Lansdowne Development Co. v. Xerox Realty Corp.

Present: All the Justices

LANSDOWNE DEVELOPMENT COMPANY, L.L.C.
OPINION BY
v. Record No. 981043 JUSTICE LAWRENCE L. KOONTZ, JR.
February 26, 1999
XEROX REALTY CORPORATION, ET AL.

FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
Thomas D. Horne, Judge

In this appeal, we consider whether the contract between

the parties to a real estate transaction required the purchaser

to provide a deed of trust to the seller to secure the

purchaser’s performance of rezoning proffers made by the seller

to the local government, where the contract required the

purchaser to assume the seller’s liability for the proffers.

BACKGROUND

Although the record in this complex land development case

is quite extensive, we recount only those facts relevant to our

resolution of the appeal. Xerox Realty Corporation (Xerox

Realty), a wholly owned subsidiary of Xerox Corporation, is the

owner of approximately 1,350 acres of undeveloped land in

Loudoun County (the property). Xerox Realty also owns an

adjacent developed parcel leased to another Xerox subsidiary,

the Xerox Document University (the XDU parcel). Xerox Realty

had planned to use the undeveloped property for expansion and

mixed commercial and residential development. However, due to

changes in market conditions, Xerox Realty determined that
commercial development of the property was not feasible and

began exploring the possibility of selling the property to a

developer for use exclusively as a residential development.

This change in the development concept required rezoning of the

property.

At the time the decision to change the development concept

was made, Xerox Realty had already made various proffers to

Loudoun County concerning the development of the property and

had entered into contracts and conservancy documents relevant to

the use of both the property and the XDU parcel. In the summer

of 1993, Xerox Realty entered into negotiations with Lansdowne

Development Company, L.L.C. (Lansdowne) 1 for the sale of the

property. The completion of the sale was conditioned upon the

successful rezoning of the property for residential development,

and Xerox Realty was to “take the lead on the rezoning effort

with the cooperation and input of [Lansdowne].” During the

negotiations and in the final contract, the parties referred to

the development plan for the property, including the existing

and anticipated proffer obligations, as “the Project.”

During the negotiations between Xerox Realty and Lansdowne,

Xerox Realty estimated the total value of the project prior to

1
Xerox Realty initially negotiated with Parity Partners, a
California partnership controlled by Lansdowne’s principal.

2
development at 40 million dollars, of which approximately 18.5

million dollars represented Xerox Realty’s obligation to

complete the proffers it had previously made or would make to

secure the necessary rezoning. In a letter of intent dated

September 30, 1993, Lansdowne agreed to a cash purchase price of

21.5 million dollars and the assumption “of [Xerox Realty’s]

liabilities and obligations with respect to the Project

(including, without limitation, those arising under contracts,

proffers, bonds, conservancy documents and other matters related

to the [property]) and [to] secure a release of [Xerox Realty]

therefrom, if possible.” Lansdowne’s letter of intent further

specified that Lansdowne’s “agreement to perform such proffer

obligations will be secured by [a] Deed of Trust . . . and by a

reserve account.”

In the final contract, dated December 30, 1993, between

Xerox Realty and Lansdowne, these aspects of the negotiations

regarding the purchase price of the property and the assumption

of liability for the rezoning proffers were memorialized in the

following terms:

Purchaser shall assume the Liabilities and, to the
extent Seller has not been released from the
Liabilities, shall pay, honor and discharge such
Liabilities when due and payable or otherwise required
to be performed under the relevant agreements and
instruments. . . .

[A]t Closing Purchaser shall assume all proffer
obligations with respect to the Project provided for

3
 in the Development Concept Plan . . . (“Proffer
Obligations”). All such Proffer Obligations shall be
performed by Purchaser as and when required under the
Development Concept Plan. Proffer Obligations that
require expenditures of sums of money in connection
with their performance . . . are referred to herein as
“Monetary Proffers.” Purchaser’s obligations
hereunder to perform the Monetary Proffers shall be
secured by the Purchase Money Trust (as hereinafter
defined). The amount to be secured shall be
determined prior to Closing by christopher consultants
or by another engineer mutually acceptable to the
parties. . . .

