Source: https://caselaw.findlaw.com/va-supreme-court/1663940.html
Timestamp: 2019-04-22 21:12:14+00:00

Document:
NORFOLK SOUTHERN RAILWAY COMPANY v. E.A. BREEDEN, INC.
Present: KINSER, C.J., LEMONS, MILLETTE, MIMS, McCLANAHAN, and POWELL, JJ., and RUSSELL, S.J.
Norfolk Southern Railway Company (Norfolk Southern) appeals from the judgment of the circuit court granting permanent injunctive relief to E.A. Breeden, Inc. (Breeden) requiring Norfolk Southern to restore a private grade crossing over its railway tracks in Rockingham County. We will affirm the judgment of the circuit court.
The current action involves a private grade crossing across Norfolk Southern's railway tracks created pursuant to a crossing agreement dated March 26, 1940, and recorded in the circuit court clerk's office of Rockingham County (Crossing Agreement). The Crossing Agreement was entered into by the owners of the 156–acre T.L. Yancey estate (Yanceys) and Norfolk & Western Railway Company (Norfolk & Western), a predecessor to Norfolk Southern.
[The Yanceys] covenant and agree that the private crossing to be constructed hereunder shall be used solely in their own interest and for their own benefit, and that they will indemnify and save harmless the Railway Company from any and all claims for damage or injury to person, including death, or property, resulting from their use of said grade crossing.
In 1996, Breeden acquired title to a 2.56 acre tract that was originally a part of the T.L. Yancey estate tract and, in 1999, leased a house and yard located upon this tract to Todd and Michelle Ditton. In 2001, Todd Ditton was injured when his vehicle was struck by a Norfolk Southern train at the crossing. Ditton filed an action against Norfolk Southern and the parties settled the action in 2005.
In 2006, Norfolk Southern filed an action against Breeden seeking to recover the settlement amount as well as the costs and attorney's fees associated with the Ditton litigation based on the indemnity clause of the Crossing Agreement (indemnification litigation). The circuit court ruled that Norfolk Southern was not entitled to indemnification or contribution from Breeden. In reaching its decision, the circuit court ruled that the Crossing Agreement was a covenant running with the land, and that Ditton, as lessee of Breeden, was a successor to the Crossing Agreement and had a right to use the crossing.
The circuit court further ruled that Ditton's use of the crossing was not attributable to Breeden and, therefore, Breeden was not obligated under the Crossing Agreement to indemnify Norfolk Southern for the costs incurred and damages paid by Norfolk Southern arising from Ditton's use of the crossing. Norfolk Southern filed a petition for appeal with this Court, which petition was refused by an unpublished Order. See Norfolk Southern Railway Company v. E.A. Breeden, Inc., Record No. 080429 (June 13, 2008).
At some time subsequent to the conclusion of the indemnification litigation, Norfolk Southern removed the private crossing. Breeden filed a complaint against Norfolk Southern seeking a permanent injunction requiring Norfolk Southern to replace and maintain the crossing. Breeden also sought compensatory and punitive damages alleging breach of contract, tortious interference with the right of way, and nuisance.
Breeden filed a motion for summary judgment seeking a judgment that Norfolk Southern was obligated to maintain the crossing and an order requiring Norfolk Southern to replace the private crossing on the grounds that the circuit court's prior holdings were binding under principles of collateral estoppel. Norfolk Southern opposed the motion for summary judgment on the grounds that there were genuine issues of material fact as to whether Breeden sustained actual injury or damages to recover on a breach of contract claim and that Breeden was not entitled to injunctive relief because it had not presented evidence of irreparable harm and lack of an adequate remedy at law. In addition, Norfolk Southern argued that Breeden's motion for summary judgment failed to address the affirmative defenses raised by Norfolk Southern, including estoppel, laches, unclean hands, and first material breach.
The circuit court denied Breeden's motion for summary judgment and held an evidentiary hearing on Breeden's request for permanent injunctive relief. Upon consideration of the evidence presented at the hearing and certain concessions made by Norfolk Southern, the circuit court granted the request for injunctive relief requiring Norfolk Southern to replace the crossing.
