Present: All the Justices 

DILIP R. PATEL 

 OPINION BY JUSTICE LEROY R. HASSELL, SR. 

v. Record No. 011913 June 7, 2002 

ANAND, L.L.C. 

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 

Clifford R. Weckstein, Judge Designate 

I. 

 In this appeal of a judgment entered in favor of a 

plaintiff against a defendant in an action for fraud, breach 

of fiduciary duty, and breach of contract, we consider whether 

the plaintiff introduced evidence to establish that it 

incurred damage to the value of its ground lease as a result 

of the defendant's conduct. 

II. 

 Plaintiff, Anand, L.L.C. (Anand), a Virginia limited 

liability corporation, filed its amended motion for judgment 

against Clifford Kent Allison, Deep Enterprises, Inc. (Deep 

Enterprises), and Dilip R. Patel. Nayan K. Bhatt and Dinesh 

K. Bhatt, members of Anand, filed a separate motion for 

judgment against Allison, alleging that he committed acts 

and/or omissions that constituted legal malpractice. The 

circuit court consolidated these actions and during the first 

day of a jury trial, Anand and the Bhatts settled their claims 

against Deep Enterprises. 
 At the conclusion of the trial, the jury returned a 

verdict in favor of Anand against Dilip Patel in the amount of 

$1,250,000 in damages for actual fraud, breach of fiduciary 

duty, and breach of contract. The jury awarded Anand $500,000 

in punitive damages against Dilip Patel, and the court reduced 

that award to $350,000 as required by Code § 8.01-38.1. The 

jury returned a verdict in favor of the Bhatts against Allison 

for $52,500 in compensatory damages and $100,000 in punitive 

damages, and that verdict is not challenged in this appeal. 

 Dilip Patel filed a petition for appeal and assigned 

error to six different rulings of the circuit court. We 

awarded Dilip Patel an appeal limited to one assignment of 

error. In spite of this Court's order that limited the issues 

in this appeal, Dilip Patel has included in his brief, under 

the guise of questions presented, assignments of error that we 

specifically rejected. We will not consider these so-called 

questions presented, and we remind counsel for Dilip Patel of 

their duty to comply with this Court's order. 

III. 

 Even though the record in this case is voluminous, we 

will only discuss those facts that are relevant to the narrow 

issue presented in this appeal. Deep Enterprises is a 

Virginia corporation. When Deep Enterprises was formed, Dilip 

Patel, president and director of Deep Enterprises, owned 50% 

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of its stock. Rajesh Patel, who also owned 50% of the 

corporation's stock, was the vice president, secretary, and a 

director of the corporation. 

 Deep Enterprises owned, as its only asset, the right to 

purchase a long-term ground lease from the Federal Deposit 

Insurance Corporation (FDIC). The ground lease, recorded 

among the land records in the City of Hampton, permitted the 

owner of the leasehold estate to use the land and improvements 

that are the subjects of the lease for a term of 99 years. An 

old hotel, which had been closed, was situated on the property 

that was the subject of the leasehold estate. 

 In late 1994 or sometime in 1995, Rajesh Patel approached 

Allison, who at that time was an attorney licensed to practice 

law in this Commonwealth. Rajesh Patel informed Allison that 

Rajesh Patel had been the successful bidder at an auction to 

purchase a ground lease from the FDIC.* The ground lease was 

for a period of 99 years, with 82 or 83 years remaining on the 

lease. 

 The FDIC required that Deep Enterprises pay $918,961 to 

purchase the ground lease, which included an $80,000 deposit 

that had been paid and an additional contingency fund for the 

removal of asbestos from the hotel situated on the property. 

 *

 Even though initially the Resolution Trust Corporation 

acquired ownership of the ground lease, the FDIC acquired the 

Resolution Trust Corporation's interests. 

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Dilip Patel and Rajesh Patel, purportedly acting on behalf of 

Deep Enterprises, were unable to raise this money and, 

therefore, Deep Enterprises undertook numerous dilatory 

efforts, including the filing of litigation in a federal 

district court, to delay the closing on the ground lease. 

Ultimately, Deep Enterprises and the FDIC reached a settlement 

that required Deep Enterprises to close on the ground lease 

contract on or before June 14, 1996, or it would forfeit the 

$80,000 deposit. 

