Manchester Oaks Homeowners Ass'n v. Batt ( 2012 )

PRESENT: All the Justices
MANCHESTER OAKS HOMEOWNERS
ASSOCIATION, INC.
OPINION BY
v. Record No. 111949 JUSTICE WILLIAM C. MIMS
September 14, 2012
PATRICK K. BATT, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Randy I. Bellows, Judge
In this appeal, we consider whether a homeowners’
association violated its declaration when it assigned parking
spaces in a common area to lot owners on an unequal basis. We
also consider whether an award of attorneys’ fees to the
prevailing party in an action to enforce the declaration was
proper under Code § 55-515(A).
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
The Manchester Oaks subdivision encompasses 57 townhouses,
30 of which were constructed with a garage and driveway (“the
Garaged Lots”) and 27 of which were constructed with an
additional bedroom and bathroom in lieu of a garage (“the
Ungaraged Lots”). The subdivision also includes a common area
with 72 parking spaces.
The subdivision’s developer incorporated the Manchester
Oaks Homeowners Association, Inc. (“the HOA”). Through a
Declaration of Covenants, Conditions and Restrictions (“the
Declaration”) recorded in 1989 pursuant to the Property Owners’
Association Act, Code § 55-508 et seq., (“the Act”), the
developer conferred certain rights and obligations on each lot
owner and invested the HOA with certain powers and duties
consistent with the Act.
Section 3.1 of the Declaration provides that “[e]very
Owner shall have a right and easement of enjoyment in and to
the Common Area, which shall be appurtenant to and shall pass
with the title to each such Owner’s Lot,” subject to
enumerated conditions. 1 One such condition, set forth in
Section 3.1.7, reserved to the HOA “[t]he right . . . to
establish rules and regulations governing the use of the
Common Area, including the right set forth in Section 2.3.17
[sic] to establish rules and regulations governing the parking
lots within the Common Area.” 2 Section 2.3.18 specifically
conferred on the HOA
the right to designate a maximum of two parking
spaces within the Common Area for the exclusive
use of the Owner of each Lot; provided, however,
that nothing herein shall require the [HOA] to
make any such designations or to ensure that the
parking spaces are available for the use of any
particular Owner of a Lot, nor shall the [HOA] be
1
While “Common Area” is a defined term in the Declaration,
the definition merely describes the geographic territory set
aside “for the common use and enjoyment” of the owners.
2
The HOA’s power to “make and enforce rules and regulations
governing the use of parking areas within the Common Area”
actually is set forth in Section 2.3.18. The parties agree that
the reference to Section 2.3.17 in Section 3.1.7 was a
scrivener’s error.
2
required to supervise or administer the use of
the parking lots located in the Common Areas.
Patrick K. Batt, Rudolph J. Grom, and James R. Martin, Jr.,
(collectively, “the Plaintiffs”) each own a Garaged Lot. Batt
and Grom each purchased their lots in 1990, before construction
in the subdivision was complete. At that time, the roads were
not finished or marked and residents parked wherever they chose.
In either 1993 or 1994, the developer began marking some parking
spaces in the common area as “reserved” and assigning two to
each Ungaraged Lot. The remaining 18 parking spaces were
designated as “visitor” parking.
Martin purchased his lot in 2006. Although he saw that the
parking spaces were marked either “reserved” or “visitor,” there
was no indication of the purpose for which the spaces marked
“reserved” were designated.
From the time the parking spaces were marked until 2009,
visitor parking was available to all lot owners on a first-come,
first-served basis. However, in June 2009 the HOA posted a
visitor parking policy on its website. Under the policy, each
lot owner received one visitor parking permit. Any vehicle not
displaying a permit while parked in the spaces designated
visitor parking would be towed.
In July 2009, the Plaintiffs filed a complaint in the
circuit court seeking, among other things, a declaratory
3
judgment that the policy was invalid and permanent injunctive
relief enjoining its enforcement. Thereafter, the HOA
stipulated that it would no longer restrict each lot owner to
one visitor permit, effectively restoring the status quo ante
and reopening visitor parking to all lot owners on a first-come,
first-served basis.
In December 2009, the HOA purportedly adopted an amendment
to the Declaration (“the Amendment”). The Amendment added
Section 1.16, which created the defined term “Reserved Common
Area” and set forth its meaning as “a portion of the Common Area
for which the Board of Directors of the [HOA] has granted a
license to an Owner of a Lot in accordance with the terms of the
Declaration.” The Amendment also altered Section 2.3.18 to
confer on the HOA
the right to designate portions of the Common
Area as Reserved Common Area, which includes the
right to designate two parking spaces within the
Reserved Common Area for the exclusive use of the
Owner of each [Ungaraged Lot] on a non-uniform
and preferential basis; provided, however, that
nothing herein shall require the [HOA] to ensure
that the parking spaces are available for the use
of any particular Owner of a Lot, nor shall the
[HOA] be required to supervise or administer the
use of the parking lots located in the Common
Areas.
