Zoroastrian Center v. Rustam Guiv Foundation , 822 F.3d 739 ( 2016 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1841
ZOROASTRIAN CENTER AND DARB-E-MEHR OF METROPOLITAN
WASHINGTON, D.C.,
Plaintiff – Appellant,
v.
RUSTAM GUIV FOUNDATION OF NEW YORK; MEHRABAN SHAHRVINI,
Trustee; DARYOUSH JAHANIAN, a/k/a Dariush Jahanian,
Trustee,
Defendants – Appellees,
and
SOROOSH SOROOSHIAN; BRUCE NADJMI; KHOSRO MEHRFAR,
Appellees,
and
ESFANDIAR ANOUSHIRAVANI, Trustee; KEIKHOSRO MOBED, Trustee;
ROSTAM GHAIBI, Trustee; JAMSHID VARZA, Trustee; ROSTAM
SARFEH, Trustee,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Liam O’Grady, District
Judge. (1:13-cv-00980-LO-TRJ)
Argued: September 15, 2015 Decided: May 4, 2016
Before WILKINSON, AGEE, and KEENAN, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published
opinion. Judge Agee wrote the opinion, in which Judge Wilkinson
and Judge Keenan joined.
ARGUED: Robert Lee Vaughn, Jr., O’CONNOR & VAUGHN LLC, Reston,
Virginia, for Appellant. Billy Bernard Ruhling, II, TROUTMAN
SANDERS LLP, Tysons Corner, Virginia, for Appellees. ON BRIEF:
Massie P. Cooper, TROUTMAN SANDERS LLP, Richmond, Virginia, for
Appellees.
2
AGEE, Circuit Judge:
The Zoroastrian Center and Darb-E-Mehr of Metropolitan
Washington, D.C. (“The Center”) is a nonprofit entity dedicated
to the advancement and practice of Zoroastrianism, an ancient
Persian religion. Rustam Guiv Foundation (“Rustam Guiv”) is a
charitable trust with a similar mission. 1 As part of a joint
effort to construct a Zoroastrian worship center, the parties
signed a ninety-nine-year lease on a parcel of property owned by
Rustam Guiv in the Vienna area of Fairfax County, Virginia.
What followed was a tumultuous relationship that culminated in
Rustam Guiv terminating the lease. The Center responded with
this litigation seeking, among other things, a declaratory
judgment to reinstate the lease. Rustam Guiv removed the case
to federal court, where the district court ultimately granted
summary judgment to Rustam Guiv and awarded attorneys’ fees. On
appeal, The Center raises several claims of error, including the
threshold question of whether federal subject matter
jurisdiction existed.
We agree with the district court that The Center’s case
cannot go forward. Rustam Guiv presented sufficient evidence to
show complete diversity between the parties, thereby
establishing subject matter jurisdiction in federal court.
1
Except as indicated, we reference the Rustam Guiv trust
and its individual trustees as “Rustam Guiv” collectively.
3
Likewise, the undisputed material facts show that The Center
breached the lease, so we affirm the district court’s decision
to dismiss the complaint in its entirety and enter judgment for
Rustam Guiv.
The district court’s attorneys’ fee award, however,
presents another matter. Under Virginia law governing
contractual fee-shifting provisions, the prevailing party is
entitled to recover attorneys’ fees for work performed only on
its successful claims. See Ulloa v. QSP, Inc., 271 Va. 72, 82
(2006). The district court correctly identified Rustam Guiv as
the prevailing party but made no effort to narrow the fee award
to its successful claims. Thus, we vacate the district court’s
fee award and remand for further proceedings as to that issue.
I.
A.
Rustam Guiv owns a seven-acre parcel of property in Vienna,
Virginia. In 1991, Rustam Guiv leased this land to The Center
for ninety-nine years at a nominal rent of one dollar a year.
In return, The Center was to construct “a place of worship for
all Zoroastrians of the world”; “a facility for the advancement
of the Zoroastrian religion”; and “a dwelling suitable for
4
residence of a Mobed (priest).” J.A. 41. 2 The Center would bear
all costs of improving the property to meet these requirements. 3
The lease did not include a firm deadline for this construction,
but did provide that “time is of the essence.” J.A. 50.
The Center contends it invested “thousands of dollars” in
planning and designing a worship facility, which included
obtaining permits and density exemptions from the Fairfax County
government. Despite these alleged efforts, however, The Center
did not begin actual construction for many years. And, by 2008,
The Center still had not completed a single structure.
Frustrated with the state of progress, Rustam Guiv
threatened to rescind the lease. The parties then executed a
lease amendment dated January 1, 2009, designed to “re-energize
[The Center’s] efforts.” J.A. 261. Together, the original
lease and amendment governed the parties’ lessor-lessee
relationship.
