Present: Carrico, C.J., Compton, Stephenson, Hassell, and
Keenan, JJ., and Poff and Whiting, Senior Justices
HAZEL & THOMAS, P.C., et al.
OPINION BY
v. Record No. 950211 SENIOR JUSTICE HENRY H. WHITING
January 12, 1996
SHAHRAM YAVARI, et al.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
J. Howe Brown, Jr., Judge
In this appeal in an attorney malpractice action, the
dispositive issue is whether the client proved that the
attorneys' negligence was a proximate cause of the client's loss.
Therefore, we recite only those facts relevant to this issue,
and, in accordance with familiar appellate principles, we state
those facts in the light most favorable to the client, the
prevailing party in the trial court.
In February 1990, Shahram Yavari asked Daniel H. Shaner, an
attorney with the law firm of Hazel & Thomas, P.C. (Hazel &
Thomas), to represent him in the negotiation of a sales contract
for Yavari's $6.6 million purchase from James M. Kline of a
6.4259-acre tract of commercial property in the City of
Alexandria. Since Yavari needed to quickly move his carpet sales
and installation business from leased property, he told Shaner
that he wanted to take possession of the Kline property
immediately after signing the contract and to lease part of the
property to tenants prior to closing on the contract, which was
planned for September 1990.
Accordingly, Shaner negotiated the contract to provide
Yavari with these rights. Pursuant to the contract, Yavari was
to pay Kline a $1 million deposit that would be credited towards
the purchase price, but would be forfeited if Yavari failed to
close on the property. The contract also required Yavari to
execute a purchase money note in which he agreed to pay Kline 59
monthly payments of $60,500 in principal and interest, with a
balloon payment of nearly $5 million 60 months after closing.
The note was to be secured by a purchase money deed of trust on
the property.
The contract also gave Kline the right to convey the
property subject to the liens of three deeds of trust Kline had
previously placed on the property. The total of the three liens
was not to exceed $5.6 million at the time of closing. If Kline
exercised this right, he was obligated to obtain the three lien
creditors' consent to the sale.
The contract was signed on March 15, 1990 by Kline and by
Yavari, Mehrdad Yavari, his wife, and his two corporations,
Carpetland, Inc., and Mattress Land, Inc. (hereafter collectively
Yavari). Yavari took possession of the property and timely paid
the $1 million deposit to Kline.
After the contract was signed, Kline exercised his right to
continue his existing financing and obtained the three lien
creditors' consent to the sale. Although not required to do so
by the contract, Kline, at Yavari's request, also sought to
extend the maturity dates on his preexisting notes to conform to
the maturity date on Yavari's purchase money note. General
Motors Acceptance Corporation (GMAC), one of Kline's lien
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creditors, agreed to extend the maturity date on the notes it
held, but conditioned that consent on Kline continuing to be a
franchised General Motors Corporation (GM) automobile dealer
during the life of Yavari's purchase money note. If Kline ceased
to be a GM dealer, then Kline's obligations to GMAC would
immediately become due.
Yavari objected to this condition, fearing that if Kline
ceased to be a GM dealer and defaulted on his obligations to
GMAC, Yavari would have to pay in excess of $2 million prior to
the due date of his balloon payment to protect his possessory
rights in the property. To assuage Yavari's fears, Kline
negotiated an agreement with GMAC providing that the obligations
to GMAC would not become due until one year after any termination
of Kline's dealership. However, this further agreement did not
allay Yavari's concerns.
Yavari was unable to lease part of the property to
prospective tenants. This inability arose because the parties
with whom he was negotiating, large national companies such as
Midas Muffler, Inc. (Midas), and National Tire Wholesalers (NTW),
demanded nondisturbance agreements from Kline and the three lien
creditors before leasing the property. In general, a
nondisturbance agreement is one in which a lienholder of leased
property agrees that, in the event of the lessor's default on his
obligation secured by the lien, the lienholder will not disturb
the lessee's leasehold rights, provided the lessee continues to
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tender performance to the party succeeding to the lessor's
rights. Kline refused to provide these agreements, asserting
that the contract did not require him to do so, and that such
agreements would place him at risk if Yavari defaulted on the
contract.