The Amendment further added Section 3.1.10, vesting in the HOA’s
board of directors the power “to grant non-uniform licenses in
the Common Area to an Owner of [an Ungaraged Lot] by designating
4
portions of the Common Area as Reserved Common Area . . .
includ[ing] the right to designate parking spaces for the
exclusive use of the Owners of [Ungaraged Lots] on a non-uniform
and preferential basis.”
In June 2010, the Plaintiffs filed an amended complaint
alleging that the unequal treatment resulting from the HOA’s
assignment of parking spaces only to Ungaraged Lots violated the
Declaration. They also alleged that the individual members of
the HOA’s board of directors had breached fiduciary duties owed
to them as members of the HOA, a non-stock corporation. The
Plaintiffs sought only an award of compensatory damages for
breach of contract and breach of fiduciary duties, and an award
of costs, expenses, and attorneys’ fees pursuant to Code § 55-
515(A). 3 The HOA filed an answer asserting, among other things,
an affirmative defense that the Plaintiffs’ claim was barred by
the Amendment. The HOA subsequently reiterated its position in
a plea in bar. In response, the Plaintiffs contended that the
Amendment was invalid because it had been improperly adopted.
Following a bench trial, the circuit court determined that
the Amendment was invalid on six grounds. First, it effected a
3
In contrast to the original complaint, the Plaintiffs did
not seek declaratory or injunctive relief in the amended
complaint. In addition, the claims against the individual board
members for breach of fiduciary duties were subsequently
nonsuited. Accordingly, the only claim before the circuit court
at trial was for breach of contract and the only relief sought
was an award of compensatory damages.
5
partition of the common area and therefore required written
approval by two-thirds of the lot owners and their mortgagees.
Second, the use of proxies in its adoption was not expressly
authorized by the Declaration. Third, notice of the meeting at
which it was considered had not been sent at least 15 days prior
to the meeting, as required by the Declaration. Fourth, prior
to its adoption, the HOA’s president sent false information to
the members. Fifth, its terms were internally inconsistent.
Sixth, it effected a forfeiture or revocation of the recorded
easement rights of the owners of Garaged Lots in derogation of
their titles.
Having determined that the Amendment was invalid, the
circuit court then ruled that the reservation of parking spaces
in the common area for use solely by owners of Ungaraged Lots
violated the Declaration by discriminating against Garaged Lot
owners and giving them unequal access to the common area.
Specifically, the court ruled that Section 3.1 of the
Declaration gives all lot owners an equal right of use and
enjoyment of the common area. Therefore, consistent with this
Court’s holding in Sully Station II Community Ass’n, Inc. v.
Dye, 259 Va. 282, 289, 525 S.E.2d 555, 559 (2000), any
assignment of parking spaces undertaken pursuant to Section
2.3.18 must benefit all lot owners equally without regard to the
type of lot owned.
6
In considering the evidence of damages, the circuit court
ruled that each lot owner held equitable title in the common
area and therefore could testify as to its value. It likewise
ruled that the HOA held legal title in the common area and its
board members could testify as to its value as well. It also
ruled that the HOA website was a publication of the HOA.
An entry on the website written by a board member indicated
that the loss of assigned parking in the common area would
decrease the value of Ungaraged Lots by $50,000 to $70,000.
Because the Ungaraged Lots would be regarded as comparable
properties in calculating the fair-market value of the Garaged
Lots at resale, according to the website, the Garaged Lots would
lose $50,000 to $70,000 in value also.
The circuit court ruled that the opinion expressed on the
HOA’s website was a party admission that loss of access to
parking in the common area reduced a lot’s value by $25,000 to
$35,000 per space. Under Section 2.3.18 of the Declaration, the
court continued, the HOA could assign a maximum of two spaces
per lot provided the assignment benefited all lots equally, as
required by Section 3.1. However, because the common area
contained only 72 parking spaces, the HOA could properly assign,
at most, one space per lot. Because the HOA chose to assign two
spaces to each Ungaraged Lot instead of the one space to all
lots equally, the HOA improperly deprived each Garaged Lot owner
7
of one space. Accordingly, the court ruled that Batt and Grom
each were entitled to compensatory damages of $25,000, the lower
value of each parking space according to the website entry.