Several clauses from the lease amendment are pertinent
here. First, The Center agreed to “undertake such construction
[of a religious center] no later than November 1, 2009” and
complete the project by March 13, 2011. J.A. 55. Although
2
This opinion omits internal marks, alterations, citations,
emphasis, or footnotes from quotations unless otherwise noted.
3 The Center was also required to pay all real estate taxes
and related assessments, the cost of insurance, and all
utilities.
5
Rustam Guiv was allowed to extend this completion deadline, in
no event could construction go past March 15, 2013. The
amendment further permitted Rustam Guiv to terminate the lease
if “substantial” activity had not been undertaken by either
date. J.A. 55-56. As these provisions make clear, the lease
amendment was designed to speed the pace of construction by
instituting hard deadlines.
For financial reasons not entirely clear from the record,
The Center missed the start deadline for construction. This set
in motion a series of meetings that culminated with Rustam Guiv
notifying The Center that it was pursuing a partnership with
another charitable foundation for a Zoroastrian temple in
Maryland. Dr. Daryoush Jahanian, who can best be described as
RGF’s lead trustee, followed up with an email explaining that
this alternate site would be sufficient to service the regional
Washington Zoroastrian community, and consequently, The Center
should “stop signing any contract[s] and . . . not write any
check[s] as much as possible.” J.A. 869. The Center
“temporarily stopped the progress” on this recommendation from
Dr. Jahanian, but soon decided “to stay on course” and continue
its efforts at construction. J.A. 473.
In sum, by the end of April 2010, the original lease had
been amended to include particular construction deadlines, the
first of which had been missed. Rustam Guiv had chosen to focus
6
its efforts on an alternative site and requested The Center to
stop construction. The Center briefly ceased its operations,
but within a few weeks, elected to continue with its plans.
B.
The parties remained at a virtual standstill for over a
year without significant dialogue. The Center alleges that it
could not “obtain bonds that were required by Fairfax County” or
“pull any permits” without Rustam Guiv’s consent, and thus its
construction activities stalled. Opening Br. 11. Rustam Guiv,
in turn, was pursuing the Maryland site.
In March 2011, Rustam Guiv contacted The Center for an in-
person meeting about taking possession of the Vienna property.
During the subsequent conference, however, the parties agreed to
continue construction on the Vienna building as reflected in a
one-page, hand-written Memorandum of Understanding (“MOU”) that
included the following provisions:
1 – [Rustam Guiv] will be in full
cooperation with [The Center] in
facilitating the required paperwork.
2 – [The Center] will provide to [Rustam
Guiv] an accounting book to list the names
[and] amounts of all donations and all
expenses. [The Center] will also continue
to provide quarterly financial report[s]
[and] account summar[ies] of all donations
and expenses.
3 – [The Center] will provide an
accomplishment plan with milestones [and]
7
deadlines, mutually agreed by the two
parties.
. . . .
6 – Items 2, 3 and 5 above will be provided
on or before 5/15/2011 and must be approved
by [Rustam Guiv].
J.A. 495-96.
As required by the MOU, The Center delivered an initial
report on May 15, 2011. That report, however, failed to include
a full accounting, list of donor activity, or accomplishment
milestones. For reasons unknown, Rustam Guiv did not object to
these deficiencies, and the parties again went silent.
On April 20, 2013 –- approximately two years after the MOU
was drafted, four years after the lease amendment, and over
twenty years after the original lease was signed –- Rustam Guiv
sent The Center a formal notice terminating the lease. As
grounds, Rustam Guiv cited The Center’s failure to complete
construction of a worship center by March 15, 2013, the final
deadline in the lease amendment. The Center responded with this
litigation seeking, among other relief, a declaratory judgment
that the lease remained in effect.
C.
The Center filed its initial complaint in the Fairfax
County Circuit Court, naming Rustam Guiv and its trustees,
individually, as defendants. Rustam Guiv timely removed the
8
case to the Eastern District of Virginia based on diversity of
citizenship. Opposed to proceeding in federal court, The Center
sought remand on grounds that Rustam Guiv had failed to show the
complete diversity necessary to establish federal jurisdiction.
In its order, the district court noted that neither the
Supreme Court nor the Fourth Circuit had addressed the precise
issue of how to determine the citizenship of a defendant-trust
for purposes of diversity jurisdiction. Faced with a lack of
binding precedent, the court adopted the Third Circuit’s test:
the citizenship of a trust is determined by looking at the
citizenship of both the trustees and beneficiaries. See Emerald
Inv’rs Tr. v. Gaunt Parsippany Partners, 492 F.3d 192, 205 (3d
Cir. 2007). Having settled on this framework, the district
court reserved judgment “until the parties [had] presented
[further] evidence of [Rustam Guiv’s] citizenship . . . and
additional evidence related to the trust’s beneficiaries.” J.A.
166.
Rustam Guiv then submitted an affidavit from Dr. Jahanian
and residence information for the current trustees. These
documents affirmed that none of its current trustees or
beneficiaries were Virginia residents. Based on this evidence,
and over The Center’s objection, the district court denied The
Center’s motion to remand.
