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BLUE STONE LAND COMPANY, INC. v. NEFF



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BLUE STONE LAND COMPANY,
INC.

v.

NEFF


March 3, 2000

Record No. 990969

BLUE STONE LAND COMPANY, INC.

v.

BILL V. NEFF, T/A BILL V. NEFF ENTERPRISES

FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY

John J. McGrath, Jr., Judge

Present: Carrico, C.J., Compton,[1] Lacy, Hassell, Keenan, Koontz,
and Kinser, JJ.

OPINION BY CHIEF JUSTICE HARRY L. CARRICO


In a motion for judgment filed below, Bill V.
Neff, trading as Bill V. Neff Enterprises (Neff), sought damages
from Blue Stone Land Company, Inc. (Blue Stone) for the
latter’s alleged breach of a written contract dated July 22,
1992. In the contract, Neff agreed to construct a street known as
Lucy Drive in a subdivision located in the City of Harrisonburg
and Blue Stone agreed to pay Neff an amount not to exceed
$181,609.88 for the work. Neff alleged that he had fully
performed the contract but that Blue Stone had refused to pay the
agreed amount.

Blue Stone filed grounds of defense in which it
denied any indebtedness to Neff. Blue Stone also filed a
counterclaim in which it alleged that Neff had agreed to complete
the construction of the street within a reasonable period of
time, but, despite repeated requests from Blue Stone, the
construction was not completed within a reasonable period of
time. Blue Stone alleged further that as a direct and proximate
result of Neff’s material breach of contract and refusal to
construct the street within a reasonable and timely manner, Blue
Stone was unable to sell its lots. Finally, Blue Stone alleged
that as a direct and proximate result of Neff’s material
breach of contract and refusal to construct the street in a
reasonable and timely manner, Blue Stone had suffered damages in
the amount of $200,000.

The record shows that Neff and Blue Stone each
contributed half the land for construction of Lucy Drive. In the
contract between the parties, Blue Stone agreed to pay Neff
$32,089.88 for previous work performed on the street and to split
"fifty/fifty" with Neff the remaining cost of
construction. The contract provided that Blue Stone’s share
of the total cost would not exceed $181,609.88, and payment would
not be required until lots located on Lucy Drive "would be
sold by Bluestone." However, it was agreed that the
$181,609.88 amount "would be paid in full no later than five
years from June 9, 1992." No time was fixed for the
completion of Lucy Drive.

On September 27, 1996, Blue Stone addressed a
letter to Neff stating that since "prior to July of 1992
. . . [n]othing further has been done on [Lucy
Drive]" and that Neff should "do no further work"
on the street. A Neff exhibit in the record indicates that
construction of the street was "generally completed" as
of July 14, 1997, some five years after the date of the
parties’ contract.

During discovery, Neff served interrogatories
upon Blue Stone. One inquiry required Blue Stone to
"[i]temize and describe with particularity all damages,
including but not limited to the $200,000 in damages sought in
[the] Counterclaim filed in this case
. . . ." In response, Blue Stone stated:

i) The sale of [Blue Stone’s] land
abutting Lucy Drive to Balanced Care Corporation was contingent
upon [Blue Stone] constructing and paying for Deyerle [Avenue] Extended. Due to the fact that Lucy Drive was not completed as
agreed, [Blue Stone] could not sell its lots to Balanced Care
Corporation without constructing a street at an estimated cost of
$200,000.

Lucy Drive runs in a north-south direction,
with Neff’s land lying to the west and Blue Stone’s to
the east. Deyerle Avenue runs east and west along Neff’s
southern border and intersects Lucy Drive at a right angle.
Deyerle Avenue extended runs eastward from Lucy Drive and is
bordered on both sides by Blue Stone’s property. The lot
sold by Blue Stone to Balanced Care Corporation is located at the
southeast corner of the intersection of Lucy Drive and Deyerle
Avenue extended. A Blue Stone exhibit in the record indicates
that the cost of constructing Deyerle Avenue extended amounted to
$296,289.86.

Prior to trial, Neff filed a motion in limine
seeking to exclude from evidence any testimony or exhibits
relating to costs expended by Blue Stone in the construction of
Deyerle Avenue extended. By order, the trial court sustained
Neff’s motion in limine and ruled that Blue Stone "will
be limited to proving damages relating to lost lot sales or
diminished revenues from lot sales."

