Present: All the Justices 

KENNETH A. DAVIS 

v. Record No. 050215 OPINION BY JUSTICE ELIZABETH B. LACY 

 November 4, 2005 

STEPHEN HOLSTEN, ET AL. 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Stanley P. Klein, Judge 

In this appeal, Kenneth A. Davis asserts that the trial 

court erred in ruling that substantial compliance does not 

apply to an escrow agreement obligating him to remove and 

replace synthetic stucco siding and rotten wood from a house 

and seeks a reversal of the trial court's finding that he did 

not comply with the terms of the agreement. Because we 

conclude that the trial court was correct in its application 

of the law and that its findings of fact are supported by the 

record, we will affirm the judgment of the trial court. 

FACTS AND PROCEEDINGS 

On July 11, 2002, Davis contracted to sell his Fairfax, 

Virginia, home to Stephen E. and Tami S. Holsten. At the time 

of contracting, the house was coated with Exterior Insulation 

Finishing System (EIFS), a type of synthetic stucco, which had 

caused water damage to the home. Paragraph 33 of the sales 

contract stated that prior to the date of settlement, Davis 

would "have or cause to have the Stucco replaced with hard 

coat Stucco." If the repairs were not made prior to 
2

settlement, Davis would escrow $50,000 until "repairs are made 

and Stucco is replaced along with any rotted or damaged wood." 

Davis had not made the repairs by the date of settlement; 

thus, he, the Holstens, and Virginia Settlement Group, L.L.C. 

(VSG), an escrow agent, executed a contract entitled "Escrow 

Agreement" (the Agreement). Paragraph 2 of the Agreement 

incorporated the provisions of Paragraph 33 of the sales 

contract and required Davis to deliver $50,000 to VSG at 

settlement and to engage a contractor to do the work within 

ten days of the execution of the Agreement. Under the 

Agreement, when the obligations set out in Paragraph 2 were 

completed, VSG would release the escrowed funds to Davis. If 

the obligations were not completed within one year, VSG would 

pay the escrowed funds to the Holstens upon their written 

notification that the repairs and replacement were not 

completed.*

 Paragraph 4 of the Agreement also provided that 

Davis would indemnify the Holstens for losses, damages, costs, 

and attorney's fees associated with completing the 

reinstallation. 

On August 19, 2002, Davis hired a contractor to perform 

the work required under the Agreement. The work did not 

progress smoothly. In an exchange of correspondence in early 

 *

 The parties later amended the escrow agreement to allow 

Davis one year and one month to complete the work. 
3

2003, the Holstens notified Davis of their dissatisfaction 

with the contractor's progress, stating the work was 

" 'complete' but not done." In a February 6, 2003 letter, 

Davis informed the Holstens that he had inspected the 

reinstallation and believed he was entitled to the escrowed 

money. He stated that he had contracted for the repair work 

within ten days of closing and that "[t]he stucco is replaced 

along with any wood." Davis told the Holstens he expected "no 

delays" from them. 

By a letter of the same date, Davis reported to VSG that 

"the repairs are now completed" and that it should consider 

the letter as Davis' demand for release of the escrowed funds. 

In the letter, Davis acknowledged matters of disagreement 

between himself and the Holstens but asserted that the 

Agreement does not allow withholding release of the funds 

"over a few very small details." 

VSG refused to release the funds, stating that Davis' 

demand "did not create an absolute right to receive" the funds 

and that it could not release the funds "unless and until it 

is clear that the terms of the escrow have been met." Davis 

then filed a Bill of Complaint against the Holstens and VSG 

for specific performance of the Agreement and for breach of 

contract. He contended that since he had performed, or at 

least substantially performed, all of his obligations under 
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the Agreement, the Holstens and VSG had breached their duty to 

him by failing to release the $50,000 in escrow. Prior to 

trial, VSG paid into court the escrowed funds and was 

dismissed as a party. 

At trial, various experts testified regarding the stucco 

reinstallation. Ronald E. Wright, an expert in engineering 

and in providing estimates for costs related to residential 

construction, testified on behalf of Davis. The trial court 

refused to allow Wright to testify whether, in Wright's 

opinion, the work the Agreement required was "substantially 

complete." The trial court concluded such testimony was not 

relevant; the contracting parties "could have said substantial 

performance . . . . But the parties didn't do that . . . . 