 In the fall of 1995, Deep Enterprises caused two 

appraisals to be performed on the property. One appraisal, 

referred to as the Copeland appraisal, placed a fair market 

value on the property subject to the ground lease at 

$2,670,000. Another appraisal established the value of the 

same property at $500,000. 

 Colonial Downs, L.L.C., an entity that had constructed a 

horse race track in New Kent County, Virginia, had an interest 

in the acquisition of the ground lease. Gilbert D. Short, 

Colonial Downs' employee, made an offer to Deep Enterprises to 

purchase the ground lease in November 1995 for $1,000,000. 

Subsequently, Colonial Downs increased its offer to purchase 

the ground lease to $1,496,000. 

 In an effort to secure financing to close on the ground 

lease, in November 1995, Deep Enterprises sold 30% of its 

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shares to several English investors for $300,000. However, in 

late May 1996, Dilip Patel and Rajesh Patel were anxious 

because they were still unable to raise the capital necessary 

to purchase the ground lease, and they were worried that Deep 

Enterprises would forfeit the $80,000 deposit. They began to 

search frantically for additional investors. At the same 

time, Allison, Rajesh Patel, and Dilip Patel participated in a 

scheme to deceive the English investors and convinced them to 

forward an additional $300,000 to Deep Enterprises under the 

guise that the money was necessary to obtain an extension of 

the June 14, 1996 closing date from the FDIC. As a part of 

this scheme, Allison created a fictitious letter to lead the 

English investors to believe that Colonial Downs desired to 

purchase the ground lease promptly. 

 During his search for additional investors, Dilip Patel 

met Dinesh K. Bhatt and Nayan K. Bhatt, brothers who were 

physicians in Martinsville, Virginia. Upon Dilip Patel's 

directions, Allison forwarded a copy of the Copeland appraisal 

that valued the ground lease at $2,670,000 to Dinesh Bhatt and 

Nayan Bhatt. 

 During several conversations, Dilip Patel made the 

following representations to Dinesh Bhatt. The value of the 

ground lease was between $1,500,000 to $2,000,000. Colonial 

Downs was willing to purchase the ground lease for a price in 

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excess of $1,000,000. Dilip Patel had paid most of a sum of 

$200,000 to the FDIC as a deposit for a contract to purchase 

the ground lease. Dilip Patel would contribute $200,000, the 

Bhatts would contribute $700,000, and the sum of $900,000 

would be used by Deep Enterprises to acquire the ground lease. 

Deep Enterprises, in turn, would immediately transfer the 

property to Dinesh Bhatt, Nayan Bhatt, and Dilip Patel. 

 Even though the Bhatts had only known Dilip Patel for 

about three months, Dilip Patel convinced them to invest 

$700,000 in the plan to obtain ownership of the ground lease. 

Dilip Patel and Allison falsely assured Dinesh Bhatt that the 

shareholders of Deep Enterprises had unanimously agreed with 

the decision to transfer the corporation's interest in the 

ground lease to Dinesh Bhatt, Nayan Bhatt, and Dilip Patel. 

The Bhatts made their $700,000 investment, and the closing 

occurred on June 14, 1996. Later, Dilip Patel, acting on 

behalf of Deep Enterprises, but without the consent or 

knowledge of the English minority shareholders, conveyed Deep 

Enterprises' interest in the ground lease to Dinesh Bhatt, 

Nayan Bhatt, and Dilip Patel. Anand, a limited liability 

corporation formed by Dilip Patel and the Bhatts, acquired the 

ground lease. Subsequently, the English investors learned 

that they had been defrauded and contacted Dinesh Bhatt, who 

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was unaware of their involvement or the fraudulent acts of 

Allison, Rajesh Patel, and Dilip Patel. 

IV. 

 Dilip Patel argues that Anand failed to present evidence 

that would permit the jury to conclude that Anand suffered 

damage to its interest in the ground lease as a result of 

Patel's fraudulent acts. Patel contends that Anand failed to 

prove any loss between the difference in the value of the 

ground lease that it bargained for and the value of the ground 

lease that it actually received. Responding, Anand asserts 

that it presented evidence of the amount it paid for the 

ground lease, $900,000, and the amount of offers that 

prospective purchasers made for the ground lease. Anand also 

argues that it presented evidence regarding the renovation 

costs for the hotel on the property and the amount it paid in 

lease payments and in franchise and application fees. Anand 

also says that it presented evidence of the amount of 

mechanic's liens that encumbered the property, as well as 

evidence of litigation expenses from a separate lawsuit that 

challenged its legal interest in the ground lease. 

