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DRHI, Inc. v. Hanback

Supreme Court of Virginia

October 31, 2014

DRHI, Inc., Appellant,
William W. Hanback, Jr., Appellee

Upon appeals from a judgment rendered by the Circuit Court of Fairfax County. Circuit Court No. CL-2012-17631.



Upon consideration of the record, briefs, and argument of counsel, the Court is of the

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opinion that there is error in the judgment of the circuit court.

On August 28, 2000, DRHI, Inc. (" DRHI" ) entered into a contract to purchase a parcel of land from William W. Hanback, Jr. (" Hanback" ). On June 5, 2002, DRHI filed a complaint in the circuit court against Hanback for specific performance of the land purchase contract. DRHI alleged, upon information and belief, that Hanback had received a better offer from a third party and was now refusing to confirm in writing that he would honor his contractual obligations and sell the property to DRHI.

Hanback filed an answer and grounds of defense in which he admitted entering into the land purchase contract, but he argued that DRHI failed to perform certain terms of the contract and asserted that the contract was therefore void. On June 9, 2004, the trial court entered a decree which provided, in relevant part, that:

Mr. Hanback shall appear at settlement on or before June 9th at a time and place selected by DRHI, Inc. [A]t the time of settlement, DRHI, Inc. shall pay to Mr. Hanback $400,000 minus the $10,000 already paid, and . . . at the time any subdivision plans submitted by DRHI, Inc. for the development of the property sold by Mr. Hanback are approved by the City of Fairfax, in the event that the plans submitted by DRHI, Inc. permit the construction of six or more individual residences, [288 Va. 250] DRHI, Inc. shall pay to Mr. Hanback $70,000 for the sixth lot and $70,000 for each additional approved lot.

More than eight years later, on November 21, 2012, Hanback filed a petition for rule to show cause.[1] In his petition, Hanback asserted that after closing on his property in 2004, DRHI purchased an adjoining property and designed an integrated development plan combining the two parcels. The integrated planned development was approved by the City of Fairfax on May 22, 2007, permitting 15 homes to be constructed between the two parcels. Under the plan, Hanback's former property contained 5.5 lots and a one acre " buffer zone," and the adjoining parcel contained 9.5 lots. The site plan for the properties was approved in 2010 by the City of Fairfax, and construction of the homes began in 2012.

Hanback asserted in his petition, that once he became aware that 15 homes were being constructed on the two parcels, he contacted DRHI and requested the additional funds that were owed to him under the 2004 order. Hanback attached a letter from DRHI to his petition in which DRHI asserted that it had paid Hanback in accordance with the contract based upon conditions existing at the time of closing, and was under no obligation to pay him additional sums.

In his petition, Hanback argued that the one acre buffer zone assigned to his former property allowed for 10 additional homes to be constructed on the adjoining parcel, and demanded $70,000 for each additional lot (over the five for which he had already been paid) attributable to his property. He claimed that DRHI violated the June 9, 2004 order by refusing to pay and asked the trial court to issue the rule to show cause and hold DRHI in contempt of court.

The following proceedings then took place:

o On May 9, 2013, the circuit court held an evidentiary hearing on the petition for rule to show cause. The circuit court issued a letter opinion on July 16, 2013, in which it held the following:
Mr. Hanback's Verified Petition for Rule to Show Cause is hereby granted. DRHI is in contempt of the June 9, 2004 Decree of this Court. DRHI is directed to appear on Friday, [288 Va. 251] January 17, 2014, at 10:00 a.m. to show cause why it is not in contempt of the Decree. DRHI may purge itself of this contempt finding by paying to Mr. Hanback the $350,000 additional compensation owed under the terms of the Decree on or before the January 17, 2014 review date.
o On August 8, 2013, the circuit court held a hearing, during which the parties

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agreed to move up the date of the show cause hearing.
o On August 9, 2013, the circuit court issued a rule to show cause to DRHI which stated:
You are hereby ordered to appear before this Court on the 16th day of September 2013 at 8:30 a.m., or as soon thereafter as this matter may be heard, and show cause, if any you can, why you should not be held in contempt of Court, and fined, imprisoned or both for any such contempt, for your failure to comply with the provisions of the Order entered on June 9, 2004. Prior to that appearance, you may purge the contempt by paying $350,000.00, plus any applicable interest, to counsel for Hanback.
o On September 20, 2013, after determining that DRHI had not paid the $350,000, the circuit court entered an order finding DRHI in contempt of the June 9, 2004 order. The order stated " [t]hat a judgment shall be, and hereby is, entered for Hanback against DRHI in the amount of $350,000, which represents the outstanding amount owed under the June 9, 2004 decree."

DRHI filed a notice of appeal to both the Court of Appeals of Virginia and to this Court. Prior to filing a petition for appeal in this Court, DRHI filed a motion for relief from collection proceeding in the Court of Appeals and this Court. On December 18, 2013, this Court declined the motion, finding that the motion arose out of a judgment of contempt, the appeal of which was pending in the Court of Appeals, and that the Court therefore lacked jurisdiction over the motion.

On the same day this Court issued its order, DRHI filed its petition for appeal in this Court. The appeal contained the following assignments of error:

[288 Va. 252] 1. The lower court erred when it entered a $350,000 judgment in favor of Appellee Hanback because it did not have the ...

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