Title: Dewberry & Davis, Inc. v. C3NS, Inc.
Citation: N/A
Docket Number: 111661
State: Virginia
Issuer: Virginia Supreme Court
Date: September 14, 2012

Present:  Kinser, C.J., Lemons, Goodwyn, Millette, Mims, and 
Powell, JJ., and Koontz, S.J. 
 
DEWBERRY & DAVIS, INC. 
 
 
 
OPINION BY 
v.  Record No. 111661 
SENIOR JUSTICE LAWRENCE L. KOONTZ, JR. 
 
 
 
September 14, 2012 
C3NS, INC., ET AL. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
R. Terrence Ney, Judge 
 
In this appeal, we consider whether the circuit court 
erred in applying an attorneys' fees provision of a contract.  
The court determined that the plaintiff, the prevailing party 
on both its claim for compensation under the contract and the 
defendant's counterclaim for the plaintiff's alleged breach of 
the contract, was entitled to only a nominal award of one 
dollar in attorneys' fees for its defense of the counterclaim 
because the defendant had a "good faith" basis for alleging 
the breach.  We further consider an assignment of cross-error 
asserting that any award of attorneys' fees on the 
counterclaim was subject to a further provision in the 
contract for calculating fees in an action to collect 
compensation owed under the contract. 
BACKGROUND 
The material facts are not in dispute and may be 
summarized in the following manner.  On May 12, 2008, Dewberry 
& Davis, Inc. ("Dewberry"), an engineering firm, entered into 
a contract with C3NS, Inc. to prepare a survey and site plan 
 
2 
for the construction of a building on property owned by C3 
Holdings, LLC in an industrial park located in Louisa, 
Virginia.  The building would house a tire recycling plant to 
be operated by C3RS, Inc.1 
"Attachment B" to the contract included certain "standard 
terms and conditions" including a provision that 
[C3] shall furnish [to Dewberry] all plans, 
drawings, surveys, deeds and other documents related 
to the services in your possession and shall inform 
us in writing about all special criteria or 
requirements related to Services . . . .  [Dewberry] 
may obtain deeds, plats, maps and any other 
information filed with or published by any 
governmental entity . . . .  [C3] agree[s] to give 
prompt notice to [Dewberry] of any development or 
occurrence that affects the scope or timing of 
Services. 
 
Also included in Attachment B was the following provision 
concerning the payment of attorneys' fees and expenses in the 
event of litigation arising from the contract ("attorneys' 
fees provision"): 
 
The losing party shall pay the winning party's 
reasonable attorneys' fees and expenses for the 
prosecution or defense of any cause of action, claim 
or demand arising under this Agreement in any court 
or in arbitration.  The attorneys' fees payable to 
us for the collection of compensation you owe us 
shall be twenty-five percent of any judgment or 
award against you and our attorneys' fees, expenses, 
and collection costs. 
 
                     
1 C3NS, Inc., C3 Holdings, LLC, and C3RS, Inc. are related 
entities.  We will refer to them collectively as "C3." 
 
3 
Under the terms of an addendum signed by C3 on June 15, 
2008, Dewberry was required to relocate the proposed building 
site from the location originally designated by C3 to "allow[] 
for a closer proximity to the Dominion Virginia Power (DVP) 
service area" within the industrial park so that the building 
would "receive power service from DVP."  The addendum 
indicated that C3 was acquiring additional acreage in the 
industrial park in order to facilitate this change. 
Prior to the execution of the addendum, Dewberry received 
from Rappahannock Electric Cooperative ("Rappahannock 
Electric"), the other electric service provider for the 
industrial park, materials which purported to show the 
division of the service areas of the two providers.  Unknown 
to Dewberry, the materials were inaccurate.  However, using 
these materials, Dewberry prepared a building site plan that 
did not meet the criteria of the June 15, 2008 addendum. 
Also prior to the execution of the addendum, C3 had 
received from DVP an aerial photograph which accurately 
reflected the service areas of the two electric service 
providers.  This photograph showed that no portion of the 
building site, including the additional acreage acquired by 
C3, was within DVP's service area.  C3, which apparently was 
unaware of the photograph's significance, failed to provide it 
to Dewberry as required by the contract. 
 
