Present: All the Justices 

GAIL STEPP, ET AL. 

 OPINION BY 

v. Record No. 990404 JUSTICE LAWRENCE L. KOONTZ, JR. 

January 14, 2000 

JAMES A. FOSTER, ET AL. 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Kathleen H. MacKay, Judge 

In this appeal, the principal issue we consider is whether 

the trustees of a trust who successfully defended an action by 

beneficiaries of the trust are entitled to recover an award of 

attorney’s fees and expenses from the beneficiaries rather than 

from the trust corpus. 

BACKGROUND 

The Belmont Park Estates subdivision was created by 

recorded plat in 1956 and consists of 140 residential lots 

located in Fairfax County. Marketing of the subdivision by the 

owner/developer included reference to an adjoining 6.8-acre 

parcel (hereafter Parcel A) as the site of a future clubhouse, 

marina, dock, and other recreational facilities on Belmont Bay 

in Occoquan Creek near its outlet into the Potomac River. 

A Declaration of Covenants for Belmont Park Estates was 

recorded on September 1, 1960. The covenants, which deal 

primarily with restrictions on lot use and easements, do not 

reference Parcel A or any other common property. No provision 

for a community association, either voluntary or mandatory, is 
contained in these covenants. Sometime after the covenants were 

recorded, the owner/developer abandoned the project leaving the 

majority of the lots in the subdivision unsold. 

On February 24, 1973, the new owner of Parcel A transferred 

it to a trust, naming James A. Foster, Marvin E. Lear, and 

Marshall L. Ware, three resident lot owners, as trustees.1 The 

trust is for the benefit of all lot owners in Belmont Park 

Estates. The trust deed recites various powers of the trustees, 

but imposes upon them no express duties to enforce those powers. 

Among the powers given to the trustees is the power to appoint 

successor trustees, to restrict access to Parcel A to those lot 

owners in the subdivision who pay “a uniform charge as 

determined by the trustees . . . to pay expenses incurred in the 

ownership, maintenance and improvement of the property,” and to 

create a governing board of lot owners. The deed further 

provides that the trustees are “to have no personal liability as 

a trustee for any act or omission in connection with said 

property, except for . . . acts committed with malice or in bad 

faith.” 

 

1

When Foster sought to acquire title to a vacant lot 

adjoining his home, he learned that Parcel A and the unsold lots 

in the subdivision had been acquired by the new owner some time 

after the owner/developer had abandoned the project. Foster and 

the new owner subsequently entered into a joint venture to 

market the unsold lots. 

2
Pursuant to the terms of the trust deed referencing a 

governing board, the trustees called a meeting of the lot owners 

and established Belmont Bay Community Associates (Associates), 

an unincorporated association. Gail Stepp, a resident lot 

owner, was elected as Associates’ first president. The minutes 

and other records of Associates indicate that it was initially 

and principally concerned with the maintenance and improvement 

of Parcel A, frequently referred to as “the park,” and the 

imposition of a maintenance fee for that purpose. Over time, 

however, Associates expanded the scope of its activities to 

include enforcement of the covenants, sponsoring civic and 

social functions, involvement in local planning and land use 

issues, and cooperation and encouragement of efforts by Foster 

and others to market the unsold lots in the subdivision. The 

widening scope of the activities of Associates caused some 

friction among resident and nonresident lot owners. 

In November 1986, Stepp was named a successor trustee after 

Ware moved out of the subdivision. The deed in the record to 

this effect appears to have been filed on April 23, 1987. On 

September 29, 1993, apparently related to the growing discord 

among lot owners over the role and authority of Associates, 

Stepp and Marie Stepp, his wife, submitted a letter of 

resignation from Associates. 

3
In 1994, the Belmont Bay Community Association, Inc. (the 

Association), a Virginia non-stock corporation, was chartered 

and assumed the duties of the governing board called for in the 

trust deed. Marie Stepp became treasurer and a board member of 

the Association. Associates’ assets were transferred to the 

Association on May 22, 1994. 

Disputes over the role and authority of the Association 

continued and a controversy developed over the selection of 

candidates for election to the Association’s board in 1995. 