Every contract has a term of reasonableness that is part of it 

. . . . But that is a far cry from substantial completion." 

Davis objected to this ruling. Wright was allowed to testify 

that he estimated the total cost to repair the installation 

was $4,692 and that apart from the specific repairs about 

which he had testified, the installation was "complete." 

Stanley Yeskolski, a certified EIFS inspector, testified 

for the Holstens. Prior to the litigation, the Holstens had 

engaged Yeskolski to inspect the property and prepare a stucco 

inspection report. At trial, Yeskolski testified on proper 

stucco reinstallation procedures and on the shortcomings of 
5

the repair work. He testified that, among other things, 

crucial expansion joints were not installed at the front of 

the house and all the EIFS had not been removed from the 

exterior of the home. Yeskolski did not "think the 

installation was complete" because of the elements left out or 

performed incorrectly. 

The Holstens also called Ralph D.(Donnie) Davis, a 

specialist in EIFS repair and restoration. Based on his 

inspection of the home prior to the reinstallation and his 

visual observations of the home after reinstallation, he 

opined that all of the rotten wood under the synthetic stucco 

had not been removed. Donnie Davis, like Yeskolski, 

identified a number of problems with the stucco reinstallation 

and recommended "completely removing it, put[ting] it in the 

dumpster, and start[ing] over" at a cost he estimated to be in 

excess of $50,000.

 At the close of Davis' case in chief, the trial judge 

granted the Holstens' Motion to Strike Count I for specific 

performance because VSG had paid the funds into court and was 

no longer a party to the case. After the parties rested, the 

trial court, again relying on the language of the Agreement, 

concluded that the greater weight of the evidence did not show 

that the conditions for release of the escrowed funds were met 

because EIFS stucco remained under a bay window and control 
6

and expansion joints reasonably necessary for appropriate 

repairs had not been installed. Accordingly, the trial court 

held that Davis had not carried his burden of proof to show 

that the Holstens had breached the Agreement and entered 

judgment in favor of the Holstens. From that decision, Davis 

appeals to this Court. 

DISCUSSION 

Although Davis raises three assignments of error on 

appeal, his basic contention is that under the facts of this 

case, "a reasonable person could find that Davis completed, or 

at least substantially completed, his obligations under the 

escrow agreement." We begin by considering Davis' claim that 

the trial court erred in concluding that substantial 

compliance does not apply to the Agreement in this case. 

The Agreement

The Agreement the parties executed does not contain any 

reference to substantial completion; nevertheless, Davis 

contends that substantial compliance applies to all 

construction contracts and the Agreement is in the nature of a 

construction contract. Even if the Agreement is not a 

construction contract, Davis argues this Court should apply 

the principle of substantial compliance because performance 

here cannot be measured in terms of strict compliance in the 

absence of a definition of "completion." He also states that 
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the indemnity provision in Paragraph 4 of the Agreement is 

rendered meaningless if substantial compliance is inapplicable 

to this Agreement. We consider these arguments in order. 

A. 

Davis argues that this Court has held that substantial 

compliance applies to contracts and specifically to 

construction contracts. See, e.g., Buena Vista Co. v. 

McCandlish, 92 Va. 297, 304-05, 23 S.E. 781, 783-84 (1895); 

Kirk Reid Co. v. Fine, 205 Va. 778, 787-89, 139 S.E.2d 829, 

835-37 (1965). Davis asserts that because the Agreement in 

this case incorporated Paragraph 33 of the original sales 

contract, "it should be determined in terms of contract law 

and equity" and if a party has substantially received the 

benefit of the bargain, that party should be compelled to 

complete its part of the bargain by paying for the benefit 

received. Continuing, Davis argues that the obligations under 

the Agreement are in the nature of construction obligations 

and, therefore, the Agreement is a construction contract 

subject to the principle of substantial compliance. We 

disagree with Davis. 