Because Martin had purchased his lot in 2006, after two
parking spaces were reserved and assigned to each Ungaraged Lot,
the circuit court ruled that the calculation of lost value did
not apply to him. However, based on his testimony regarding the
calculation of the square footage of his lot and his real
property tax assessment, the court determined that he had paid
$37.50 per month in real property taxes on a parking space in
the common area. 4 Ruling that the assignment of parking spaces
to Ungaraged Lots effected a forfeiture of Martin’s right-of-use
easement in the common area and, consequently, a loss of value
equivalent to the apportioned tax assessment, the court awarded
Martin compensatory damages of $1762.50 – $37.50 per month for
each of the 47 months Martin had owned his lot. 5
In addition, the circuit court awarded each Plaintiff
compensatory damages for assessments paid to the HOA for
maintenance of the common area. Grom, a former board member,
testified that $15 per month from the total monthly assessment
4
According to Martin’s testimony, his calculation resulted
in a monthly payment of $35.70, not $37.50. However, no party
assigns error to the discrepancy and we adopt the circuit
court’s unchallenged determination.
5
The court ruled that any loss of value by Batt and Grom
attributable to forfeiture of their easement rights was subsumed
by the $25,000 calculation of lost value.
8
levied by the HOA was spent on maintaining the common area. The
court accordingly calculated that Martin was entitled to an
additional award of $705 – $15 per month for 47 months--and Batt
and Grom were each entitled to an additional award of $2355. 6
Finally, the circuit court ruled that the Plaintiffs were
the prevailing parties within the meaning of Code § 55-515(A)
and therefore were entitled to an award of costs and attorneys’
fees. The Plaintiffs adduced evidence of $191,445.19 in fees
plus $3267.50 in expert witness costs. The HOA objected that
the Plaintiffs were not the prevailing party on the nonsuited
claim for breach of fiduciary duties or the abandoned action for
declaratory judgment and injunctive relief and therefore were
not entitled to costs and fees arising from them. The
Plaintiffs identified $5767 in fees attributable to those
claims, and the court awarded them $188,840.69.
We awarded the HOA this appeal.
II. ANALYSIS
A. ASSIGNING PARKING SPACES IN THE COMMON AREA
The HOA first challenges the circuit court’s interpretation
of the Declaration and its conclusion that parking in the common
6
The court also awarded, in the alternative to the
cumulative awards for loss of value and common area maintenance
assessments, nominal damages of $10 to each Plaintiff but this
alternative award was not included in the final order. We
therefore do not consider it. See Moreau v. Fuller, 276 Va.
127, 137, 661 S.E.2d 841, 847 (2008) (stating that courts speak
only through their written orders).
9
area must be assigned to all lot owners equally if assigned at
all. A declaration pursuant to the Act is “a contract entered
into by all owners” of the lots in the subdivision it governs.
Sully Station, 259 Va. at 284, 525 S.E.2d at 556 (internal
quotation marks omitted). Accordingly, we review the circuit
court’s interpretation of the Declaration de novo. See Uniwest
Constr., Inc. v. Amtech Elevator Servs., 280 Va. 428, 440, 699
S.E.2d 223, 229 (2010).
The HOA argues that nothing in the Declaration requires it
to assign parking equally. Section 2.3.18 allows it “to
designate a maximum of two parking spaces within the Common Area
for the exclusive use of the Owner of each Lot” but this
provision also expressly absolves it of any requirement “to
ensure that the parking spaces are available for the use of any
particular Owner of a Lot.” Therefore, the HOA asserts that
under this provision it could assign any particular lot owner
one, two, or no parking spaces in the Common Area, while
concomitantly assigning a different number of spaces to another
lot owner. Accordingly, the HOA contends Sully Station is
distinguishable because in that case the association’s
declaration expressly required any licensing of the use of the
common area to be “on a uniform, non-preferential basis,” 259
Va. at 285, 525 S.E.2d at 557, but there is no such requirement
in the Declaration here. We disagree.
10
When a court interprets a contract, the words that the
parties used are given their usual, ordinary, and popular
meaning. Uniwest Constr., Inc., 280 Va. at 440, 699 S.E.2d at
229. Although the HOA argues that nothing in the Declaration
requires that parking spaces in the common area be assigned
equally, equality is inherent in the definition of a common
area. A common area is defined as “[a]n area owned and used in
common by the residents of a condominium, subdivision, or
planned-unit development.” Black’s Law Dictionary 311 (9th ed.
2009) (emphasis added). “In common” means “[s]hared equally
with others, undivided into separately owned parts.” Id. at 833
(emphasis added). Accordingly, the HOA must assign parking
spaces in the common area to all lot owners equally, if at all,
unless the Declaration expressly provides otherwise. Nothing in
the original Declaration does so, including its definition of
“Common Area.” Consequently, Sully Station controls the outcome
on this issue.
The HOA argues that this interpretation renders meaningless
its power under the Declaration to assign “a maximum of two”
parking spaces in the common area because it contains only 72
spaces and there are 57 lots. We disagree. The phrase “a
maximum of two” includes one and none, both of which are
permissibly equal assignments of parking in the common area in
its current, 72-space configuration. In addition, nothing in
11
the Declaration prohibits the HOA from “annexing” additional
land as common area from which more parking spaces could be
assigned. To the contrary, Section 10.6 of the Declaration
expressly confers such annexation power. 7 Therefore, our
decision that all lot owners must be treated equally by any
assignment of parking in the common area has no effect on the
meaning of the phrase “a maximum of two.”
