Opinion ID: 1058992
Heading Depth: 2
Heading Rank: 2

Heading: The Plain Meaning of the Contract

Text: Having determined the doctrine of judicial estoppel does not apply under the facts of this case, we next address Bentley and Denger's argument that the trial court failed to follow the plain meaning of the Contract in several respects. Specifically, Bentley and Denger aver the trial court erred in holding the Escrows were a development right and thus passed to SK & R under that term of the Contract. Further, Bentley and Denger contend the trial court ignored the plain meaning of Property in the Contract and improperly construed the Contract to include the Escrows as part of the project. We agree with Bentley and Denger. The parties do not dispute that the Contract is unambiguous, and the trial court agreed. [W]hen contract terms are clear and unambiguous, we must construe those terms according to their plain meaning. Lansdowne Dev. Co., L.L.C. v. Xerox Realty Corp., 257 Va. 392, 400, 514 S.E.2d 157, 161 (1999). A court may not add to the terms of the contracts of parties by construction, in order to meet the [circumstances] of a particular case. C.S. Luck & Sons, Inc. v. Boatwright, 157 Va. 490, 497, 162 S.E. 53, 55 (1932). We therefore examine the terms of the Contract as written. The Contract specifically defined the term Property to be the delineated real property together with all approvals, permits, development rights, consents and renewals thereof relating thereto. Nowhere in the Contract do the terms project or Escrows appear. Neither does the Contract contain an inference that something other than the Property is conveyed. The trial court noted the sale of the Property took place during Bentley's bankruptcy proceeding and that the Contract, therefore, was not just the sale of the real estate ... but the salvage of the entire project. The trial court found in the March 12th order that it was the intent of the parties to transfer the entire project ... including the erosion control escrows. The trial court implied that the Bankruptcy Court's Order approving the Contract included the entire River Oaks project, not just the Property in the confirmed conveyance. However, the term project does not appear in the Bankruptcy Court Order. To the contrary, that Order specifically recites that SK & R is to receive Bentley's interest in the Property under the terms of the Contract and approves the Contract. It is the function of the court to construe the contract made by the parties, not ... to alter the contract they have made so as to conform it to the court's notion of the contract they should have made in view of the subject matter and the surrounding facts and circumstances.... The court ... is not at liberty ... to put a construction on the words the parties have used which they do not properly bear. It is the court's duty to declare what the instrument itself says it says. Ames v. American Nat. Bank, 163 Va. 1, 38, 176 S.E. 204, 216 (1934). The trial court's construction of the admittedly unambiguous Contract, transforming the mutually defined term of the conveyance, Property, into the transfer of an unmentioned and undefined term, Project, is plainly wrong. The trial court ignored the plain language of the Contract by adding provisions not included by the parties. This it cannot do. The trial court cannot conjure the conveyance of the Escrows under the rubric of the project when the parties have not chosen by the plain language of the Contract to do so. Further, under the principle of expressio unius est exclusio alterius, the omission of a particular covenant or term from a contract reduced to writing shows an intent to exclude it. First Nat'l Bank v. Roy N. Ford Co., 219 Va. 942, 946, 252 S.E.2d 354, 357 (1979). As Property under the Contract does not include the Escrows, the trial court cannot add that asset to the items conveyed. Thus, unless the term development rights, which is used in the Contract, includes the Escrows by definition, we must find that the Contract did not transfer the Escrows. In examining the Contract's conveyance of all approvals, permits, development rights, consents and renewals as part of the Property, the trial court found that an erosion control escrow constitutes a development right because this is an interest claim that the developer has, in this case SK & R, [in] the development, the improvement of this particular property. So I don't think it's a stretch to say that an erosion control escrow is a development right. [9] Development rights are property rights. Although less than a fee interest, development rights are beyond question a valuable right in property. Mission Springs, Inc. v. City of Spokane, 134 Wash.2d 947, 954 P.2d 250, 257 (1998). While a deed or contract conveying a development right will often identify the scope of that right, that did not occur in this case. However, it is clear the Escrows are not an interest in real property or a related right to real property. Rather, an escrow is [a]n account held in trust or as security. Black's Law Dictionary 584 (8th ed.2004). Whatever else a development right may encompass, it does not include a security interest like the Escrows unless the parties have so agreed. To hold otherwise would fundamentally alter the meaning of development rights and, again, add terms to the Contract not agreed upon by the parties. Had the parties wished, in addition to development rights, to convey any asset securing those rights, they could have done so. They did not. The trial court therefore erred in determining that the Contract conveyed the Escrows as a development right. As a consequence, the trial court's finding that no evidence supported Denger's claim to the Escrows is also untenable. The trial court based its judgment as to Denger on the theory that the Escrows passed to SK & R as development rights which the Contract required be free and clear of all liens, interest and encumbrances. As Denger had not joined the Contract to note an exception to the lien-free conveyance of the Escrows, the trial court reasoned any claim by him violated that contractual covenant. Having determined that the development rights do not include the Escrows, the trial court's basis for its decision as to Denger's claim to the Escrows is without foundation. Moreover, the record plainly reflects Denger's transfer of all the funds comprising the Escrows directly from his personal account to legal counsel's trust account and in turn, to the County.