Title: Shepherd v. Davis
Citation: N/A
Docket Number: 020188
State: Virginia
Issuer: Virginia Supreme Court
Date: January 10, 2003

Present:  All the Justices 
WILLIAM R. SHEPHERD, JR., 
v. Record No. 020188 
RICHARD F. DAVIS, ET AL.  
 
 
OPINION BY 
JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
   January 10, 2003 
JOHN T. HENNING, ET AL. 
v. Record No. 020189 
RICHARD F. DAVIS, ET AL. 
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 
Edward W. Hanson, Jr., Judge 
 
 
These consolidated appeals concern a parcel of real 
estate that is subject to a lease agreement granting the 
lessee both a fixed-price option to purchase the tract of 
real estate and a right of first refusal.  Such provisions 
are generally referred to as a “dual option.”  One of the 
issues presented in this appeal concerns the interplay 
between those two provisions when a third party offered to 
purchase the subject property and the lessee failed to 
exercise the right of first refusal, attempting instead to 
invoke the fixed-price option.  Additional questions are 
whether the third-party offeror was entitled to specific 
performance and, if not, what amount of damages was 
appropriate.  Because we find no error in the chancellor’s 
decrees holding that the lessee forfeited his contractual 
rights by failing to exercise the right of first refusal, 
and awarding only nominal damages to the third-party 
offeror, we will affirm those decrees. 
I. MATERIAL FACTS AND PROCEEDINGS 
 
Richard F. and Amelia D. Davis (the Davises) entered 
into a contract with George J. Parker (Parker or the Parker 
Estate) in 1981 to purchase a parcel of real estate located 
a short distance south of Virginia Beach Boulevard in the 
City of Virginia Beach.  Under the terms of the purchase 
contract and a separate indenture agreement between the 
parties, the Davises would receive title to the property 
upon payment in full of the deferred purchase price.  The 
final amortized payment was not due until April 2015.1  
Notably, the purchase contract contained neither an 
acceleration clause nor a provision allowing prepayment of 
the purchase price.  The contract also prohibited the 
Davises from conveying their interests in the real estate 
or assigning the purchase contract without the prior 
consent of Parker, but provided that they could, with 
Parker’s consent, assign their interests in the contract to 
“an assignee of adequate financial capability.” 
                     
 
1 In 1990, the Davises borrowed additional money, which 
increased the amount of their deferred obligation and 
extended the payments to 2015. 
 
 
2
 
In July 1993, the Davises leased this same parcel of 
real estate to William R. Shepherd, Jr. (Shepherd), for an 
initial term of five years.  The lease agreement contained 
provisions granting Shepherd both a fixed-price option to 
purchase and a right of first refusal.2  This dual option 
pertained not only to the leased parcel of real estate 
(referred to as “Parcel 1” in the lease agreement), but 
also to an adjacent parcel of real estate owned by the 
Davises (referred to as “Parcel 2” in the lease agreement) 
(collectively designated the “Property”).  The relevant 
sections of the lease creating the dual option state the 
following: 
23.  OPTION TO PURCHASE AND RIGHT OF FIRST 
 
REFUSAL
 
 
23.1.  Option.  Upon compliance with the 
provisions of this Section 23, Tenant shall have 
the sole and exclusive Option to purchase the 
Property pursuant to the terms of this Agreement 
for the continuous period of time commencing on 
the Commencement Date and ending on the date the 
lease terminates.  If the Option is properly and 
timely exercised, as provided in this Agreement, 
a contract shall then exist between Landlord and 
Tenant pursuant to which Landlord agrees to sell 
and Tenant agrees to buy the Property upon the 
terms and conditions specified in this Section 
23. 
 
                     
2 A “Memorandum of Option” was allegedly recorded in 
the Clerk’s Office of the Circuit Court of the City of 
Virginia Beach.  That document is not part of the record in 
this case. 
 
3
 
23.2.  Exercise of Option.  The Option may 
be exercised, subject to the terms of paragraph 
23.8, by Tenant at any time prior to the 
expiration of the Lease, which shall be midnight 
of the last day this lease is in effect.  Tenant 
shall exercise the Option by sending written 
notice to Landlord prior to the expiration date 
of the Option specifying Tenant’s desire to 
exercise the Option. 
 
 
23.3.  Purchase Price.  The purchase price 
(“Purchase Price”) to be paid by Tenant to 
Landlord for the Property shall be ONE HUNDRED 
FIFTY THOUSAND AND NO/100 DOLLARS 
($150,000.00)[.] 
 
 
23.4.  Title.  Landlord shall convey to Tenant, 
at Closing, good, indefeasible and marketable title 
to the Property, free and clear of all liens, 
encumbrances and easements, other than those to 
which the Tenant fails to object . . . . 
 