9
D.
The Center filed an amended complaint requesting a
declaratory judgment that the original lease remains in full
force and effect (Count I); an order restraining Rustam Guiv
from interfering with its rights under the lease (Counts II and
III); and a judgment that Rustam Guiv had breached the lease and
was liable for damages (Count IV). Meanwhile, Rustam Guiv filed
its answer along with several counterclaims seeking relief for
breach of contract (Counterclaim Count I); slander of title
(Counterclaim Count II); and quiet title (Counterclaim Count
III).
The parties filed cross-motions for summary judgment at the
close of discovery. Although The Center presented a litany of
arguments to the district court, its principle theory of the
case rested on the MOU and its enforceability. According to The
Center, Rustam Guiv had no authority to cancel the lease because
the MOU was a binding agreement that rescinded the construction
timeline in the lease and lease amendment.
Following oral argument, the district court granted summary
judgment to Rustam Guiv. The court found that The Center had
breached the lease by failing to construct a temple before the
final deadline, and as a result, Rustam Guiv validly exercised
its right to end the lease. The court rejected The Center’s
argument that the MOU altered the lease amendment’s deadlines,
10
concluding it was “too vague to be enforceable.” J.A. 1170.
The court further noted, “[e]ven if [the MOU] read as a
modification of the lease arrangement . . . nothing in [it]
eliminates or alters the dispositive deadlines.” Id.
Therefore, “RGF still had the right to terminate the tenancy.”
Id. The effect of this order was to dismiss The Center’s
amended complaint with prejudice and enter judgment in favor of
Rustam Guiv. 4
Rustam Guiv then petitioned the court for an award of
attorneys’ fees. After adjusting the billing rates and time
billed by several attorneys, the district court granted Rustam
Guiv’s fee request. The Center filed a motion for
reconsideration, which the district court denied.
The Center timely appealed, challenging both the district
court’s decision on the merits and the fee award. We have
jurisdiction under 28 U.S.C. § 1291.
After oral argument in this case, the Supreme Court granted
certiorari in Americold Realty Trust v. ConAgra Foods, Inc. “to
resolve confusion among the Courts of Appeals regarding the
citizenship of unincorporated entities.” 136 S. Ct. 1012, 1015
4Although summary judgment was awarded to Rustam Guiv, not
all of Rustam Guiv’s claims were successful. Specifically, the
district court rejected the slander of title counterclaim. That
finding is relevant in the context of its attorneys’ fee award
as discussed below.
11
(2016). Consequently, we held this case in abeyance pending the
Supreme Court’s decision, which has issued and is reviewed
below.
II.
We first address Rustam Guiv’s argument concerning the
standard of review. Typically we consider a district court’s
decision on summary judgment de novo, applying the same legal
standards as the district court and viewing the facts in the
light most favorable to the nonmoving party. FDIC v. Cashion,
720 F.3d 169, 173 (4th Cir. 2013). Rustam Guiv argues instead
that the standard of review should be abuse of discretion
because The Center noticed its appeal from the order denying its
motion for reconsideration. See Robinson v. Wix Filtration
Corp., 599 F.3d 403, 407 (4th Cir. 2010) (“This court reviews
the denial of a Rule 59(e) motion under the deferential abuse of
discretion standard.”).
Although the factual underpinning of Rustam Guiv’s argument
is correct –- The Center’s notice of appeal designates the
district court’s ruling on the motion for reconsideration –- its
legal conclusion does not follow. “[W]e should be liberal in
passing on the sufficiency of a notice of appeal,” and the
“designation of a postjudgment motion in the notice of appeal is
adequate to support a review of the final judgment when the
12
intent to do so is clear” and there is no prejudice. MLC Auto.,
LLC v. Town of S. Pines, 532 F.3d 269, 279 (4th Cir. 2008)
(citations omitted). That is the case here.
The Center’s notice of appeal references the final order
from its motion for reconsideration but simultaneously requests
review of the “relief” granted Rustam Guiv by the district
court. J.A. 1295. On these facts, we believe The Center’s
intent to appeal the district court’s summary judgment ruling is
sufficiently clear. And since the parties have both extensively
briefed the underlying judgment, Rustam Guiv does not face any
measurable prejudice. See Nat’l Ecological Found. v. Alexander,
496 F.3d 466, 477 (6th Cir. 2007) (affirming that an appeal of a
motion for reconsideration preserves general appellate review so
long as parties “fully argued the merits of the prior orders”).
Accordingly, we will apply the typical de novo standard of
review where required.
We also note that Virginia supplies the substantive law
here since the district court was sitting in diversity. See
Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114, 118
(4th Cir. 2004) (“In a diversity case, we must consult state law
to determine the nature of the litigant’s rights . . . .”).
13
III.