Norfolk Southern argues that the circuit court erred in overruling the demurrer and enforcing the Crossing Agreement because Breeden committed the first material breach of the Crossing Agreement, thereby precluding Breeden from enforcing the agreement. See, e.g., Countryside Orthopaedics, P.C. v. Peyton, 261 Va. 142, 154, 541 S.E.2d 279, 285 (2001); Horton v. Horton, 254 Va. 111, 115–16, 487 S.E.2d 200, 203–04 (1997).
We have not previously applied the doctrine of first material breach to vested property rights granted under a real covenant. Indeed, this doctrine is ill-suited to address situations in which the covenantor seeks to excuse its unilateral termination of real property interests held by other landowners. Nevertheless, the circuit court did not err in concluding there was no material breach by Breeden. In previously determining the enforceability of the indemnity clause of the Crossing Agreement in the indemnification litigation, the circuit court ruled that the Crossing Agreement is a valid covenant running with the land such that Breeden, as a successor to the Yanceys, was entitled to the use and benefits of the crossing.3 Additionally, the circuit court ruled that Ditton, as Breeden's lessee, was a successor under the terms of the Crossing Agreement and, therefore, had a legal right to utilize the crossing independent of whether Breeden permitted such use by Ditton. The circuit court further ruled that “Ditton's use of the crossing did not solely benefit [Breeden] but benefited Ditton independently.” Since the Crossing Agreement expressly “grant[ed] unto the [Yanceys and their successors] the right and privilege” to use the crossing “solely in their own interest and for their own benefit,” Ditton's use of the crossing for his own benefit was not a violation of the Crossing Agreement.
Norfolk Southern also argues the circuit court erred in granting the injunction without requiring Breeden to prove harm and without balancing the equities. “[T]he decision to grant or deny an injunction is within the discretion of the trial court, and it will not be disturbed on appeal unless it is plainly wrong.” Snead v. C & S Props. Holding Co., 279 Va. 607, 613, 692 S.E.2d 212, 215 (2010).
At the hearing, Breeden introduced evidence regarding its use of the crossing and safety concerns caused by the removal of the crossing due to the lack of ingress or egress during times of high water or flooding that blocked other access. Although Norfolk Southern proffered evidence through cross-examination of Breeden's witness regarding the lease payments received by Breeden before and after the removal of the crossing and an appraisal obtained by Breeden estimating a diminution in value of $7,500 resulting from the removal of the crossing, the circuit court disallowed the evidence.
We have previously held that an injunction is the appropriate remedy for enforcement of a real property right. See, e.g., Snead, 279 Va. at 608, 616, 692 S.E.2d at 212, 216; Pizzarelle v. Dempsey, 259 Va. 521, 532, 526 S.E.2d 260, 266 (2000); Sonoma Development, Inc. v. Miller, 258 Va. 163, 169–70, 515 S.E.2d 577, 580–81 (1999); Boerner v. McCallister, 197 Va. 169, 172, 89 S.E.2d 23, 25 (1955). This is so because the violation of a real property interest is deemed “ ‘irreparable and the owner protected in the enjoyment of his property whether such be sentimental or pecuniary.” ’ Levisa Coal Co. v. Consolidation Coal Co., 276 Va. 44, 62, 662 S.E.2d 44, 54 (2008) (quoting Boerner, 197 Va. at 172, 89 S.E.2d at 25)).6 In such a case, we have noted “that the question was not one of reasonableness, nor was it a case in which the equities should be balanced.” Snead, 279 Va. at 615, 692 S.E.2d at 216.
We have also recognized that a party seeking to enforce a real covenant is generally entitled to the equitable remedy requested upon showing the validity of the covenant and its breach. Perel v. Brannan, 267 Va. 691, 700, 594 S.E.2d 899, 904 (2004). See, e.g., Sonoma Development, 258 Va. at 169–70, 515 S.E.2d at 580–81 (evidence with regard to an appropriate remedy in equity is unnecessary where a restrictive covenant was valid and the breaching party had notice of the covenant); Marks v. Wingfield, 229 Va. 573, 577, 331 S.E.2d 463, 465 (1985) (trial court erred in denying injunction to enforce restrictive covenant where restrictions were reasonable and enforceable); Spilling v. Hutcheson, 111 Va. 179, 183, 68 S.E. 250, 252 (1910) (“The injunction in this case is granted almost as a matter of course upon a breach of the covenant. The amount of damages, and even the fact that the plaintiff has sustained any pecuniary damages, are wholly immaterial.”).