Apparently in connection with this controversy, some members of 

the Association asserted that there was no record of Stepp’s 

selection as a substitute trustee. Ware was asked by the 

Association to submit a letter of resignation as trustee, which 

he did on May 31, 1995. A notation in the minutes of the 

December 15, 1995 board meeting indicates that “Carol Ann Wright 

has accepted the position of Trustee.”2

On February 4, 1997, Stepp, both individually as a lot 

owner and as a trustee, Marie Stepp as a lot owner, and Ralph 

Edwards, both individually as a lot owner and “for the use and 

benefit of Belmont Bay Community Associates,” and Patricia 

 

2

No formal action to record Wright’s selection as a trustee 

was taken at this time. Subsequent to the initiation of the 

suit from which this appeal arises, a deed was filed naming 

Wright as successor trustee replacing Ware and naming Polifko as 

successor trustee replacing Lear. 

4
Edwards as a lot owner, filed an amended bill of complaint 

against the Association, Foster and Lear, both individually and 

as trustees, and seven individual lot owners including Wright 

and Michael Polifko.3 In essence, the Stepps and the Edwardses 

sought a declaration that the Association was not the governing 

board of the trust called for by the February 24, 1973 trust 

deed, and that it lacked the power to enforce the collection of 

dues from lot owners. They further sought a declaration that 

Wright was “not a duly appointed Trustee.” In addition, they 

sought an accounting of the funds collected by the Association 

and Associates, the removal of Foster and Lear as trustees, and 

damages from Foster and Lear for alleged breaches of their 

fiduciary duties.4

Characterized by the chancellor in her final opinion letter 

as a “firestorm,” the proceedings in the trial court, 

culminating in a six and one-half day ore tenus hearing, reveal 

the extent to which the dispute over conflicting interpretations 

 

3

The original bill of complaint had been filed on October 3, 

1996. The amended bill of complaint was filed in order to add 

additional lot owners as respondents in order to provide 

adequate notice to the beneficiaries of the trust. 

4

On April 11, 1997, in a preliminary hearing, the trial 

court granted partial summary judgment to Foster, Lear, and 

Wright, finding that the trustees did not have to act 

unanimously, but could act by majority vote. The chancellor 

also found that the trust in question is “a charitable trust.” 

5
of the trust deed, the duties of the trustees under that deed, 

the authority of the community associations, and the rights of 

the individual lot owners had devolved into a bitter and 

acrimonious community feud. For purposes of our resolution of 

this appeal, however, it is unnecessary to recount the full 

extent of the accusations and counter-accusations of the 

principal parties. It will suffice to say that the Stepps, the 

Edwardses, and their supporters opposed the efforts to expand 

the role of the Association beyond the maintenance and use of 

Parcel A as a “park” and viewed these efforts as intended to 

primarily benefit Foster and Lear individually. Foster, Lear, 

and their supporters maintained that these efforts were 

altruistic and were intended to benefit the entire community. 

After the chancellor issued preliminary findings in their 

favor, Foster, Lear, and Wright (the trustees) filed a motion to 

recover the attorney’s fees and expenses expended by them in 

defending the suit. The trustees specifically sought to recover 

these fees and expenses personally from the Stepps and the 

Edwardses (the beneficiaries). 

After receiving briefs from the parties, the chancellor 

issued a preliminary ruling. In a letter opinion dated June 5, 

1998, the chancellor recognized that, as an exception to the 

“American Rule” that attorney’s fees and costs generally are not 

recoverable by a prevailing litigant, a trustee who is required 

6
to defend in his capacity as trustee “without his own fault” is 

entitled to be reimbursed for attorney’s fees and expenses 

incurred in the litigation. Willson v. Whitehead, 181 Va. 960, 

965, 27 S.E.2d 213, 216 (1943). The chancellor, relying on 

Willson, accepted the trustees’ argument that because “there is 

no trust fund within the control of the court but, rather, the 

trust is non-liquid realty,” the burden of reimbursing the 

trustees should fall on the cestuis que trust, i.e., the 

beneficiaries who sued the trustees, personally. 

After receiving briefs and exhibits from the parties, the 

chancellor held an ore tenus hearing to determine the 

reasonableness of the attorney’s fees and “expenses” claimed by 

the trustees. In an opinion letter dated November 23, 1998, the 

chancellor found that the attorney’s fees were reasonable and, 

after making minor adjustments to their claim for expenses and 

rejecting the beneficiaries’ claim for offset for reimbursement 

received by Foster under his homeowner’s liability policy, the 

chancellor awarded the trustees $158,343.50 in attorney’s fees 

and $14,153.71 in “costs” against the beneficiaries personally. 

