Present: Carrico, C.J., Compton, * Lacy, Hassell, Keenan,
Koontz, and Kinser, JJ.
BLUE STONE LAND COMPANY, INC.
OPINION BY
v. Record No. 990969 CHIEF JUSTICE HARRY L. CARRICO
March 3, 2000
BILL V. NEFF, T/A BILL V.
NEFF ENTERPRISES
FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY
John J. McGrath, Jr., Judge
In a motion for judgment filed below, Bill V. Neff,
trading as Bill V. Neff Enterprises (Neff), sought damages
from Blue Stone Land Company, Inc. (Blue Stone) for the
latter’s alleged breach of a written contract dated July
22, 1992. In the contract, Neff agreed to construct a
street known as Lucy Drive in a subdivision located in the
City of Harrisonburg and Blue Stone agreed to pay Neff an
amount not to exceed $181,609.88 for the work. Neff
alleged that he had fully performed the contract but that
Blue Stone had refused to pay the agreed amount.
Blue Stone filed grounds of defense in which it denied
any indebtedness to Neff. Blue Stone also filed a
counterclaim in which it alleged that Neff had agreed to
complete the construction of the street within a reasonable
period of time, but, despite repeated requests from Blue
*
Justice Compton participated in the hearing and decision
of this case prior to the effective date of his retirement
on February 2, 2000.
Stone, the construction was not completed within a
reasonable period of time. Blue Stone alleged further that
as a direct and proximate result of Neff’s material breach
of contract and refusal to construct the street within a
reasonable and timely manner, Blue Stone was unable to sell
its lots. Finally, Blue Stone alleged that as a direct and
proximate result of Neff’s material breach of contract and
refusal to construct the street in a reasonable and timely
manner, Blue Stone had suffered damages in the amount of
$200,000.
The record shows that Neff and Blue Stone each
contributed half the land for construction of Lucy Drive.
In the contract between the parties, Blue Stone agreed to
pay Neff $32,089.88 for previous work performed on the
street and to split “fifty/fifty” with Neff the remaining
cost of construction. The contract provided that Blue
Stone’s share of the total cost would not exceed
$181,609.88, and payment would not be required until lots
located on Lucy Drive “would be sold by Bluestone.”
However, it was agreed that the $181,609.88 amount “would
be paid in full no later than five years from June 9,
1992.” No time was fixed for the completion of Lucy Drive.
On September 27, 1996, Blue Stone addressed a letter
to Neff stating that since “prior to July of 1992 . . .
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[n]othing further has been done on [Lucy Drive]” and that
Neff should “do no further work” on the street. A Neff
exhibit in the record indicates that construction of the
street was “generally completed” as of July 14, 1997, some
five years after the date of the parties’ contract.
During discovery, Neff served interrogatories upon
Blue Stone. One inquiry required Blue Stone to “[i]temize
and describe with particularity all damages, including but
not limited to the $200,000 in damages sought in [the]
Counterclaim filed in this case . . . .” In response, Blue
Stone stated:
i) The sale of [Blue Stone’s] land abutting Lucy
Drive to Balanced Care Corporation was contingent upon
[Blue Stone] constructing and paying for Deyerle
[Avenue] Extended. Due to the fact that Lucy Drive
was not completed as agreed, [Blue Stone] could not
sell its lots to Balanced Care Corporation without
constructing a street at an estimated cost of
$200,000.
Lucy Drive runs in a north-south direction, with
Neff’s land lying to the west and Blue Stone’s to the east.
Deyerle Avenue runs east and west along Neff’s southern
border and intersects Lucy Drive at a right angle. Deyerle
Avenue extended runs eastward from Lucy Drive and is
bordered on both sides by Blue Stone’s property. The lot
sold by Blue Stone to Balanced Care Corporation is located
at the southeast corner of the intersection of Lucy Drive
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and Deyerle Avenue extended. A Blue Stone exhibit in the
record indicates that the cost of constructing Deyerle
Avenue extended amounted to $296,289.86.
Prior to trial, Neff filed a motion in limine seeking
to exclude from evidence any testimony or exhibits relating
to costs expended by Blue Stone in the construction of
Deyerle Avenue extended. By order, the trial court
sustained Neff’s motion in limine and ruled that Blue Stone
“will be limited to proving damages relating to lost lot
sales or diminished revenues from lot sales.”
