Construction Law Insights

Atkins v. A.H. Elec. Contrs., LLC, 2017 Va. Unpub. LEXIS 27, 2017 WL 4681945 (Va. Oct. 19, 2017)

A.H. Electric Contractors, LLC (the “LLC”) filed a complaint against Tamika Atkins (“Atkins”) for enforcement of a mechanic’s lien against her home. The complaint alleged that the LLC entered into a written contract with Atkins in 2014 under which the LLC would perform certain home repairs and that Atkins pay for the work performed. Atkins filed a counterclaim in which she asserted a claim for breach of contract alleging that the LLC failed to complete its work under the contract.

On April 23, 2015, the parties entered into a written settlement agreement providing that counsel for the parties will contact Christopher Neary (“Neary”) to evaluate the work necessary to bring Atkins’ home into compliance with his original estimate. The settlement agreement provided that Atkins would cooperate with Neary to make her home available for inspection but would not be present during the inspection. The cost of the estimate was to be split between the parties.

After the settlement agreement was signed, the deal fell through when Neary declined to perform the inspection. The parties then resumed litigation. In May 2016, the LLC filed an amended complaint that no longer sought enforcement of the mechanic’s lien, but instead sought specific enforcement of the settlement agreement. Atkins filed an amended counterclaim, adding a counterclaim against Anthony Holmes, manager of the LLC, alleging breach of contract and violations of the Virginia Consumer Protection Act.

In June 2016, the circuit court heard the case and ruled it would enforce the settlement agreement and instructed the parties to select another third-party inspector to replace Neary. It also ruled the underlying contract was valid, as it had been ratified by both parties, Finally, the circuit court dismissed Atkins’ counterclaims as barred given the enforced settlement.

The case was appealed to the Supreme Court of Virginia. Atkins argued that the circuit court erred in granting specific performance of the settlement agreement and dismissing her counterclaims. The Court held that a party seeking specific performance of a contract bears the burden of proving that all conditions have been fulfilled. Thus, there can be no specific performance of a contract which is subject to a condition unless the condition has been fulfilled. In other words, non-performance of one condition will prevent the existence of a duty in the other party, but it does not create remedial rights and duties.

In this case, the obligations of the parties under the settlement agreement were conditioned on the performance of an inspection by Neary. The only obligations of Atkins prior to inspection were to cooperate with Neary to make her home available and to not be there while the inspection was happening. Because Neary was unwilling to carry through with his obligation, the condition of the inspection itself could not be fulfilled and its non-occurrence prevented the existence of any duty in Atkins. Therefore, the circuit court erred in ruling that the LLC was entitled to specific performance of the settlement agreement. This error was compounded when the circuit court compelled Atkins to execute that contract, despite the absence of Neary’s inspection.

PLDR Law Mark Burgin 1 PLDR Law Scott Kowalski 1 Thomas Wolf 002 Kenneth Stout 002

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