The HOA likewise argues that this interpretation renders
meaningless the language in Section 2.3.18 absolving it of the
obligation “to ensure that the parking spaces are available for
the use of any particular Owner of a Lot.” We again disagree.
The recited language merely discharges the HOA from a duty to
enforce parking assignments. Rather, enforcement is the
prerogative of the assignees. In short, the language means that
if a vehicle is improperly parked in an assigned parking space,
the HOA is not responsible for towing the vehicle away. Our
decision does not shift that responsibility to the HOA.
Accordingly, the circuit court did not err in ruling the
Declaration requires that parking spaces in the common area be
assigned equally among all lot owners. We will affirm that
portion of its judgment.
7
We consider the authority of the HOA to take such action
rather than whether it is likely to do so.
12
B. THE VALIDITY OF THE AMENDMENT
The HOA next challenges the circuit court’s determination
that the Amendment is invalid. Specifically, it assigns error
to the court’s rulings that the Declaration does not authorize
the use of proxies to enact amendments, that the Amendment
effected a partition of the common area and therefore required
written approval by two-thirds of the lot owners and their
mortgagees, and that the Amendment effected a forfeiture or
revocation of the recorded easement rights of the owners of
Garaged Lots in derogation of their titles. However, these
assignments of error contest only three of the six bases for the
court’s ruling.
It is well-settled that a party who challenges the ruling
of a lower court must on appeal assign error to each articulated
basis for that ruling. United Leasing Corp. v. Thrift Ins.
Corp., 247 Va. 299, 307-08, 440 S.E.2d 902, 907 (1994) (failure
to assign error to an independent ground supporting the circuit
court’s ruling “barred any appellate relief that might otherwise
have been available” on the ground challenged by the appellant);
see also Parker-Smith v. Sto Corp., 262 Va. 432, 441, 551 S.E.2d
615, 620 (2001) (“Since the court had an independent basis for
[its ruling] that is not the subject of an assignment of error,
we cannot consider the arguments advanced by” the appellant.);
Rash v. Hilb, Rogal & Hamilton Co., 251 Va. 281, 286, 467 S.E.2d
13
791, 795 (1996) (“[W]e cannot consider these arguments advanced
by the [appellant] because there is an independent basis to
support the [ruling below] on these issues and that basis has
not been challenged on appeal.”). Just as “[w]e cannot review
the ruling of a lower court for error when the appellant does
not bring within the record on appeal the [evidentiary] basis
for that ruling,” Prince Seating Corp. v. Rabideau, 275 Va. 468,
470, 659 S.E.2d 305, 307 (2008), we cannot review it when the
appellant does not assign error to every legal basis given for
it. “[O]therwise, ‘an appellant could avoid the adverse effect
of a separate and independent basis for the judgment by ignoring
it and leaving it unchallenged.’ ” Johnson v. Commonwealth, 45
Va. App. 113, 116-17, 609 S.E.2d 58, 60 (2005) (quoting San
Antonio Press v. Custom Bilt Machinery, 852 S.W.2d 64, 65 (Tex.
App. 1993)).
However, the mere fact that the HOA has not assigned error
to each basis for the circuit court’s ruling does not end the
inquiry. Rather, as the Court of Appeals has noted,
we still must satisfy ourselves that the
alternative holding is indeed one that (when
properly applied to the facts of a given case)
would legally constitute a freestanding basis in
support of the [lower] court’s decision. . . .
But, in making that [evaluation], we do not
examine the underlying merits of the alternative
holding – for that is the very thing being waived
by the appellant as a result of his failure to
[assign error to it] on appeal.
14
Id. at 117, 609 S.E.2d at 60. Where, as here, an appellant’s
assignments of error leave multiple bases for the challenged
ruling uncontested, our review is satisfied by a determination
that any one of them provides a sufficient legal foundation for
the ruling.
In this case, the circuit court determined that the meeting
at which the Amendment was adopted was improper because the HOA
provided inadequate notice under the Declaration. Without
reviewing the correctness of that determination, id., we are
satisfied that, if correct, it would render the Amendment
invalid because a meeting of a corporation held upon inadequate
notice is an improper meeting and the corporate acts undertaken
therein are invalid as a matter of law. Noremac, Inc. v. Centre
Hill Court, Inc., 164 Va. 151, 166-67, 178 S.E. 877, 881-82
(1935). Accordingly, this ground forms a separate and
independent basis to affirm the circuit court’s ruling that the
Amendment was invalid and we will not reverse it.
