Gerald T. Dixon, Jr., L.L.C. v. Hassell & Folkes

• Court: Supreme Court of Virginia
• Decided: March 2, 2012
• Docket: 110187
• Status: Published

Opinion

PRESENT: All the Justices

GERALD T. DIXON, JR., L.L.C. OPINION BY v. Record No. 110187 JUSTICE WILLIAM C. MIMS March 2, 2012 HASSELL & FOLKES, P.C.

FROM THE CIRCUIT COURT OF THE CITY OF CHESAPEAKE Randall D. Smith, Judge

In this appeal, we consider whether an agreement was in

writing for the purposes of the statute of limitations set

forth in Code § 8.01-246.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

In March 2003, Gerald T. Dixon, Jr., L.L.C. (“Dixon”)

retained Hassell & Folkes, P.C. (“Hassell”) to survey and mark

the boundary lines of a parcel Dixon owned in the City of

Chesapeake. After completion of the survey, Dixon constructed

a concrete slab foundation on the parcel. In March 2006, Dixon

conveyed the parcel by general warranty deed to Brat

Development, L.L.C. (“Brat”), which began construction of an

office building on the foundation slab.

Soon thereafter, A & G Partnership t/a Chesapeake Pizza

(“A&G”) commenced an action for injunctive relief alleging that

Brat’s office building encroached upon its adjoining parcel.

In January 2008, the circuit court entered final judgment

finding that Brat’s office building encroached on A&G’s parcel, ordered its removal, and permanently enjoined Brat from

entering upon A&G’s parcel.

In July 2008, Brat filed a complaint against Dixon

alleging constructive fraud and breach of warranty deed

pursuant to the deed from Dixon to Brat. In August 2009, Dixon

filed a complaint against Hassell alleging breach of contract

due to Hassell’s erroneous determination of the parcel’s

boundary lines. * Dixon subsequently filed a supplemental bill

of particulars in which it represented that a written contract

existed between it and Hassell.

The document attached and referred to in the supplemental

bill of particulars is a letter addressed to Dixon signed by S.

Grey Folkes, Jr., in his capacity as president of Hassell (“the

Writing”). The Writing began by stating, “[p]ursuant to your

request, we are pleased to submit this proposal . . . . If you

find the following terms acceptable, an executed copy will

serve as our agreement.” Similarly, the Writing concluded by

stating, “[s]hould you find this proposal acceptable, please

sign both copies of this proposal in the space provided below

and return a fully executed copy to us. Receipt of the

* Dixon also filed a third-party complaint against Hassell in the ongoing litigation with Brat, and the two proceedings were consolidated by agreement of the parties. Hassell filed a demurrer to the third-party complaint, which the circuit court sustained. The court then dismissed Dixon’s third-party complaint with prejudice. The demurrer to and dismissal of the third-party complaint are not presently before us.

2 executed copy will serve as the written agreement . . . .”

While Dixon conceded it had never signed the Writing, Dixon

asserted that it was a written contract which had been fully

performed by both parties.

Hassell filed a plea in bar of the statute of limitations

to Dixon’s complaint for breach of contract. Hassell asserted

that the Writing was merely an unexecuted proposal to enter

into a written contract but that no written contract had been

formed. Accordingly, Hassell argued, the only contract between

the parties was an oral agreement consistent with the terms of

the Writing. Because there was no written contract, Hassell

asserted that Code § 8.01-246(4) required Dixon to file its

complaint within three years. While all work under the

contract was complete in March 2006, Dixon failed to file its

breach of contract complaint until August 2009; therefore

Hassell concluded that Dixon’s cause of action was barred by

the statute of limitations. After a hearing, the circuit court

granted Hassell’s plea in bar and dismissed Dixon’s complaint

with prejudice. We awarded Dixon this appeal.

II. ANALYSIS

Code § 8.01-246(2) provides that “actions on any contract

which is not otherwise specified and which is in writing and

signed by the party to be charged thereby” shall be brought

“within five years whether such writing be under seal or not.”

3 By contrast, Code § 8.01-246(4) provides that “actions upon any

unwritten contract, express or implied,” shall be brought

“within three years.” The sole issue in this appeal is whether

the Writing is a “contract . . . in writing” within the meaning

of Code § 8.01-246(2). “There are no facts in dispute, so the

applicability of the statute of limitations is a purely legal

question of statutory construction which we review de novo.”

