Case Title: Long v. Abbruzzetti

Citation: 

Docket Number: 961815

State: virginia

Court: Virginia Supreme Court

Date: 1997-06-06T00:00:00Z

Document:
Present:  All the Justices 
 
STEFAN C. LONG 
 
v.  Record No. 961815 
OPINION BY JUSTICE BARBARA MILANO KEENAN 
                                    June 6, 1997 
FRANCESCO ABBRUZZETTI 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 
 
Thomas A. Fortkort, Judge Designate 
 
 
The dispositive issue in this appeal is whether a plaintiff 
who recovered consequential damages for breach of contract 
presented sufficient evidence that those damages were within the 
contemplation of the parties at the time the contract was made. 
 
Francesco Abbruzzetti (the plaintiff) filed a motion for 
judgment against Stefan C. Long, seeking damages for Long's 
alleged breach of his oral contract to act as escrow agent for 
the plaintiff and his former wife, Josephine Wendy Abbruzzetti.  
The plaintiff and Long filed cross-motions for summary judgment 
and agreed, pursuant to Rule 3:18, that the trial court could 
consider certain depositions, in addition to the pleadings and 
admissions, in deciding the case. 
 
The trial court considered the following facts in ruling on 
the motions.  On October 6, 1992, at 3:45 p.m., the plaintiff and 
Mrs. Abbruzzetti executed an "Offer to Purchase," in which the 
plaintiff agreed to purchase Mrs. Abbruzzetti's interest in their 
jointly owned restaurant, Trattoria da Franco, located in the 
City of Alexandria.  The Offer to Purchase and an accompanying 
escrow agreement executed by the plaintiff and Mrs. Abbruzzetti 
required the plaintiff to deliver to Long, the escrow agent who 
was also Mrs. Abbruzzetti's attorney, several items including a 
 
 
 
 
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cash down payment, a note payable to Mrs. Abbruzzetti for the 
balance of the purchase price, and evidence of Mrs. Abbruzzetti's 
release from liability on notes held by the Bank of Alexandria 
and the First Commonwealth Savings Bank.  The Offer to Purchase 
specified that "[a]ll parties agree to execute all required 
documents within 72 HRS of execution of this agreement," and 
stated that if the plaintiff was unable to perform in accordance 
with the agreement, it would become null and void, and an 
alternate agreement allowing Mrs. Abbruzzetti to purchase the 
restaurant would take effect. 
 
On October 6, 1992, the plaintiff delivered the down payment 
to Long, who deposited the check in his escrow account.  The 
escrow agreement directed Long to release the down payment to 
Mrs. Abbruzzetti when he received all the documents required from 
the plaintiff under the terms of the Offer to Purchase.  On 
October 9, 1992, Long received from Charles O. Cake, the 
plaintiff's attorney, several items including letters from the 
Bank of Alexandria and First Commonwealth Savings Bank, which 
indicated that the plaintiff had initiated, but not completed, 
action to assume full responsibility for the two loans. 
 
On October 9, 1992, at about 4:00 p.m., Mrs. Abbruzzetti 
delivered a letter to Long stating that the plaintiff had failed 
to comply with the terms of the Offer to Purchase because he had 
not obtained her release on the notes held by the two banks, and 
she presented written verification from both banks to that 
 
 
 
 
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effect.  At Mrs. Abbruzzetti's request, Long wrote the plaintiff 
a letter stating that "[i]t has been brought to my attention that 
you have failed to comply with the offer to purchase."  Long 
stated in the letter that Mrs. Abbruzzetti was exercising her 
option to purchase the restaurant and that, "[p]ursuant to her 
offer of purchase, she is entitled to assume control of the 
family business forthwith."  Long gave the letter to Mrs. 
Abbruzzetti. 
 
Long stated in his deposition that he did not make an 
independent attempt to verify the contents of the bank letters 
because he had not received the releases within the 72-hour time 
period specified in the Offer to Purchase.  When asked if he 
"simply took [Mrs.] Abbruzzetti's word," Long stated, "[a]ll I 
know is she said 72 hours had expired and that he had not 
complied." 
 
Mrs. Abbruzzetti delivered a copy of Long's letter to Cake 
and then went to the restaurant, bringing the letter and her 
check for the down payment to exercise her purchase option.  She 
was accompanied by two security guards she had hired that 
morning.  The plaintiff arrived at the restaurant a few hours 
after Mrs. Abbruzzetti and became angry when she informed him 
that she was taking possession of the restaurant.  The plaintiff 
left the restaurant and returned with two policemen who 
determined, on the basis of Long's letter, that Mrs. Abbruzzetti 
was entitled to possession of the business.  The plaintiff left 
 
 
 
 
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the restaurant and later filed a suit for specific performance of 
the Offer to Purchase. 
 