4 
When C3 learned that the site plan prepared by Dewberry 
would not place the building within the DVP service area, it 
withheld payment to Dewberry on the balance owed under the 
contract.  Dewberry subsequently obtained a mechanic's lien on 
the property to secure this debt. 
On May 21, 2009, Dewberry filed in the Circuit Court of 
Fairfax County, C3's principal place of business, a complaint 
against C3 seeking to collect the balance owed on the 
contract.  On November 10, 2009, C3 filed in the same circuit 
court a complaint against Dewberry alleging, among other 
things, breach of contract and seeking 1.5 million dollars in 
damages allegedly incurred as a result of the tire recycling 
plant not being located within DVP's service area.  Both 
parties sought an award of attorneys' fees and expenses under 
the contract.  Ultimately, the suits were consolidated for 
trial with C3's complaint nominated as a counterclaim. 
Following an extended period of discovery and pre-trial 
motions, the case was set for a bench trial, limited to the 
issue of liability on the complaint and counterclaim.  In this 
regard, the court had entered a consent order reflecting the 
parties' agreement that neither party would be required to 
present evidence concerning attorneys' fees until after a 
judgment had been rendered on the merits of the asserted 
claims.  The consent order stated that "[a]ttorney[s'] fees 
 
5 
and expenses may be awarded in accordance with" the attorneys' 
fees provision of Attachment B.  (Emphasis added.) 
The trial commenced on February 28, 2011, and evidence in 
accord with the above recited facts was received by the 
circuit court.  At the conclusion of the trial on March 10, 
2011, the court entered an order awarding Dewberry judgment 
for $49,459.85 on its claim.  In its summation, the court 
concluded that even if Dewberry had breached the contract by 
failing to discover the inaccuracy in the information obtained 
from Rappahannock Electric and, thus, not providing a site 
plan in accord with the criteria of the June 15, 2008 
addendum, C3 could not recover on its counterclaim.  The court 
reasoned that this was so because C3 had been the first to 
breach the contract by failing to provide Dewberry with the 
aerial photograph provided by DVP.  The court further stated 
that it would consider an award of attorneys' fees, "[b]ut it 
strikes [the court] that this was a legitimate, good-faith 
dispute, a difference of opinion, and without making any 
decision, [the court is] not likely to shift fees absent any 
other evidence presented." 
On April 15, 2011, citing the attorneys' fees provision, 
Dewberry filed a motion, supported by numerous billing records 
and other documentation, for an award of attorneys' fees and 
expenses for both the prosecution of its complaint and the 
 
6 
defense of the counterclaim.  Dewberry calculated the award 
due for collection of compensation owed under the second 
sentence of the attorneys' fees provision to include 25% of 
the judgment in addition to attorneys' fees and expenses of 
$5,795.50, while it claimed $338,356.60 in attorneys' fees and 
expenses for successfully defending the counterclaim. 
In response, C3 contended that although the attorneys' 
fees provision required that "[t]he losing party shall pay 
. . . reasonable attorneys' fees and expenses," the use of the 
term "may" in the consent order had modified the contract and 
allowed the circuit court the discretion to decline awarding 
attorneys' fees to Dewberry.  (Emphasis added.)  C3 noted that 
the court had observed that the suit involved a "legitimate, 
good-faith dispute," and, thus, it contended that an award of 
attorneys' fees would be a "windfall for Dewberry," while 
penalizing C3 for pursing a legitimate, though ultimately 
unsuccessful, claim for breach of contract. 
C3 further contended that the attorneys' fees provision 
limited any recovery by Dewberry to that available under its 
second sentence.  C3 maintained that where a contract provides 
for an award of liquidated cost of collection damages that 
includes attorneys' fees, such an award necessarily includes 
the cost of the defense of any counterclaim. 
 