On the morning of trial, Blue Stone moved for
reconsideration of the trial court’s ruling on the motion in
limine. When the court denied the motion for reconsideration,
Blue Stone moved the court to provide the reasons for its ruling.
The trial judge stated: "I consider damages for construction
of an alternate route to [Blue Stone’s] property to be
special damages which should have been pled specially. It would
have been very simple to plead it []specially, it was not done,
and it’s too late to change it now on the eve of
trial."

The case proceeded to trial before a jury. At
the conclusion of all the evidence, the trial court struck Blue
Stone’s counterclaim and submitted the case to the jury on
Neff’s motion for judgment alone. The jury returned a
verdict in favor of Neff in the amount of $181,609.88. The trial
court entered judgment on the verdict, and we awarded Blue Stone
this appeal.

Blue Stone assigns a number of errors, but we
think the dispositive question is whether the trial court erred
in sustaining Neff’s motion in limine on the ground the
damages for the construction of Deyerle Avenue extended were
special damages not specially pleaded. We are of opinion the
trial court did err in this regard.

In Roanoke Hospital Ass’n v. Doyle
& Russell, Inc.
, 215 Va. 796, 214 S.E.2d 155 (1975), we
said:

There are two broad categories of damages ex
contractu: direct (or general) damages and consequential
(or special) damages. Direct damages are those which arise
"naturally" or "ordinarily" from a breach of
contract; they are damages which, in the ordinary course of human
experience, can be expected to result from a breach.
Consequential damages are those which arise from the intervention
of "special circumstances" not ordinarily predictable.
If damages are determined to be direct, they are compensable. If
damages are determined to be consequential, they are compensable
only if it is determined that the special circumstances were
within the "contemplation" of both contracting parties.
Whether damages are direct or consequential is a question of law.
Whether special circumstances were within the contemplation of
the parties is a question of fact.

Id. at 801, 214 S.E.2d at 160 (citations
and footnote omitted); see also Chesapeake &
Potomac Tel. Co. v. Sisson & Ryan, Inc.
, 234 Va. 492,
505-06, 362 S.E.2d 723, 731 (1987) (damages direct when
contractor fails to complete work to specifications and building
collapses). Direct or general damages need not be specially
pleaded. Wood v. American Nat’l Bank, 100 Va. 306,
309, 40 S.E. 931, 932 (1902).

Here, the counterclaim involves a
garden-variety type of breach of contract without the
intervention of any special circumstances that would convert the
resulting damages from general to special. Neff and Blue Stone
were both land developers, and Neff knew that Blue Stone’s
purpose in contracting for the construction of Lucy Drive was to
provide access to Blue Stone’s land so it could be developed
and sold. Blue Stone alleges that Neff failed to complete Lucy
Drive within a reasonable period of time. If Neff breached the
contract in that respect, he should have expected that Blue
Stone, in the ordinary course of human experience, would take
alternative means of providing access to its property when needed
to accomplish a sale of a portion that would have been served by
Lucy Drive. Indeed, had Blue Stone not taken alternative means of
providing access to its property, it might well have been met at
the threshold of this case with a claim that it had failed to
mitigate its damages.

The alleged damages, therefore, are those which
arise naturally and ordinarily from a breach of contract, they
are direct and not consequential, and it was not necessary to
plead them specially. They were sufficiently pleaded in the
allegation of Blue Stone’s counterclaim that "[a]s a
direct and proximate result of [Neff’s] material breach of
contract and refusal to construct Lucy Drive in a reasonable and
timely manner, [Blue Stone] suffered damages in the amount of TWO
HUNDRED THOUSAND DOLLARS." If Neff desired more detailed
information concerning the damages, he could have requested a
bill of particulars.

Neff argues, however, that even if it is
assumed the trial court erred in any of its rulings concerning
Blue Stone’s alleged damages for the costs of constructing
Deyerle Avenue extended, such error "would not provide
grounds for overturning the jury’s verdict." Neff says
that by favoring him with a verdict in the full amount of his
claim, "the jury conclusively determined and established the
fact that [he] was not in breach
. . . and . . . had in fact completed Lucy
Drive within a reasonable amount of time." Hence, Neff
concludes, "[s]ince the jury found that [he] was not in
breach of the contract, and since Blue Stone’s defenses and
counterclaim damages (including the proffered Deyerle Avenue
extended construction costs) were asserted solely on the basis of
a breach by Neff, . . . said damages became irrelevant
to the case once the jury’s verdict was returned in favor of
Neff" and the trial court’s rulings were "rendered
. . . harmless."