C. DAMAGES
The HOA next challenges the circuit court’s award of
compensatory damages. “Factual findings of a trial court are
entitled to the same weight as a jury verdict and will not be
set aside unless they are plainly wrong or without evidence to
support them.” Riverside Owner, L.L.C. v. City of Richmond, 282
Va. 62, 75, 711 S.E.2d 533, 540 (2011). This Court “view[s] the
15
evidence and all reasonable inferences fairly deducible from it
in the light most favorable to the prevailing party at trial,”
and “review[s] matters of law de novo.” Bennett v. Sage Payment
Solutions, Inc., 282 Va. 49, 54, 710 S.E.2d 736, 739 (2011)
(quoting Syed v. ZH Technologies, Inc., 280 Va. 58, 68, 694
S.E.2d 625, 631 (2010)).
In a claim for breach of contract, proof of damages is an
essential element and a plaintiff’s failure to prove it requires
that the action be dismissed. Collelo v. Geographic Servs., 283
Va. 56, 72, 727 S.E.2d 55, 62 (2012); Sunrise Continuing Care,
LLC v. Wright, 277 Va. 148, 156, 671 S.E.2d 132, 136 (2009).
Further, the plaintiff bears “the burden of proving with
reasonable certainty the amount of damages and the cause from
which they resulted; speculation and conjecture cannot form the
basis of the recovery. Damages based on uncertainties,
contingencies, or speculation cannot be recovered.” Shepherd v.
Davis, 265 Va. 108, 125, 574 S.E.2d 514, 524 (2003) (internal
citations and quotation marks omitted). This burden requires
the plaintiff “to furnish evidence of sufficient facts and
circumstances to permit the fact-finder to make at least an
intelligent and probable estimate of the damages sustained.”
Dillingham v. Hall, 235 Va. 1, 4, 365 S.E.2d 738, 739 (1988)
(internal quotation marks omitted). “Proof with mathematical
precision is not required, but there must be at least sufficient
16
evidence to permit an intelligent and probable estimate of the
amount of damage.” Id. at 3-4, 365 S.E.2d at 739 (emphasis and
internal quotation marks omitted).
The circuit court found that the Plaintiffs had suffered
compensatory damages arising from the parking space assignments.
In doing so, it relied primarily on the calculation from the
website entry that Ungaraged Lots would lose $50,000 to $70,000
if no parking spaces were assigned to their owners’ use. It
extrapolated that if Ungaraged Lots lost $50,000 to $70,000 when
deprived of the assignment of two spaces (i.e., $25,000 to
$35,000 per space), Garaged Units must lose the equivalent
amount when deprived of the single space that their owners would
have been assigned if the HOA had treated all lot owners
equally. But this treats the assignment of parking spaces as a
zero-sum game in which any increase in the value of Ungaraged
Lots from assigning parking spaces necessarily reduces the value
of Garaged Lots proportionally.
This perspective is refuted by the evidence in the record.
The website entry and witness testimony, including that of the
website entry’s author, established that rather than decreasing
the Garaged Lots’ value, assigning two parking spaces to
Ungaraged Lots actually increased the Garaged Lots’ value
because the assignment increased the value of the Ungaraged Lots
and Ungaraged Lots were considered comparable units in
17
determining the value of Garaged Lots at resale. Accordingly,
rather than increasing the value of some lots at the expense of
others, as in a zero-sum game, the parking space assignment was
in effect a rising tide lifting all ships. 8
Other evidence adduced by the Plaintiffs at trial
purporting to establish a diminution of the value of their lots
was insufficient to meet their burden. At best, it established
the replacement value of a parking space in the common area.
But we have said that “[d]iminution in value of real property is
not replacement value.” Campbell County v. Royal, 283 Va. 4,
26, 720 S.E.2d 90, 101 (2012). Rather, “[t]he correct measure
of damages . . . is undoubtedly the diminution in value of the
property by reason of the change, or the difference in value
before and after the change.” Id. at 25, 720 S.E.2d at 101
8
The circuit court’s view also exemplifies the fallacy of
denying the antecedent in propositional logic. Denial of the
antecedent occurs when reasoning that, “If P, then Q. Not P.
Therefore, not Q.” See Ruggero J. Aldisert, Logic for Lawyers:
A Guide to Clear Thinking 158 (3d ed. 1997). In this case, the
proposition is that if the HOA assigns parking spaces (“P”),
then the property value of the assignee lots increases (“Q”).
The HOA did not assign parking spaces to the Garaged Lots (“not
P”), therefore the property values of Garaged Lots did not
increase (“not Q”). Accordingly, the proposition that any
increase in the value of Ungaraged Lots attributable to the
parking assignment necessitated a proportional decrease in the
value of Garaged Lots is not a reasonable inference fairly
deducible from the evidence.