A defendant may avoid the imposition of the equitable remedy sought for violation of a real covenant “if such a remedy would create a hardship or injustice that is out of proportion to the relief sought, if performance by the defendant would be impossible, or if the enforcement of the decree would be unusually difficult for the court.” Perel, 267 Va. at 700, 594 S.E.2d at 904–05 (footnotes omitted). “However, on the questions of hardship, injustice, or impossibility, the defendant bears the burden of providing the elements of the defense.” Id. at 700, 594 S.E.2d at 905. Nevertheless, “[t]he doctrine of ‘balancing of equities' must be viewed in light of our long-standing pronouncement that a private landowner is to be protected for injuries he may sustain ‘even though inflicted by forces which constitute factors in our material development and growth.” ’ Blue Ridge Poultry & Egg Co. v. Clark, 211 Va. 139, 144, 176 S.E.2d 323, 327 (1970) (quoting Townsend v. Norfolk Ry. & Light Co., 105 Va. 22, 49, 52 S.E. 970, 979 (1906)).
Based on the rulings of the circuit court in the indemnification litigation, Breeden was the successor in interest to the Crossing Agreement, a valid covenant running with the land, under which Norfolk Southern was obligated to construct and maintain the private grade crossing. It is undisputed that Norfolk Southern had notice of the covenant and removed the crossing to which Breeden was granted “the right and privilege.” Therefore, Breeden was entitled to an injunction requiring the replacement of the crossing unless Norfolk Southern proved “such a remedy would create a hardship or injustice that is out of proportion to the relief sought, if performance by the defendant would be impossible, or if the enforcement of the decree would be unusually difficult for the court .” Perel, 267 Va. at 700, 594 S.E.2d at 904–05 (footnotes omitted).
Norfolk Southern contends that the circuit court erred in hearing Breeden's request for a permanent injunction prior to the trial scheduled for Breeden's breach of contract claim because it deprived Norfolk Southern of its right to a jury.
When the circuit court scheduled the hearing on Breeden's request for an injunction, Norfolk Southern made an objection to the circuit court's decision to proceed with the injunction hearing prior to the scheduled trial, which the circuit court overruled. Thereafter, Norfolk Southern filed a motion to reconsider on the grounds that the court's action violated Rule 3:22(e) and deprived Norfolk Southern of its right to a jury trial on issues of fact common to the claims for injunctive relief and damages. The circuit court denied the motion to reconsider and proceeded with a hearing on Breeden's request for a permanent injunction.
It is well-established that a party has no right to a jury trial on a claim for equitable relief. “[W]hen a party seeks injunctive relief, he must sue in equity. In equity, a litigant has no constitutional right to trial by jury, and, absent a plea in equity, no statutory right.” Wright v. Castles, 232 Va. 218, 222, 349 S.E.2d 125, 128 (1986) (citations omitted); see also Code § 8.01–336(D). Norfolk Southern did not file a plea in equity. Therefore, Norfolk Southern did not have a constitutional or statutory right to a jury on Breeden's claim for injunctive relief.
In any case when there are both jury and non-jury issues to be tried, the court shall adopt trial procedures and a sequence of proceedings to assure that all issues properly heard by the jury are decided by it, and applicable factual determinations by the jury shall be used by the judge in resolving the non-jury issues in the case.
Under the plain language of the Rule, it only applies when there are jury issues to be tried. Although Breeden's breach of contract claim required it to prove damages resulting from the breach, Breeden was not required to prove monetary damages or quantify the harm resulting from the removal of the crossing to seek an injunction. See Sonoma Development, 258 Va. at 169–70, 515 S.E.2d at 580–81; Spilling, 111 Va. at 183, 68 S.E. at 252. Therefore, there were no factual determinations before the circuit court at the injunction hearing that were common to the breach of contract claim. Accordingly, Rule 3:22(e) was not applicable.