The Center contends that the district court was required to
remand this case to the Virginia state court because Rustam Guiv
failed to prove the diversity of citizenship necessary to
establish federal subject matter jurisdiction. In its view,
deficiencies in Rustam Guiv’s proffered evidence made it
“impossible for the District Court to decide whether [complete]
diversity existed.” Opening Br. 29. As a result, removal “was
in error.” Id. at 37.
The Center is correct that Rustam Guiv bears the burden of
proof, by a preponderance of the evidence, to show the parties’
citizenship to be diverse. See Mulcahey v. Columbia Organic
Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (“The burden of
establishing federal jurisdiction is placed upon the party
seeking removal.”). However, the case presents a threshold
question that both sides largely ignored in their briefs –- how
is the citizenship of a trust such as Rustam Guiv to be
determined for purposes of diversity jurisdiction? The
resolution of this initial inquiry determines the evidentiary
factors a court should consider in the jurisdictional analysis.
A.
Despite over two centuries of federal litigation involving
trusts, the method for determining a trust’s citizenship was
long unsettled and the subject of much debate. See Americold,
14
136 S. Ct. at 1016 (“[C]onfusion regarding the citizenship of a
trust is understandable and widely shared.”). Two Supreme Court
cases in particular gave rise to a divergence in lower-court
decisions on this issue: Navarro Savings Ass’n v. Lee, 446 U.S.
458 (1980), and Carden v. Arkoma Associates, 494 U.S. 185
(1990).
In Navarro, the individual trustees of a business trust,
suing in their own names, brought an action for breach of
contract. 446 U.S. at 459-60. The defendants disputed
jurisdiction, arguing that the trust’s beneficiaries, and not
the trustees, were the real parties to the controversy and their
citizenship should control. The question presented was whether
“trustees of a business trust may invoke the diversity
jurisdiction of the federal courts on the basis of their own
citizenship, rather than that of the trust’s beneficial
shareholders.” Id. at 458. After looking at the role of the
trustees and beneficiaries with respect to the trust, the Court
found that “a trustee is a real party to the controversy for
purposes of diversity jurisdiction when he possesses certain
customary powers to hold, manage, and dispose of assets for the
benefit of others.” Id. at 464. The Court concluded, “trustees
who meet this standard [may] sue in their own right, without
regard to the citizenship of the trust beneficiaries.” Id. at
465–66.
15
Although Navarro involved an action brought in the name of
individual trustees, it was generally read to imply that when a
trustee “possesses certain customary powers to hold, manage, and
dispose of assets for the benefit of others,” id. at 464, a
court should refer only to the citizenship of the trustee to
determine the trust’s citizenship, see Ind. Gas Co. v. Home Ins.
Co., 141 F.3d 314, 318 (7th Cir. 1998).
A decade later, in Carden, the Supreme Court offered
additional directions on this issue. In that case, a limited
partnership brought a contract claim in district court on the
basis of diversity jurisdiction. Carden, 494 U.S. at 186. The
partnership contended that, like corporations, its citizenship
should be determined with reference to the state in which it was
organized or, alternatively, with reference to the citizenship
of its general partners only. Id. at 187-96. The Court
disagreed, holding that “diversity jurisdiction in a suit by or
against [an artificial] entity depends on the citizenship of all
the members.” Id. at 195. In articulating this “all the
members” rule, the Court explicitly distinguished Navarro:
“Navarro had nothing to do with the citizenship of the ‘trust,’
since it was a suit by the trustees in their own names.” Id. at
192-93. The Court further emphasized that Navarro concerned the
distinct question of whether the trustees in that action “were
the real parties to the controversy.” Id. at 191.
16
Lower courts interpreted these cases in very different
ways. Some courts, relying on Navarro, concluded that a trust
has the citizenship of its trustees. See, e.g., Mullins v.
TestAmerica, Inc., 564 F.3d 386, 397 n.6 (5th Cir. 2009).
Following Carden, other courts held the view that the
citizenship of a trust depends on the citizenship of its
trustees and beneficiaries, as they are analogous to being the
“members” of the trust. See Emerald Inv’rs Tr., 492 F.3d at 201
(“[D]iversity jurisdiction by or against an artificial entity
depends on the citizenship of ‘all the members.’”). 5 In the case
at bar, the district court followed the latter approach and
looked at the citizenship of both the trustees and beneficiaries
of Rustam Guiv to determine diversity. The Supreme Court
granted certiorari in Americold Realty Trust v. ConAgra Foods,
Inc., 136 S. Ct. 1012 (2016), ostensibly to resolve this circuit
split.
Americold involved a real estate investment trust which,
under the applicable state law, was deemed owned and controlled
by its “members,” the equivalents of a corporation’s
shareholders. However, “as Americold [wa]s not a corporation,
5
Corporations are treated differently by statute as
distinct legal persons. See 28 U.S.C. § 1332(c) (recognizing
that corporations are a distinct entity which “shall be deemed
to be a citizen of every State and foreign state by which it has
been incorporated and of the State or foreign state where it has
its principal place of business”).