18
(quoting Town of Galax v. Waugh, 143 Va. 213, 229, 129 S.E. 504,
509 (1925)). 9
With respect to Batt and Grom, Grom testified that Garaged
Lots originally cost $6000 more than Ungaraged Lots. However,
Batt testified that the higher price was attributable to the
cost of additional materials associated with Garaged Lots
compared to Ungaraged Lots, such as the concrete necessary for
the driveway. Moreover, they have adduced no evidence of the
value of their lots before the parking space assignment or the
value of their lots after spaces were marked reserved and
assigned to Ungaraged Lots in 1993 or 1994. Accordingly, any
loss of value now cannot be attributed with reasonable certainty
to the parking space assignment. Cf. Shepherd, 265 Va. at 125,
574 S.E.2d at 524 (The plaintiff must prove “with reasonable
certainty the amount of damages and the cause from which they
resulted.” (emphasis added) (internal quotation marks omitted)).
Thus there is no evidence in the record supporting the
award of compensatory damages for diminution of property value.
That portion of the circuit court’s judgment must be reversed.
The HOA also contends that the circuit court’s award of
other compensatory damages was improper. Specifically, the
9
While the holding in Campbell County arose from an inverse
condemnation action, inverse condemnation actions proceed on a
theory of breach of implied contract. See Richmeade, L.P. v.
City of Richmond, 267 Va. 598, 602-03, 594 S.E.2d 606, 608-09
(2004).
19
court determined the HOA had deprived Martin of a parking space
for which he had paid $37.50 per month in real property taxes
and awarded him $1762.50 – 47 months of payments. It also found
that the parking space assignment deprived the Plaintiffs of
their use of the common area that they had paid to maintain as
part of their monthly assessments. Grom, a former member of the
HOA’s board of directors, testified that $15 of each month’s
assessment went to maintaining the common area. The court
therefore awarded compensatory damages of $2355 each to Batt and
Grom and $705 to Martin for such maintenance payments.
The HOA asserts the Plaintiffs may not recover these
damages because they were not identified as damages sought in
their discovery responses. 10 The purpose of discovery is to
10
In its First Set of Interrogatories, the HOA propounded
the following: “Interrogatory 18: Itemize with particularity
all expenses and/or damages incurred by you as a result of the
occurrences alleged in the Complaint. Include an itemization of
all attorney’s fees and costs you have allegedly incurred.” The
Plaintiffs responded:
Subject to and without waiving the foregoing
objections, Plaintiffs state as follows:
Decreased property value related to deprivation
of reserved parking spaces: $70,000 per Plaintiff.
Attorneys’ fees and costs: currently in
excess of $66,000, and increasing with additional
fees incurred through the resolution of this
matter.
Punitive damages in an amount to be determined
by the Court.
The HOA argued to the circuit court that the Plaintiffs’
interrogatory response limited their grounds for recovery in
objections at trial, in supplemental briefing directed by the
court, and in a motion to strike the Plaintiffs’ evidence, and
20
narrow the issues being litigated, the HOA argues, so it was
entitled to rely on the Plaintiffs’ response.
We have said that “a trial court's decision to admit
evidence that is not timely disclosed, rather than to impose the
sanction of excluding it, will not be reversed unless the
court’s action amounts to an abuse of discretion.” Rappold v.
Indiana Lumbermens Mut. Ins. Co., 246 Va. 10, 15, 431 S.E.2d
302, 305 (1993). A court abuses its discretion “when a relevant
factor that should have been given significant weight is not
considered; when an irrelevant or improper factor is considered
and given significant weight; and when all proper factors, and
no improper ones, are considered, but the court, in weighing
those factors, commits a clear error of judgment.” Landrum v.
Chippenham & Johnston-Willis Hosps., Inc., 282 Va. 346, 352, 717
S.E.2d 134, 137 (2011).
The purpose of discovery is to narrow the issues being
litigated. Little v. Cooke, 274 Va. 697, 717-18, 652 S.E.2d
129, 141 (2007) (citing Sheek v. Asia Badger, Inc., 235 F.3d
687, 693 (1st Cir. 2000)). However, such narrowing principally
serves the purpose of avoiding surprise. See id. at 718, 652
S.E.2d at 141. Accordingly, we have held that permitting a
plaintiff to raise a new claim at trial that was neither
it renews the argument on appeal in its third assignment of
error.
21
disclosed in discovery nor pled in the complaint constituted an
abuse of discretion because the defendant was prejudiced by the
inability to prepare to defend against the new claim. Id.