If Purchaser fails to timely perform its Proffer
Obligations . . . and if Loudoun County requires
Seller to perform such Proffer Obligations or if the
failure to perform such Proffer Obligations has a
material adverse effect on the use and operation of
the XDU Parcel, . . . then Seller shall have the
right, but not the obligation . . . to enter upon the
Land . . . to perform such unperformed Proffer
Obligations as may be deemed necessary by Seller in
its sole discretion.

The Purchase Money Trust as defined in the contract

included a purchase money note “secured by a first lien deed of

trust . . . on the Project.” Relevant to this appeal, the

contract also provided that in the event of litigation arising

from the contract, “any judgment awarded to the prevailing party

shall include all litigation expenses, including actual

attorney’s fees, which shall not be unreasonable, and court

costs.”

In order to obtain the rezoning required by the contract,

Xerox Realty as owner of the property and the XDU parcel, along

with other adjoining landowners and Lansdowne, made further

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rezoning proffers to Loudoun County in an amendment to the

original development plan dated May 24, 1995. Loudoun County

accepted the amended development plan, which required the

parties to put into effect certain escrow arrangements and trust

funds to assure adequate funding of construction and

improvements related to the proffers.

Pursuant to the terms of the contract, christopher

consultants 2 was to develop “an estimate for the proffer

commitments made with the recently approved Rezoning and Concept

Plan Amendment for Lansdowne.” On September 7, 1995,

christopher consultants provided Xerox Realty with a preliminary

estimate of the construction cost of the proffers, placing that

cost in excess of 18 million dollars. Xerox Realty forwarded

this estimate to Lansdowne on September 26, 1995, indicating

that Xerox Realty intended to use the estimate “in computing the

final amount of the [Lansdowne] Deed of Trust” at the closing.

Prior to closing, Lansdowne arranged to sell two sections

of the property. Lansdowne requested that Xerox Realty release

these sections from the deed of trust at closing. Xerox Realty

refused this request, noting that the contract had specific

terms for release of portions of the property, and that these

requirements would not be met under Lansdowne’s proposal.

2
The firm uses all lower case letters for its trade name.
5
 After first obtaining an attorney’s opinion letter

indicating that Xerox Realty could not “be required to perform

obligations under the Monetary Proffers,” Lansdowne prepared a

memorandum for christopher consultants requesting that it

“determine the amount of security [Lansdowne] is to give in

order to protect [Xerox Realty] from liability under the

Monetary Proffers.” In this memorandum, Lansdowne further

stated that “[t]he amount of security to be granted by

[Lansdowne] is to be distinguished from the projected cost of

construction or comp[l]etion of the Monetary Proffers, which the

[contract] does not request.”

On January 22, 1996, Dr. Henry Grausz, Lansdowne’s

principal, met with Louis Canonico, a vice president of

christopher consultants, and gave him the memorandum requesting

an opinion as to the liability to be secured. Canonico told

Grausz that, as an engineering firm, christopher consultants was

not qualified to give an opinion as to liability.

On January 25, 1996, Canonico prepared a letter for

Lansdowne stating that, while christopher consultants “cannot

speak to legal issues relating to proffers or sales contracts,”

it had “retained the services” of the attorney who had provided

Lansdowne with the opinion letter. Relying on the attorney’s

opinion that Xerox Realty would have no liability to perform the

proffers after the sale of the property, the letter goes on to

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state that “we find that there is zero dollars liability, in

terms of the value of what would need to be secured relating to

[M]onetary [P]roffers as it impacts the seller of the Lansdowne

project.” At trial, Canonico admitted that christopher

consultants had not retained the services of the attorney, and

that he had relied on the opinion letter obtained by Lansdowne

in drafting the January 25, 1996 letter. He further testified

that in writing the letter, christopher consultants was not

“taking any position as to what the contract [between Xerox

Realty and Lansdowne] required” christopher consultants to

perform. Lansdowne did not provide Xerox Realty with a copy of

this letter.

On the day of the scheduled closing, Lansdowne refused to

provide Xerox Realty with the deed of trust called for in the

contract. Based on this refusal, Xerox Realty terminated the

contract.

