Coady v. Strategic Resources, Inc.

515 S.E.2d 273, 258 Va. 12, 1999 Va. LEXIS 79
CourtSupreme Court of Virginia
DecidedJune 11, 1999
DocketRecord 981857
StatusPublished
Cited by31 cases

This text of 515 S.E.2d 273 (Coady v. Strategic Resources, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coady v. Strategic Resources, Inc., 515 S.E.2d 273, 258 Va. 12, 1999 Va. LEXIS 79 (Va. 1999).

Opinions

CHIEF JUSTICE CARRICO

delivered the opinion of the Court.

This appeal involves a “Consulting Agreement” entered into on April 22, 1996, between Strategic Resources, Inc. (SRI) and Jerry J. Coady (Coady) whereby SRI retained Coady as a consultant to perform services at a rate of $50.00 per hour in connection with “SRI’s contract with the Food and Drug Administration (FDA) Center for Drug Evaluation and Research.” The focus of the controversy is this provision of the Consulting Agreement:

CONSULTANT shall indemnify SRI . . . and hold [it] harmless from any and all claims, suits, proceedings, costs, losses, expenses, damages and liabilities, including but not limited to attorney’s fees and court costs, caused by or arising out of, or in connection with, CONSULTANT’S performance or nonperformance under this Agreement.

The record shows that Coady submitted an invoice to SRI for his work during the month of September 1996 in the amount of $7,700.71. SRI refused to pay the amount billed and sent Coady a check in the amount of $3,350.95 accompanied by a letter dated January 13, 1997, stating as follows: “This check covers all approved hours and expenses for all projects per our discussions. This will now settle your account with SRI.” Coady wrote on the front of the [15]*15check “Accepted as Partial Payment Balance due $3450.00.” On the back, he endorsed the check “For Deposit Only” and below his signature wrote “Accepted as partial payment of account.”

Coady requested payment of the $3,450.00, but SRI refused. On July 22, 1997, Coady filed a warrant in debt against SRI in the General District Court of Fairfax County alleging that SRI owed him $3,450.00 plus interest, costs, and attorney’s fees for services performed under their contract. SRI answered the warrant in debt and also filed a counterclaim alleging breach of contract and breach of warranty on Coady’s part and requesting damages in the amount of $30,000.00.

Prior to commencement of the trial in the district court, SRI moved to dismiss the warrant in debt on the ground of accord and satisfaction. The court dismissed both the warrant and the counterclaim “on the basis that an accord and satisfaction had been reached by the parties pursuant to Section 8.3A-311 of the Code of Virginia.”1

With leave of the district court, SRI subsequently filed a motion for attorney’s fees based upon the indemnification provision of the Consulting Agreement. The court allowed SRI $3,228.00 in attorney’s fees, and Coady appealed this award to the Circuit Court of Fairfax County. In its final order, the circuit court awarded SRI the same amount in attorney’s fees and an additional $305.00 for the fee of an expert witness SRI presented in the circuit court. We awarded Coady this appeal.

In an argument that ignores the indemnification clause of the Consulting Agreement, Coady cites three of our earlier decisions applying what is now Code § 17.1-604, which allows the recovery of costs in this Court by the “party substantially prevailing.”2 Those decisions recognize the principle that when a case becomes moot while an appeal is pending, the controversy ceases to exist and there is no prevailing party. Coady asserts that because the claims of both [16]*16the parties in this case were dismissed in district court on the ground of accord and satisfaction, the “controversy ceased to exist” and there was no prevailing party. Hence, Coady concludes, neither party should be liable for the other’s attorney’s fees and costs.

Further, quoting United States v. One Bally Golden Gate, 225 F.Supp. 552 (W.D. Va. 1964), Coady argues that the “ ‘general principle of Anglo-Saxon jurisprudence has always been that the loser of a lawsuit had to pay the taxable court costs but that other costs incurred by the winner (legal fees, expert witness fees, etc.) are not such costs as can be charged to the loser.’ ” Id. at 554. Finally, Coady argues that under Code § 14.1-178 (now Code § 17.1-601), “the party for whom final judgment is given in an action or motion shall recover his costs against the opposite party.” Here, Coady says, “neither party obtained a judgment against the other in the underlying cases and, therefore, neither should be granted costs against the other.”

The difficulty with these arguments is that the outcome of this case is controlled not by the statutes Coady cites or Anglo-Saxon jurisprudence but by the indemnification clause of the Consulting Agreement. There is nothing in the language of the indemnification clause that hinges the allowance of attorney’s fees and costs upon a determination whether SRI was the prevailing party or not, was a winner or not, or was given a final judgment or not. The allowance depends upon whether the attorney’s fees and costs SRI claimed were “caused by or [arose] out of, or in connection with, [Coady’s] performance or non-performance under” the Consulting Agreement.

But, Coady argues, “[t]he indemnification clause in this contract does not mean that the party agreeing to indemnify the other is indemnifying it from a suit to enforce the provisions of the contract.” The answer to this argument is found in Chesapeake & Potomac Telephone Co. v. Sisson & Ryan, Inc., 234 Va. 492, 362 S.E.2d 723 (1987). There, the telephone company (C & P) entered into an agreement with a contractor (S & R) for the site work incident to the construction of several buildings. When one of the buildings collapsed, C & P sued S & R for its damages and also made a claim for its attorney’s fees. The trial court denied the fee claim, and C & P appealed. The contract between the parties contained this provision:

To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless the Owner and the Architect from and against all claims, damages, losses and expenses, [17]*17including but not limited to attorneys’ fees, arising out of or resulting from the performance of the Work. . . .

Id. at 501, 362 S.E.2d at 728. S & R contended that the indemnification provision was “one of indemnity against liability for property damage sustained by third parties” and that “indemnification does not operate between parties to a contract in a dispute involving those parties.” Id. at 502, 362 S.E.2d at 728. Dismissing this argument and holding that C & P was entitled to recover its attorney’s fees, we said: “We are committed to the view that parties may contract as they choose so long as what they agree to is not forbidden by law or against public policy. S & R contracted ... to pay C & P’s attorneys’ fees in certain situations, and we think the present situation falls fairly within the terms of that agreement.” Id. at 503, 362 S.E.2d at 729.

The remaining question, therefore, is whether SRI’s attorney’s fees and costs were “caused by or [arose] out of, or in connection with, [Coady’s] performance or non-performance under” the Consulting Agreement. (Emphasis added.) Coady says that his original warrant in debt was not a proceeding in connection with his performance or non-performance but rather one in connection with SRI’s nonperformance, i.e., not paying Coady for the services he rendered.

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Bluebook (online)
515 S.E.2d 273, 258 Va. 12, 1999 Va. LEXIS 79, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coady-v-strategic-resources-inc-va-1999.