With respect to the assessments, there was neither
prejudice nor surprise. The amended complaint included an
allegation that the Plaintiffs had paid assessments, partially
for the purpose of maintaining the common area. The circuit
court therefore did not abuse its discretion in permitting
Grom’s testimony. Conversely, the amended complaint did not
include any allegation that the Plaintiffs had paid taxes on the
common area. That issue therefore was outside the scope of both
the pleadings and discovery. It was raised for first time at
trial and the HOA promptly objected. Accordingly, we will
affirm the circuit court’s award of compensatory damages for the
portion of the assessments attributable to maintenance of the
common area but reverse its award to Martin for apportioned real
property taxes.
D. ATTORNEYS’ FEES
Finally, the HOA argues that Code § 55-515(A) does not
allow the circuit court to award attorneys’ fees to homeowners
if they are the prevailing party in an action they bring against
an association. Alternatively, the HOA argues that the evidence
does not establish that the fees awarded arose from the claim on
which the Plaintiffs were the prevailing party.
22
The circuit court’s application of Code § 55-515(A)
presents a question of statutory interpretation, which we review
de novo. Eberhardt v. Fairfax County Emps. Ret. Sys. Bd. of
Trs., 283 Va. 190, 194, 721 S.E.2d 524, 526 (2012).
In determining that the Plaintiffs in this case were
entitled to an award of costs and attorneys’ fees under the
statute, the circuit court relied on our construction in White
v. Boundary Ass’n, Inc., 271 Va. 50, 624 S.E.2d 5 (2006). The
court noted that in that case, we determined that homeowners who
sued an association seeking a declaratory judgment were the
prevailing party under Code § 55-515(A) and thus were entitled
to an award of costs and attorneys’ fees. The HOA argues that
the court’s reliance on White is misplaced because we “did not
undertake any analysis of the statute” in that case. We
disagree.
Prior to July 1, 2012, Code § 55-515(A) provided that
[e]very lot owner, and all those entitled to
occupy a lot shall comply with all lawful
provisions of this chapter and all provisions of
the declaration. Any lack of such compliance
shall be grounds for an action or suit to recover
sums due, for damages or injunctive relief, or
for any other remedy available at law or in
equity, maintainable by the association, or by
its executive organ or any managing agent on
behalf of such association, or in any proper
case, by one or more aggrieved lot owners on
their own behalf or as a class action. The
prevailing party shall be entitled to recover
reasonable attorneys' fees and costs expended in
the matter.
23
Former Code § 55-515(A) (2007 Repl. Vol.). The HOA contends
that the first sentence of the statute requires lot owners and
occupants to comply with the declaration, the second sentence
allows certain parties to bring an action against lot owners and
occupants to enforce such compliance, and the third sentence
allows the prevailing party in such an action to recover its
costs and fees. But in this case, the HOA argues, it is neither
an owner nor occupant of a lot, and therefore the Plaintiffs’
action to enforce its compliance with the Declaration is outside
the scope of the statute.
The HOA’s position creates a patent imbalance under which
the question of whether a lot owner or occupant is entitled
under the statute to an award of costs and fees in a suit to
enforce a declaration turns as much on whether an association is
the enforcer or alleged violator as on whether the lot owner or
occupant prevails. Under the HOA’s interpretation of the
statute, when an association sues a non-compliant lot owner or
occupant and wins, it is entitled to the damages and other legal
and equitable relief it may seek and an award of costs and fees
as well. However, where the aggrieved lot owner or occupant
successfully undertakes a seemingly quixotic quest to force an
association to comply with its own declaration, he must bear the
expenses of litigation alone.
24
We implicitly rejected this inequity six years ago in White
and we expressly reject it today. In White we held that Code
§ 55-515(A) allowed lot owners and occupants as well as
associations to recover litigation expenses resulting from
successful suits to enforce compliance with a declaration. 271
Va. at 57, 624 S.E.2d at 9-10. The General Assembly is presumed
to be aware of our interpretation. Its failure to express a
contrary intention by enacting appropriate legislation is not
only acquiescence but approval. 11 Barson v. Commonwealth, 284
Va. 67, 74, 726 S.E.2d 292, 296 (2012). Accordingly, White
controls and Code § 55-515(A) entitles the Plaintiffs to an
award of costs and attorneys’ fees.
Nevertheless, the statute establishes boundaries for the
costs and fees which may be awarded. As we indicated in Ulloa
v. QSP, Inc., 271 Va. 72, 83, 624 S.E.2d 43, 50 (2006), in an
action encompassing several claims, the prevailing party is
entitled to an award of costs and attorneys’ fees only for those
claims for which (a) there is a contractual or statutory basis
for such an award and (b) the party has prevailed. Therefore,
Code § 55-515(A) authorizes an award of costs and fees to the
11
As noted above, the General Assembly amended the statute
effective July 1, 2012. The amendment does not derogate our
judgment in White. To the contrary, it applies only to actions
against a lot owner for nonpayment of association assessments.
2012 Acts ch. 758. The fact that the legislature chose to amend
the statute but declined to supersede White while doing so
further attests that we correctly ascertained its intention.