. . . If Landlord is unwilling or unable to 
correct such objections within [thirty days,] 
Tenant shall have the option of taking such title 
as Landlord can give without abatement of the 
Purchase Price, or terminating this Agreement[.] 
 
* * * * 
 
 
23.11. Right of First Refusal.  
Notwithstanding anything contained in this 
Agreement to the contrary, if Landlord shall 
receive from a third party (“Offeror”) a bona 
fide written offer to purchase the Property, or 
any part of it, Landlord shall send to Tenant a 
copy of the proposed offer (“Offer”), with 
notification that Landlord intends to accept the 
Offer.  Tenant shall have the right within ten 
(10) days thereafter to exercise the Option to 
purchase the Property, or such part of it 
described in the Offer, pursuant to the terms and 
conditions contained in the Offer.  If Tenant 
does not elect to purchase the Property or such 
part of it described in the Offer, within such 
five (5) day period, Landlord may sell the 
Property or the part described in the Offer to 
the Offeror.  If Landlord does not sell the 
 
4
Property or any part of it, according to the 
Offer, then Tenant’s right of first refusal shall 
remain in full force. 
 
 
Almost five years later, in March 1998, John T. 
Henning and David J. Cross (Henning/Cross), who jointly 
owned a parcel of real estate adjoining the Property to the 
west, offered to buy the Property for $175,000.  As 
specified in the ensuing agreement between Henning/Cross 
and the Davises, the purchase of the Property was 
contingent upon vacation of the lot line between the 
Property and the Henning/Cross parcel.  The terms of the 
agreement also acknowledged that Shepherd had an option to 
purchase and a right of first refusal with respect to the 
Property.  Accordingly, the Davises, through their 
attorney, transmitted the Henning/Cross offer (the “Offer”) 
to Shepherd in accordance with the requirements of 
Paragraph 23.11 of their lease with Shepherd.  Shepherd 
elected not to exercise his right of first refusal because 
the terms of the Offer were not acceptable to him.  
Instead, he attempted to exercise his fixed-price option to 
purchase the Property. 
 
Despite repeated demands from both Shepherd and 
Henning/Cross, the Davises refused to close on either 
 
5
agreement.3  Consequently, Shepherd and Henning/Cross filed 
separate bills of complaint for specific performance of 
their respective agreements with the Davises.  The Davises 
defended both suits on the basis that it was impossible for 
them to perform under the terms of either agreement 
because, pursuant to their purchase contract with Parker, 
they did not yet own marketable title to Parcel 1. 
 
The matters were consolidated and referred to a 
commissioner in chancery for presentation of evidence and 
the submission of a report to a chancellor.  The issues 
before the commissioner were: (1) whether Shepherd could 
purchase the Property pursuant to his fixed-price option or 
whether, having failed to exercise his right of first 
refusal, Shepherd lost that option; (2) whether 
Henning/Cross were entitled to specific performance of 
their agreement with the Davises; (3) whether the Davises 
were excused from fulfilling their obligations under either 
agreement based on the defense of impossibility; (4) 
whether the Davises’ rights under the purchase contract 
with Parker could be assigned; and (5) whether either 
Shepherd or Henning/Cross were entitled to damages and an 
award of attorney fees, and if so, in what amounts. 
                     
3 The Parker Estate apparently had refused to accept 
prepayment of the purchase price by the Davises. 
 
6
 
After hearing evidence, the commissioner issued his 
report, finding that the “first refusal clause [was] 
obviously intended to override the option clause, since it 
[began] with the language ‘[n]otwithstanding anything 
contained in this Agreement to the contrary . . . .’ ”  
Concluding that the Henning/Cross Offer to purchase the 
Property was a “ ‘bona fide offer’ ” not made for any 
improper purpose, the commissioner determined that 
“Shepherd was required to respond to the right of first 
refusal, and was not entitled to ignore it by preferring 
the option.”4
 
The Commissioner further concluded that, although the 
Henning/Cross agreement was “valid and facially 
enforceable” and had been breached by the Davises, the 
agreement could not be specifically enforced because it was 
presently impossible for the Davises to convey marketable 
title.  Their purchase contract with Parker did not contain 
an acceleration clause or provision allowing prepayment of 
the purchase price.  Nor did it allow an assignment of the 
Davises’ interests without Parker’s consent, and there was 
no evidence of such consent.  Thus, the commissioner 
                     
4 Shepherd and the Davises entered into a lease 
amendment one day after the lease expired.  The 
commissioner found that this document “conferred no further 
 
7
declined to recommend an assignment of the Davises’ 
interests under their purchase contract with Parker. 
 