7 
Lastly, C3 contended that Dewberry's request for 
attorneys' fees included amounts that were "unrecoverable" 
because these fees related to "claims" on which Dewberry had 
not prevailed.  These "claims" were "unsuccessful defenses 
[that] were outside the scope of the [attorneys' fees] clause 
or were unreasonable," including a pre-trial motion for 
partial summary judgment and motions to compel discovery. 
In response, Dewberry maintained that the consent order 
was not intended as a novation of the contract, but merely 
provided for the manner of conduct of the trial.  Dewberry 
further contended that because it had prevailed on all issues 
regarding liability, it was entitled to recover all attorneys' 
fees related to both the prosecution of its complaint and the 
defense of the counterclaim and that it would be an abuse of 
discretion for the circuit court not to enforce the attorneys' 
fees provision as written. 
Thereafter, the circuit court held a hearing on the 
motion for attorneys' fees.  On June 14, 2011, the court 
issued an order with an incorporated opinion letter.  The 
court first concluded that "the only logical purpose of the 
[c]onsent [o]rder was to bifurcate the attorneys' fees issue 
from the trial on the merits."  Nonetheless, the court further 
concluded that "the 'may' versus 'shall' argument is 
ultimately a distinction without a difference [because, while] 
 
8 
the language of the [c]ontract is mandatory, under Virginia 
law, this Court must still be satisfied that fees should be 
awarded." 
The circuit court then discussed the nature of the 
counterclaim, concluding that "this was a good faith dispute."  
Thus, although "C3 [did] not dispute" that "Dewberry's fees 
for its defense of C3's [c]ounterclaim standing alone are fair 
and reasonable," the court nonetheless concluded that "given 
the nature of the dispute, shifting [the burden of attorneys' 
fees] to C3 is not warranted."  However, recognizing that the 
attorneys' fees provision was "mandatory," the court awarded 
Dewberry attorneys' fees of $18,160.46 for the prosecution of 
its complaint and one dollar for the defense of the 
counterclaim.2  The circuit court did not address C3's 
arguments that Dewberry could recover only under the second 
sentence of the attorneys' fees provision and that Dewberry 
was barred from recovering fees associated with the pre-trial 
motions on which it had not prevailed. 
Dewberry filed a motion for reconsideration of the award 
of one dollar as attorneys' fees and expenses for its 
successful defense of the counterclaim.  Dewberry maintained 
                     
2 The record is not clear regarding how the amount of the 
award was calculated with regard to Dewberry's complaint.  
However, that issue is not presented in this appeal. 
 
 
9 
that the court had improperly rewritten the parties' contract 
through its "adoption of [a] 'good faith dispute'" standard.  
Dewberry asserted that it was entitled to an award of 
reasonable attorneys' fees for its successful defense of C3's 
counterclaim, regardless of whether C3 had a good faith basis 
for asserting that claim. 
Having previously suspended the order entered June 14, 
2011, the circuit court issued a final order with an 
incorporated opinion letter on July 8, 2011 denying Dewberry's 
motion for reconsideration.  The court stated that while its 
prior opinion letter had "take[n] into consideration the 
nature of the dispute, it was to explain the circumstances 
that led to the result of the dispute."  In the court's view, 
although "Dewberry may have prevailed in the trial . . . it 
still plainly breached its contract . . . because it failed to 
provide C3 access to [DVP's service area] as it had agreed."  
Thus, because both parties had breached the contract and 
Dewberry had prevailed on C3's counterclaim only because C3 
had been the first to breach the contract, the court reasoned 
that "based on the result of the dispute, the . . . decision 
to award Dewberry its attorneys' fees of $1.00 is reasonable." 
We awarded Dewberry an appeal on the following assignment 
of error: 
 
10 
The trial court erred by abusing its discretion in 
awarding Dewberry only $1.00 in attorneys' fees and 
expenses for its successful defense of [C3's] 
Counterclaim in contravention of clear contract 
language directing recovery by a prevailing party of 
reasonable attorneys' fees and expenses for the 
prosecution or defense of any claim. 
 
We also awarded an appeal to C3 on its assignment of 
cross-error:3 
The trial court incorrectly construed the contract 
when it failed to find that the second sentence of 
section twenty two of the standard terms of the 
Contract, which states "The attorneys' fees payable 
to us [Dewberry] for the collection of compensation 
you [C3] owe shall be twenty-five percent of any 
judgment or award against you and our attorney's 
fees, expenses, and collection costs," did not cover 
all of Dewberry's Attorneys' fees, including defense 
of counterclaims filed in response to Dewberry's 
action. 
 
