Case Title: Palmer & Palmer Co. v. Waterfront Marine Construction, Inc.

Citation: 

Docket Number: 071373

State: virginia

Court: Virginia Supreme Court

Date: 2008-06-06T00:00:00Z

Document:
PRESENT:  All the Justices 
 
PALMER & PALMER COMPANY, LLC, 
T/A PALMER & COMPANY 
 
v.       Record No. 071373                   OPINION BY 
 
 
 
     JUSTICE S. BERNARD GOODWYN 
WATERFRONT MARINE CONSTRUCTION, 
          June 6, 2008 
INC. 
 
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 
Thomas S. Shadrick, Judge 
 
 
 
In this appeal, we consider whether the trial court erred 
in its interpretation of a contract between Palmer & Palmer 
Company, LLC (“Palmer”) and Waterfront Marine Construction, 
Inc. (“Waterfront”) and in its imposition of liability on 
Palmer for damage resulting from Waterfront’s crane falling 
into an abandoned, disconnected septic tank on Palmer’s 
property. 
 
Waterfront filed a complaint alleging breach of contract 
against Palmer and seeking damages primarily related to repair 
of its crane.  Palmer and Waterfront filed joint stipulations 
as to the facts of the case, agreed that no material issues of 
fact remained in dispute, and submitted the matter for the 
trial court’s consideration on competing motions for summary 
judgment.  The trial court denied Palmer’s motion for summary 
judgment and, holding that Palmer breached the contract, 
granted Waterfront’s motion for summary judgment.  The trial 
court awarded Waterfront damages plus attorneys’ fees.  Palmer 
appeals to this Court. 
 
The facts are undisputed.  Waterfront, a marine 
construction and pile driving company, and Palmer, the owner 
of the property and the general contractor for construction of 
a house on 856 South Atlantic Avenue, Virginia Beach (“Lot 
2”), entered into a contract.  The contract specified that 
Waterfront would drive foundation piles into the ground on  
Lot 2.  
 
On August 5, 2004, an employee of Waterfront was 
operating a crane owned by Waterfront on Lot 2 when the crane 
fell into a buried septic tank and was damaged.  The septic 
tank was empty and covered with approximately four to ten 
inches of sand.  Prior to the accident, neither Waterfront nor 
Palmer was aware of the existence of the septic tank.  The 
house previously located on Lot 2 had been demolished before 
Palmer bought the property; however, the house utilized the 
City of Virginia Beach public sewage system from at least 
1990.  No recorded plat, survey, or drawing disclosed a septic 
tank on the property.  Also, the Department of Public Health 
for the City of Virginia Beach, which is the agency that keeps 
records of private septic systems in the City of Virginia 
Beach, had no record of any septic system or tank as having 
been located on the subject property. 
 
 
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Waterfront sought damages from Palmer on a purely 
contractual basis because of the damage to Waterfront’s crane 
and other expenses related thereto.  The relevant provisions 
of the contract are as follows: 
 
2.1   EXCLUSIONS: . . . Waterfront . . . 
assumes no responsibility for the following: 
 
. . . . 
 
 
  2. Removal of underground or overhead 
obstructions. 
 
. . . . 
 
 
2.2   WORK AND/OR SERVICES TO BE PERFORMED BY  
OWNER PRIOR TO PILE DRIVING: 
 
. . . . 
 
 
  6. Location, protection, and removal of all 
utilities in area. 
 
 
  7. Protection of existing structures. 
 
. . . . 
 
 
4.1   ADDITIONAL WORK:  Should additional work 
such as, but not limited to, underground 
obstructions such as trees, stumps, rocks, debris, 
etc. be encountered, an extra charge for equipment, 
labor, overhead and profit will be charge [sic] at 
$250.00/hour for removal or augering. 
 
 
The trial court concluded that Palmer was liable based on 
the court’s combined reading of sections 2.1(2) and 4.1, 
reasoning that reading those provisions together indicates 
that Palmer was responsible for removal of underground 
obstructions.  Additionally, the trial court found that the 
 
 
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septic tank was either a utility or an existing structure that 
Palmer was responsible for under sections 2.2(6) or 2.2(7) of 
the contract.  On March 30, 2007, the trial court awarded 
Waterfront damages in the amount of $22,696.05 plus attorneys’ 
fees in the amount of $11,006.55. 
 
Palmer argues that the trial court erred in interpreting 
the contract and imposing liability and damages.  Focusing on 
the language of the contract, Palmer contends that the 
contract does not reflect an agreement that Palmer would 
remove or locate an abandoned septic tank.  According to 
Palmer, the trial court created a duty that was not 
memorialized in the contract.  
 
Waterfront argues that the trial court correctly 
interpreted the contract.  Waterfront states that Palmer is 
liable under the contract for primarily three reasons.  First, 
Waterfront asserts that sections 2.1(2) and 4.1 demonstrate it 
was Palmer’s responsibility to prepare the work site, which 
included removing underground obstructions.  Second, Palmer 
failed to “locate and protect existing structures, 
specifically the septic tank, as required by Paragraph 
2.2(7).”  Third, section 2.2(6) provides that Palmer was 
responsible for the location and removal of “all utilities.”  
Arguing that the septic tank is a utility, Waterfront contends 
 
 
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that Palmer breached the contract by failing to comply with 
section 2.2(6). 
 