However, the commissioner stated that “while 
impossibility is a defense to specific performance, it is 
no defense to liability for contractual damages.”  
Consequently, the commissioner recommended an award of 
damages in the amount of $376,430 to Henning/Cross as well 
as attorney fees and costs.  The commissioner also 
recommended a reimbursement of certain sums paid by 
Shepherd to the Davises in his attempt to exercise his 
fixed-price purchase option and to protect his position. 
 
All the parties filed exceptions to the commissioner’s 
report.  Upon considering those exceptions, the chancellor 
confirmed the commissioner’s findings except those 
concerning the reimbursement of certain payments to 
Shepherd, the award of damages to Henning/Cross, and the 
issue of attorney fees.  The chancellor re-referred those 
matters to the commissioner. 
 
After hearing additional evidence, the commissioner 
submitted a supplemental report.  Having learned for the 
first time that the Davises actually owned Parcel 2 of the 
Property, the commissioner addressed not only the question 
                                                             
rights, and failed to resurrect those which had been 
forfeited.” 
 
8
whether either Shepherd or Henning/Cross was entitled to an 
award of damages but also the question whether specific 
performance could be ordered as to Parcel 2.  With regard 
to the latter question, the commissioner concluded that 
specific performance was not appropriate because Parcel 2, 
by itself, is “landlocked” and because an order directing 
the Davises to convey solely that parcel would be 
tantamount to creating a new contract for the parties. 
 
On the issue of damages, the commissioner recommended 
no award of damages to Shepherd because the commissioner 
concluded that, having first failed to exercise his right 
of first refusal, Shepherd forfeited his other contractual 
rights.  As to Henning/Cross, the commissioner recommended 
an award of only “nominal damages” to include their costs 
and attorney fees related to this litigation and any other 
“out of pocket expenses which would be ‘restitutionary.’ ”  
Relying on this Court’s decisions in Davis v. Beury, 134 
Va. 322, 114 S.E. 773 (1922), and Chesapeake Builders, Inc. 
v. Lee, 254 Va. 294, 492 S.E.2d 141 (1997), the 
commissioner reasoned that, in order to recover damages for 
the “ ‘benefit of the bargain,’ ” Henning/Cross had to 
prove one of the following elements: (1) that the Davises 
acted in bad faith; (2) that the Davises voluntarily 
rendered themselves unable to complete the conveyance on or 
 
9
before the time fixed for closing; or (3) that the Davises 
were able to complete the conveyance but neglected or 
refused to so do.  Although Henning/Cross argued that the 
Davises had acted in bad faith, the commissioner concluded 
otherwise and, accordingly, decided that Henning/Cross were 
not entitled to damages based on the benefit of their 
bargain. 
 
After considering exceptions to the commissioner’s 
supplemental report, the chancellor confirmed the report 
and entered judgment against the Davises in favor of 
Henning/Cross in the amount of $20,040.48.5  We awarded 
separate appeals to Shepherd and Henning/Cross but 
consolidate them for purposes of this opinion.  In the 
Henning/Cross appeal, we also accepted assignments of 
cross-error filed by the Davises. 
II. ANALYSIS 
A. STANDARD OF REVIEW 
 
On appeal, we affirm a chancellor’s decree approving a 
commissioner’s report unless the decree is plainly wrong or 
without evidence to support it.  Snyder Plaza Properties, 
Inc. v. Adams Outdoor Advertising, Inc., 259 Va. 635, 641, 
528 S.E.2d 452, 456 (2000); Lim v. Choi, 256 Va. 167, 171, 
                     
5 This sum included $5,761.48 for expenses and $14,279 
for attorney and paralegal fees. 
 
10
501 S.E.2d 141, 143 (1998).  A chancellor should sustain a 
commissioner’s factual findings if supported by the 
evidence, but this principle does not apply to a 
commissioner’s conclusions of law.  Chesapeake Builders, 
254 Va. at 299, 492 S.E.2d at 144.  Similarly, we are not 
bound by a chancellor’s interpretation of a contract 
because we have the same opportunity as the chancellor to 
consider the contract language.  C.F. Garcia Enterprises, 
Inc. v. Enterprise Ford Tractor, Inc., 253 Va. 104, 107, 
480 S.E.2d 497, 498-99 (1997); Langman v. Alumni Ass’n of 
the Univ. of Virginia, 247 Va. 491, 498, 442 S.E.2d 669, 
674 (1994). 
B. SHEPHERD APPEAL 
 
The primary issue in Shepherd’s appeal concerns the 
relationship between the provisions in the lease with the 
Davises establishing Shepherd’s fixed-price option to 
purchase the Property and his right of first refusal.  
Shepherd argues, based on our decision in Cities Service 
Oil Co. v. Estes, 208 Va. 44, 49, 155 S.E.2d 59, 63 (1967), 
that a right of first refusal benefits a lessee and must, 
therefore, be interpreted with that purpose in mind.  
Interpreting the right of first refusal in that manner, 
Shepherd contends that the parties’ reason for including 
the dual option was to allow him to purchase the Property 
 
11
pursuant to whichever provision was more favorable to him 
at the time based on a comparison of the terms of his 
fixed-price option with those presented in a third-party 
offer.  In Shepherd’s view, the fixed-price option set a 
ceiling on the purchase price of the Property, and the 
right of first refusal allowed him to buy the Property at a 
lower figure by matching a third-party offer. 
 
