Title: Lansdowne Development Co. v. Xerox Realty
Citation: N/A
Docket Number: 981043
State: Virginia
Issuer: Virginia Supreme Court
Date: February 26, 1999

Present:  All the Justices 
 
LANSDOWNE DEVELOPMENT COMPANY, L.L.C. 
 
OPINION BY 
v.  Record No. 981043 
JUSTICE LAWRENCE L. KOONTZ, JR. 
 
February 26, 1999 
XEROX REALTY CORPORATION, ET AL. 
 
 
FROM THE CIRCUIT COURT OF LOUDOUN COUNTY 
Thomas D. Horne, Judge 
 
In this appeal, we consider whether the contract between 
the parties to a real estate transaction required the purchaser 
to provide a deed of trust to the seller to secure the 
purchaser’s performance of rezoning proffers made by the seller 
to the local government, where the contract required the 
purchaser to assume the seller’s liability for the proffers. 
BACKGROUND
Although the record in this complex land development case 
is quite extensive, we recount only those facts relevant to our 
resolution of the appeal.  Xerox Realty Corporation (Xerox 
Realty), a wholly owned subsidiary of Xerox Corporation, is the 
owner of approximately 1,350 acres of undeveloped land in 
Loudoun County (the property).  Xerox Realty also owns an 
adjacent developed parcel leased to another Xerox subsidiary, 
the Xerox Document University (the XDU parcel).  Xerox Realty 
had planned to use the undeveloped property for expansion and 
mixed commercial and residential development.  However, due to 
changes in market conditions, Xerox Realty determined that 
commercial development of the property was not feasible and 
began exploring the possibility of selling the property to a 
developer for use exclusively as a residential development.  
This change in the development concept required rezoning of the 
property. 
At the time the decision to change the development concept 
was made, Xerox Realty had already made various proffers to 
Loudoun County concerning the development of the property and 
had entered into contracts and conservancy documents relevant to 
the use of both the property and the XDU parcel.  In the summer 
of 1993, Xerox Realty entered into negotiations with Lansdowne 
Development Company, L.L.C. (Lansdowne)1 for the sale of the 
property.  The completion of the sale was conditioned upon the 
successful rezoning of the property for residential development, 
and Xerox Realty was to “take the lead on the rezoning effort 
with the cooperation and input of [Lansdowne].”  During the 
negotiations and in the final contract, the parties referred to 
the development plan for the property, including the existing 
and anticipated proffer obligations, as “the Project.” 
During the negotiations between Xerox Realty and Lansdowne, 
Xerox Realty estimated the total value of the project prior to 
                     
1Xerox Realty initially negotiated with Parity Partners, a 
California partnership controlled by Lansdowne’s principal. 
 
 
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development at 40 million dollars, of which approximately 18.5 
million dollars represented Xerox Realty’s obligation to 
complete the proffers it had previously made or would make to 
secure the necessary rezoning.  In a letter of intent dated 
September 30, 1993, Lansdowne agreed to a cash purchase price of 
21.5 million dollars and the assumption “of [Xerox Realty’s] 
liabilities and obligations with respect to the Project 
(including, without limitation, those arising under contracts, 
proffers, bonds, conservancy documents and other matters related 
to the [property]) and [to] secure a release of [Xerox Realty] 
therefrom, if possible.”  Lansdowne’s letter of intent further 
specified that Lansdowne’s “agreement to perform such proffer 
obligations will be secured by [a] Deed of Trust . . . and by a 
reserve account.” 
In the final contract, dated December 30, 1993, between 
Xerox Realty and Lansdowne, these aspects of the negotiations 
regarding the purchase price of the property and the assumption 
of liability for the rezoning proffers were memorialized in the 
following terms: 
Purchaser shall assume the Liabilities and, to the 
extent Seller has not been released from the 
Liabilities, shall pay, honor and discharge such 
Liabilities when due and payable or otherwise required 
to be performed under the relevant agreements and 
instruments. . . . 
 
[A]t Closing Purchaser shall assume all proffer 
obligations with respect to the Project provided for 
 
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in the Development Concept Plan . . . (“Proffer 
Obligations”).  All such Proffer Obligations shall be 
performed by Purchaser as and when required under the 
Development Concept Plan.  Proffer Obligations that 
require expenditures of sums of money in connection 
with their performance . . . are referred to herein as 
“Monetary Proffers.”  Purchaser’s obligations 
hereunder to perform the Monetary Proffers shall be 
secured by the Purchase Money Trust (as hereinafter 
defined).  The amount to be secured shall be 
determined prior to Closing by christopher consultants 
or by another engineer mutually acceptable to the 
parties. . . . 
 
