.E.2d
at 797. The term “utility” is defined as “a service provided
by a public utility” and as “a unit composed of one or more
pieces of equipment usually connected to or part of a
structure and designed to provide a service (as heat, light,
power, water, or sewage disposal).” Webster’s Third New
International Dictionary 2525 (1993).
Assuming, without deciding, that an operational septic
system is a utility, the septic tank involved in this case is
not a utility because there is no evidence that this septic
tank is, or ever was, part of an operational septic system.
The evidence is uncontroverted that the house previously on
the property utilized the public sewer system since 1990.
There is no evidence that this septic tank was ever connected
to the house that was previously located on Lot 2 or that it
was part of an operational septic system. At best, the septic
tank is part of a disconnected septic system that had been
abandoned for years; it is one part of a unit that, if
operational, would be a utility. Thus, we hold that the
empty, abandoned septic tank was not a “utility” within the
intendment of Section 2.2(b) of the parties’ contract.
Under the terms of the contract, Palmer did not have a
duty to locate or remove an abandoned, disconnected septic
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tank. The trial court erred in holding such a duty existed
under the contract.
Palmer also argues that the trial court erred in awarding
attorneys’ fees. In view of our disposition concerning
Palmer’s liability, we hold that Waterfront is not entitled to
attorneys’ fees pursuant to the terms of the contract.
This Court concludes that the contract contains no
provision that would make Palmer liable for Waterfront’s
damages. We will reverse the judgment of the trial court and
enter final judgment in favor of Palmer.
Reversed and final judgment.
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