With regard to the prefatory language 
“[n]otwithstanding anything contained in this Agreement to 
the contrary,” Shepherd posits that this phrase means that, 
notwithstanding the fact that he had a fixed-price option, 
he also had the right to purchase the Property at the price 
set forth in a bona fide third-party offer.  The terms of 
the dual option, says Shepherd, are not contradictory.  
Instead, the two provisions are separate and distinct, 
creating two ways in which he can elect to purchase the 
Property.  According to Shepherd, the fixed-price option 
remains in effect throughout the term of the lease even if 
he elects not to exercise his right of first refusal and 
the Davises sell the Property to a third party. 
 
We agree that generally a fixed-price option is 
included in a lease to benefit the lessee, see id., but 
that principle does not control our interpretation of the 
provisions at issue.  In Cities Service Oil, this Court 
 
12
addressed a dual option in a lease, but the issue was 
whether the right of first refusal contained in that 
particular lease applied to a public judicial sale.  Id. at 
45, 155 S.E.2d at 60.  We were not called upon in that 
case, as we are here, to decide whether either provision 
took precedence over the other. 
 
There is a split in authority on this issue.  Some 
courts have held that a lessee may exercise a fixed-price 
option without regard to a right of first refusal.  See 
e.g. Gulf Oil Corp. v. Chiodo, 804 F.2d 284, 286 (4th Cir. 
1986); Amoco Oil Co. v. Snyder, 478 A.2d 795, 798-99 (Pa. 
1984); Butler v. Richardson, 60 A.2d 718, 722 (R.I. 1948); 
Crowley v. Patterson, 306 N.W.2d 871, 875 (S.D. 1981).  
Other courts have concluded that a lessee forfeits the 
right to purchase under a fixed-price option when the 
lessee refuses to exercise a right of first refusal after 
being presented with a third-party offer.  See e.g. Shell 
Oil Co. v. Blumberg, 154 F.2d 251, 252-53 (5th Cir. 1946); 
Northwest Racing Ass’n v. Hunt, 156 N.E.2d 285, 288 (Ill. 
App. Ct. 1959); Tarrant v. Self, 387 N.E.2d 1349, 1353 
(Ind. Ct. App. 1979); M & M Oil Co. v. Finch, 640 P.2d 317, 
320-21 (Kan. Ct. App. 1982).  However, courts agree that 
the interpretation of dual-option provisions turns upon the 
particular language used and that a decision construing a 
 
13
dual option in one agreement will not necessarily be 
persuasive or controlling in a case involving a different 
agreement.  Chiodo, 804 F.2d at 286; Bobali Corp. v. Tamapa 
Co., 340 A.2d 485, 490 (Pa. Super. Ct. 1975); Crowley, 306 
N.W.2d at 873. 
 
We find the terms of the dual-option provisions in 
this case to be clear and unambiguous.  Thus, we construe 
those terms according to their plain meaning.  Golding v. 
Floyd, 261 Va. 190, 192, 539 S.E.2d 735, 736 (2001); Winn 
v. Aleda Const. Co., 227 Va. 304, 307, 315 S.E.2d 193, 194-
95 (1984).  In doing so, we do not treat any word or phrase 
as meaningless if a reasonable meaning can be given to it.  
Dominion Saving Bank, FSB v. Costello, 257 Va. 413, 417, 
512 S.E.2d 564, 567 (1999); Winn, 227 Va. at 307, 315 
S.E.2d at 194-95. 
 
Applying these principles to the dual-option 
provisions at issue, we are persuaded that the prefatory 
language modifies the fixed-price option and gives the 
right of first refusal precedence.  The fixed-price option 
is the only provision in the lease that, by its terms, is 
“contrary” to Shepherd’s right of first refusal.  We agree 
with the Davises’ argument that “the use of the term 
‘contrary’ suggests the terms being overridden are not 
complementary.”  The phrase “[n]otwithstanding anything 
 
14
. . . to the contrary” means irrespective of the fixed-
price option.  To read this phrase as Shepherd suggests 
would render meaningless not only the prefatory language 
but also two other sentences found in Paragraph 23.11, 
which created the right of first refusal. 
 