17
it possesse[d] its members’ citizenship.” Id. at 1015 (noting
that under 28 U.S.C. § 1332(c) only corporations “should also be
considered a citizen of the State where it has its principal
place of business”). For such unincorporated entities, the
Supreme Court adhered to the “oft-repeated rule that diversity
jurisdiction in a suit by or against the entity depends on the
citizenship of all its members.” Id.
The Supreme Court rejected Americold’s argument that
Navarro called for the opposite conclusion. The Court again
“reminded litigants” that “Navarro had nothing to do with the
citizenship of a trust.” Americold, 136 S. Ct. at 1016.
“Rather, Navarro reaffirmed a separate rule that when a trustee
files a lawsuit in her name, her jurisdictional citizenship is
the state to which she belongs -- as is true of any natural
person.” Id. Perhaps in dicta, the Supreme Court went on to
note that when a trustee of “a traditional trust” files a
lawsuit or is sued in her own name, “there is no need to
determine its membership, as would be true if the trust, as an
entity, were sued.” Id. (emphasis added).
Having settled the diversity of citizenship question for
real estate investment trusts, perhaps the Supreme Court in
Americold intended this statement to globally resolve the issue
for other trusts. However, the statement may generate as many
questions as it answers. Putting aside the lack of a
18
comprehensive definition of a “traditional trust,” the “as would
be true if the trust, as an entity were sued” phrase seems open
to several interpretations.
For example, does the phrase mean that there is no need to
determine entity membership for diversity purposes when a
“traditional trust” is sued as an entity? Or do we read the
statement to mean that a trust sued as an entity must prove
entity membership because it is a separate legal person from the
individual trustees? We need not resolve those questions now,
however, as the record here reflects diversity exists whether
the trustees, the trust beneficiaries, or both are the subject
of the citizenship requirement.
It is clear from the record evidence that the trustees are
residents of other states and not Virginia. Although The Center
contends Rustam Guiv’s evidence on this point is insufficient,
the district court found it credible, and The Center has offered
no contradictory evidence. The Center’s arguments go to two
areas -- witness credibility and the weight of the evidence --
where we defer to the findings of the trier of fact when
substantial evidence in the record supports those findings. See
Sligh v. Doe, 596 F.2d 1169, 1171 n.9 (4th Cir. 1979) (“It is
plain that the ‘clearly erroneous’ rule applies to
jurisdictional . . . determinations.”); U.S. ex rel. Vuyyuru v.
Jadhav, 555 F.3d 337, 348 (4th Cir. 2009) (“We review a district
19
court’s jurisdictional findings of fact . . . under the clearly
erroneous standard of review and any legal conclusions flowing
therefrom de novo.”). This record contains substantial
evidence, and we find nothing erroneous, much less clearly
erroneous, in the district court’s conclusion that Rustam Guiv
proved by a preponderance of the evidence the trustees’
diversity of citizenship from The Center. 6
Moreover, the record does not establish any beneficiaries
of the Rustam Guiv trust in Virginia. Rustam Guiv proffered it
had no beneficiaries in Virginia. In response, The Center
contended there were two Virginia beneficiaries: itself and
Fairfax County.
The Center, however, is not a trust beneficiary; it is
simply a tenant in a landlord/tenant business relationship with
6 The Center posits that Rustam Guiv’s affidavits are
insufficient because they contain evidence of the trustee’s
residence, which is not the same as citizenship. It is true
that residency and citizenship are not interchangeable in the
jurisdictional context. See Axel Johnson, Inc. v. Carroll
Carolina Oil Co., 145 F.3d 660, 663 (4th Cir. 1998) (“As the
Supreme Court has consistently held, however, state citizenship
for purposes of diversity jurisdiction depends not on residence,
but on national citizenship and domicile.”). But The Center is
mistaken that the evidence here is inadequate to establish
citizenship. Physical presence coupled with residency is prima
facie proof of citizenship, see Krasnov v. Dinan, 465 F.2d 1298,
1300 (3d Cir. 1972), and Rustam Guiv has shown more than that
here through its affidavits and other evidence. Without
something to cast doubt on this evidence, the district court did
not err by accepting these facts as adequate to establish the
trustees’ citizenship.
20
Rustam Guiv. And The Center did not contend otherwise below,
where its argument was that the lease was cancelled by the MOU.
Neither is Fairfax County a trust beneficiary. The Center
posits that by granting storm water and public street easements
to the County, as required by local code for the development of
the property, Rustam Guiv somehow created a beneficiary
relationship status despite The Center’s concession that “[i]n
exchange, [Rustam Guiv] received a density credit.” Opening Br.
