Road extension contract was not ambiguous

The circuit court correctly concluded that a road extension contract unambiguously provided that the developer of a residential neighborhood and an apartment complex for seniors was responsible for the contract costs.

Background

Mintbrook Developers owned property on which it developed residential lots and an apartment complex for seniors. The Lims sought to develop property they owned adjacent to Mintbrook’s parcel. Each development would benefit by extending Lafayette Ave. to connect to Route 28. The Lims bought a strip of land needed to complete the connection.

“Mintbrook proposed that, if the Lims dedicated the road parcel, Mintbrook would extend Lafayette Avenue to Route 28. The parties exchanged various drafts of an agreement. In the final ‘Development Agreement,’ entered into as of April 14, 2014, Mintbrook agreed to extend Lafayette Avenue to Route 28 and to complete the interconnection between the two roads. …

“In 2015, Fauquier County approved the commercial rezoning of the Lims’ land. The rezoning required the construction of improvements to connect Lafayette Avenue to Route 28, the details of which would be based on the traffic study.

“In 2017, Mintbrook sent the Lims what Mintbrook called a ‘comfort letter,’ reassuring them that Mintbrook intended ‘to plan, permit and construct’ the extension of Lafayette Avenue to Route 28. Mintbrook noted that it was ‘required to update our traffic study … since this road segment was not part of Mintbrook’s original plan,’ and Mintbrook would ‘then get an access permit from VDOT.’

“Mintbrook’s principal, Russell Marks, admitted at trial that Ms. Lim would ‘understand from this letter that we were going to do what was necessary for this road segment.’

“In 2018, the Lims conveyed their property to Forest Gold, a limited liability company that they had formed. The parties subsequently treated Forest Gold as succeeding to the interests of the Lims under the Development Agreement, even though Forest Gold had not signed the Development Agreement.”

A dispute arose regarding the extent of the require road improvements. Mintbrook claimed that the work it was paying for “exceeded the scope of its obligations under the Development Agreement. …

“As a result, Forest Gold contracted with Groundscapes, LLC, to perform the required roadwork. Groundscapes charged a flat fee of $407,479.71, for which Forest Gold made an initial payment of $70,000. The Lims, through a related entity, posted the bond required by VDOT to secure performance of the … work.”

In the trial court

“When Forest Gold failed to pay Groundscapes, Groundscapes sued Forest Gold for the balance due: $337,479.71. Forest Gold filed a third-party complaint against Mintbrook [Record No. 0474-22-4], claiming that Mintbrook was responsible for the work and had to indemnify Forest Gold. …

“[T]he circuit court found that Forest Gold breached its contract with Groundscapes and was liable for the outstanding balance, $337,479.71. The court also held that the Development Agreement unambiguously required Mintbrook to perform that work, making Mintbrook liable to Forest Gold and the Lims in the same amount.

“The court, however, denied Forest Gold’s claim for attorney fees. While the indemnification provision of the Development Agreement provided for the recovery of attorney fees, Forest Gold had waived its fee claim under Rule 3:25, the court reasoned, because the amended third-party complaint did not plead that the indemnification provision was the basis for the fee claim. …

“Mintbrook appealed the adverse judgment against it, and Forest Gold and the Lims appealed the trial court’s ruling denying them attorney fees.”

Unambiguous agreement

The development agreement provided, in paragraph 1G, that “‘the intent of this Road Segment language is that Mintbrook shall, at Mintbrook’s sole cost and expense, construct the entirety of Lafayette Avenue, including but not limited to, (i) all road improvements required at Lafayette Avenue’s intersection with Route 28 per the approved Mintbrook Code of Development Site Plans, the relevant sections of which are detailed in Exhibits “A” and “B”, and (ii) all measures required to release all bonds and to dedicate Lafayette Avenue to the Virginia Department of Transportation (VDOT).’

“Mintbrook contends that, under the Mintbrook Code of Development Site Plans and Exhibits A and B – referenced in romanette (i) – Mintbrook agreed to connect Lafayette Avenue to Route 28 using a flare-out design, but not to perform additional roadwork like the construction of acceleration and deceleration lanes.

“On the other hand, Forest Gold relies on romanette (ii), which required Mintbrook to construct everything necessary for VDOT to accept the dedication of the extension of Lafayette Avenue to Route 28 and to cause all bonds to be released.

“We agree with the trial court that romanette (ii) unambiguously required Mintbrook to perform the broader scope of work. Romanette (ii) required Mintbrook to perform ‘all measures required to release all bonds and to dedicate Lafayette Avenue.’” A VDOT representative testified “that VDOT would not have accepted the road dedication and would not have released the performance bond if that work had not been completed. …

“We disagree with Mintbrook that paragraph 1(G) is ambiguous in defining the Road Segment work. Mintbrook focuses almost exclusively on the more limited Route 28 work described in romanette (i), which incorporated the flare-out design anticipated in the Mintbrook Code of Development Site Plans, the relevant sections of which are detailed in Exhibits ‘A’ and ‘B’ of the Development Agreement.

“But paragraph 1(G) makes clear that ‘the intent of this Road Segment language is that Mintbrook shall, at Mintbrook’s sole cost and expense, construct the entirety of Lafayette Avenue, including but not limited to” the work described in romanette (i) ‘and’ in romanette (ii). (Emphasis added.)

“It does not matter that Mintbrook did not know in 2014 what type of improvements VDOT would ultimately require at the intersection of Lafayette Avenue and Route 28. Whatever that might be, Mintbrook promised in romanette (ii) to construct ‘all measures required to release all bonds and to dedicate Lafayette Avenue’ to VDOT.”

The trial court’s ruling that the agreement is unambiguous is affirmed.

Attorneys’ fees

“In their separate appeal [Record No. 0499-22-4], Forest Gold and the Lims argue that the trial court erred in finding that they waived their attorney-fee claim under Rule 3:25. …

“We find it a close question whether the amended third-party complaint – viewed in isolation – adequately pleaded that the attorney-fee claim was based on paragraph 2(D) of the Development Agreement. …

“Mintbrook’s concession that it knew that the fee claim was based on the indemnification provision of the Development Agreement makes it unnecessary to decide whether the amended third-party complaint, standing alone, adequately pleaded that claim. …

“We remand the case for the trial court to determine an appropriate award of attorney fees and costs incurred at trial and on appeal.”

Record No. 0474-22-4 – Affirmed.

Record No. 0499-22-4 – Reversed and remanded.

Mintbrook Developers v. Groundscapes, et al., Record No. 0474-22-4, Dec. 20, 2022. CAV (Raphael). From the Circuit Court of Fauquier County (Sincavage). David W. Shreve for Mintbrook Developers, LLC. James P. Downey for Forest Gold, LLC, Grace Lim and James Lim. No brief or argument for Groundscapes. VLW 022-7-582, 13 pp.