The first of those sentences provides that, if the 
Davises receive a third-party offer to purchase the 
Property (designated in the lease as the “Offer”), Shepherd 
has the right to “exercise the Option to purchase the 
Property [defined in the recital section of the lease as 
Shepherd’s ‘option to purchase . . . Parcels 1 and 2’], or 
such part of it described in the Offer, pursuant to the 
terms and conditions contained in the Offer.”  (Emphasis 
added.)  This sentence means that, when the Davises 
communicated the Henning/Cross Offer to Shepherd, his 
fixed-price option became subject to the terms of the 
Offer, despite the fact that those terms were “contrary” to 
the terms contained in the fixed-price option.  Shepherd no 
longer had the right to purchase the Property for the 
amount established in the fixed-price option. 
 
The second sentence is found at the conclusion of 
Paragraph 23.11.  That sentence provides that, if the 
Davises do not sell the Property in accordance with the 
Offer, Shepherd’s right of first refusal remains in effect.  
 
15
Noticeably absent is any statement that, in those 
circumstances, the fixed-price option to purchase also 
remains in effect.  Contrary to Shepherd’s argument, his 
fixed-price option does not survive in that situation.6
 
Thus, we conclude that, upon receipt of the 
Henning/Cross Offer, Shepherd had the right to purchase the 
Property but only pursuant to the terms and conditions of 
the Offer.  He no longer could purchase the Property under 
the terms of his fixed-price option. 
 
As an alternative argument, Shepherd contends that he 
was not obliged to exercise the right of first refusal 
because the Henning/Cross Offer was not “bona fide” as 
required by the terms of Paragraph 23.11.  He enumerates 
two reasons for this contention: (1) the Offer “contained a 
‘poison pill’ making it unreasonable for Shepherd to accept 
it[,]”; and (2) the terms of the Offer “required far more 
than the mere purchase of the [Property].”  Both of these 
reasons turn on the fact that the Henning/Cross Offer was 
contingent upon vacation of the lot line between the 
                     
6 Our conclusion is not altered by Shepherd’s assertion 
that a “Memorandum of Option” was recorded in the land 
records for the City of Virginia Beach.  See Code §§ 55-
57.1 and -57.2.  Shepherd’s rights vis-à-vis the Davises 
are determined by the lease agreement. 
 
 
16
Property and the parcel of real estate owned by 
Henning/Cross.7
 
Shepherd asserts that this contingency was a “poison 
pill” for him because, if he exercised the right of first 
refusal, he would have to eliminate the lot line between 
the Property and an adjacent parcel of real estate situated 
to the north and owned by Lynnhaven Realty, L.L.C. 
(Lynnhaven Realty).  Although Shepherd acknowledged that he 
owned Lynnhaven Realty, he, nevertheless, claimed that he 
                     
 
7 Henning testified before the commissioner that the 
purpose of vacating the lot line was to unify the title 
between the two parcels so that an easement for the benefit 
of the Property across the Henning/Cross parcel could be 
eliminated.  That easement provided access to the Property 
from Parker Lane, which in turn accessed Virginia Beach 
Boulevard.  Henning further agreed that vacating the lot 
line and unifying the title would end the reason for the 
then pending litigation involving the easement. 
That easement has been the subject of ongoing 
litigation between the same parties that are before us in 
these two appeals.  In Davis v. Henning, 250 Va. 271, 277, 
462 S.E.2d 106, 109 (1995), we held that an easement by 
necessity exists over the Henning/Cross property for the 
benefit of the parcel referred to in this opinion as Parcel 
1.  Subsequently, when Henning/Cross allegedly blocked the 
easement, Shepherd and the Davises each commenced suits 
against Henning/Cross.  According to the answer filed by 
the Davises in the present suit, the purpose of their 
agreement with Henning/Cross was to settle that second 
round of litigation.  After the execution of the agreement 
between the Davises and Henning/Cross, the Circuit Court of 
the City of Virginia Beach ruled that Henning/Cross could 
not block the easement or interfere with either Shepherd’s 
or the Davises’ use of it.  This Court refused to award 
Henning/Cross an appeal from that decree.  Davis v. 
Henning, No. 982364 (Feb. 18, 1999). 
 
 
17
could not fulfill that requirement because two different 
entities would own the parcels, unless he took title to the 
Property in the name of Lynnhaven Realty, and vacating the 
lot line would leave the Property landlocked.8  Shepherd 
also admitted that paying an additional $25,000 for the 
Property was not acceptable to him. 
 
We are not persuaded by Shepherd’s argument.  The term 
“bona fide” is defined as “[m]ade in good faith; without 
fraud or deceit.”  Black’s Law Dictionary 168 (7th ed. 
1999).  Like the commissioner, we find no evidence that the 
Henning/Cross Offer was made for any improper purpose.  The 
fact that acceptance of the Offer would have resolved 
pending litigation about the easement does not mean that it 
was made in bad faith or was to perpetrate a fraud.  
Shepherd suggests on brief that the terms of the Offer were 
designed to make it unreasonable for him to purchase the 
Property.  However, neither his displeasure with those 
terms nor the fact that they were more burdensome for 
Shepherd than the terms of his fixed-price purchase option 
changes our conclusion that the Henning/Cross Offer was 
bona fide. 
                     