Incorporating by reference the opinion letter dated the 

same day, a final decree dated November 23, 1998, confirmed the 

7
award of attorney’s fees and “expenses.”5 In addition, the 

chancellor memorialized the findings of fact and conclusions of 

law made earlier in the proceedings. Relevant to this appeal, 

the chancellor held that Stepp had been properly named as a 

substitute trustee, but had been removed and replaced by Wright, 

and that the current trustees are Foster, Wright, and Polifko. 

The chancellor further held that no evidence supported a finding 

that Foster and Lear had breached their fiduciary duties as 

trustees or acted in bad faith. Although the decree makes no 

express reference to the request for an accounting, it is clear 

by implication that this relief was denied. We awarded the 

Stepps this appeal. 

DISCUSSION 

The parties concentrated the majority of their argument on 

brief and the entirety of their oral argument on the issue 

whether an award of attorney’s fees and expenses could be made 

against an unsuccessful beneficiary/litigant personally. 

However, because a judgment in favor of the beneficiaries on the 

other assigned errors would necessarily render moot the 

 

5

Throughout the proceedings the parties and the chancellor 

use the terms “expenses” and “costs” interchangeably. For 

reasons that we will subsequently address, the proper term in 

the context of this case is “expenses.” 

8
trustees’ claim for attorney’s fees and expenses, we will first 

address these assigned errors. 

The Stepps have assigned error to the chancellor’s findings 

that Mr. Stepp is no longer a trustee, that the trustees were 

not required to act unanimously, and that Foster and Lear had 

not breached their fiduciary duties as trustees. Additionally, 

the Stepps assign error to the chancellor’s failure to order an 

accounting of Associates and the Association. Each of these 

challenges to the chancellor’s judgment involves and is 

determined by a disputed issue of fact. When the chancellor 

hears evidence ore tenus, her decree is entitled to the same 

weight as a jury verdict, and we are bound by the chancellor’s 

findings of fact unless they are plainly wrong or without 

evidence to support them. Rash v. Hilb, Rogal & Hamilton Co., 

251 Va. 281, 283, 467 S.E.2d 791, 793 (1996). The record 

adequately supports the chancellor’s findings of fact in favor 

of the trustees on each of these issues, and, accordingly, we 

will affirm the chancellor’s judgment on them. 

As framed by the Stepps, the remaining issue to be resolved 

is whether “[t]he trial court erred in entering a personal 

judgment against the Stepps in the amount of $172,497.21 as 

attorney’s fees and costs awarded to Foster, Lear and Wright.” 

For the reasons that follow, we hold that the award was proper, 

9
but that the chancellor erred in not assessing that award 

against the trust. 

The trustees’ premise for seeking to have the chancellor 

assess the award against the beneficiaries rather than the trust 

is that assessing the award against the trust would require 

mortgaging or liquidation of the only trust asset, Parcel A, 

and, thus cause undue hardship on the other beneficiaries. 

Accordingly, they assert that “under the circumstances of this 

case, that right and entitlement requires that the reimbursement 

come personally from the Stepps.” In support of this assertion, 

the trustees cite Willson and Cooper v. Brodie, 253 Va. 38, 480 

S.E.2d 101 (1997). In neither case, however, was the award to 

the trustee charged to the beneficiary/litigant personally. 

Indeed, we expressly held in Cooper that “the trial court erred 

in charging a portion of Cooper’s attorney’s fees and [expenses] 

to her individual interest. . . . [T]hat portion should be 

charged to the trust.” 253 Va. at 44, 480 S.E.2d at 104. 

(Emphasis added). 

The trustees contend, however, that because the corpus of 

the trust is real property, there is no fund from which the 

chancellor could have ordered payment of the attorney’s fees and 

expenses. They contend that this is so because the chancellor 

is without power to force the termination of the trust by 

ordering the sale of the real property as this would frustrate 

10
the purpose of the trust. Accordingly, they conclude that “the 

proper source of reimbursement is the Stepps.” We disagree. 

Unquestionably, in Willson we recognized an exception to 

the “American Rule” that litigants bear the burden of their own 

expenses in litigation. However, as we explained in Ward v. 

