On Tuesday, in Lehmann v. WFV Holdings, LLC, Record No. 0201-23-2 (Ct. App. Va. May 14, 2024), available here, the Court of Appeals of Virginia reversed a decision from the Circuit Court of Amelia County, holding that because the party seeking partition did not request compensation or reimbursement in its complaint, it was not entitled to any for the expenses it incurred related to the real property or the suit.  

Helen Lehmann died intestate in 2012 while owning real property in Amelia County. Her brother, Arthur Lehmann, filed an affidavit declaring that he was her sole surviving heir. However, Helen had at least four other surviving heirs. Arthur conveyed his interest in the property to WFV by deed in 2017. Three years later, WFV filed a complaint for partition of the real estate. Two of Helen’s heirs filed a complaint for partition of three of the same parcels. WFV was then granted leave to amend its complaint, and it sought partition of the same three parcels. While WFV asked the court to determine boundary lines, identity and determine the percentage interests of any co-tenants, and partition the properties, it, importantly, did not request reimbursement of any costs, expenses, or attorney fees it incurred in connection with the properties.

The circuit court found four parties, including WFV, were tenants in common, partitioned the property amongst the co-tenants, and appointed a special commissioner to sell the property. After the approved sale of the property for $6.16 million, WFV moved the circuit court to distribute the proceeds of the sale and for reimbursement from its co-tenants of various expenses it had incurred related to the property, including boundary surveys, appraisals, property taxes, security, liability insurance, heir-locator services, overhead time and costs of an employee of WFV, and attorney’s fees. While the other parties argued WFV did not request any reimbursement in its complaint, the circuit court found that the expenses WFV incurred, except the attorney fees, inured to the benefit of the co-tenants and therefore enhanced the property. For example, the court found that the heir locator fees and title services contributed to the sales price of the property and security and insurance costs maintained the property’s value, which benefitted the co-tenants. The court therefore ordered the co-tenants to pay $23,874.23 each in reimbursable expenses to WFV.

On appeal, WFV’s co-tenants argued that the circuit court erred in awarding WFV reimbursement because WFV failed to request reimbursement in its complaint. The Court of Appeals reversed the circuit court’s holding, emphasizing that “the basis of every right of recovery under our system of jurisprudence is a pleading setting forth facts warranting the granting of the relief sought” (quoting Grayson v. Westwood Bldgs. L.P., 300 Va. 25, 69 (2021)) (internal citation omitted).

The Court explained that while a party seeking partition may seek an accounting in equity, if he “desires compensation for enhancement, he must request it in his pleadings.” Griffin v. Tomlinson, 159 Va. 161, 178-79 (1932). An exception to this rule is when the co-tenants’ testimony treats permanent improvements as calling for compensation such that the testimony describes the improvements as ones for which the party seeking partition is entitled to equitable compensation. Even in that case, the compensation is limited to the amount by which the property’s value has been enhanced by the improvement.

In noting that Virginia is a notice pleading jurisdiction, the Court held “[a]lthough our Supreme Court has not established a rule that the issue of compensation for enhancements must be raised before the circuit court rules on the underlying partition, we believe such a rule comports with these cases and the requirements of our pleading system.” The Court therefore held that because WFV’s complaint for partition only informed the other parties that WFV wanted partition, the parties were not on notice that WFV also wanted compensation for the expenses it incurred related to the suit or the property. In fact, the circuit court partitioned the property long before WFV requested compensation, and, before the hearings on WFV’s request for reimbursement, the circuit court had not yet ruled that WFV had enhanced the property in any way. Further, all testimony related to the expenses came solely from WFV’s witnesses, meaning WFV’s co-tenants never treated the expenses as calling for compensation. Accordingly, the Court reversed the circuit court’s judgment and remanded the case to reimburse WFV’s co-tenants the amounts of reimbursement the court had deducted from their respective shares of the sales proceeds.

This opinion establishes that a party seeking partition must specifically plead for reimbursement of fees and costs for expenses it incurred in the suit or enhancing the property in its complaint.