DISCUSSION 
At no time have the parties contended that the attorneys' 
fees provision is ambiguous, nor is there any dispute that 
Dewberry was the "winning party," as that term is used in the 
contract on both its complaint and C3's counterclaim.  Under 
these circumstances, this Court applies a de novo standard of 
review to interpret an unambiguous provision of a contract.  
PMA Capital Ins. Co. v. US Airways, Inc., 271 Va. 352, 357-58, 
626 S.E.2d 369, 372 (2006).  Moreover, the contract is to be 
                     
3 C3 also filed a cross-appeal addressing the merits of 
the underlying case.  We refused C3's petition for appeal by 
order.  C3NS, Inc. v. Dewberry & Davis, Inc., Record No. 
111778 (December 19, 2011). 
 
11 
"construed as written, without adding terms that were not 
included by the parties."  Id. at 358, 626 S.E.2d at 372. 
"Under the so-called 'American rule,' a prevailing party 
generally cannot recover attorneys' fees from the losing 
party."  Ulloa v. QSP, Inc., 271 Va. 72, 81, 624 S.E.2d 43, 49 
(2006).  This rule, however, does not prevent parties to a 
contract from adopting provisions that shift the 
responsibility of attorneys' fees to the losing party in 
disputes involving the contract.  Id. 
A prevailing party who seeks to recover attorneys' fees 
pursuant to a contractual provision such as the one at issue 
here has the burden to present a prima facie case that the 
requested fees are reasonable and necessary.  Chawla v. 
BurgerBusters, Inc., 255 Va. 616, 623, 499 S.E.2d 829, 833 
(1998); see also Seyfarth, Shaw, Fairweather & Geraldson v. 
Lake Fairfax Seven Ltd. P'ship, 253 Va. 93, 96, 480 S.E.2d 
471, 473 (1997).  We have identified several factors that are 
relevant to the determination of this issue: 
[A] fact finder may consider, inter alia, the time 
and effort expended by the attorney, the nature of 
the services rendered, the complexity of the 
services, the value of the services to the client, 
the results obtained, whether the fees incurred were 
consistent with those generally charged for similar 
services, and whether the services were necessary 
and appropriate. 
 
 
12 
Chawla, 255 Va. at 623, 499 S.E.2d at 833; accord Ulloa, 271 
Va. at 82, 624 S.E.2d at 49. 
Dewberry asserts that the circuit court misapplied the 
guidance given in Chawla by inferring that the "whether the 
services were necessary and appropriate" language permitted 
the court to consider the "nature of the dispute" and apply a 
"good faith" requirement to limit the prevailing party's 
recovery.  Dewberry contends that a trial court's 
consideration of the reasonableness of the attorneys' fees 
requested should be limited to the substance and relationship 
of the fees to the prosecution or defense of a claim, without 
consideration of whether the opposing party had a good faith 
basis for taking an adverse position at trial.  Thus, because 
the court determined that the fees and expenses Dewberry 
submitted for the defense of C3's counterclaim were otherwise 
"fair and reasonable," Dewberry asserts that the court abused 
its discretion in limiting Dewberry's recovery of attorneys' 
fees for the defense of the counterclaim because it found that 
the counterclaim arose from a "legitimate dispute."  We agree. 
In its June 14, 2011 opinion letter, the circuit court 
expressly stated that it was limiting Dewberry's recovery 
because "given the nature of the dispute, shifting [the burden 
of attorneys' fees] to C3 is not warranted."  Although the 
court subsequently clarified that it had "take[n] into 
 
13 
consideration the nature of the dispute . . . to explain the 
circumstances that led to the result of the dispute," the 
result of the dispute is relevant only to determining under 
the contract which party is the "winning party" and therefore 
entitled to seek an award of attorneys' fees.  Moreover, the 
court reasoned that not shifting the burden of the attorneys' 
fees to C3 was "warranted" because Dewberry had prevailed on 
the counterclaim only by virtue of the affirmative defense 
that C3 had first breached the contract.  This reasoning is 
plainly wrong.  It is not in accord with the contract 
provision providing that the "losing party shall pay the 
winning party's reasonable attorneys' fees and expenses for 
the . . . defense of any . . . claim . . . under this 
Agreement." 
A trial court may, when determining the reasonableness of 
the fees and expenses claimed by a prevailing party, deduct 
from the award any fees and expenses associated with claims 
and defenses the court views to be frivolous, spurious, or 
unnecessary.  Chawla, 255 Va. at 624, 829 S.E. 2d at 833; 
Ulloa, 271 Va. at 83, 624 S.E.2d at 50.  However, "[c]ourts 
will not rewrite contracts; parties to a contract will be held 
to the terms upon which they agreed."  The Bank of Southside 
Virginia v. Candelario, 238 Va. 635, 640, 385 S.E.2d 601, 603 
(1989).  Here, the award of one dollar as reasonable 
 