 First, the Agreement is not a construction contract. The 

Agreement does not anticipate that Davis would engage in any 

construction activities. Davis' obligations under the 

Agreement were limited to contracting for the repair work 
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within ten days of the execution of the Agreement and 

depositing $50,000 with the escrow agent. Davis was entitled 

to the escrowed funds if within one year and one month the 

EIFS stucco was removed and replaced with hard coat stucco and 

the rotted or damaged wood was removed and replaced. 

Construction activities were necessary to meet the obligations 

under the agreement; nevertheless, the Agreement was not a 

construction contract between Davis and the Holstens. The 

relevant construction contract was between Davis and the 

contractor he engaged to perform the repairs. 

 Similarly the parties' incorporation of Paragraph 33 of 

the sales agreement did not make the Agreement a sales 

contract. The sales contract was completed at closing. The 

Agreement was a separate contract and compliance or default 

under the Agreement had no effect on the sale of the house. 

B. 

The Agreement, as titled by the parties, was an escrow 

agreement. It set out specific conditions for the release of 

the escrowed funds and made no reference to or provision for 

substantial compliance with those conditions. We have not had 

occasion to consider whether an escrow agreement, a contract 

in which a third party holds property that is to be released 

to another party to the contract upon completion of certain 

conditions precedent, see Humphreys v. R. & M. R. R. Co., 88 
9

Va. 431, 451, 13 S.E. 985, 992 (1891), should be subject to 

substantial completion. 

Davis argues that courts have required parties to comply 

strictly with the provisions of an escrow agreement only when 

completion of the conditions precedent was straightforward. 

See, e.g., Jones v. Gregg, 293 S.W.2d 545, 551 (Ark. 1956) 

(describing a seller providing an abstract of good and 

marketable title); In re Creative Data Forms, Inc., 41 B.R. 

334, 336 (Bankr. E.D. Pa. 1984) (discussing a debtor 

defaulting on loan repayments); Commonwealth Land Title Ins. 

Co. v. 1616 Reminc Ltd. P'ship, 13 B.R. 948, 951 (Bankr. E.D. 

Va. 1981) (regarding a defendant who refused to release funds 

in escrow when the condition governing release was simply the 

passage of four years). Davis contends the conditions in this 

Agreement are not straightforward because the term 

"completion" is open to interpretation. Thus, Davis asserts 

that strict compliance should not be applied. 

We do not find Davis' arguments persuasive. Rather, we 

agree with the clear weight of authority that, unless the 

agreement provides otherwise, substantial performance will not 

be applied to an escrow agreement and compliance must be 

strict. See, e.g., Commonwealth Land Title Ins. Co., 13 B.R. 

at 951 (strictly construing term in escrow agreement which 

required disbursement of any remaining funds in escrow after 
10

four years from date of contracting); In re Creative Data 

Forms, Inc., 41 B.R. at 336-37 (declining to release $100,000 

held in escrow account for debtor because the debtor failed to 

make some repayments on money it had borrowed); Jones, 293 

S.W.2d at 551 (declining to apply substantial performance to 

release of escrowed funds, when release was conditioned upon 

sellers of real estate timely providing an abstract of good 

and marketable title); Love v. White, 363 P.2d 482, 484 (Cal. 

1961)(holding: "In this state the terms and conditions of an 

escrow must be performed. The doctrine of substantial 

performance does not apply, and no title passes prior to full 

performance of the terms of the escrow agreement."); Watts v. 

Mohr, 194 P.2d 758, 761 (Cal. Ct. App. 1948) (refusing to 

apply substantial performance and to order release of funds 

from escrow where one party had failed to deliver timely to 

escrow agent a $6000 note and deed of trust to complete real 

estate transaction); Taft v. Taft, 26 N.W. 426, 430 (Mich. 

1886) (holding: "performance of the condition must be 

absolute and accurate, and cannot be dispensed with on any 

otherwise substantial performance."); Hart v. Barron, 204 P.2d 

797, 808 (Mont. 1949) (finding part performance did not apply 

to escrow agreement for sale of land where buyer did not 

timely pay taxes or obtain a loan, both of which were 

conditions precedent to escrow agent delivering deed to 
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buyer); Valentine Oil Co. v. Powers, 59 N.W.2d 150, 157 (Neb. 

