Title: Ott v. L&J Holdings
Citation: N/A
Docket Number: 070228
State: Virginia
Issuer: Virginia Supreme Court
Date: January 11, 2008

Present:  Hassell, C.J., Keenan, Koontz, Kinser, Lemons, and 
Agee, JJ., and Russell, S.J. 
 
JANET M. OTT, INDIVIDUALLY AND AS  
PERSONAL REPRESENTATIVE OF THE ESTATE  
OF ADMIRAL DEWEY MONROE, DECEASED 
            
             OPINION BY 
v.  Record No. 070228       SENIOR JUSTICE CHARLES S. RUSSELL 
           
          January 11, 2008 
L&J HOLDINGS, LLC, ET AL. 
 
FROM THE CIRCUIT COURT OF STAFFORD COUNTY 
J. Martin Bass, Judge 
 
 
This appeal presents the question whether a deed, 
executed pursuant to a power of attorney, should be set aside 
on the ground that it exceeded the authority of the attorney-
in-fact. 
Facts and Proceedings 
 
The essential facts are undisputed, although the parties 
differ as to the interpretations and inferences to be drawn 
from them.  Admiral Dewey Monroe (Dewey) and his wife, Lou Ann 
Monroe (Lou Ann) were married for more than 50 years.  During 
the marriage, they acquired substantial holdings of real 
property in Stafford County, some of which they subdivided and 
sold.  On December 27, 2001, Dewey executed a durable power of 
attorney, naming Lou Ann his attorney-in-fact with authority 
to sell and convey real property, to enter into binding 
contracts on Dewey’s behalf and to manage his business 
affairs.  The document authorized the attorney-in-fact to make 
gifts, but only to family members and to “such other persons 
 
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or charitable organizations with whom I have an established 
pattern of giving.  My Agent may not make gifts of my property 
to the Agent.”  The power of attorney provided that it would 
not be affected by Dewey’s disability or lack of mental 
competence and would remain effective until his death unless 
revoked by written notice. 
 
On January 23, 2002, Dewey suffered a debilitating stroke 
that left him unable to communicate or to manage his business 
affairs.  He retired to a nursing home and remained there 
until his death on August 5, 2004. 
 
Dewey and Lou Ann had, for many years, been in the 
business of developing real property, by subdividing and 
selling residential building lots.  After Dewey’s stroke, they 
retained three contiguous undeveloped parcels of land, 
containing 50.84 acres, 49.22 acres and 129.38 acres, 
respectively.  Record title to the 49.22-acre parcel, which 
lay between and separated the other two parcels, was in the 
names of Dewey and Lou Ann as tenants by the entirety.  Title 
to the other two parcels was in Dewey’s name alone. 
 
Lou Ann believed that it would be advantageous to unite 
the three parcels, vacating the boundary lines between them, 
to facilitate their sale to a developer as a single tract.  
Her opinion was that such a sale would incur capital gains 
 
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taxes at a 15% rate rather than income taxes at a 40% rate, 
which might arise from developing and selling individual lots. 
 
Lou Ann consulted Glenn H. Goodpasture, a Fredericksburg 
attorney, who formed an entity called L&J Holdings, LLC (L&J) 
to accomplish her purpose.  Lou Ann had also consulted R. 
Leigh Frackleton, Jr., Goodpasture’s law partner, with respect 
to estate planning.  Frackleton examined the real estate tax 
assessments on the three parcels and determined that the value 
of Dewey’s interest was 80% of the whole.  Upon Frackleton’s 
recommendation, Goodpasture prepared an operating agreement 
constituting Dewey and Lou Ann as the sole members of L&J and 
establishing Dewey’s membership interest at 80% and Lou Ann’s 
membership interest at 20%.  Lou Ann signed the operating 
agreement, on her own behalf and as attorney-in-fact for 
Dewey, on April 3, 2003. 
 