8 We note that Lynnhaven Realty did not acquire title 
to its property until sometime between January and June 
1998, when Shepherd deeded the property to it.  During that 
time frame, Henning/Cross offered to purchase the Property. 
 
18
 
Thus, we hold that there is no error in the decree of 
the chancellor confirming the commissioner’s findings that 
the Henning/Cross Offer was bona fide and that Shepherd 
forfeited his contractual rights to purchase the Property 
by failing to exercise his right of first refusal upon 
receipt of the Offer.  Having forfeited those contractual 
rights, Shepherd was not entitled to either specific 
performance or damages.9
C. HENNING/CROSS APPEAL 
 
The assignments of error in the appeal awarded to 
Henning/Cross can be narrowed to two questions: (1) whether 
the chancellor erred by failing to award specific 
performance to Henning/Cross; and (2) whether, having 
denied specific performance, the chancellor erred by 
awarding only “nominal” damages to Henning/Cross rather 
than damages based on the “benefit of the bargain.”10  We 
will address the questions seriatim. 
1. SPECIFIC PERFORMANCE 
                     
9 It is not necessary to address Shepherd’s remaining 
assignments of error. 
 
10 The Davises assert on brief that Henning/Cross 
failed to assign error to the commissioner’s finding that 
it was impossible for the Davises to convey fee simple 
title to Parcel 1.  That assertion is correct, but we still 
must address whether the chancellor erred by refusing to 
order an assignment of the Davises’ interests in Parcel 1. 
 
19
 
Henning/Cross assert that they were entitled to 
specific performance of their contract with the Davises 
with an abatement of the purchase price.  In particular, 
they claim that they demanded and were willing to accept an 
assignment of the Davises’ rights under their purchase 
contract with Parker as to Parcel 1 and a deed from the 
Davises conveying Parcel 2 to Henning/Cross, with an 
appropriate abatement of the purchase price.  At the 
hearing before the commissioner, Henning confirmed that he 
and Cross were still willing to accept an assignment of the 
Davises’ contractual rights on the terms previously 
outlined in a letter to the Davises’ attorney.  In that 
letter, Henning/Cross advised that they were ready, 
willing, and able to close on the purchase of the Property, 
and that, if necessary, they would “pay the full purchase 
price less the provable assumption balance” and take an 
assignment of the Davises’ contractual rights under their 
agreement with Parker. 
 
As Henning/Cross argue, we recognize, as a general 
rule, that “when there is a deficiency in title, quantity, 
or quality of an estate, the purchaser has the option to 
require the seller to convey such part as the seller is 
able, with an abatement of the purchase price for any 
deficiency.”  Chesapeake Builders, 254 Va. at 300-01, 492 
 
20
S.E.2d at 145 (citing Turner v. Holloway, 146 Va. 827, 834, 
132 S.E. 685, 687 (1926); Millman v. Swan, 141 Va. 312, 
322, 127 S.E. 166, 169 (1925)); accord Firebaugh v. 
Hanback, 247 Va. 519, 526, 443 S.E.2d 134, 137 (1994); 
Hawks v. Sparks, 204 Va. 717, 720, 133 S.E.2d 536, 539 
(1963).  However, the rule is not absolute; we have 
recognized exceptions.  “[S]pecific performance of a 
contract is not a matter of right, but rests in the 
discretion of the trial court to be granted or refused 
according to established principles and the facts of each 
case.”  Hawks, at 720, 133 S.E.2d at 539 (citing Raney v. 
Barnes Lumber Corp., 195 Va. 956, 970, 81 S.E.2d 578, 586 
(1954); Griscom v. Childress, 183 Va. 42, 47-48, 31 S.E.2d 
309, 312 (1944); Darling v. Cumming’s Ex’or, 92 Va. 521, 
525, 23 S.E. 880, 881 (1896)); accord Firebaugh, 247 Va. at 
526, 443 S.E.2d at 137. 
 