38. The Center cites no precedent or statute for its argument
and with good reason. Compliance with required subdivision
ordinances or building codes by a trust owning real property
confers no beneficiary status on the government entity any more
so than would payment of real estate taxes. This is
particularly true here where Rustam Guiv received an asset, a
density credit, in exchange for the easements. Accordingly, we
find no error in the district court’s determination that Rustam
Guiv had no trust beneficiaries in Virginia.
Whether Americold has resolved “confusion among the Courts
of Appeals regarding the citizenship of unincorporated entities”
we leave to others to answer. 136 S. Ct. at 1015. In this
case, regardless of the test applied, Rustam Guiv met its burden
to prove diversity of citizenship. Thus, the district court did
not err in concluding it had subject matter jurisdiction.
21
IV.
We now turn to the merits. The district court concluded
that the lease amendment was binding and that The Center
breached the lease by failing to construct a temple on the
Vienna property before the final deadline. Consequently, the
court granted summary judgment in favor of Rustam Guiv. The
Center raises a host of challenges to this judgment, none of
which are meritorious.
A.
Initially, The Center argues that inconsistent and
conflicting testimony from Rustam Guiv’s witnesses created
“issue[s] of fact which can only be determined at trial.”
Opening Br. 44. In the Center’s view, “when there is a conflict
in the testimony and an issue as to the veracity of the
witnesses, summary judgment is not proper.” Id. at 41.
While conflicting testimony can indeed preclude summary
judgment, any inconsistency must concern a material fact. As
the Supreme Court has explained, the mere existence of a factual
dispute “will not defeat an otherwise properly supported motion
for summary judgment; the requirement is that there be no
genuine issue of material fact.” Anderson v. Liberty Lobby
Inc., 477 U.S. 242, 247-48 (1986).
In its effort to establish a contested issue of material
fact, The Center first points to conflicting testimony regarding
22
who drafted the lease amendment. According to The Center, this
inconsistency concerns a “key point” that a factfinder should
have resolved. Opening Br. 21. However, on the record in this
case, who drafted the lease amendment is irrelevant. This
document is unambiguous and its contents uncontested. Any
inconsistency about its authorship thus has no bearing here.
See Martin & Martin, Inc. v. Bradley Enters., Inc., 256 Va. 288,
291 (1998) (“In the event of an ambiguity in the written
contract, such ambiguity must be construed against the drafter
of the agreement.”); Lexicon, Inc. v. Safeco Ins. Co. of Am.,
436 F.3d 662, 671 (6th Cir. 2006) (explaining that “it may be
relevant which party drafted” an agreement when it is
ambiguous).
The Center next suggests that, because Dr. Jahanian
referred to the MOU as a binding agreement, the district court
should have submitted this issue to the jury instead of
unilaterally deciding it was “too vague to be enforceable.”
J.A. 1170. This argument suffers from the same deficiency noted
above: Whether a written contract is sufficiently definite is a
question of law that we determine from looking at the document.
See Williams v. Dynatech Commc’ns, Inc., 163 F.3d 600, 604 (4th
Cir. 1998). Hence, Dr. Jahanian’s statements about the MOU,
even if inconsistent, are not relevant.
23
Finally, to the extent The Center suggests that Dr.
Jahanian’s credibility created a material issue of fact to
preclude summary judgment, that argument also fails. Where the
determination of what actually happened depends on an assessment
of the credibility of the respective witnesses, “[t]his
assessment is a disputed issue of fact [that] cannot be resolved
on summary judgment.” Rainey v. Conerly, 973 F.2d 321, 324 (4th
Cir. 1992). But this case does not turn on the credibility of
Dr. Jahanian or any other witness. Quite the opposite, this
controversy arises from the unambiguous written terms of a
landlord-tenant arrangement. Thus, the dispute is governed by
the legal import of the terms of that agreement, not the
credibility of ancillary witnesses.
Although this case involves a complicated and lengthy
lessor-lessee relationship, it is fundamentally a contract
dispute governed by the parties’ agreements. As such,
conflicting testimony and credibility issues, like those The
Center raises, are not material here and are not a ground upon
which the district court judgment can be disturbed.
B.
The Center also argues that the district court erred by
enforcing the terms of the lease amendment to the exclusion of
the MOU. As this argument goes, “the MOU was intended to, and
did in fact, supersede the Lease Amendment,” and so “[t]he
24
District Court’s finding that [The Center] breached the subject
Lease, as [a]mended, by failing to timely construct the [temple]
on the lease property was in error.” Opening Br. 21-22. The
district court rejected this argument, finding the MOU was
unenforceable as a matter of law. We agree.
The basic requirements for a valid contract are well
settled. “[A]n agreement must be definite and certain as to its
terms and requirements; it must identify the subject matter and
spell out the essential commitments and agreements with respect
thereto.” Progressive Const. Co. v. Thumm, 209 Va. 24, 30-31
(1968). In practical terms, a contract “must be sufficiently
definite to enable a court to give it an exact meaning, and must
obligate the contracting parties to matters definitely
ascertained or ascertainable.” Smith v. Farrell, 199 Va. 121,
128 (1957).