14 
attorneys' fees essentially required the circuit court to 
rewrite the parties' contract.  It takes no analytical leap to 
conclude that an award of one dollar was not contemplated by 
the parties' contract.  Accordingly, we hold that the circuit 
court abused its discretion in limiting Dewberry's recovery of 
attorneys' fees and expenses for its successful defense of 
C3's counterclaim to one dollar. 
We turn now to consider C3's assignment of cross-error.  
The thrust of C3's various assertions is that Dewberry was 
limited to one award of attorneys' fees rather than two and 
the amount of that award was limited by the provisions of the 
second sentence in the attorneys' fee provision of the 
parties' contract. 
C3 maintains that Dewberry's complaint was "for the 
collection of compensation" as contemplated by the second 
sentence of the attorneys' fees provision and would have 
included the costs of the necessary efforts to dispute C3's 
claim that Dewberry had breached the contract and, thus, 
excused or mitigated C3's lack of payment of compensation 
otherwise due to Dewberry.  C3 contends that the costs of 
these efforts would have been incurred by Dewberry even if C3 
had not also sought an "affirmative recovery" through its 
counterclaim.  C3 thus maintains that because there was only 
one action for the collection of compensation, Dewberry was 
 
15 
limited to one award of attorneys' fees and the award was 
limited to "twenty-five percent of any judgment . . . against 
[C3] and [Dewberry's] attorneys' fees, expenses, and 
collection costs." 
C3's assertions are flawed on multiple grounds.  First, 
C3's assertion that Dewberry would have been required to 
respond to the claim that it had breached the contract even if 
C3 had not asserted its counterclaim and sought an 
"affirmative recovery" belies the fact that C3 actually sought 
to recover damages for Dewberry's alleged breach that were 
well in excess of those claimed in Dewberry's complaint.  The 
counterclaim did not seek merely to mitigate or alleviate C3's 
liability, but to impose a significant liability on Dewberry 
as well.  By increasing the magnitude of the amount in 
controversy, C3 necessarily increased the costs to defend a 
claim that otherwise would have been presented only as an 
affirmative defense to a much smaller amount in controversy. 
Second, the nature of the counterclaim expanded the scope 
of the litigation far beyond a collection of compensation 
dispute.  An examination of the record shows that the greater 
portion of the lengthy discovery process and the nine-day 
trial was devoted to the prosecution and defense of the 
counterclaim.  In this context, there was never any real 
dispute that Dewberry was owed compensation under the 
 
16 
contract, only whether it had breached the contract in a 
manner that would bar it from collecting the balance due.  
Indeed, while a claim of $338,356.60 in attorneys' fees for 
contesting an affirmative defense to the claim for 
compensation of less than one-sixth that amount would be 
excessive and unreasonable, a different calculus would apply 
where the same amount is expended in defending against a claim 
for $1,500,000 in damages. 
Accordingly, we do not agree with C3 that because the 
facts asserted to support its counterclaim might also have 
served as a defense to the complaint, the entire matter was 
"for the collection of compensation" and, thus, all fees to be 
awarded would be subject to the second sentence of the 
attorneys' fees provision.  We hold that the defense of the 
counterclaim was not part of the collection action and the 
circuit court did not err in failing to find that an award of 
attorney's fees and expenses to Dewberry on the counterclaim 
would be controlled by the second sentence of the attorneys' 
fees provision.4 
Having determined that the circuit court erred in 
limiting the award of attorneys' fees and expenses for 
                     
4 In light of this holding, we need not address C3's 
further assertion concerning the method for calculating an 
award under the second sentence of the attorneys' fees 
provision. 
 