On March 27, 1996, Lansdowne filed a bill of complaint

against Xerox Realty seeking specific performance of the

contract. Lansdowne alleged that the contract required it to

secure by deed of trust Xerox Realty’s post-transfer liability

for the “Monetary Proffers,” not the actual cost of completing

those proffers. Lansdowne further alleged that christopher

consultants was to determine the amount of liability, if any, to

be secured. Asserting that the January 25, 1996 letter from

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christopher consultants established that Xerox Realty’s post-

transfer liability was “‘zero dollars,’” Lansdowne alleged that

it was entitled to specific performance of the contract without

having to provide Xerox Realty with the deed of trust. 3 In its

answer, Xerox Realty denied that a plain reading of the contract

would support Lansdowne’s interpretation that only Xerox

Realty's liability was to be secured by the deed of trust.

Xerox Realty also sought an award of attorney’s fees and costs

for having to defend the suit.

A hearing was held before the chancellor in which evidence

in accord with the above recounted facts was received. In an

opinion letter dated April 22, 1997, the chancellor indicated

that he would rule in favor of Xerox Realty, stating:

[T]he Court can find no justification to vary the
express terms of the contract of sale. That agreement
requires that Lansdowne Development Corporation . . .
secure the monetary proffer obligations to be
performed in connection with the development of the
property with a purchase money trust securing
completion of over eighteen million dollars in
proffers as determined by the engineering firm agreed
upon by the parties. The lengthy record is devoid of
evidence that it was the understanding of the parties
to leave open for further consideration the legal
determination as to whether, and to what extent,
[Xerox Realty] would have a continuing obligation to
perform the proffers after the land had been conveyed.
Lansdowne failed to tender such a deed of trust and
was in default of its obligation to settle in

3
Lansdowne also sought monetary damages under various
theories. These claims are not at issue in this appeal.

8
 accordance with the terms of the contract. . . . It
is not for this court to rewrite the contract for the
parties.

In a decree referencing his opinion letter, the chancellor

awarded judgment to Xerox Realty and appointed a commissioner in

chancery to determine “attorney’s fees and costs to which [Xerox

Realty] is entitled pursuant to [the contract].” After

receiving expert testimony and reviewing the claims made by

Xerox Realty, the commissioner deleted certain specific claims,

reduced certain other claims by ten percent, and recommended an

award of $908,007.73 for attorney’s fees and $234,100.32 for

other litigation expenses to Xerox Realty.

Prior to the commissioner’s hearing, Lansdowne filed

numerous pleadings objecting to Xerox Realty’s claims for

attorney’s fees and costs. Subsequent to the filing of the

commissioner’s report, Lansdowne filed its exceptions to the

report, incorporating its prior objections. Relevant to this

appeal, Lansdowne asserted that Xerox Realty had not incurred

any “litigation expenses” since all of the attorney’s fees and

costs had been billed to and paid by Xerox Realty’s parent

corporation. Lansdowne further asserted generally that the

attorney’s fees and costs claimed by Xerox Realty were

unreasonable, contending that the case “could have been handled

at typical Loudoun County rates.”

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 In an opinion letter dated January 29, 1998, the chancellor

found that Xerox Realty as “a wholly owned subsidiary of the

Xerox Corporation, and not its parent company, was liable for,

and ultimately held accountable for the legal services rendered

in connection with this case.” The chancellor further found

that the fee schedules of the individual attorneys were

reasonable and that “given the limited number of large law firms

in Loudoun County and the relationship which [Xerox Realty]

previously enjoyed with [a Washington, D.C.-based law firm], it

was not unreasonable that Xerox would seek the services of that

firm,” when a local firm was required to withdraw from

representation. Accordingly, the chancellor rejected

Lansdowne’s exceptions to the commissioner’s report and awarded

attorney’s fees and costs to Xerox Realty in the amount

determined by the commissioner. This appeal followed.

DISCUSSION

Several familiar principles govern our resolution of this

appeal. First, when contract terms are clear and unambiguous,

we must construe those terms according to their plain meaning.