If Purchaser fails to timely perform its Proffer 
Obligations . . . and if Loudoun County requires 
Seller to perform such Proffer Obligations or if the 
failure to perform such Proffer Obligations has a 
material adverse effect on the use and operation of 
the XDU Parcel, . . . then Seller shall have the 
right, but not the obligation . . . to enter upon the 
Land . . . to perform such unperformed Proffer 
Obligations as may be deemed necessary by Seller in 
its sole discretion. 
 
The Purchase Money Trust as defined in the contract 
included a purchase money note “secured by a first lien deed of 
trust . . . on the Project.”  Relevant to this appeal, the 
contract also provided that in the event of litigation arising 
from the contract, “any judgment awarded to the prevailing party 
shall include all litigation expenses, including actual 
attorney’s fees, which shall not be unreasonable, and court 
costs.” 
In order to obtain the rezoning required by the contract, 
Xerox Realty as owner of the property and the XDU parcel, along 
with other adjoining landowners and Lansdowne, made further 
 
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rezoning proffers to Loudoun County in an amendment to the 
original development plan dated May 24, 1995.  Loudoun County 
accepted the amended development plan, which required the 
parties to put into effect certain escrow arrangements and trust 
funds to assure adequate funding of construction and 
improvements related to the proffers. 
Pursuant to the terms of the contract, christopher 
consultants2 was to develop “an estimate for the proffer 
commitments made with the recently approved Rezoning and Concept 
Plan Amendment for Lansdowne.”  On September 7, 1995, 
christopher consultants provided Xerox Realty with a preliminary 
estimate of the construction cost of the proffers, placing that 
cost in excess of 18 million dollars.  Xerox Realty forwarded 
this estimate to Lansdowne on September 26, 1995, indicating 
that Xerox Realty intended to use the estimate “in computing the 
final amount of the [Lansdowne] Deed of Trust” at the closing. 
Prior to closing, Lansdowne arranged to sell two sections 
of the property.  Lansdowne requested that Xerox Realty release 
these sections from the deed of trust at closing.  Xerox Realty 
refused this request, noting that the contract had specific 
terms for release of portions of the property, and that these 
requirements would not be met under Lansdowne’s proposal. 
                     
2The firm uses all lower case letters for its trade name.  
 
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After first obtaining an attorney’s opinion letter 
indicating that Xerox Realty could not “be required to perform 
obligations under the Monetary Proffers,” Lansdowne prepared a 
memorandum for christopher consultants requesting that it 
“determine the amount of security [Lansdowne] is to give in 
order to protect [Xerox Realty] from liability under the 
Monetary Proffers.”  In this memorandum, Lansdowne further 
stated that “[t]he amount of security to be granted by 
[Lansdowne] is to be distinguished from the projected cost of 
construction or comp[l]etion of the Monetary Proffers, which the 
[contract] does not request.” 
On January 22, 1996, Dr. Henry Grausz, Lansdowne’s 
principal, met with Louis Canonico, a vice president of 
christopher consultants, and gave him the memorandum requesting 
an opinion as to the liability to be secured.  Canonico told 
Grausz that, as an engineering firm, christopher consultants was 
not qualified to give an opinion as to liability. 
On January 25, 1996, Canonico prepared a letter for 
Lansdowne stating that, while christopher consultants “cannot 
speak to legal issues relating to proffers or sales contracts,” 
it had “retained the services” of the attorney who had provided 
Lansdowne with the opinion letter.  Relying on the attorney’s 
opinion that Xerox Realty would have no liability to perform the 
proffers after the sale of the property, the letter goes on to 
 