The MOU is not sufficiently definite to be enforceable. It
does not refer either explicitly or implicitly to the lease, the
Vienna property, or the nature of the parties’ relationship. As
the district court found, were it not for the extensive history
between the parties, this document would be unenforceable on its
face. See W.J. Schafer Assocs. v. Cordant, Inc., 254 Va. 514,
519 (1997); Stanley’s Cafeteria, Inc. v. Abramson, 226 Va. 68,
73 (1983). But even considering how the document arose, it is
not possible to decipher what mutual obligations exist. The
25
most definite clauses outline broad tasks for The Center to
complete by deadlines to be mutually agreed upon in the future.
Such “agreements to agree” are uniformly unenforceable in
Virginia. Allen v. Aetna Cas. & Sur. Co., 222 Va. 361, 363
(1981); see also EG&G, Inc. v. Cube Corp., No. 178996, 2002 WL
31950215, at *6-7 (Va. Cir. Ct. Dec. 23, 2002) (“[W]here the
evidence is that the parties merely agreed to make an agreement
in the future, and where a determination of the terms and
conditions under which the obligation would be assumed are vague
and uncertain, Virginia law treats such agreements as
unenforceable ‘agreements to agree.’” ).
Even assuming the MOU was binding and enforceable, The
Center still cannot prevail. Nothing in the MOU eliminates or
alters the dispositive deadlines that The Center breached in the
lease amendment. At most, it states the parties would later
agree on different deadlines, which never occurred. Therefore,
the MOU had no effect on the lease and lease amendment or The
Center’s breach of those obligations.
C.
The Center next argues that the doctrine of equitable
estoppel precluded Rustam Guiv from enforcing the lease
amendment’s deadlines because Dr. Jahanian directed The Center
to stop construction. The Center maintains that it “did, in
fact, cease its efforts” and so “[t]o allow RGF to now seek to
26
use the deadline of the [l]ease [a]mendment as a basis to
declare the [l]ease terminated would be a gross miscarriage of
justice.” Opening Br. 48-49.
We agree with the district court that the doctrine of
equitable estoppel has no application here. To prevail on this
claim, The Center was required to show “(1) a representation,
(2) reliance, (3) change of position, and (4) detriment.”
Princess Anne Hills Civic League, Inc. v. Susan Constant Real
Estate Trust, 243 Va. 53, 59 (1992). This doctrine is “applied
rarely and only from necessity,” and the moving party must prove
“each element by clear, precise, and unequivocal evidence.” Id.
Even viewing the record in The Center’s favor, it fails in
its burden of proof on the final two elements. Nothing suggests
The Center materially changed its position in light of Dr.
Jahanian’s statements or Rustam Guiv shifting its focus to the
Maryland site. In fact, The Center sent a formal letter
outlining its decision to ignore Rustam Guiv and “stay on
course.” J.A. 473. The same letter further notes that The
Center only “temporarily stopped the progress of [its] work.”
Id. As the district court rightly concluded, this admittedly
“brief pause, resulting in no material change in [The Center’s]
position, cannot be said to represent detrimental reliance.”
Id. at 1173.
27
The Center now counters that it could not resume
construction immediately but had to wait until April 2011 to
renew efforts with the help of Rustam Guiv. We are unpersuaded
this alters the outcome. Even accepting this new timeframe, The
Center still had at least two years to build the temple, which
is well within the lease amendment’s schedule. Yet, at the time
of this litigation, the site remained largely untouched. We
thus conclude, to the extent The Center was unable to proceed,
this brief period would not have prevented The Center from
complying with the lease amendment’s obligations.
At bottom, the record suggests that The Center simply
failed to meet its obligations and sat on its hands in the face
of looming contractual deadlines. Having failed to fulfill its
side of the bargain due to this inactivity, The Center cannot
look to equity to avoid the effects of its own breach.
D.
In its last volley, The Center argues for the first time
that it did not breach the lease amendment because there was a
temple on the property by the final deadline. 7 According to The
7
During oral argument, counsel represented to the Court
that this point was raised below and thus we can consider it de
novo on appeal. The record does not support counsel’s claim.
Although The Center did mention that it renovated an existing
building on the property that was then used for prayer services,
J.A. 1136, nowhere was it further argued that this action was
sufficient to satisfy the lease obligations. On the contrary,
(Continued)
28
Center, it “renovated a building on the Vienna [p]roperty which
was actively being used as a Zoroastrian worship center and
meeting place.” Opening Br. 50.
Issues raised for the first time on appeal are generally
not considered by this Court. See Singleton v. Wulff, 428 U.S.