We disagree with Neff that the error in
excluding evidence of the cost of constructing Deyerle Avenue
extended was harmless. In a related context, we said:

Under the harmless error doctrine, the judgment
of the court below will be affirmed whenever we can say that the
error complained of could not have affected the result. The
doctrine is never applied, however, when it appears that the jury
has been misinstructed and, had it been properly instructed, that
it might have returned a different verdict.

Rhoades v. Painter, 234 Va. 20, 24, 360
S.E.2d 174, 176 (1987) (citation omitted); see also
Director Gen’l of Railroads v. Pence’s Adm’x,
135 Va. 329, 352, 116 S.E. 351, 358-59 (1923) (error in
instructing jury not harmless when upon correct instruction jury
might have found contrary verdict). By logical extension, the
same rule must apply when it appears that evidence has been
excluded erroneously and that, had it been admitted, it might
have produced a different result. See Pace v. Richmond,
231 Va. 216, 226, 343 S.E.2d 59, 65 (1986) (error in excluding
evidence harmless when it could not affect verdict); Lester’s
Ex’r v. Simpkins
, 117 Va. 55, 69, 83 S.E. 1062, 1067
(1915) (admission of illegal evidence not reversible when it
could not affect result).

In this case, we are of opinion that had the
evidence concerning the cost of constructing Deyerle Avenue
extended been admitted it might have produced a different result
both with respect to Blue Stone’s defenses and its
counterclaim. Daniel W. Brubaker, one of Blue Stone’s
principals, testified to the necessity for the construction of
Deyerle Avenue extended. Neff objected to the testimony as
violative of the trial court’s order granting Neff’s
motion in limine, but the court overruled the objection, and the
ruling is not the subject of an assignment of cross-error.

Brubaker was asked why Blue Stone had written
the letter of September 27, 1996, to Neff "telling him not
to go ahead with the street." Brubaker answered as follows:

Well, at that point, the street had not been
built. We had waited all of this time for it to be built, and I
had a contract at that time with [Balanced Care Corporation] to
. . . buy three acres of real estate from us at a price
of $100,000 per acre. They would not sign the contract to
purchase, or would not buy it until I assured to them
. . . that we would have an entrance, either off of
Lucy or off of Deyerle. And since Lucy was not built, I
immediately told them that I’d bring them in an entrance off
of Deyerle Avenue extended, which we did. And we had to build
Deyerle Avenue extended in order to sell that three-acre lot to
[Balanced Care Corporation].

It seems somewhat inconsistent for the trial
court to admit evidence concerning the necessity for constructing
Deyerle Avenue extended but to exclude evidence concerning the
cost of construction. Without evidence concerning the cost of
construction, the testimony concerning necessity would have been
meaningless or at least confusing to the jurors. They would not
have known how to treat the testimony and, out of perplexity,
might have disregarded it entirely. Had the evidence been
admitted, however, the confusion might have been avoided and a
different result obtained.

Furthermore, the trial court’s sole basis
for striking Blue Stone’s counterclaim was "a lack of
any compensable damages." Had the evidence of the cost of
constructing Deyerle Avenue extended been admitted, the trial
court might have found the evidence of compensable damages
sufficient and might not have struck the counterclaim. And it
goes without saying that Blue Stone would have been in a much
stronger position, both offensively and defensively, had the
counterclaim been submitted to the jury for its consideration.

Moreover, under the instructions of the trial
court, Blue Stone had the burden of proving that Neff’s
alleged breach of contract was material. With evidence concerning
the cost of construction excluded from the case, Blue Stone was
denied one appropriate basis for the jury to find that
Neff’s alleged breach was material and not merely de minimus.
Had the evidence been admitted, the jury might well have found
Neff’s breach was material and decided against him.

For these reasons, we will reverse the judgment
of the trial court and remand the case for a new trial on
Neff’s claim and Bluestone’s counterclaim consistent
with the views expressed in this opinion.

Reversed and remanded.

 

 

FOOTNOTES:

[1] Justice Compton participated in
the hearing and decision of this case prior to the effective date
of his retirement on February 2, 2000.

 

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