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state that “we find that there is zero dollars liability, in 
terms of the value of what would need to be secured relating to 
[M]onetary [P]roffers as it impacts the seller of the Lansdowne 
project.”  At trial, Canonico admitted that christopher 
consultants had not retained the services of the attorney, and 
that he had relied on the opinion letter obtained by Lansdowne 
in drafting the January 25, 1996 letter.  He further testified 
that in writing the letter, christopher consultants was not 
“taking any position as to what the contract [between Xerox 
Realty and Lansdowne] required” christopher consultants to 
perform.  Lansdowne did not provide Xerox Realty with a copy of 
this letter. 
On the day of the scheduled closing, Lansdowne refused to 
provide Xerox Realty with the deed of trust called for in the 
contract.  Based on this refusal, Xerox Realty terminated the 
contract. 
On March 27, 1996, Lansdowne filed a bill of complaint 
against Xerox Realty seeking specific performance of the 
contract.  Lansdowne alleged that the contract required it to 
secure by deed of trust Xerox Realty’s post-transfer liability 
for the “Monetary Proffers,” not the actual cost of completing 
those proffers.  Lansdowne further alleged that christopher 
consultants was to determine the amount of liability, if any, to 
be secured.  Asserting that the January 25, 1996 letter from 
 
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christopher consultants established that Xerox Realty’s post-
transfer liability was “‘zero dollars,’” Lansdowne alleged that 
it was entitled to specific performance of the contract without 
having to provide Xerox Realty with the deed of trust.3  In its 
answer, Xerox Realty denied that a plain reading of the contract 
would support Lansdowne’s interpretation that only Xerox 
Realty's liability was to be secured by the deed of trust.  
Xerox Realty also sought an award of attorney’s fees and costs 
for having to defend the suit. 
A hearing was held before the chancellor in which evidence 
in accord with the above recounted facts was received.  In an 
opinion letter dated April 22, 1997, the chancellor indicated 
that he would rule in favor of Xerox Realty, stating: 
[T]he Court can find no justification to vary the 
express terms of the contract of sale.  That agreement 
requires that Lansdowne Development Corporation . . . 
secure the monetary proffer obligations to be 
performed in connection with the development of the 
property with a purchase money trust securing 
completion of over eighteen million dollars in 
proffers as determined by the engineering firm agreed 
upon by the parties.  The lengthy record is devoid of 
evidence that it was the understanding of the parties 
to leave open for further consideration the legal 
determination as to whether, and to what extent, 
[Xerox Realty] would have a continuing obligation to 
perform the proffers after the land had been conveyed.  
Lansdowne failed to tender such a deed of trust and 
was in default of its obligation to settle in 
                     
3Lansdowne also sought monetary damages under various 
theories.  These claims are not at issue in this appeal. 
 
 
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accordance with the terms of the contract. . . .  It 
is not for this court to rewrite the contract for the 
parties. 
 
In a decree referencing his opinion letter, the chancellor 
awarded judgment to Xerox Realty and appointed a commissioner in 
chancery to determine “attorney’s fees and costs to which [Xerox 
Realty] is entitled pursuant to [the contract].”  After 
receiving expert testimony and reviewing the claims made by 
Xerox Realty, the commissioner deleted certain specific claims, 
reduced certain other claims by ten percent, and recommended an 
award of $908,007.73 for attorney’s fees and $234,100.32 for 
other litigation expenses to Xerox Realty. 
Prior to the commissioner’s hearing, Lansdowne filed 
numerous pleadings objecting to Xerox Realty’s claims for 
attorney’s fees and costs.  Subsequent to the filing of the 
commissioner’s report, Lansdowne filed its exceptions to the 
report, incorporating its prior objections.  Relevant to this 
appeal, Lansdowne asserted that Xerox Realty had not incurred 
any “litigation expenses” since all of the attorney’s fees and 
costs had been billed to and paid by Xerox Realty’s parent 
corporation.  Lansdowne further asserted generally that the 
attorney’s fees and costs claimed by Xerox Realty were 
unreasonable, contending that the case “could have been handled 
at typical Loudoun County rates.” 
 
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In an opinion letter dated January 29, 1998, the chancellor 
found that Xerox Realty as “a wholly owned subsidiary of the 
Xerox Corporation, and not its parent company, was liable for, 
and ultimately held accountable for the legal services rendered 
in connection with this case.”  The chancellor further found 
that the fee schedules of the individual attorneys were 
reasonable and that “given the limited number of large law firms 
in Loudoun County and the relationship which [Xerox Realty] 
previously enjoyed with [a Washington, D.C.-based law firm], it 
was not unreasonable that Xerox would seek the services of that 
firm,” when a local firm was required to withdraw from 
representation.  Accordingly, the chancellor rejected 
Lansdowne’s exceptions to the commissioner’s report and awarded 
attorney’s fees and costs to Xerox Realty in the amount 
determined by the commissioner.  This appeal followed. 
DISCUSSION
Several familiar principles govern our resolution of this 
appeal.  First, when contract terms are clear and unambiguous, 
we must construe those terms according to their plain meaning.  
Bridgestone/Firestone v. Prince William Square, 250 Va. 402, 
407, 463 S.E.2d 661, 664 (1995).  Additionally, we will not 
insert by construction, for the benefit of a party, a term not 
express in the contract.  See id.  Moreover, when considering 
the meaning of any part of a contract, we will construe the 
 