In January 1993, in the suit for specific performance, the 
trial court entered an order granting the plaintiff immediate 
possession of the restaurant, holding that he had complied with 
the terms of the October 6, 1992 Offer to Purchase.  The 
plaintiff then filed this motion for judgment against Long, 
seeking recovery of the attorney's fees he expended in the 
specific performance suit. 
 
In a letter opinion addressing the parties' cross-motions 
for summary judgment, the trial court held that the plaintiff was 
entitled to damages for Long's "failure to investigate the 
default circumstances claimed by his client."  The court ruled 
that although Long did not have any specific knowledge of Mrs. 
Abbruzzetti's intended actions beyond her intent to deliver the 
letter and check to the plaintiff's attorney, "it was clearly 
foreseeable that she would make some effort to enforce her claim 
and that such effort would cause the plaintiff some damage either 
in business losses or potential attorney fees in defending 
against Mrs. Abbruzzetti's claim."  The court awarded summary 
judgment to the plaintiff, ruling that Long's failure to 
investigate the plaintiff's alleged default under the terms of 
the Offer to Purchase entitled the plaintiff to recover his 
attorney's fees incurred in the specific performance suit.
*
 
     
*The court awarded the plaintiff $42,785.  Long stipulated 
 
 
 
 
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On appeal, Long contends that the attorney's fees incurred  
in the specific performance suit were consequential damages not 
reasonably foreseeable at the time his contract as escrow agent 
was made, because those damages were the direct result of Mrs. 
Abbruzzetti's action ousting the plaintiff from the restaurant.  
In response, the plaintiff asserts that the attorney's fees were 
damages directly flowing from Long's breach of contract, and that 
the resolution of this issue is governed by Hiss v. Friedberg, 
201 Va. 572, 112 S.E.2d 871 (1960).  In the alternative, the 
plaintiff asserts that even if the attorney's fees were 
consequential damages, they are recoverable because they were 
reasonably foreseeable at the time the contract was made.  We 
disagree with the plaintiff. 
 
As stated above, this case was submitted to the trial court 
 based on the parties' cross-motions for summary judgment.  Since 
the parties agreed to the trial court's consideration of certain 
depositions as evidence, we are required to consider them as part 
of the record the parties have presented.  See Code § 8.01-420; 
Rule 3:18; Carson v. LeBlanc, 245 Va. 135, 137, 427 S.E.2d 189, 
190 (1993).  In this procedural posture, we review the trial 
court's judgment under Code § 8.01-680, which provides that the 
judgment will not be set aside unless it appears from the record 
                                                                  
to the amount of damages while reserving the right to appeal on 
the issue of liability. 
 
 
 
 
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that the judgment is plainly wrong or without evidence to support 
it.  Id.; see also W.S. Carnes, Inc. v. Board of Supervisors of 
Chesterfield County, 252 Va. 377, 385, 478 S.E.2d 295, 301 
(1996); Ravenwood Towers, Inc. v. Woodyard, 244 Va. 51, 57, 419 
S.E.2d 627, 630 (1992). 
 
There are two broad categories of damages which may arise 
from a breach of contract.  Direct damages are those which flow 
naturally or ordinarily from the contract breach.  Consequential 
 damages occur from the intervention of special circumstances 
that are not ordinarily predictable.  NAJLA Associates, Inc. v. 
Griffith, 253 Va. 83, 86, 480 S.E.2d 492, 494 (1997); Richmond 
Medical Supply Co. v. Clifton, 235 Va. 584, 586, 369 S.E.2d 407, 
409 (1988); Roanoke Hospital v. Doyle and Russell, 215 Va. 796, 
801, 214 S.E.2d 155, 160 (1975). 
 
If damages are direct, they are compensable.  In contrast, 
if damages are consequential in nature, they are compensable only 
if the special circumstances were within the contemplation of all 
contracting parties at the time the contract was made.  NAJLA 
Associates, Inc., 253 Va. at 86-87, 480 S.E.2d at 494; Morris v. 
Mosby, 227 Va. 517, 523, 317 S.E.2d 493, 497 (1984).  
"Contemplation," in this context, includes both circumstances 
that are actually foreseen and those that are reasonably 
foreseeable.  Richmond Medical Supply Co., 235 Va. at 586, 369 
S.E.2d at 409; Danberg v. Keil, 235 Va. 71, 76, 365 S.E.2d 754, 
757 (1988).  
 