By a deed dated June 18, 2003, which is the subject of 
this suit, Lou Ann conveyed the three parcels to L&J.  The 
first paragraph of the deed reads: 
THIS CORRECTED DEED OF GIFT (exempt from recordation 
taxes pursuant to Virginia Code Section 58.1-
811.A.10) [sic] made and entered into . . . by and 
between ADMIRAL DEWEY MONROE, JR. by his Attorney-
in-Fact, LOU ANN MONROE, and LOU ANN MONROE, husband 
and wife, Grantors; and  L&J HOLDINGS, L.L.C., a 
Virginia limited liability company, Grantee. 
 
The deed recites that it was made to correct an erroneous 
description of the land contained in an earlier deed.  It 
 
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recites that it is made:  “[F]or and in consideration of the 
sum of Ten Dollars ($10.00) and other valuable consideration.”  
The deed conveys the three parcels with General Warranty and 
English covenants. 
 
After Dewey’s death in 2004, his last will was admitted 
to probate.  It devised all his property to Janet M. Ott 
(Janet), one of Dewey’s and Lou Ann’s four children.  Janet 
qualified as Dewey’s personal representative and brought this 
suit for a declaratory judgment against Lou Ann, L&J, and two 
unrelated entities that had contracted to purchase the land 
from L&J.  Janet asked for a decree declaring Lou Ann’s deed 
to L&J to be void ab initio.  She contended that the deed was 
a gift, that it failed to comply with the requirements of Code 
§ 11-9.5(C),∗ and that it was beyond the powers granted to Lou 
Ann by Dewey’s power of attorney. 
 
All parties, by agreement, submitted the case to the 
circuit court upon the pleadings, exhibits, depositions and 
argument.  The court, by letter opinion, ruled that the deed, 
despite its misleading caption, was not in fact a deed of 
gift, and, because of ambiguity apparent on the face of the 
                     
∗ Code § 11-9.5(C) provides that an attorney-in-fact under 
a durable power of attorney may petition the circuit court for 
authority to make gifts of the principal’s property in limited 
circumstances. 
 
 
 
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deed, parol evidence was properly received to determine the 
grantor’s intent.  The circuit court found from that evidence 
that there was a valid business purpose for the deed, and that 
the conveyance was supported by valuable consideration.  The 
circuit court entered a decree denying the relief prayed for 
and dismissing Janet’s suit.  We awarded Janet an appeal. 
Analysis 
1. Standard of Review 
 
If the sole issues upon appeal were the legal effect of 
written documents, we would apply a de novo standard of review 
to the entire case.  Jones v. Brandt, 274 Va. 131, 135, 645 
S.E.2d 312, 314 (2007).  In the present case, however, the 
parties stipulate that Dewey’s durable power of attorney is “a 
valid and enforceable document in accordance with its terms 
and subject to all applicable laws.”  Here, the issues on 
appeal are whether the circuit court erred in admitting parol 
evidence to explain Lou Ann’s purpose in executing the deed, 
and, if so, whether the evidence supported the court’s finding 
of fact as to the parties’ intent.  The first of those issues 
involves a pure question of law, to which we apply a de novo 
standard of review.  See, e.g., Pyramid Dev., L.L.C. v. D&J 
Assocs., 262 Va. 750, 753-54, 553 S.E.2d 725, 727 (2001).  The 
second issue is one which requires us to affirm the trial 
court’s finding unless it is apparent from the evidence that 
 
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it is plainly wrong or without evidence to support it.  Code 
§ 8.01-680; Video Zone, Inc. v. KF&F Props., 267 Va. 621, 627, 
594 S.E.2d 921, 925 (2004); Pyramid Dev., 262 Va. at 753, 553 
S.E.2d at 727. 
2. Parol Evidence 
 
The venerable parol evidence rule requires a court to 
construe a document according to its plain terms if it is 
clear and unambiguous on its face.  In such a case, the court 
will not look for meaning beyond the instrument itself.  When 
a document is ambiguous, however, the court will look to parol 
evidence in order to determine the intent of the parties.  
Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 
632, 561 S.E.2d 663, 667-68 (2002).  Janet argues that the 
deed in question, because it begins with the words “THIS 
CORRECTED DEED OF GIFT,” is plainly and unambiguously a 
donation of the principal’s property.  As such, she contends, 
the conveyance was beyond the authority of the attorney-in-
fact for two reasons:  (1) No court approval of the gift was 
sought pursuant to Code § 11-9.5(C), and (2) the gift was 
expressly barred by the terms of the power of attorney or was 
self-dealing prohibited by law.  
 