Bridgestone/Firestone v. Prince William Square, 250 Va. 402,

407, 463 S.E.2d 661, 664 (1995). Additionally, we will not

insert by construction, for the benefit of a party, a term not

express in the contract. See id. Moreover, when considering

the meaning of any part of a contract, we will construe the

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contract as a whole. See Vega v. Chattan Associates, 246 Va.

196, 199, 435 S.E.2d 142, 143 (1993).

Although the chancellor permitted the parties to present

extensive parol evidence, his ultimate resolution rested on “the

express terms of the contract of sale” and, thus, the chancellor

implicitly found the contract to be clear and unambiguous.

Moreover, neither party now contends that parol evidence is

necessary to construe the contract in its favor. Rather,

Lansdowne contends that the plain meaning of the contract is

that the Purchase Money Trust would secure Xerox Realty’s post-

sale liability 4 on the Monetary Proffers and that christopher

consultants was to determine the amount of that liability.

Xerox Realty contends that the plain meaning of the contract is

that the Purchase Money Trust would secure Lansdowne’s

performance of the Monetary Proffers and that christopher

consultants was to determine the cost of that performance. We

agree with Xerox Realty.

Under the terms of the contract, Lansdowne was to assume

all liabilities relevant to the development and rezoning

proffers made by Xerox Realty including the “Monetary Proffers.”

4
Although a local zoning administrator may bring a legal
action to enforce zoning conditions, see Code § 15.2-2299, we
need not, and do not, express an opinion on the applicability of
this statute to Xerox Realty’s post-sale liability on the
Monetary Proffers in this case.
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The contract plainly states that Lansdowne’s “obligations . . .

to perform the Monetary Proffers shall be secured by the

Purchase Money Trust.” (Emphasis added.) Nothing in this

language, or in any other provision of the contract, suggests

that the parties intended the Purchase Money Trust to secure

Xerox Realty’s post-sale liability, and we will not insert such

language for the benefit of Lansdowne. Bridgestone/Firestone,

supra.

Lansdowne further contends that regardless of the purpose

of the security to be provided for the Monetary Proffers, the

determination by christopher consultants in the January 25, 1996

letter that there was “zero dollars . . . to be secured relating

to the [M]onetary [P]roffers” was binding on Xerox Realty since

the parties agreed that christopher consultants would determine

“[t]he amount to be secured.” We disagree with Lansdowne.

The January 25, 1996 letter Lansdowne procured from

christopher consultants merely expresses an opinion as to Xerox

Realty’s post-sale liability. Nothing in the contract suggests

that the parties contemplated that christopher consultants, an

engineering firm, would provide a legal opinion as to liability

or that such an opinion was relevant to the determination of

“[t]he amount to be secured” for Lansdowne’s performance of the

Monetary Proffers. The September 7, 1995 letter provided by

christopher consultants to Xerox Realty and sent by Xerox Realty

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to Lansdowne established “[t]he amount to be secured,” and, as

Canonico’s testimony confirms, nothing in the January 25, 1996

letter was intended to contradict or displace the estimate given

in the earlier letter.

Lansdowne further contends that Xerox Realty should be

estopped from asserting its right to have Lansdowne’s

performance of the Monetary Proffers secured by the deed of

trust because of the terms of the amended development plan

agreed to by Loudoun County, Xerox Realty, Lansdowne, and the

other landowners. Lansdowne contends that the establishment of

the escrow accounts and trust funds under the amended

development plan eliminated any risk that the proffers would not

be completed and, thus, that Xerox Realty, as a party to this

agreement, waived its right to have completion of the proffers

secured by the deed of trust.

Again, Lansdowne confuses the bargain of the contract,

which required it to secure its performance of the Monetary

Proffers, with the unrelated issue of whether Xerox Realty might

ultimately incur liability as a result of Lansdowne’s failure to

perform. Under the contract, Lansdowne was obligated to perform

the Monetary Proffers and was required to secure that obligation

by providing Xerox Realty with a deed of trust. This obligation

was part of the consideration Lansdowne was to give in return

for the transfer of the property. It is simply not relevant

13
that Loudoun County, with Xerox Realty’s agreement, obtained

additional means to secure the ultimate completion of the

proffers.