Following the injunction hearing, Breeden moved for reimbursement of attorney's fees pursuant to the sanction provisions of Code § 8.01–271.1 on the grounds that Norfolk Southern asserted there were genuine issues of material facts in dispute in opposition to the motion for summary judgment but failed to produce any evidence at the hearing on the injunction to support its defenses to the injunction, thus rendering the injunction hearing unnecessary. Finding no violation of Code § 8.01–271.1, the circuit court denied Breeden's motion. Breeden assigns cross-error to this ruling and contends the circuit court abused its discretion in denying its motion for attorney's fees.
In response to Breeden's motion for summary judgment, Norfolk Southern filed an opposition in which it asserted that Breeden must prove damages as an essential element of its case, and irreparable harm and lack of an adequate remedy at law for an injunction, all of which were in dispute. Additionally, Norfolk Southern asserted that there were affirmative defenses pled by it, including the doctrine of first material breach, estoppel, laches, and unclean hands on which issues of fact remained. Although Norfolk Southern did not contest laches and estoppel at the hearing, it insisted that the circuit court should determine whether Breeden proved actual injury and lack of an adequate remedy at law. Norfolk Southern also argued the circuit court should weigh the burden to Norfolk Southern if injunctive relief was awarded against the harm to Breeden if it was not awarded.
Code § 8.01–271.1 provides, in pertinent part, that signature of an attorney on any pleading, written motion, or other writing constitutes a certificate that “to the best of his knowledge, information and belief, formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law” and that “it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.” The circuit court's decision to deny the motion for sanctions will only be reversed for an abuse of discretion. Northern Va. Real Estate v. Martins, 283 Va. 86, 103, 720 S.E.2d 121, 129 (2012).
We cannot conclude the circuit court abused its discretion. Norfolk Southern opposed the motion for summary judgment, among other reasons, on the grounds that Breeden was required to prove actual damages and an inadequate remedy at law on which it asserted there were disputed issues of fact. Norfolk Southern continues to maintain on appeal that the circuit court erred in failing to require proof of actual injury, the lack of an adequate remedy at law, and in failing to balance the equities in considering the injunction. Although Norfolk Southern chose not to call its corporate witnesses and contest the issues of laches and estoppel at the injunction hearing and did not prevail on its arguments regarding Breeden's burden to prove damages, there is no evidence that Norfolk Southern's asserted defenses were not well-grounded or interposed for an improper purpose.
For the foregoing reasons, we will affirm the judgment of the circuit court.
The following essential facts are undisputed: The predecessors in title of the present parties entered into a “Crossing Agreement” in 1940 that granted reciprocal benefits and imposed reciprocal obligations upon them. The Railroad's benefit was the consolidation of two former crossings into one. The landowners' benefit was the Railroad's obligation to provide a new, unguarded crossing over its right-of-way to the landowners' property and to maintain it in perpetuity. The landowners' reciprocal obligation was to ensure that the crossing was a private one that “shall be used solely in their own interest and for their own benefit.” The landowners also agreed to “indemnify and save harmless the [Railroad] from any and all claims for damage or injury to [any] person, including death, or property, resulting from their use of said grade crossing.” The landowners also agreed that “the said private crossing shall not be converted at their demand or request or with their consent into a public crossing.” The agreement was made binding upon the parties' “heirs, executors, administrators, successors and assigns.” The agreement was recorded among the land records and constitutes a covenant running with the land.
The present parties both insist upon their benefits under the 1940 agreement, but both have refused to honor the reciprocal obligations it imposes upon them. First, the present owner leased a part of the property to a residential tenant without imposing any limitation on the tenant's right to use the crossing. The tenant was injured while using the crossing and sued the Railroad. The Railroad settled the case with the tenant and claimed indemnity from the owner under the 1940 agreement. The circuit court held that the indemnity agreement was inapplicable because the tenant had an independent right to use the crossing and that his use at the time of the accident was not as agent or for the benefit of the owner. The Railroad, taking the position that the owner was now accepting all of its benefits under the 1940 agreement while successfully evading all its reciprocal obligations, closed the crossing. Such was the posture of the case when it came before the circuit court on the owner's claim for a permanent injunction.