 We stated in Carstensen v. Chrisland Corp., 247 Va. 433, 

444, 442 S.E.2d 660, 666-67 (1994), the following principle 

that is equally pertinent here: 

 "In Long & Foster Real Estate, Inc. v. Clay, 

231 Va. 170, 343 S.E.2d 297 (1986), we considered 

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the measure of damages in a case where a fiduciary 

withheld information from its principal which, if 

disclosed, would have caused the principal to reject 

the transaction. In that case, we held that the 

measure of damages is the difference between the 

value of the item bargained for and the value of the 

item actually received. Id. at 175-76, 343 S.E.2d 

at 300-01, cited with approval in, Duvall, 

Blackburn, Hale & Downey v. Siddiqui, 243 Va. 494, 

498, 416 S.E.2d 448, 450 (1992)." 

We applied this principle in Prospect Development Co. v. 

Bershader, 258 Va. 75, 91, 515 S.E.2d 291, 300 (1999): 

 "Generally, a person who acquired property by 

virtue of a commercial transaction and who has been 

defrauded by false representations is entitled to 

recover as damages the difference between the actual 

value of the property at the time the contract was 

made and the value that the property would have 

possessed had the representation been true." 

 Applying this established principle, we hold that Anand 

failed to present evidence that would permit the jury to 

conclude that Anand suffered damage because it failed to 

obtain clear title to the ground lease in the fall of 1996. 

Anand failed to present evidence of the actual value of the 

ground lease that it bargained for – a ground lease which 

would have had a clear title – and the value of the ground 

lease that it actually received – a ground lease with a cloud 

on the title. The record simply does not contain this 

evidence. 

 Upon our review of the record, we hold that the only 

legally cognizable item of compensatory damage that Anand 

presented at trial was the sum of $23,148.77 that it incurred 

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in litigation expenses related to a lawsuit that Deep 

Enterprises filed against Anand in the Circuit Court of the 

City of Hampton. In that lawsuit, Deep Enterprises challenged 

Anand's legal interest in the ground lease. We observe that a 

party, required to act in the protection of his interests by 

bringing or defending an action against a third person, may 

recover attorney's fees incurred in that action against the 

original entity or person who breached a duty owed, in this 

instance, Dilip Patel. Prospect Development Co., 258 Va. at 

92, 515 Va. at 301; Fidelity Nat'l Ins. Co. v. Southern 

Heritage Ins., 257 Va. 246, 253-54, 512 S.E.2d 553, 557-58 

(1999); Owen v. Shelton, 221 Va. 1051, 1055-56, 277 S.E.2d 

189, 192 (1981); Hiss v. Friedberg, 201 Va. 572, 577-78, 112 

S.E.2d 871, 875-76 (1960); see Restatement (Second) of Torts

§ 914 (1977). And, we note that Dilip Patel did not challenge 

this element of damage in the circuit court. 

 Anand contends, however, that it incurred the following 

compensable damages as a result of Dilip Patel's acts: costs 

incurred in the renovation of the hotel, the costs of the 

ground lease payments, the costs associated with franchise and 

application fees for the hotel, and the costs of mechanic's 

liens that encumbered the property. We disagree. Anand 

failed to establish that Dilip Patel's actions were a 

proximate cause of these costs. See Murray v. Hadid, 238 Va. 

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722, 730-31, 385 S.E.2d 898, 903-04 (1989). For example, 

Anand incurred costs and expenses associated with the ground 

lease payments and fees, as well as renovation expenses, in 

its attempt to develop the hotel. Additionally, the 

mechanic's liens were not proximately caused by any act 

committed by Dilip Patel. 

V. 

 We will reverse that portion of the judgment that 

included damages that are not recoverable and we will reduce 

the jury's verdict of compensatory damages to $23,148.77, and 

we will enter final judgment in favor of Anand. We will also 

enter final judgment in favor of Anand on the punitive damage 

award because that award is not the subject of any assignment 

of error in this appeal. 

Affirmed in part, 

reversed in part, 

modified in part, 

and final judgment. 

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