1953) (refusing to order release of funds in escrow and citing 

inapplicability of substantial performance to escrow 

agreements where a party to oil and gas escrow agreement 

failed to continue drilling for oil as required by agreement). 

Furthermore, we reject Davis' argument that we should not 

strictly apply the provisions of this Agreement because of 

uncertainty over the word "completion." A principle of 

interpretation applicable to escrow agreements applies to all 

such agreements, not just to some escrow agreements. As the 

trial court observed, it is not the province of the courts to 

add words to parties' contracts and their failure to provide a 

definition of "completion" does not provide a basis for 

applying a principle of construction other than that 

applicable to escrow agreements. 

C. 

Finally, we reject Davis' argument that strictly 

construing the Agreement negates the indemnity provision in 

Paragraph 4. Davis argues that Paragraph 4 obligates him to 

indemnify the Holstens if they had to complete the tasks of 

removing and replacing the EIFS stucco and rotten wood, even 

if Davis had received the escrowed funds. Paragraph 4, 

however, refers to situations in which the Buyer, the 

Holstens, has received some of the escrowed funds and 
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obligates Davis to "indemnify and hold harmless [the Holstens] 

from any loss or damages, including all costs and attorney's 

fees, as a result of any expense that [the Holstens] may incur 

in completing [Davis'] work as stated herein." As the trial 

court correctly stated, this provision protects the Holstens 

and makes Davis responsible in the event the cost of 

completing the work exceeds $50,000. 

In summary, the trial court correctly declined to apply 

substantial compliance to the Agreement and, accordingly, did 

not err in refusing to allow Davis' expert to testify 

regarding substantial completion of the repairs. 

The Evidence

 Davis also claims on appeal that the trial court erred in 

finding that he failed to complete his obligations under the 

Agreement. Because the trial judge heard the evidence ore 

tenus and was able to judge the credibility of the witnesses, 

we must afford his decree the same weight as a jury verdict 

and uphold his findings unless they are plainly wrong or 

without evidence to support them. See Shooting Point, L.L.C. 

v. Wescoat, 265 Va. 256, 264, 576 S.E.2d 497, 501 (2003) 

(citing Tauber v. Commonwealth, 263 Va. 520, 526, 562 S.E.2d 

118, 120 (2002); Chesterfield Meadows Shopping Ctr. Assocs., 

L.P. v. Smith, 264 Va. 350, 355, 568 S.E.2d 676, 679 (2002)). 

Further, we will construe the facts in the light most 
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favorable to the Holstens, who prevailed below. See Tauber, 

263 Va. at 525, 562 S.E.2d at 120 (citing Hoffman Family, 

L.L.C. v. Mill Two Assocs. P'ship, 259 Va. 685, 696, 529 

S.E.2d 318, 325 (2000)). 

 Davis argues that the trial court erroneously relied on 

the conditions the Holstens imposed in their correspondence 

with Davis and, thus, enlarged Davis' obligations when 

determining Davis failed to complete the Agreement. For 

example, although the Holstens sought a warranty for the 

repair work and a home inspection in that letter, the 

Agreement did not impose as a condition precedent to the 

release of the funds either an extended warranty on the stucco 

installation or a home inspection. Further, the Agreement 

made no mention of performance in a workmanlike manner. Thus, 

Davis concludes that the trial court imposed conditions not 

present in the Agreement on the release of the escrowed funds. 

 The record does not support Davis' contention. The trial 

court did not base its ruling on the Holstens' demands. 

Rather the trial court found the job incomplete based on 

expert testimony, uncontroverted at trial, that EIFS stucco 

was left under the bay window in violation of an express term 

of the Agreement and that some expansion joints, necessary for 

the replacement of the stucco, were not installed. Donnie 

Davis also testified that not all the rotten wood under the 
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stucco had been removed and replaced. Finally, Davis himself 

acknowledges that the contractor failed to remove EIFS stucco 

from beneath the bay window. 

 This record supports the trial court's conclusion that 

Davis did not carry his burden of proof in his breach of 

contract count to show that he had strictly complied with the 

provisions of the agreement and, therefore, that he was 

entitled to release of the funds. 

 For the foregoing reasons, we will affirm the judgment of 

the trial court. 

Affirmed.