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contract as a whole.  See Vega v. Chattan Associates, 246 Va. 
196, 199, 435 S.E.2d 142, 143 (1993). 
Although the chancellor permitted the parties to present 
extensive parol evidence, his ultimate resolution rested on “the 
express terms of the contract of sale” and, thus, the chancellor 
implicitly found the contract to be clear and unambiguous.  
Moreover, neither party now contends that parol evidence is 
necessary to construe the contract in its favor.  Rather, 
Lansdowne contends that the plain meaning of the contract is 
that the Purchase Money Trust would secure Xerox Realty’s post-
sale liability4 on the Monetary Proffers and that christopher 
consultants was to determine the amount of that liability.  
Xerox Realty contends that the plain meaning of the contract is 
that the Purchase Money Trust would secure Lansdowne’s 
performance of the Monetary Proffers and that christopher 
consultants was to determine the cost of that performance.  We 
agree with Xerox Realty. 
Under the terms of the contract, Lansdowne was to assume 
all liabilities relevant to the development and rezoning 
proffers made by Xerox Realty including the “Monetary Proffers.”  
                     
4Although a local zoning administrator may bring a legal 
action to enforce zoning conditions, see Code § 15.2-2299, we 
need not, and do not, express an opinion on the applicability of 
this statute to Xerox Realty’s post-sale liability on the 
Monetary Proffers in this case.  
 
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The contract plainly states that Lansdowne’s “obligations . . . 
to perform the Monetary Proffers shall be secured by the 
Purchase Money Trust.” (Emphasis added.)  Nothing in this 
language, or in any other provision of the contract, suggests 
that the parties intended the Purchase Money Trust to secure 
Xerox Realty’s post-sale liability, and we will not insert such 
language for the benefit of Lansdowne.  Bridgestone/Firestone, 
supra. 
Lansdowne further contends that regardless of the purpose 
of the security to be provided for the Monetary Proffers, the 
determination by christopher consultants in the January 25, 1996 
letter that there was “zero dollars . . . to be secured relating 
to the [M]onetary [P]roffers” was binding on Xerox Realty since 
the parties agreed that christopher consultants would determine 
“[t]he amount to be secured.”  We disagree with Lansdowne. 
The January 25, 1996 letter Lansdowne procured from 
christopher consultants merely expresses an opinion as to Xerox 
Realty’s post-sale liability.  Nothing in the contract suggests 
that the parties contemplated that christopher consultants, an 
engineering firm, would provide a legal opinion as to liability 
or that such an opinion was relevant to the determination of 
“[t]he amount to be secured” for Lansdowne’s performance of the 
Monetary Proffers.  The September 7, 1995 letter provided by 
christopher consultants to Xerox Realty and sent by Xerox Realty 
 
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to Lansdowne established “[t]he amount to be secured,” and, as 
Canonico’s testimony confirms, nothing in the January 25, 1996 
letter was intended to contradict or displace the estimate given 
in the earlier letter. 
Lansdowne further contends that Xerox Realty should be 
estopped from asserting its right to have Lansdowne’s 
performance of the Monetary Proffers secured by the deed of 
trust because of the terms of the amended development plan 
agreed to by Loudoun County, Xerox Realty, Lansdowne, and the 
other landowners.  Lansdowne contends that the establishment of 
the escrow accounts and trust funds under the amended 
development plan eliminated any risk that the proffers would not 
be completed and, thus, that Xerox Realty, as a party to this 
agreement, waived its right to have completion of the proffers 
secured by the deed of trust. 
Again, Lansdowne confuses the bargain of the contract, 
which required it to secure its performance of the Monetary 
Proffers, with the unrelated issue of whether Xerox Realty might 
ultimately incur liability as a result of Lansdowne’s failure to 
perform.  Under the contract, Lansdowne was obligated to perform 
the Monetary Proffers and was required to secure that obligation 
by providing Xerox Realty with a deed of trust.  This obligation 
was part of the consideration Lansdowne was to give in return 
for the transfer of the property.  It is simply not relevant 
 