106, 120 (1976); United States v. One 1971 Mercedes Benz 2–Door
Coupe, 542 F.2d 912, 915 (4th Cir. 1976) (explaining that the
failure to raise and preserve an issue in district court
ordinarily waives consideration of that issue on appeal).
Although we have occasionally departed from this general rule,
The Center has failed to raise any argument that such
exceptional circumstances are present here. See In re Under
Seal, 749 F.3d 276, 285 (4th Cir. 2014) (“When a party in a
civil case fails to raise an argument in the lower court and
instead raises it for the first time before us, we may reverse
only if the newly raised argument establishes fundamental error
or a denial of fundamental justice.”). On this record, we find
the claim waived.
The Center repeatedly conceded that it never fulfilled the lease
amendment’s final construction deadline. Id. at 941, 1102. The
Center instead opted to continue with its theory that compliance
was irrelevant because this document was null and void. See id.
at 1150-56.
29
V.
Having found none of The Center’s challenges to the
district court’s judgment to be meritorious, we turn to the
award of attorneys’ fees. The Center’s principal argument here
is that the court erred by allowing Rustam Guiv “to recover fees
for all services performed in the litigation, not just those
[claims] on which it did, in fact, prevail.” Opening Br. 51.
We generally review a district court’s decision awarding or
denying attorneys’ fees for abuse of discretion. McAfee v.
Boczar, 738 F.3d 81, 88 (4th Cir. 2013). Under this standard,
reversal is appropriate only if “the district court [was]
clearly wrong or has committed an error of law.” Id. That
said, legal determinations justifying an award, such as whether
the plaintiff is a prevailing party, are reviewed de novo.
Smyth v. Rivero, 282 F.3d 268, 274 (4th Cir. 2002). The parties
agree that Virginia supplies the substantive law here since the
district court was sitting in diversity.
The lease specifies that “[i]n the event of any litigation
between the parties hereto, the prevailing party in such
litigation shall be entitled to recover from the other party its
costs, expenses and reasonable attorney’s fees.” J.A. 47-48.
The Center appears to concede that Rustam Guiv is the prevailing
party under this provision. We agree. As the Virginia Supreme
Court has explained, the “prevailing party” is “the party in
30
whose favor the decision or verdict in the case is . . .
rendered.” Sheets v. Castle, 263 Va. 407, 414 (2002). The
reviewing court is to consider “the general result” of the case
and determine “who has, in the view of the law, succeeded in the
action.” Id. The Center brought this action to enforce a
contract between the parties, and Rustam Guiv defended on
grounds that the agreement was terminated by The Center’s
breach. The district court ultimately entered judgment in favor
of Rustam Guiv, clearly making it the prevailing party. See
Chase v. DaimlerChrysler Corp., 266 Va. 544, 548-49 (2003)
(equating “prevailing party” with “successful party”).
Prevailing party status does not, however, automatically
make that party eligible for all the fees they request. In
Virginia, “each party [has] the burden of establishing, as an
element of its prima facie case, that the attorneys’ fees it
seeks are reasonable in relation to the results obtained and
were necessary.” Chawla v. BurgerBusters, Inc., 255 Va. 616,
624 (1998). Moreover, “[n]either party shall be entitled to
recover fees for duplicative work or for work that was performed
on unsuccessful claims.” Id. It is well-settled in Virginia
that “under contractual [fee-shifting] provisions a party is not
31
entitled to recover fees for work performed on unsuccessful
claims.” Ulloa, 271 Va. at 82. 8
Although Rustam Guiv prevailed below, it was not wholly
successful. In particular, the district court rejected one of
its counterclaims and ruled in favor of The Center.
Consequently, Rustam Guiv was barred from recovering “fees for
. . . work that was performed on [this] unsuccessful claim.”
Chawla, 255 Va. at 624. The district court, however, never
narrowed the fee award to account for the ruling against Rustam
Guiv. Absent some discount or reduction for this unsuccessful
counterclaim, the court’s fee award includes time spent on
matters for which Rustam Guiv was not entitled to recover under
Virginia law. See Ulloa, 271 Va. at 82. Accordingly, we vacate
and remand the district court’s attorneys’ fee award for further
proceedings in accordance with this opinion.
VI.
The record shows that The Center breached the parties’
lease by failing to complete construction of the required
religious center by the lease deadline. We therefore agree with
8
Federal courts take a different approach on federal claims
by allowing a prevailing party to recover fees for unsuccessful
claims where the entire case “involve[s] a common core of facts
or . . . related legal theories.” Hensley v. Eckerhart, 461
U.S. 424, 435 (1983). The Virginia Supreme Court, however, has
steadfastly rejected this approach. See Ulloa, 271 Va. at 83.
32
the district court that Rustam Guiv was entitled to summary
judgment. Consequently, we affirm the district court’s judgment
on the merits. However, for the reasons outlined above, we
vacate the district court’s attorneys’ fee award and remand for
further proceedings consistent with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
33