NationsBank, 256 Va. 427, 441, 507 S.E.2d 616, 624 (1998), 

“[t]he correct application of Willson is that a trustee, who has 

the duty to defend the actions challenged as detrimental to the 

trust, is entitled to attorney’s fees when he has been called on 

to defend himself against a charge of dereliction of duty and 

there is neither substantial evidence that the trustee wasted or 

mismanaged the trust nor evidence of any conduct warranting the 

removal of the trustee. . . . [W]here a trustee has a good faith 

basis for defending a suit challenging his actions as trustee, 

attorney’s fees and [expenses] incurred in the defense of the 

suit should be charged against the trust.” (Emphasis added.) 

See also Cooper, 253 Va. at 44, 480 S.E.2d at 104. 

That the corpus of a trust consists of real property rather 

than liquid assets does not remove those assets from the control 

of the chancellor. Nor is it controlling that an award of 

attorney’s fees and expenses to a trustee who has successfully 

defended the interests of the trust might result in diminution 

of the corpus and thereby frustrate the grantor’s intention. 

Nothing in our prior case law suggests such limitations on the 

11
ability of the chancellor to make an award from the corpus of a 

trust, charitable or otherwise, reimbursing a trustee for 

expenses incurred in representing the trust. Moreover, in the 

present case the record does not establish that making an award 

of the trustees’ expenses from the trust corpus would 

necessarily terminate the trust as the trustees suggest. 

There is no dispute here that because the trustees had a 

duty to defend the suit and the chancellor found no breach of 

their fiduciary duties, they are entitled to recover their 

expenses incurred in the defense of the suit. As we previously 

noted in footnote 5, supra, the parties and the chancellor use 

the terms “expenses” and “costs” interchangeably. To the extent 

that it might appear we draw no distinction between these terms 

in this case, a further discussion of the nature of the 

chancellor’s judgment is necessary. 

In this case, we are not concerned with an award of costs 

as contemplated by Code § 17.1-601, which provides, in part, 

that “the party for whom final judgment is given in an action or 

motion shall recover his costs against the opposite party.” Nor 

are we concerned with the distinctions we necessarily draw 

between costs essential for the prosecution of a suit, such as 

filing fees or charges for service of process, and incidental 

expenses incurred in an attorney’s representation of clients in 

the form of expert witness fees, express mail service, 

12
messengers, meals, law clerk temporaries, computer-based legal 

research, library research, photocopies, parking, taxicabs, 

telephone calls, and transcript preparation in appropriate 

cases. See Advanced Marine Enterprises v. PRC Inc., 256 Va. 

106, 126, 501 S.E.2d 148, 160 (1998); see also Lansdowne 

Development Company v. Xerox Realty Corp., 257 Va. 392, 403, 514 

S.E.2d 157, 163 (1999)(discussing award of “all litigation 

expenses” under contract). 

While a portion of the chancellor’s award in the present 

case reimburses the trustees for some of the items of expense 

listed above that we rejected in Advanced Marine, here we are 

not concerned with an award of what are commonly referred to as 

“court costs.” Rather, we are concerned with “expenses” of 

trustees incurred in defending a suit brought against them by 

beneficiaries of the trust. In that context, we apply our 

holding in Willson as requiring that the trustees be held 

financially harmless in that “they ought not in justice and good 

conscience to be put to any expense out of their own moneys 

. . . [and] if it appears . . . that they have sustained charges 

and expenses beyond the costs of the suit, as between solicitor 

and client, the court will order such further expenses properly 

incurred to be paid to them.” Willson, 181 Va. at 965, 27 

S.E.2d at 216. Accordingly, here we are concerned with any 

reasonable expense of the trustees beyond and above their 

13
attorney’s fees, that they may have incurred as a result of 

being required to defend this suit. In short, here the 

chancellor properly awarded expenses in the unique context of 

trustees defending a suit brought by beneficiaries of the trust 

so as to hold them financially harmless.6

CONCLUSION 

For these reasons, we will reverse that portion of the 

chancellor’s judgment making the beneficiaries personally liable 

for the attorney’s fees and expenses awarded to the trustees, 

modify the judgment to place the liability for that award on the 

trust, and enter final judgment for the trustees. 

 Affirmed in part,

reversed and modified in part,

 and final judgment. 

 

6

Moreover, because the amount of their expenses is not 

challenged on appeal, the trustees are entitled to recover those 

expenses as awarded by the chancellor’s judgment. We stress 

that our affirmance of the judgment in this case should not be 

interpreted as permitting an award of similar incidental 

expenses in a different litigation context. 

14