Conger v. Barrett, 280 Va. 627, 630, 702 S.E.2d 117, 118

(2010).

Dixon argues that its failure to sign and return the

Writing was a mere formality that did not prevent the formation

of a contract. We agree. However, the issue in this case is

not whether a contract existed between the parties but whether

the contract was “in writing” for the purposes of the five-year

statute of limitations. We hold that it was not.

Dixon principally relies on our decisions in Snyder-

Falkinham v. Stockburger, 249 Va. 376, 457 S.E.2d 36 (1995),

and Golding v. Floyd, 261 Va. 190, 539 S.E2d 735 (2001). In

Snyder-Falkinham, we held that a settlement agreement orally

agreed to by the parties was binding even though it

contemplated the execution of a formal writing memorializing

its terms and one of the parties subsequently refused to

execute the written document. 249 Va. at 385, 457 S.E.2d at

41. Conversely, in Golding, we held that a settlement

4 agreement was unenforceable when a memorandum setting forth the

terms of the agreement expressly provided that it was “subject

to execution of a formal agreement consistent with the terms”

of the memorandum and no such formal agreement was executed.

261 Va. at 192, 194, 539 S.E.2d at 736-38 (emphasis omitted).

Dixon also cites Galloway Corp. v. S. B. Ballard Construction

Co., 250 Va. 493, 464 S.E.2d 349 (1995), in which we noted that

the absence of a party’s signature did not undermine the

existence of a contract which had been accepted by performance.

Id. at 505, 464 S.E.2d at 356.

In each of these cases, the question was whether the

parties had formed an enforceable contract at all, not whether

the contract was written or unwritten for the purposes of the

statute of limitations. But Hassell does not dispute that a

contract existed in this case; it disputes only which statute

of limitations applies. Accordingly, these precedents are not

relevant to our inquiry in this case. This is equally true for

each of the additional cases Dixon cites from federal courts

and the courts of other states, with one exception.

In Simmons & Simmons Construction Co. v. Rea, 286 S.W.2d

415 (Tex. 1995), the Supreme Court of Texas stated that “[a]n

unsigned agreement all the terms of which are embodied in a

writing, unconditionally assented to by both parties, is a

written contract.” Id. at 418 (quoting 1 Corbin on Contracts

5 §§ 31 and 32) (emphasis in Simmons). But that is not all the

court said in that case. It also said that “the making of a

valid contract requires no writing whatever; and even if there

is a writing, there need be no signatures unless the parties

have made them necessary at the time they express their

assent.” Id. (quoting 1 Corbin on Contracts §§ 31 and 32)

(emphasis added).

In this case, Hassell specifically required Dixon to “sign

both copies of this proposal . . . and return a fully executed

copy to us.” Moreover, Hassell conditioned the existence of a

written contract upon its receipt of an executed copy of the

Writing in two separate places: at the beginning, where the

Writing stated that “an executed copy will serve as our

agreement,” and at the end, where it stated that “the executed

copy will serve as the written agreement.”

The fact that the Writing states the signature requirement

twice underscores its importance to Hassell and clearly

evidences Hassell’s intent that the Writing would not become a

written contract without Dixon’s signature. Dixon’s failure to

sign and return the Writing as its terms required did not

preclude the parties from forming a binding contract. But

Dixon’s failure to sign and return the Writing did preclude the

Writing itself from becoming a written contract as contemplated

by Code § 8.01-246(2).

6 Dixon also argues that by its plain language, Code § 8.01-

246(2) requires only three elements for the five-year statute

of limitations to apply: (1) that the contract specify no

alternative statute of limitations, (2) that the contract be in

writing, and (3) that it be signed by the party charged with

breach. Dixon contends that because the third element requires

that a contract be signed only by the party charged with

breach, the statute does not require every party to sign the

contract. Based on the clear and specific terms set forth in

the Writing in this specific case, we disagree.

It is well-settled that the parties may contract as they

choose so long as the terms they adopt are not prohibited by

statute or public policy. Barber v. VistaRMS, Inc., 272 Va.