One such exception arises when a purchaser is not 
asking for specific performance of a contract “ ‘as far as 
the vendor is able.’ ”  Reid v. Allen, 216 Va. 630, 633, 
221 S.E.2d 166, 169 (1976) (quoting Robinson v. Shepherd, 
137 Va. 687, 695, 120 S.E. 265, 267-68 (1923)).  In Reid, 
the purchasers sought to require a conveyance of a seller’s 
undivided one-half interest in a certain tract of real 
estate in exchange for payment of one-half of the contract 
 
21
price with an abatement to be determined by the court.  Id. 
at 631, 221 S.E.2d at 168.  We concluded that the 
purchasers, “in effect, [sought] to convert an agreement to 
sell the whole estate into one for a sale of one of the 
undivided shares[,]” amounting to a “substitution of an 
agreement which the parties had not contracted for.”  Id. 
at 633-34, 221 S.E.2d at 169.  Thus, because the evidence 
supported the commissioner’s finding that the parties never 
intended to sell less than the whole estate, we denied 
specific performance.  Id.; see M’Cann v. Janes, 40 Va. (1 
Rob.) 256, 261 (1842) (“plaintiff in a bill for specific 
performance must not . . . call upon the other party to do 
an act which he is not lawfully competent to do”). 
 
As pointed out by the commissioner in the present 
case, the purchase contract between the Davises and Parker 
contains a provision explicitly prohibiting a conveyance or 
assignment of the Davises’ interests in the contract and 
the Property without Parker’s consent.  There is no 
evidence of such consent in this record.  In fact, Michael 
J. Parker, trustee of a testamentary trust established by 
Parker, who was Michael’s father, testified before the 
commissioner that, while the purchase contract with the 
Davises could have been terminated or amended if all the 
parties agreed, there had not been any such agreement.  
 
22
Michael Parker also stated that no offer had been presented 
to the Parker Estate “that would be a sufficient incentive” 
to allow the Davises to prepay their obligation under the 
purchase contract and “to tear up this contract and 
substitute something else for it.” 11
 
Thus, Henning/Cross are not asking for specific 
performance “as far as the [Davises] are able.”  Reid, 216 
Va. at 633, 221 S.E.2d at 169.  The Davises cannot perform 
as requested.  An assignment of their interests in the 
purchase contract with Parker would constitute a breach of 
that contract.  We agree with the commissioner; action 
should not be ordered that would violate the contract. 
 
We also agree with the commissioner’s finding that 
specific performance should not be granted with regard to 
only Parcel 2.  Such relief would leave Parcel 2 landlocked 
because the easement across the property of Henning/Cross 
runs only to Parcel 1.  Davis v. Henning, 250 Va. 271, 277, 
462 S.E.2d 106, 109 (1995). 
                     
11 In a letter dated August 24, 1998, from an attorney 
representing the Parker Estate to the Davises’ attorney, 
the Parker Estate indicated that it “would, subject to 
certain conditions and affirmations, permit an assignment 
to Sans Souci with a full irrevocable payment and 
performance guarantee by Mr. Shepherd.”  However, when 
Michael Parker testified, he stated that, in light of the 
fact that a year and a half had passed since that letter 
had been written, he did not presently have a position on 
 
23
 
Given the facts of this case, we cannot say that the 
chancellor abused his discretion by refusing to award 
specific performance in favor of Henning/Cross with an 
abatement of the purchase price.  As we stated earlier, the 
decision whether to award specific performance of a 
contract rests in the sound discretion of a trial court; it 
is not a matter of right.  Hawks, 204 Va. at 720, 133 
S.E.2d at 539. 
2. DAMAGES 
 
As an alternative argument, Henning/Cross assert that, 
assuming specific performance was properly denied, they are 
entitled to recover damages based on the loss of their 
bargain.  They ask this Court to reverse the chancellor’s 
finding that they were entitled to only “restitutionary” 
damages and to award them damages in the amount of $376,430 
as recommended by the commissioner in his first report.  
That figure was based on Henning’s valuation of the 
Property.  As an additional alternative position, 
Henning/Cross claim that they should at least be awarded 
loss-of-bargain damages in the amount of $315,000 based on 
expert appraisal testimony at the second hearing before the 
commissioner. 
                                                             
whether Shepherd’s guarantee would constitute adequate 
financial capability. 
 
24
 
“The general rule in Virginia is that the measure of 
damages for failure of the vendor to convey as agreed is 
the purchase price, or any part thereof, paid by the 
vendee, with interest from date of payment.”  Williams v. 
Snider, 190 Va. 226, 228, 56 S.E.2d 63, 64 (1949); accord 
Chesapeake Builders, 254 Va. at 299-300, 492 S.E.2d at 145; 
Davis v. Beury, 134 Va. at 339, 114 S.E. at 777.  However, 
a purchaser of real estate may recover damages beyond the 
return of the purchase price with interest, i.e. damages 
for loss of the bargain, if the purchaser proves that the 
seller 
either acted in bad faith in originally undertaking to 
convey such title [as was contracted to be conveyed], 
or that, since the undertaking and on or before the 
time fixed for the completion of the contract, he has 
voluntarily disabled himself from making the 
conveyance, or that he was able at such time to make 
the conveyance contracted for and  willfully neglected 
or refused to do so. 
 