On the morning of trial, Blue Stone moved for
reconsideration of the trial court’s ruling on the motion
in limine. When the court denied the motion for
reconsideration, Blue Stone moved the court to provide the
reasons for its ruling. The trial judge stated: “I
consider damages for construction of an alternate route to
[Blue Stone’s] property to be special damages which should
have been pled specially. It would have been very simple
to plead it []specially, it was not done, and it’s too late
to change it now on the eve of trial.”
The case proceeded to trial before a jury. At the
conclusion of all the evidence, the trial court struck Blue
Stone’s counterclaim and submitted the case to the jury on
Neff’s motion for judgment alone. The jury returned a
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verdict in favor of Neff in the amount of $181,609.88. The
trial court entered judgment on the verdict, and we awarded
Blue Stone this appeal.
Blue Stone assigns a number of errors, but we think
the dispositive question is whether the trial court erred
in sustaining Neff’s motion in limine on the ground the
damages for the construction of Deyerle Avenue extended
were special damages not specially pleaded. We are of
opinion the trial court did err in this regard.
In Roanoke Hospital Ass’n v. Doyle & Russell, Inc.,
215 Va. 796, 214 S.E.2d 155 (1975), we said:
There are two broad categories of damages ex
contractu: direct (or general) damages and
consequential (or special) damages. Direct damages
are those which arise “naturally” or “ordinarily” from
a breach of contract; they are damages which, in the
ordinary course of human experience, can be expected
to result from a breach. Consequential damages are
those which arise from the intervention of “special
circumstances” not ordinarily predictable. If damages
are determined to be direct, they are compensable. If
damages are determined to be consequential, they are
compensable only if it is determined that the special
circumstances were within the “contemplation” of both
contracting parties. Whether damages are direct or
consequential is a question of law. Whether special
circumstances were within the contemplation of the
parties is a question of fact.
Id. at 801, 214 S.E.2d at 160 (citations and footnote
omitted); see also Chesapeake & Potomac Tel. Co. v. Sisson
& Ryan, Inc., 234 Va. 492, 505-06, 362 S.E.2d 723, 731
(1987) (damages direct when contractor fails to complete
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work to specifications and building collapses). Direct or
general damages need not be specially pleaded. Wood v.
American Nat’l Bank, 100 Va. 306, 309, 40 S.E. 931, 932
(1902).
Here, the counterclaim involves a garden-variety type
of breach of contract without the intervention of any
special circumstances that would convert the resulting
damages from general to special. Neff and Blue Stone were
both land developers, and Neff knew that Blue Stone’s
purpose in contracting for the construction of Lucy Drive
was to provide access to Blue Stone’s land so it could be
developed and sold. Blue Stone alleges that Neff failed to
complete Lucy Drive within a reasonable period of time. If
Neff breached the contract in that respect, he should have
expected that Blue Stone, in the ordinary course of human
experience, would take alternative means of providing
access to its property when needed to accomplish a sale of
a portion that would have been served by Lucy Drive.
Indeed, had Blue Stone not taken alternative means of
providing access to its property, it might well have been
met at the threshold of this case with a claim that it had
failed to mitigate its damages.
The alleged damages, therefore, are those which arise
naturally and ordinarily from a breach of contract, they
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are direct and not consequential, and it was not necessary
to plead them specially. They were sufficiently pleaded in
the allegation of Blue Stone’s counterclaim that “[a]s a
direct and proximate result of [Neff’s] material breach of
contract and refusal to construct Lucy Drive in a
reasonable and timely manner, [Blue Stone] suffered damages
in the amount of TWO HUNDRED THOUSAND DOLLARS.” If Neff
desired more detailed information concerning the damages,
he could have requested a bill of particulars.
Neff argues, however, that even if it is assumed the
trial court erred in any of its rulings concerning Blue
Stone’s alleged damages for the costs of constructing
Deyerle Avenue extended, such error “would not provide
grounds for overturning the jury’s verdict.” Neff says
that by favoring him with a verdict in the full amount of
his claim, “the jury conclusively determined and
established the fact that [he] was not in breach . . . and
. . . had in fact completed Lucy Drive within a reasonable
amount of time.” Hence, Neff concludes, “[s]ince the jury
found that [he] was not in breach of the contract, and
since Blue Stone’s defenses and counterclaim damages
(including the proffered Deyerle Avenue extended
construction costs) were asserted solely on the basis of a
breach by Neff, . . . said damages became irrelevant to the
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case once the jury’s verdict was returned in favor of Neff”
and the trial court’s rulings were “rendered . . .
harmless.”