Finally, Lansdowne contends that the chancellor erred in

awarding certain items as “litigation expenses” to Xerox Realty. 5

Citing Advanced Marine Enterprises v. PRC Inc., 256 Va. 106,

126, 501 S.E.2d 148, 160 (1998), Lansdowne contends that

“library research, meals, courier services and the like” should

not have been included in the award.

In Advanced Marine, we held that “a trial court’s

discretion to award costs under . . . the relevant provisions of

Code §§ 14.1-177 through –201 [now § 17.1-600, et seq.], is

limited only to those costs essential for prosecution of the

suit, such as filing fees or charges for service of process,”

id., where the statute granting the trial court such authority

limited the award to “costs of suit, including reasonable

counsel fees.” Code § 18.2-500. In doing so, we noted that the

5
Lansdowne also reasserts its contentions that the
litigation expenses were actually incurred by Xerox Realty’s
parent corporation and that the fee schedules of the attorneys
were unreasonable. On appeal, the chancellor’s decree approving
a commissioner’s report will be affirmed unless plainly wrong or
without support in the evidence. Chesapeake Builders, Inc. v.
Lee, 254 Va. 294, 299, 492 S.E.2d 141, 144 (1997). The record
here adequately supports the reasonableness of the attorney’s
fees recommended by the commissioner and the chancellor’s
determination that Xerox Reality was ultimately liable for these
fees and the other litigation expenses incurred on its behalf.
14
authority for such awards is in derogation of the common law

and, thus, subject to a strict interpretation. Id. at 125, 501

S.E.2d at 159.

Here, the award of costs is not made pursuant to a statute,

but under a provision of the contract permitting the prevailing

party to recover “all litigation expenses, including actual

attorney’s fees, which shall not be unreasonable, and court

costs.” This language is more comprehensive than that of the

statute at issue in Advanced Marine. Moreover, we are not

required to apply the same narrow construction to a contract

that we apply to a statute in derogation of the common law.

Nonetheless, we agree with Lansdowne that “all litigation

expenses” cannot be so broadly construed as to include any

charge made by an attorney to a client in the course of

litigation. The record in this case shows that among other

items, Xerox Realty’s attorneys invoiced several “Conference

Room Expenses” in amounts ranging from $1.50 to $11.00. During

the commissioner’s hearing, one of the attorneys indicated that

this charge was for “sodas and coffee and things of that

nature.” Additional items found in the invoices submitted by

Xerox Realty to the commissioner in chancery, apart from the

actual legal work of the attorneys and their paraprofessional

staff, include “Consulting Fees,” “Office Supplies,” “Local

15
Meals,” “Local Transportation,” “Binding,” “Miscellaneous,” and

“Cash Expense.”

Clearly, some of these charges are not direct costs of

litigation and arguably should have been excluded from the award

of costs recommended by the commissioner and approved by the

chancellor. However, as presented to this Court, the record

does not show that Lansdowne made an adequate, particularized

objection to any of these charges during the commissioner’s

hearing or in its exceptions to the commissioner’s report.

Lansdowne’s generalized exception to the “reasonableness” of the

award of costs was insufficient to direct the chancellor, or

this Court, to which of the myriad individual charges Lansdowne

now objects. A principal function of a commissioner’s hearing

is to relieve the chancellor of the burden of assessing the

minutiae of a complex evidentiary record. Thus, the

commissioner’s hearing was the proper forum in which to assert

challenges to individual items or classes of items of the costs

claimed as “litigation expenses,” and it is not the duty of the

chancellor, or of this Court, sua sponte to conduct a review of

the record of the commissioner’s hearing to determine the

legitimacy of every individual item. Accordingly, we hold that

Lansdowne failed to adequately preserve this issue for appeal.

Rule 5:25.

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 CONCLUSION

For these reasons, we find no reversible error in the

judgment, and we will affirm the chancellor’s decree denying

Lansdowne specific performance of the contract and awarding

litigation expenses to Xerox Realty.

Affirmed

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