Davis v. Beury, 134 Va. at 339, 114 S.E. at 777; accord 
Chesapeake Builders, 254 Va. at 299-300, 492 S.E.2d at 145. 
 
In this case, it is not necessary to decide which 
category of damages Henning/Cross were entitled to recover 
because either of the amounts they claimed as damages for 
the loss of their bargain was too speculative in nature to 
be sustainable.  The calculation of both figures was 
premised on the assumption that the Property could be 
 
25
resold to a large, well-known, home and building supply 
retailer.  Henning testified at the first commissioner’s 
hearing that he valued the Property at $8.25 per square 
foot because that was the price at which Henning/Cross had 
contracted to sell their adjoining property to this 
retailer.  Henning believed that he could sell the Property 
to the same purchaser for the same price. 
 
Similarly, at the second hearing, a commercial real 
estate appraiser opined that, during the time frame of 
October through December 1999, the Property was worth $9 
per square foot “as a part of the adjoining properties.”  
His valuation was premised on the Property being included 
in the assemblage of surrounding parcels by a developer on 
behalf of the same retailer and on the contract purchase 
prices for those adjoining parcels. 
 
The commissioner also received deposition testimony 
from the real estate developer who, on behalf of that 
retailer, had negotiated purchase contracts for the parcels 
adjacent to the Property.  While assembling those parcels 
and negotiating the purchase contracts, the developer had 
become familiar with the Property.  He testified that he 
would have been willing to purchase the Property for $9 per 
square foot if “clear title” could have been conveyed.  
However, he acknowledged that any such contract to purchase 
 
26
the Property would have contained the same contingencies as 
were included in the contracts to purchase the surrounding 
parcels, including contingencies regarding rezoning. 
 
As the plaintiffs in this suit, Henning/Cross had the 
“burden of proving with reasonable certainty the amount of 
damages and the cause from which they resulted; speculation 
and conjecture cannot form the basis of the recovery.”  
Carr v. Citizens Bank & Trust Co., 228 Va. 644, 652, 325 
S.E.2d 86, 90 (1985) (citing Hale v. Fawcett, 214 Va. 583, 
585, 202 S.E.2d 923, 925 (1974); Barnes v. Quarries, Inc., 
204 Va. 414, 418, 132 S.E.2d 395, 397-98 (1963)).  Damages 
based on uncertainties, contingencies, or speculation 
cannot be recovered.  Barnes, 204 Va. at 418, 132 S.E.2d at 
397-98. 
 
As argued by the Davises both before the commissioner 
and this Court, the damages claimed by Henning/Cross fail 
under this rule.  All the evidence regarding the value of 
the Property was speculative because the valuations hinged 
on the assumption that the Property could be sold to a 
large home and building supply retailer.  Even the 
developer admitted that, as of October 1999, the date upon 
which damages were to be computed, the rezoning contingency 
had not been fulfilled for any of the parcels under 
 
27
contract.12  Thus, the chancellor did not err in awarding 
only nominal damages to Henning/Cross, which were 
restitutionary in nature and included attorney fees.  See 
Kessler v. Commonwealth Doctors Hospital, Inc., 212 Va. 
497, 504, 185 S.E.2d 43, 47 (1971) (judgment affirmed on 
appeal when chancellor assigned the wrong reason for a 
ruling but reached the correct result). 
D. ASSIGNMENTS OF CROSS-ERROR 
 
The Davises assign cross-error to the chancellor’s 
award of attorney fees to Henning/Cross and to the 
chancellor’s refusal to consider their “Special Exception” 
to the commissioner’s supplemental report.  In that 
“Special Exception,” the Davises objected to the 
commissioner’s finding that Henning/Cross were entitled to 
an award of attorney fees.  They also sought to amend their 
answer to allege the defense of “unclean hands” in response 
to the claim for attorney fees by Henning/Cross. 
 
The chancellor, in his letter opinion, refused to 
consider the “Special Exception” because it was not timely 
filed.  We find no abuse of discretion in that ruling.  The 
commissioner filed his supplemental report on January 12, 
                     
 
12 When the chancellor re-referred the damage issue to 
the commissioner, he directed that damages be calculated as 
of October 1999.  No party assigned error challenging the 
validity of that date. 
 
28
2001.  However, the Davises did not file the “Special 
Exception” until May 7, 2001.  Their exception to the 
commissioner’s supplemental report was not timely under the 
provisions of Code § 8.01-615. 
III. CONCLUSION 
 
For the reasons stated, we will affirm the 
chancellor’s final decree in both suits.  However, we will 
remand the Henning/Cross appeal for further proceedings to 
adjudicate their claim for additional attorney fees and 
costs incurred in the appeal. 
                  Record No. 020188 – Affirmed. 
Record No. 020189 – Affirmed and remanded. 
 
29