Permanent injunctions and decrees of specific performance are the most drastic remedies courts of equity are empowered to award, but they are nevertheless equitable remedies. They are to be imposed only where, after careful consideration of the facts and circumstances of each particular case, the chancellor determines that such remedy is necessary to attain the most equitable result.
Here, the circuit court refused to hear evidence of the facts and circumstances relating to the propriety of an injunction, apparently because the court regarded injunctive relief automatically justified by the owner's showing that the Railroad had closed the crossing. The court may have relied on statements we made in an earlier case involving breach of a restrictive covenant, where we said that in such a case an injunction is granted “almost as a matter of course” and that “[t]he amount of damages, and even the fact that the plaintiff ha[d] sustained any pecuniary damages, are wholly immaterial.” Spilling v. Hutcheson, 111 Va. 179, 183, 68 S.E. 250, 252 (1910).
While the retaining wall is clearly in violation of the covenants, [the plaintiff] is not automatically entitled to have the retaining wall removed. When parties have a dispute over an alleged violation of a restrictive covenant, the plaintiff, or covenantee, may file suit in the court for equitable enforcement of the restrictive covenant. A restrictive covenant may be enforced by injunctive relief or through specific performance. The party seeking enforcement ․ bears the burden of proving the validity and meaning of the covenant [and that it] has been violated by the acts of the defendant.
A defendant may avoid imposition of the remedy requested if such a remedy would create a hardship or injustice that is out of proportion to the relief sought, if performance by the defendant would be impossible, or if the enforcement of the decree would be unusually difficult for the court. However, on the questions of hardship, injustice, or impossibility, the defendant bears the burden of proving the elements of the defense․ [I]t is for the defendant to show by way of defense that it is no longer able to perform the covenant consistently with its duty to the public in general, or that performance thereof will be burdensome and oppressive or otherwise inequitable.
Id. at 699–701, 594 S.E.2d at 904–05 (citations, footnotes, and internal quotation marks omitted) (emphasis added). We concluded by remanding the case to the circuit court with specific instructions to hear evidence concerning the remedy to be ordered. Id. at 702, 594 S.E.2d at 905.
We have also observed that unless a party is entitled to an injunction pursuant to a statute, a party must establish the “traditional prerequisites, i.e., irreparable harm and lack of an adequate remedy at law” before a request for injunctive relief will be sustained.
276 Va. at 61, 662 S.E.2d at 53 (citations and some quotation marks omitted).
In Levisa Coal, as in Perel, we remanded the case to the circuit court with specific direction to grant the parties the opportunity to present evidence on the question whether injunctive relief would be appropriate under the facts and circumstances of the case. Id. at 63, 662 S.E.2d 44, 662 S.E.2d at 54.
Here, the owner's complaint included counts for damages at law as well as equitable relief. The case was set for a two-day jury trial on all issues to begin on March 7, 2013. After denying the owner's motion for summary judgment, the court, over the Railroad's objection, granted a motion by the owner to set the case for trial on the issue of injunctive relief only, to begin on February 27, 2013, eight days before the jury trial.
At that proceeding, the court refused to afford the parties an opportunity to present evidence of the facts and circumstances of the case, ruling, before the owner's evidence was completed, that any further evidence offered by either party would be immaterial. The court essentially took the view that the undisputed fact that the Railroad had closed the crossing automatically required entry of a permanent injunction.
In my view, the circuit court erred in disregarding the traditional equitable principles made specific in Perel and Levisa Coal. The parties should have been afforded an opportunity to present evidence of all the relevant circumstances that might inform the chancellor's discretion in determining the appropriate remedy. I would make the same disposition we made in those cases, reverse the decree and remand the case to the circuit court with direction to afford the parties a full opportunity to present evidence.
On remand, if any material issues of fact are disputed, the parties would be entitled to jury trial of those issues pursuant to Rule 3:22(e). If the court should decide to leave the parties to their legal remedies, their constitutional right to jury trial would, of course, be unimpaired.
OPINION BY Justice ELIZABETH A. McCLANAHAN.

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