Thank you so much for your help. That was the issue. Apparently Litespeed v1.5.8 introduced this bug. Updated to 1.5.9 and everything is going swimmingly. You might want to put up a note for any other users who have this issue.
Thank you again, you support is wonderful.
I was able to reproduce the problem. As soon as DAVdroid tries to download the contacts with REPORT addressbook-multiget, the server returns “500 Internal Server Error”.
addressbook-multiget is mandatory for CardDAV servers and required for fast contact synchronization.
Can you please report this problem to the server vendor and provide some reference (for instance, a link to the bug report) here?