 
 
 
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The issue whether damages are direct or consequential is a 
question of law.  However, the issue whether special 
circumstances were within the contemplation of the parties is a 
question of fact.  NAJLA Associates, Inc., 253 Va. at 87, 480 
S.E.2d at 494; Roanoke Hospital, 215 Va. at 801, 214 S.E.2d. at 
160. 
 
We disagree with the plaintiff's assertions that the damages 
here are direct, rather than consequential, and that this case is 
controlled by Hiss v. Friedberg.  In Hiss, the plaintiffs 
employed attorneys Hiss and Rutledge to search the title to their 
recently purchased real estate, procure title insurance, and 
settle the transaction.  Due to an allegation of an unrecorded 
lease on the property, an escrow agreement was executed in which 
Hiss and Rutledge were authorized to deliver the cash and notes 
to the sellers, and to record the deeds, when they had received a 
title insurance policy guaranteeing the plaintiffs a fee simple 
title to the property "free and clear of any liens and 
encumbrances whatsoever."   201 Va. at 574-75, 112 S.E.2d at 874. 
 
Although they had not procured such a policy, Hiss and 
Rutledge nevertheless recorded the deeds and delivered the cash 
and notes to the sellers.  The policy issued after these acts 
occurred did not insure against "[r]ights of parties in actual 
possession of all or any part of the premises other than the 
insured."  Id. at 575, 112 S.E.2d at 874. 
 
After filing suit against the sellers for breaches of 
 
 
 
 
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warranty and covenants, the plaintiffs settled their claim, 
reserving the right to proceed against Hiss and Rutledge.  In the 
action against Hiss and Rutledge, the trial court awarded the 
plaintiffs, among other things, counsel fees incurred in their 
litigation against the sellers.  Id. at 575-76; 112 S.E.2d at 
874. 
 
On appeal, we recognized that, in the absence of contractual 
or statutory liability, attorneys' fees incurred in present or 
previous litigation between the same parties generally are not 
recoverable.  However, we also stated that when a breach of 
contract has forced a plaintiff to maintain or defend a suit 
against a third person, the plaintiff may recover reasonable 
attorneys' fees incurred by him in the former suit.  Id. at 577, 
112 S.E.2d at 875-76.  We concluded that since the purchasers' 
suit against the sellers was a direct and necessary consequence 
of the attorneys' breach, the plaintiffs were entitled to recover 
damages for the attorneys' fees they incurred in that litigation. 
 Id. at 579, 112 S.E.2d at 876-77. 
 
Unlike the direct damages sustained by the plaintiffs in 
Hiss, the damages alleged here were not the direct and necessary 
consequence of Long's alleged breach of contract as escrow agent. 
 The damages were the direct and necessary result of Mrs. 
Abbruzzetti's action in having the plaintiff physically ejected 
and barred from the restaurant.  Moreover, it is purely 
speculative whether such fees would have been incurred had Mrs. 
 
 
 
 
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Abbruzzetti not taken this action.  Thus, we conclude that the 
plaintiff's attorney's fees in the specific performance suit were 
consequential, rather than direct, damages because they arose 
from the intervention of special circumstances not ordinarily 
predictable. 
 
We next consider whether the record supports the trial 
court's finding that these damages were reasonably foreseeable.  
We apply the above-stated rule that the foreseeability of 
consequential damages is determined as of the time the contract 
was made.  See NAJLA, 253 Va. at 87, 480 S.E.2d at 494; Richmond 
Medical Supply Co., 235 Va. at 586, 369 S.E.2d at 409; Roanoke 
Hospital, 215 Va. at 801, 214 S.E.2d at 160. 
 
We conclude that the record does not contain evidence that, 
at the time Long was employed as escrow agent, it was reasonably 
foreseeable that Mrs. Abbruzzetti's actions would require the 
plaintiff to incur attorney's fees in a specific performance 
suit.  There is no evidence indicating that Mrs. Abbruzzetti had 
engaged in such conduct before, or that the circumstances 
surrounding the parties' marital difficulties were so extreme 
that conduct of this nature was reasonably likely to occur.  
Thus, we hold that the record fails to support the trial court's 
conclusion that the damages in question were reasonably 
foreseeable. 
 
For these reasons, we will reverse the trial court's 
judgment and enter final judgment in favor of Long. 
 
 
 
 
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Reversed and final judgment.