17 
Dewberry's successful defense of C3's counterclaim to one 
dollar and that the calculation of the award is not subject to 
the "for the collection of compensation" clause of the 
attorneys' fees provision, we must now consider what result 
should obtain in this Court.  Dewberry contends that because 
the court determined that the claim for $338,356.60 in 
attorneys' fees and expenses was "fair and reasonable," we 
should remand with instruction to award that amount.  Dewberry 
further requests that upon remand it be permitted to seek an 
award of attorneys' fees and expenses for the prosecution of 
this appeal and defense of the assignment of cross-error.   
C3 responds that we should remand the case to the circuit 
court with "instruction regarding [the] attorneys' fees that 
can be awarded against" C3, but without specifically directing 
the court to award the amount claimed by Dewberry.  C3 
conceded at trial that it was not challenging the 
reasonableness of the hourly billing rate nor the number of 
hours billed by Dewberry's counsel for defense of the 
counterclaim.  However, C3 maintains that it did not concede 
the necessity of all the charges at trial and that the court 
made no express ruling on this issue.  The record supports 
this contention.  During oral argument of this appeal, counsel 
explained that "there had been no reason" to contest the 
necessity of individual elements of the fees in light of the 
 
18 
court's ultimate award of only one dollar.  Accordingly, 
counsel expressly requested at the conclusion of oral argument 
that the issue be remanded with instruction for the circuit 
court to receive evidence as to whether all the fees claimed 
were necessary to the defense of the counterclaim. 
In its opposition to Dewberry's motion for attorneys' 
fees, at trial C3 clearly contested the necessity of some of 
the fees claimed, specifically asserting that Dewberry should 
not recover for unsuccessful motions related to discovery and 
an unsuccessful motion for partial summary judgment on the 
counterclaim.  While we have held that a party entitled to 
recover attorneys' fees may do so only for those issues on 
which it prevailed and which relate to the contract, Ulloa, 
271 Va. at 83, 624 S.E.2d at 50, heretofore we have not 
required the party to show that it was successful in every 
aspect of its prosecution or defense related to those issues 
on which it prevailed, and we decline to adopt such a rule 
now. 
Rather, the question is whether, given the factors set 
forth and explained in Chawla, Ulloa, and their progeny, the 
fees were reasonable, necessary and appropriate to the 
particular circumstances of the litigation.  Chawla, 255 Va. 
at 623, 499 S.E.2d at 833; Ulloa, 271 Va. at 82, 624 S.E.2d at 
49.  Merely because a party loses a pre-trial motion related 
 
19 
to an issue on which the party ultimately prevails does not 
mean that the pre-trial motion was not appropriate at the time 
it was filed and under the circumstances of the case.  It is 
the province of the trial court to determine whether fees for 
these services were necessary. 
We are of opinion that the circuit court's finding that 
"[attorneys'] fees for [Dewberry's] defense of [C3's] 
counterclaim standing alone are fair and reasonable" did not 
resolve the issue whether all of those fees were necessary.  
"Fair" and "reasonable," the terms used by the court in its 
opinion letter, are synonymous in meaning.  Here, no evidence 
was received concerning the necessity of those fees and no 
express ruling on that issue was made by the court.  
Undoubtedly this was because of the court's erroneous ruling 
limiting the recovery of attorneys' fees on the counterclaim 
to one dollar.  Moreover, we are further of opinion that the 
trial court should be afforded the opportunity to exercise its 
discretion to resolve this issue in the first instance rather 
than for this Court to resolve the issue in this appeal.  
Accordingly, we hold that while the reasonableness of the 
hourly rate of Dewberry's claim for attorneys' fees and 
expenses will not be subject to challenge upon remand, the 
court may receive evidence on the issue whether all the fees 
charged with respect to the defense of the counterclaim were 
 
20 
necessary applying the guidance found in Chawla and Ulloa as 
discussed herein. 
CONCLUSION 
For these reasons, we will reverse the judgment of the 
circuit court awarding one dollar in attorneys' fees and 
expenses to Dewberry for its successful defense of C3's 
counterclaim.  We will remand the case to the circuit court 
for further proceedings to determine a proper award to 
Dewberry for attorneys' fees and expenses for its successful 
defense of C3's counterclaim.  Additionally, upon remand, 
Dewberry may submit to the circuit court a claim for 
additional attorneys' fees and expenses, and the court shall 
award such fees and expenses that it determines to be 
reasonable and necessary for the successful prosecution of 
this appeal and defense of C3's assignment of cross-error 
thereto. 
Reversed and remanded.