We disagree with Neff that the error in excluding
evidence of the cost of constructing Deyerle Avenue
extended was harmless. In a related context, we said:
Under the harmless error doctrine, the judgment of the
court below will be affirmed whenever we can say that
the error complained of could not have affected the
result. The doctrine is never applied, however, when
it appears that the jury has been misinstructed and,
had it been properly instructed, that it might have
returned a different verdict.
Rhoades v. Painter, 234 Va. 20, 24, 360 S.E.2d 174, 176
(1987) (citation omitted); see also Director Gen’l of
Railroads v. Pence’s Adm’x, 135 Va. 329, 352, 116 S.E. 351,
358-59 (1923) (error in instructing jury not harmless when
upon correct instruction jury might have found contrary
verdict). By logical extension, the same rule must apply
when it appears that evidence has been excluded erroneously
and that, had it been admitted, it might have produced a
different result. See Pace v. Richmond, 231 Va. 216, 226,
343 S.E.2d 59, 65 (1986) (error in excluding evidence
harmless when it could not affect verdict); Lester’s Ex’r
v. Simpkins, 117 Va. 55, 69, 83 S.E. 1062, 1067 (1915)
(admission of illegal evidence not reversible when it could
not affect result).
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In this case, we are of opinion that had the evidence
concerning the cost of constructing Deyerle Avenue extended
been admitted it might have produced a different result
both with respect to Blue Stone’s defenses and its
counterclaim. Daniel W. Brubaker, one of Blue Stone’s
principals, testified to the necessity for the construction
of Deyerle Avenue extended. Neff objected to the testimony
as violative of the trial court’s order granting Neff’s
motion in limine, but the court overruled the objection,
and the ruling is not the subject of an assignment of
cross-error.
Brubaker was asked why Blue Stone had written the
letter of September 27, 1996, to Neff “telling him not to
go ahead with the street.” Brubaker answered as follows:
Well, at that point, the street had not been built.
We had waited all of this time for it to be built, and
I had a contract at that time with [Balanced Care
Corporation] to . . . buy three acres of real estate
from us at a price of $100,000 per acre. They would
not sign the contract to purchase, or would not buy it
until I assured to them . . . that we would have an
entrance, either off of Lucy or off of Deyerle. And
since Lucy was not built, I immediately told them that
I’d bring them in an entrance off of Deyerle Avenue
extended, which we did. And we had to build Deyerle
Avenue extended in order to sell that three-acre lot
to [Balanced Care Corporation].
It seems somewhat inconsistent for the trial court to
admit evidence concerning the necessity for constructing
Deyerle Avenue extended but to exclude evidence concerning
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the cost of construction. Without evidence concerning the
cost of construction, the testimony concerning necessity
would have been meaningless or at least confusing to the
jurors. They would not have known how to treat the
testimony and, out of perplexity, might have disregarded it
entirely. Had the evidence been admitted, however, the
confusion might have been avoided and a different result
obtained.
Furthermore, the trial court’s sole basis for striking
Blue Stone’s counterclaim was “a lack of any compensable
damages.” Had the evidence of the cost of constructing
Deyerle Avenue extended been admitted, the trial court
might have found the evidence of compensable damages
sufficient and might not have struck the counterclaim. And
it goes without saying that Blue Stone would have been in a
much stronger position, both offensively and defensively,
had the counterclaim been submitted to the jury for its
consideration.
Moreover, under the instructions of the trial court,
Blue Stone had the burden of proving that Neff’s alleged
breach of contract was material. With evidence concerning
the cost of construction excluded from the case, Blue Stone
was denied one appropriate basis for the jury to find that
Neff’s alleged breach was material and not merely de
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minimus. Had the evidence been admitted, the jury might
well have found Neff’s breach was material and decided
against him.
For these reasons, we will reverse the judgment of the
trial court and remand the case for a new trial on Neff’s
claim and Bluestone’s counterclaim consistent with the
views expressed in this opinion.
Reversed and remanded.
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