The language of an instrument is ambiguous  
if it may be understood in more than one way or when 
it refers to two or more things at the same time.  
Such an ambiguity, if it exists, must appear on the 
 
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face of the instrument.  In determining whether the 
disputed terms are ambiguous, we consider the words 
employed . . . in accordance with their usual, 
ordinary and popular meaning. 
 
Video Zone, 267 Va. at 625-26, 594 S.E.2d at 923-24 
(citations and quotation marks omitted). 
 
The circuit court, considering the language on the face 
of the deed, found the recital “deed of gift” to be 
inconsistent with the code section recited in the deed to 
invoke an exemption from recordation taxes.  Code § 58.1-811 
(A)(10), referred to in the deed, provides a recordation tax 
exemption to limited liability companies “when the grantors 
are entitled to receive not less than 50 percent of the 
profits and surplus of such . . . limited liability company.”  
A separate exemption is provided elsewhere for deeds of gift, 
where no consideration passes between the parties, by a 
different subsection, Code § 58.1-811(D).  The circuit court 
also found the deed’s recital of valuable consideration, as 
well as its conveyance with General Warranty and English 
Covenants, to be inconsistent with a gift.  Because the deed 
could be read either as a deed of gift or as a conveyance for 
valuable consideration, the court found it to be ambiguous on 
its face and admitted parol evidence to resolve the ambiguity. 
 
We agree with the circuit court’s analysis.  A gift has 
been defined as a contract without a consideration.  Spooner 
 
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v. Hilbish, 92 Va. 333, 341, 23 S.E. 751, 753 (1895).  
Donative intent on the grantor’s part is an essential element 
of a gift.  Theismann v. Theismann, 22 Va. App. 557, 566, 471 
S.E.2d 809, 813 (1996).  All terms of the deed that were 
consistent with the grantor’s receipt of valuable 
consideration were inconsistent with donative intent on her 
part.  Because the deed could be understood in more than one 
way, the circuit court correctly decided that it was ambiguous 
and admitted parol evidence to resolve the ambiguity. 
3. Findings of Fact 
 
Mr. Goodpasture, the attorney who drafted the deed, 
testified:  “My understanding of the reason for the document 
was to transfer the real estate from the owners of it to a 
limited liability company that was owned at least 50 percent 
by the owners, and I did not intend to prepare it as a gift 
and I did not include the gift section in the Code which also 
would have exempted it from recordation tax.  But frankly, if 
I had focused on the [words] 'deed of gift' I would not have 
let it go out that way, but obviously, I wasn’t focusing on 
it.”  Mr. Frackleton testified that he saw in Goodpasture’s 
notes a suggestion that the interests of Dewey and Lou Ann in 
L&J were to be divided “60/40,” but after examining the tax 
assessments on the three parcels of land, he determined that 
the value of Dewey’s interest amounted to 80% of the whole, 
 
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and that their interests were ultimately set at “80/20” to 
reflect an accurate valuation of their respective 
contributions. 
 
Lou Ann testified that she decided to form an LLC because 
she had read about such devices and thought “it fit us” mostly 
for “tax purposes and my ability.”  She also thought selling 
the land as a whole would be preferable to developing it and 
selling individual lots, and the LLC would be “a reasonable 
thing to do” to accomplish that purpose.  The circuit court 
found from the evidence that the deed was not, in fact, a deed 
of gift despite its caption, that it was given for a valuable 
consideration and that the evidence showed no donative intent 
on Lou Ann’s part.  Rather, the court found, the transfer of 
the property was undertaken for legitimate business reasons 
and that Dewey and Lou Ann each received benefits, including 
possible future tax benefits, commensurate with their 
respective percentage interests, without any self-dealing on 
Lou Ann’s part.  The transaction was, therefore, within the 
powers granted by Dewey’s power of attorney. 
Conclusion 
 
Because the circuit court did not err in admitting parol 
evidence, and because there was credible evidence to support 
the court’s findings of fact, we will affirm the judgment. 
Affirmed.