319, 329, 634 S.E.2d 706, 712 (2006). No such prohibition

barred Hassell from requiring Dixon to sign and return the

Writing as a condition precedent to its becoming a written

contract. By failing to sign and return the Writing, Dixon

rejected that term of the agreement Hassell proposed.

Because the Writing expressly required Dixon’s signature

as a condition precedent to becoming a written contract and

Dixon failed to sign it, there was no written contract.

Accordingly, Dixon’s cause of action was subject to the three-

year statute of limitations set forth in Code § 8.01-246(4) and

7 was time-barred when Dixon filed its complaint in August 2009.

Accordingly, we will affirm the judgment of the circuit court.

Affirmed.

JUSTICE McCLANAHAN, dissenting.

As Professor Corbin explains, “[a] memorandum of

agreement, signed by one party and acted on by both is a

binding written contract.” Joseph M. Perillo, 1 Corbin on

Contracts § 2.10, at 168-70 (Joseph M. Perillo, ed., rev. ed.

1993) (emphasis added). Dixon has alleged facts to that

effect in its breach of contract action against Hassell, which

action is now before us for review on Dixon’s pleadings. The

writing alleged by Dixon to be the written contract between

the parties (the “Writing”) shows that it was executed by

Hassell. The Writing was thus signed “by the party to be

charged” in this case. Code § 8.01-246 (setting forth

elements of statute of limitations for written contracts).

Furthermore, Dixon has alleged that Hassell was performing

services pursuant to the Writing that constituted the alleged

breach of contract within five years of the filing of this

action. As such, the Writing, I believe, renders this action

on a written contract timely filed under the Code § 8.01-

246(2) five-year statute of limitations.

8 Therefore, contrary to the majority, I would reverse the

judgment of the trial court in granting Hassell’s demurrer and

plea in bar on the grounds that Dixon’s action was barred

under the Code § 8.01-246(4) three-year statute of limitations

for oral contracts. Both the trial court’s judgment and the

majority opinion are based on what I believe to be an

incorrect determination that Dixon merely presented

allegations of a breach of an oral contract.

Hassell presented no evidence in support of its plea in

bar. Thus, when “deciding both the plea in bar and

[Hassell's] demurrer, we, like the trial court, must confine

our consideration to the allegations” contained in Dixon’s

complaint, as supplemented by its bill of particulars. Bell

Atlantic-Virginia, Inc. v. Arlington Cnty., 254 Va. 60, 63,

486 S.E.2d 297, 298-99 (1997). And, in doing so, we are

required under familiar principles to view “as true all

material facts well pleaded, facts impliedly alleged, and

facts that may be fairly inferred from those alleged.” Id. at

63, 486 S.E.2d at 299 (citations omitted).

Viewed in that light, Hassell sent the Writing, signed by

Hassell’s president, to Dixon. The Writing included Hassell’s

detailed offer to perform engineering and surveying services

for Dixon in the form of “preliminary and final site plans for

[Dixon’s] proposed office building” in Chesapeake. The

9 Writing specified, inter alia, the individual services to be

provided by Hassell in conjunction with the office building

project, the various fees for each of the services (e.g.,

“[p]reliminary plan preparation . . . $1,500.00”;

“[v]erification of existing boundary $1,500.00”;

“[t]opographic survey $900.00”; “[s]ite development plans

$7,500.00”), and additional available services that would

require “changes in scope of work and compensation.”

Despite the fact that Dixon did not sign and return the

Writing to Hassell, as confirmation of the parties’ agreement

as Hassell requested, the parties proceeded with performance

pursuant to the terms of the Writing. Hassell provided to

Dixon the services covered by the Writing, as well as

additional services necessitating change orders, extending "as

late as March 20, 2006," and Dixon paid Hassell for those

services. ∗ As documentary evidence of the same (submitted with

Dixon’s bill of particulars), Hassell presented to Dixon, at

least in certain instances, written invoices indicating

completion of specific services, and requesting payment for

those services, pursuant to the terms of the Writing. Other

invoices from Hassell to Dixon regarding the same project

∗ Dixon filed its third-party complaint in 2009, and therefore instituted its breach of contract action, on the facts alleged, within five years of the accrual of that action.