Interpretation of a contract is a question of law that is 
reviewed de novo.  PMA Capital Ins. Co. v. US Airways, Inc., 
271 Va. 352, 357-58, 626 S.E.2d 369, 372 (2006).  When a 
contract is clear and unambiguous, it is the court’s duty to 
interpret the contract, as written.  Winn v. Aleda Constr. 
Co., 227 Va. 304, 307, 315 S.E.2d 193, 194 (1984).  On appeal, 
this Court is not bound by the trial court’s determinations 
regarding the interpretation of an unambiguous contract.  
Gordonsville Energy, L.P. v. Virginia Elec. & Power Co., 257 
Va. 344, 353, 512 S.E.2d 811, 816 (1999). 
 
In a breach of contract claim, the parties’ contract 
becomes the law governing the case unless it is repugnant to 
some rule of law or public policy.  Winn, 227 Va. at 307, 315 
S.E.2d at 194.  This Court must construe the contract as it is 
written.  Christopher Assocs. v. J.C. Sessoms, Jr., 245 Va. 
18, 22, 425 S.E.2d 795, 797 (1993).  “The guiding light in the 
construction of a contract is the intention of the parties as 
expressed by them in the words they have used, and courts are 
bound to say that the parties intended what the written 
instrument plainly declares.”  W.F. Magann Corp. v. Virginia-
Carolina Elec. Works, Inc., 203 Va. 259, 264, 123 S.E.2d 377, 
381 (1962). 
 
 
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We hold that sections 2.1(2) and 4.1 of the contract do 
not subject Palmer to liability in this case.  In section 
2.1(2), the contract states that Waterfront assumed no 
responsibility for the removal of underground obstructions.  
The plain meaning of that provision is that the contract price 
did not include the removal of underground obstructions.  
Section 4.1 further confirms such an interpretation by stating 
that Waterfront would charge $250 per hour for additional work 
resulting from underground obstructions. 
 
The contract indicates that the parties anticipated 
underground obstructions might be encountered during the 
project.  The contract provides for payment to Waterfront for 
the removal of any such obstructions.  However, the contract 
does not impose any obligation upon Palmer to remove such 
underground obstructions or to be responsible for damages 
caused thereby.  Thus, contract sections 2.1(2) and 4.1, 
whether considered together or separately, do not impose 
contractual liability upon Palmer for damage to Waterfront’s 
crane caused by a previously unknown underground obstruction.  
Therefore, the trial court erred in granting Waterfront’s 
motion for summary judgment based on a reading of sections 
2.1(2) and 4.1. 
 
Palmer also assigns error to the trial court’s ruling 
that Waterfront is entitled to contractual damages because the 
 
 
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septic tank was an existing structure.  Under section 2.2(7) 
of the contract, Palmer is responsible for protecting existing 
structures.  Assuming the septic tank is an existing 
structure, section 2.2(7) clearly means that Palmer could not 
hold Waterfront responsible for any damage to the septic tank.  
However, section 2.2(7) does not make Palmer liable for damage 
to Waterfront’s crane caused when the crane fell into the 
septic tank.  The trial court’s holding that the septic tank 
was such an existing structure therefore does not provide a 
contractual basis for imposing liability upon Palmer for 
Waterfront’s damages. 
 
Palmer further assigns error to the trial court’s holding 
that the abandoned, disconnected septic tank could be the 
basis for imposing liability upon Palmer, pursuant to section 
2.2(6) of the contract. Section 2.2(6) states that Palmer was 
responsible for the location, protection, and removal of all 
utilities.  This Court must therefore consider whether an 
abandoned, disconnected septic tank is a utility.  We hold 
that it is not. 
 
When the interpretation of a contract involves a term 
that is clear and unambiguous, the term is given its plain 
meaning.  PMA Capital Ins. Co., 271 Va. at 358, 626 S.E.2d at 
372.  A contractual term, absent a definition in the contract, 
is construed according to its usual, ordinary, and popular 
 
 
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meaning.  See Christopher Assocs., 245 Va. at 23, 425 S.E.2d 
at 797.  The term “utility” is defined as “a service provided 
by a public utility” and as “a unit composed of one or more 
pieces of equipment usually connected to or part of a 
structure and designed to provide a service (as heat, light, 
power, water, or sewage disposal).”  Webster’s Third New 
International Dictionary 2525 (1993).  
 
Assuming, without deciding, that an operational septic 
system is a utility, the septic tank involved in this case is 
not a utility because there is no evidence that this septic 
tank is, or ever was, part of an operational septic system.  
The evidence is uncontroverted that the house previously on 
the property utilized the public sewer system since 1990.  
There is no evidence that this septic tank was ever connected 
to the house that was previously located on Lot 2 or that it 
was part of an operational septic system.  At best, the septic 
tank is part of a disconnected septic system that had been 
abandoned for years; it is one part of a unit that, if 
operational, would be a utility.  Thus, we hold that the 
empty, abandoned septic tank was not a “utility” within the 
intendment of Section 2.2(b) of the parties’ contract. 
 
Under the terms of the contract, Palmer did not have a 
duty to locate or remove an abandoned, disconnected septic 
 
 
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tank.  The trial court erred in holding such a duty existed 
under the contract. 
 
Palmer also argues that the trial court erred in awarding 
attorneys’ fees.  In view of our disposition concerning 
Palmer’s liability, we hold that Waterfront is not entitled to 
attorneys’ fees pursuant to the terms of the contract. 
 
This Court concludes that the contract contains no 
provision that would make Palmer liable for Waterfront’s 
damages.  We will reverse the judgment of the trial court and 
enter final judgment in favor of Palmer. 
Reversed and final judgment.