25
Plaintiffs in this case only on claims that (a) were brought to
enforce the Declaration and (b) they prevailed upon.
The claim for breach of fiduciary duties satisfies neither
criterion. While the claim for declaratory and injunctive
relief satisfies the first, it does not satisfy the second
because it was abandoned by its omission from the amended
complaint. However, the breach of contract claim satisfies both
criteria and the Plaintiffs therefore are statutorily entitled
to an award of costs and fees on it.
Still, the Plaintiffs bear the burden of establishing the
amount of costs and fees arising from the breach of contract
claim for which the statute entitles them to an award. Ulloa,
271 Va. at 83, 624 S.E.2d at 50. The HOA argues that the
evidence does not support the circuit court’s award of
$188,840.69 because the Plaintiffs failed to explain how the sum
could arise solely from the single claim on which they
prevailed. 12
12
The HOA also argues that the Plaintiffs’ invoices and
affidavit regarding attorneys’ fees were not admitted into
evidence. However, it did not object to their consideration by
the circuit court at the attorneys’ fees hearing. Rather, the
record reflects only that the HOA objected to the Plaintiffs’
attempt to question their expert witness using the HOA’s
invoices because they had not been admitted. In addition, the
HOA acknowledged that the Plaintiffs were submitting their claim
for attorneys’ fees on affidavits, invited the circuit court to
review certain items listed in the invoices, and its expert
testified that he had reviewed the Plaintiffs’ submissions in
26
As we noted in Ulloa, “[t]he amount of the fee award rests
within the sound discretion of the trial court,” 271 Va. at 82,
624 S.E.2d at 49, and we therefore will not reverse it absent an
abuse of that discretion. Northern Va. Real Estate, Inc. v.
Martins, 283 Va. 86, 117, 720 S.E.2d 121, 137 (2012). As noted
above, a court abuses its discretion “when a relevant factor
that should have been given significant weight is not
considered; when an irrelevant or improper factor is considered
and given significant weight; and when all proper factors, and
no improper ones, are considered, but the court, in weighing
those factors, commits a clear error of judgment.” Landrum, 282
Va. at 352, 717 S.E.2d at 137.
We set forth the factors to be considered when determining
an award of attorneys’ fees in Chawla v. BurgerBusters, Inc.,
255 Va. 616, 499 S.E.2d 829 (1998). They include, among other
things, “the time and effort expended by the attorney, the
nature of the services rendered, the complexity of the services,
the value of the services to the client, the results obtained,
whether the fees incurred were consistent with those generally
charged for similar services, and whether the services were
necessary and appropriate.” Id. at 623, 499 S.E.2d at 833.
preparing his testimony. Accordingly, this argument has not
been preserved for appeal. Rule 5:25.
27
Each of the parties argued these factors to the circuit court. 13
We therefore are satisfied that the court considered the
relevant factors without giving significant weight to any
irrelevant improper factor.
In considering whether the circuit court nevertheless made
a clear error of judgment, we note that the Plaintiffs’ expert
witness testified that the claims for declaratory and injunctive
relief and for breach of contract were inseparable because they
both involved the HOA’s powers under the Declaration. The
breach of contract claim largely subsumes the claim for a
declaratory judgment because the circuit court was required to
ascertain what the Declaration required in order to determine
whether the HOA had breached it. Similarly, the HOA’s expert
witness testified that no entries in the Plaintiffs’ invoices
were associated with the claim for breach of fiduciary duties
after the filing of the complaint. Finally, the Plaintiffs
identified the entries on their invoices associated with the
fiduciary duty claim, including the time spent on preliminary
research, preparing the complaint, negotiating settlement, and
preparing and filing the nonsuit of that claim. They excluded
those entries, which amounted to $5767, from the amount of
attorneys’ fees sought. We therefore are satisfied that the
13
The court also considered the effect of false evidence by
the HOA in protracting the length of trial.
28
circuit court did not make a clear error of judgment in awarding
$188,840.69.
Accordingly, we find the circuit court did not err in
ruling that Code § 55-515(A) entitled the Plaintiffs to an award
of costs and attorneys’ fees on the breach of contract claim.
Further, it did not abuse its discretion in determining the
amount of that award. We will affirm that portion of its
judgment.
III. CONCLUSION
For the foregoing reasons, we will affirm the judgment in
part, reverse it in part, and enter final judgment of $2355 to
Batt, $2355 to Grom, and $705 to Martin. We likewise enter
final judgment for the Plaintiffs of $188,840.69 in costs and
attorneys’ fees under Code § 55-515(A). We also will remand the
case to the circuit court for a determination and award of
reasonable costs and attorneys’ fees incurred by the Plaintiffs
subsequent to its entry of the judgment appealed from.
Affirmed in part and final judgment,
reversed in part and remanded.
29