When Yavari and Kline could not reach an agreement on these
two issues, Yavari refused to close on the property. Kline then
evicted him from the premises, retained the $1 million deposit,
and instituted an action at law in the Circuit Court of the City
of Norfolk for the recovery of additional damages because of
Yavari's refusal to close. Following a bench trial, the court
held that (1) Kline had performed all his contractual
obligations, (2) Yavari had breached the contract by failing to
close on the transaction, and (3) Kline suffered additional
damages of $773,413.12. Accordingly, the court entered judgment
against Yavari in that amount, and that judgment is now final.
In an amended motion for judgment, Shahram Yavari and his
two corporations later sought damages for attorney malpractice
against Hazel & Thomas, Shaner, and Frederick K. Roseman, another
Hazel & Thomas attorney, who assisted Shaner in the transaction.
At a jury trial, William R. Van Buren, III, qualified as an
expert witness for Yavari on the issue of attorney malpractice in
the fields of business and real estate transactions. Van Buren
testified that the defendants violated the standard of care
required of attorneys practicing in these fields in a number of
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respects. Those violations included a failure to negotiate
provisions in the contract requiring Kline to obtain (1)
unconditional extensions of the maturity dates of his preexisting
notes to match the maturity date on Yavari's purchase money note,
and (2) nondisturbance agreements from Kline and the three lien
creditors. The defendants offered expert testimony that they
were free of negligence.
Following instructions on the issues of negligence and
proximate cause, the jury returned a verdict in favor of Yavari
against Hazel & Thomas and Shaner in the amount of $500,000.
Hazel & Thomas and Shaner (hereafter collectively the defendants)
appeal. 1
The defendants raise a number of issues on appeal. Since
the issue of proximate cause is dispositive, we only consider
that issue and the contentions and facts relating thereto. 2
Ordinarily, the fact finder decides whether a plaintiff has
shown that the defendant's negligence was a proximate cause of
1
Yavari does not assign cross-error to the judgment in favor
of Roseman. Thus, that judgment is not before the Court.
2
The defendants also argue that the evidence is insufficient
to show that Shaner breached the standard of care. Since we
conclude that the evidence is insufficient to show proximate
cause, we will assume, without deciding, that the evidence is
sufficient to show the alleged breaches of the standard of care.
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the plaintiff's loss. Parham v. Albert, 244 Va. 73, 77, 418
S.E.2d 866, 868 (1992). When, however, the evidence is such that
reasonable minds could not differ as to the outcome, the issue of
proximate cause should be decided by the court, not the jury.
Id. This rule applies equally in attorney malpractice cases, in
which the client bears the burden of producing evidence that the
attorney's negligence proximately caused the client's loss.
Campbell v. Bettius, 244 Va. 347, 352, 421 S.E.2d 433, 436
(1992); Duvall, Blackburn, Hale & Downey v. Siddiqui, 243 Va.
494, 497, 416 S.E.2d 448, 450 (1992). Thus, Yavari had the
burden of showing either that Kline would have agreed to include
the above-listed provisions in the contract or that Yavari would
not have signed the contract if Kline had refused to include
them.
Recognizing this burden, Yavari relies on the following
testimony from Kline:
Q: . . . . Back in February and early
March, before the Purchase Agreement was
signed, if Mr. Yavari's lawyers had requested
at that time of you inclusion of a
nondisturbance provision in the contract,
would you have granted it?
A: I don't know. It's problematical, but I
certainly would have found a way to make the
deal happen.
However, the defendants note Kline's testimony that he would not
grant a nondisturbance agreement to Midas or NTW just before the
proposed closing since they were leasing only parts of the
property and that he did not want to be bound by the leases in
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the event that Yavari defaulted on his note. In our opinion,
Kline's testimony is insufficient to support the inference that
he would have agreed to a nondisturbance provision before signing
the contract when he refused to agree to such a provision several
months after signing the contract.
Furthermore, Yavari is unable to point to any evidence
indicating that Kline would have agreed to bind himself to obtain
his lien creditors' unconditional consent to extend the maturity
dates on his preexisting notes to match the maturity date on
Yavari's purchase money note. More importantly, Yavari never
testified that he would not have signed the contract without the
inclusion of the two provisions specified above had his attorneys
insisted on them and had Kline refused to agree to them.
Accordingly, we conclude that Yavari has failed to introduce
sufficient evidence that his former attorneys' purported
negligence was a proximate cause of his loss. Therefore, we will
reverse the judgment of the circuit court and enter final
judgment for the defendants.
Reversed and final judgment.
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