Construction Law Insights

JPMCCM 2010-C1 Aquia Office LLC v. Mosaic Aquia Owner, LLC, 101 Va. Cir. 34, 2019 Va. Cir. LEXIS 70 (Stafford Cnty. March 18, 2019)

In 2007, RAMCO Virginia Properties, LLC (“RAMCO Virginia”) launched the Aquia Office Center project (the “Project”) and bought the land to re-develop into a mixed-use development for office, retail, and residential space. On May 13, 2010, to attract businesses, RAMCO Virginia developed a Reciprocal Easement Agreement (“REA”) to govern property rights. The REA required the Project’s Administrator to maintain common areas. Under the REA, each business owner is charged with paying its fair portion of the common area maintenance (“CAM”) charges and abiding by the REA’s requirements for building and developing the property.

On May 28, 20110, RAMCO Virginia developed a Supplemental Agreement with RAMCO Aquia Office, LLC, which provided for a “Zone of Control” governing a portion of land encompassing the “Ramco Office Parcel.” Under the REA, any Zone of Control refers to an owner’s parcel within the Project, unless a Zone of Control is designated on the Site Plan, in which case the designated Zone of Control shall govern the parameters of the owner’s Zone of Control. The Supplemental Agreement declared the Ramco Office Zone of Control to be the portion of the Project identified as such on the Ramco Office Site Plan and provided that no improvements other than those depicted on the Ramco Office Parcel Site Plan shall be constructed within the Ramco Office Zone of Control without the prior written consent of the Owner. On May 28, 2010, RAMCO Virginia developed a Second Supplemental Agreement that solidified a 25% cap on all common area maintenance costs charged to each participating owner. In 2016, Mosaic Real Estate (“Mosaic”) became successor in fee simple to the Project and took ownership of the Aquia Office Building. JP Morgan Aquia’s (“Aquia”), an owner of an individual office building within the Project, sued Mosaic.

First, the Court rejected Aquia’s argument that Mosaic breached the terms of the REA by charging Aquia excessive or erroneous CAM fees for replacement of the parking lots and storm water drainage system because the original contracting parties to the REA imported plain language into the contract requiring that common area maintenance duties include replacement and reconstruction of common area property. Second, the Court rejected Aquia’s argument that Mosaic breached the REA by constructing a new parking lot in Aquia’s Zone of Control without providing Aquia with prior written consent because: (i) the Zone of Control was defined by the site map attached to the Supplemental Agreement, Mosaic was not an original signatory to the Supplemental Agreement, and no prudent person could discern the parameters of the Zone of Control from the site map because it was, effectively, illegible; (ii) written approval is not required for maintenance and replacement; and (iii) Aquia failed to establish how it was damaged by a repair and replacement that placed the Zone of Control in a better condition than it was prior to the work. Finally, the Court rejected Aquia’s argument Mosaic breached the REA by failing to pursue construction of the Project with reasonable diligence because Aquia presented no direct evidence that unfinished construction work located on the South parking lot caused actual damages to Aquia.

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