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that Loudoun County, with Xerox Realty’s agreement, obtained 
additional means to secure the ultimate completion of the 
proffers. 
Finally, Lansdowne contends that the chancellor erred in 
awarding certain items as “litigation expenses” to Xerox Realty.5  
Citing Advanced Marine Enterprises v. PRC Inc., 256 Va. 106, 
126, 501 S.E.2d 148, 160 (1998), Lansdowne contends that 
“library research, meals, courier services and the like” should 
not have been included in the award. 
In Advanced Marine, we held that “a trial court’s 
discretion to award costs under . . . the relevant provisions of 
Code §§ 14.1-177 through –201 [now § 17.1-600, et seq.], is 
limited only to those costs essential for prosecution of the 
suit, such as filing fees or charges for service of process,” 
id., where the statute granting the trial court such authority 
limited the award to “costs of suit, including reasonable 
counsel fees.”  Code § 18.2-500.  In doing so, we noted that the 
                     
5Lansdowne also reasserts its contentions that the 
litigation expenses were actually incurred by Xerox Realty’s 
parent corporation and that the fee schedules of the attorneys 
were unreasonable.  On appeal, the chancellor’s decree approving 
a commissioner’s report will be affirmed unless plainly wrong or 
without support in the evidence.  Chesapeake Builders, Inc. v. 
Lee, 254 Va. 294, 299, 492 S.E.2d 141, 144 (1997).  The record 
here adequately supports the reasonableness of the attorney’s 
fees recommended by the commissioner and the chancellor’s 
determination that Xerox Reality was ultimately liable for these 
fees and the other litigation expenses incurred on its behalf. 
 
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authority for such awards is in derogation of the common law 
and, thus, subject to a strict interpretation.  Id. at 125, 501 
S.E.2d at 159. 
Here, the award of costs is not made pursuant to a statute, 
but under a provision of the contract permitting the prevailing 
party to recover “all litigation expenses, including actual 
attorney’s fees, which shall not be unreasonable, and court 
costs.”  This language is more comprehensive than that of the 
statute at issue in Advanced Marine.  Moreover, we are not 
required to apply the same narrow construction to a contract 
that we apply to a statute in derogation of the common law. 
Nonetheless, we agree with Lansdowne that “all litigation 
expenses” cannot be so broadly construed as to include any 
charge made by an attorney to a client in the course of 
litigation.  The record in this case shows that among other 
items, Xerox Realty’s attorneys invoiced several “Conference 
Room Expenses” in amounts ranging from $1.50 to $11.00.  During 
the commissioner’s hearing, one of the attorneys indicated that 
this charge was for “sodas and coffee and things of that 
nature.”  Additional items found in the invoices submitted by 
Xerox Realty to the commissioner in chancery, apart from the 
actual legal work of the attorneys and their paraprofessional 
staff, include “Consulting Fees,” “Office Supplies,” “Local 
 
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Meals,” “Local Transportation,” “Binding,” “Miscellaneous,” and 
“Cash Expense.” 
Clearly, some of these charges are not direct costs of 
litigation and arguably should have been excluded from the award 
of costs recommended by the commissioner and approved by the 
chancellor.  However, as presented to this Court, the record 
does not show that Lansdowne made an adequate, particularized 
objection to any of these charges during the commissioner’s 
hearing or in its exceptions to the commissioner’s report.  
Lansdowne’s generalized exception to the “reasonableness” of the 
award of costs was insufficient to direct the chancellor, or 
this Court, to which of the myriad individual charges Lansdowne 
now objects.  A principal function of a commissioner’s hearing 
is to relieve the chancellor of the burden of assessing the 
minutiae of a complex evidentiary record.  Thus, the 
commissioner’s hearing was the proper forum in which to assert 
challenges to individual items or classes of items of the costs 
claimed as “litigation expenses,” and it is not the duty of the 
chancellor, or of this Court, sua sponte to conduct a review of 
the record of the commissioner’s hearing to determine the 
legitimacy of every individual item.  Accordingly, we hold that 
Lansdowne failed to adequately preserve this issue for appeal.  
Rule 5:25. 
 
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CONCLUSION
For these reasons, we find no reversible error in the 
judgment, and we will affirm the chancellor’s decree denying 
Lansdowne specific performance of the contract and awarding 
litigation expenses to Xerox Realty. 
Affirmed
 
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