10 indicated in the heading that they were for “Services Beyond

Contract Scope.” Similarly, Hassell presented to Dixon in

writing certain change orders during its work on the project,

each identified as “Notice of Additional Services to

Contract.” In providing its services to Dixon, Hassell

breached its contract with Dixon under the Writing by

preparing an “incorrect” boundary line survey, thereby causing

an encroachment to be constructed upon the adjoining landowner

for which Dixon has incurred monetary damages.

In light of these allegations, Hassell’s counsel was asked

at oral argument where this Court was to find the terms of the

purported oral contract between the parties. Hassell’s counsel

responded that the terms were “reflected” in the Writing. The

majority, in fact, recognizes that Hassell contends the

purported oral contract was “consistent with the terms of the

Writing.” This concession demonstrates why the threshold

determination in support of the judgment in this case – that

the contract between the parties was merely an oral contract –

amounts to a legal fiction. The Writing is what the parties

mutually assented to as evidenced by their performance pursuant

to its terms. There are simply no facts, as alleged, before

this Court indicating otherwise. Under basic contract law,

“[a]ssent may be inferred from the acts and conduct of the

parties.” Durham v. National Pool Equip. Co. of Va., 205 Va.

11 441, 445, 138 S.E.2d 55, 58 (1964) (citations omitted); see

Marefield Meadows, Inc. v. Lorenz, 245 Va. 255, 260, 427 S.E.2d

363, 365 (1993) (“A meeting of the minds is essential to the

formation of a contract, but ‘the law imputes to a person an

intention corresponding to the reasonable meaning of his words

and acts.’ ” (quoting Lucy v. Zehmer, 196 Va. 493, 503, 84

S.E.2d 516, 522 (1954))). As “Justice Holmes once said:

‘Conduct which imports acceptance is acceptance or assent, in

the view of the law, whatever may have been the actual state of

mind of the party.’ ” NLRB v. Local 825, Int'l Union of

Operating Eng'rs, 315 F.2d 695, 699 (3d Cir. 1963) (citation

omitted).

The fact that only Hassell signed the Writing should not

be seen, therefore, as dispositive of the issue of whether

Hassell and Dixon were parties to a written contract, given

their subsequent conduct showing that they assented to the

Writing. To be sure, Hassell could have required that Dixon

sign the Writing before Hassell rendered its performance, and

accepted Dixon’s payment, under the terms of the Writing; but

Hassell failed to do so, thereby waiving any such condition to

consummation of the Writing. Addressing analogous facts, the

United States Court of Appeals for the Third Circuit in Local

825 explained: “That the Union failed to sign the [subject]

agreement is immaterial[,] for any written contract though

12 signed only by one of the parties binds the other if he

accepts it and both act in reliance on it as a valid

contract.” Id. (emphasis added). See Coffey v. Mann, 585

N.W.2d 518, 524 (Neb. Ct. App. 1998) (“Because the parties

unconditionally manifested their assent to the terms of the

written contract, although they did not sign it, there was no

fatal variance between the pleadings and the proof in this

case. A written contract was pled, and a written contract was

proved.”); Leonard v. Bennett, 674 S.W.2d 123, 127 (Mo. Ct.

App. 1984) (“[T]hough a written contract be not signed by one

or both of the parties, the acceptance by one of performance

by the other validates the instrument, and imposes on the

acceptor the corresponding obligation provided therein.”

(quoting Sunbury v. Aaron, 116 S.W. 431, 432 (Mo. Ct. App.

1909))); Rush v. Atomic Electric Co., 384 So.2d 1067, 1068

(Ala. 1980) (“A party, by his actions and acceptance of the

benefits of a contract and by operating under such agreement,

may ratify and confirm a contract to which his actual

signature is not affixed.” (citation omitted)); Whitters &

Sons, Inc. v. Karr, 180 N.W.2d 444, 446 (Iowa 1970) (“Where a

written agreement signed by one party is accepted and adopted

by the other, and acted upon, it becomes their contract in the

same sense as though both parties had signed.” (quoting

McDermott v. Mahoney, 115 N.W. 32, 35 (Iowa 1908))).

13 For these reasons, I dissent.