Breach of contract by buyer. Seller lives in VA and buyer lives in MI. Breached this year. Where will the "case" be heard?

A contractual choice of forum provision (i.e. that "all legal hearings would be in the state of the seller") is generally enforceable. so the case would be heard in Virginia.  Absent such a provision, the case probably could have been heard in either Virginia or Michigan.  However, the "$15,000 fine" is probably not enforceable.  It will likely be considered a penalty, and therefore unenforceable, rather than a valid liquidated damages provision. "Costs" are not the same as attorneys' fees.  "Costs" are minimal, i.e. filing fees, fees for service of the complaint, etc.  IF you meant to include attorneys fees, generally you would have to be much more specific, and also provide for mutuality, i.e. that the losing party will pay the winner's attorneys' fees, whomever wins.  At any rate, regardless of the contract, I don't think the buyer would be responsible for costs or attorneys' fees if the buyer wins the case.