Condominium Services, Inc. v. FOA

Present: Kinser, C.J., Lemons, Goodwyn, Millette, and Mims,
JJ., and Koontz, S.J.

CONDOMINIUM SERVICES, INC.
OPINION BY
v. Record No. 100303 JUSTICE S. BERNARD GOODWYN
April 21, 2011
FIRST OWNERS’ ASSOCIATION OF
FORTY SIX HUNDRED CONDOMINIUM, INC.

FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA
Nolan B. Dawkins, Judge

In this appeal, we consider whether the circuit court

erred in its interpretation of a management agreement (the

Management Agreement) between First Owners’ Association of

Forty Six Hundred Condominium, Inc. (FOA) and Condominium

Services, Inc. (CSI). We also consider whether the circuit

court erred in granting summary judgment on FOA’s conversion

claim, in permitting certain expert testimony into evidence,

and in upholding the jury’s award of punitive damages.

I. Background

FOA filed a complaint against CSI in the Circuit Court of

the City of Alexandria, alleging that CSI had breached the

terms of the Management Agreement and had wrongfully converted

FOA’s funds. CSI filed a counterclaim and an amended

counterclaim for breach of contract. The circuit court

sustained FOA’s demurrers to the counterclaim and amended

counterclaim. FOA’s claims proceeded to trial before a jury.

The jury returned a verdict in favor of FOA on both claims, and
the circuit court entered judgment in favor of FOA consistent

with the jury’s verdict. CSI appeals.

II. Facts

FOA is a Virginia nonstock corporation that is a

condominium unit owners’ association under the Virginia

Condominium Act, Code § 55-79.39, et seq. In August 2005,

FOA’s Board of Directors (the Board), on FOA’s behalf, entered

into a Management Agreement with CSI for a term of two years

from November 1, 2005 to October 31, 2007. FOA was to pay CSI

a monthly fee of $6,075 in exchange for CSI acting as FOA’s

management agent. The Management Agreement provided that

either party could terminate the Management Agreement without

cause upon ninety days written notice, and FOA could terminate

the Management Agreement with cause upon thirty days written

notice to CSI.

On July 1, 2006, the Board sent CSI a letter constituting

thirty days notice of termination for cause effective August 1,

2006. FOA believed the termination was justified because CSI

failed to provide FOA with correct financial documents, failed

to file necessary tax returns, failed to pay payroll taxes, and

prepared incorrect W-2 forms for FOA’s employees. FOA received

notifications from the IRS and the Commonwealth that penalties

and interest were being assessed as a result of these failures.

FOA retained a certified public accountant, Isaac Reitberger,

2
to prepare and file the various documents that CSI should have

filed, and hired a new management agent.

On August 1, 2006, CSI’s chief executive officer sent a

letter to all of FOA’s unit owners directing them to continue

sending their assessment payments to CSI. CSI opened a new

bank account, purportedly in FOA’s name, in which to keep the

assessment money it collected from the unit owners. CSI opened

the account by having its president and controler falsely

represent in documents filed with the bank that they were

officers of FOA. FOA did not authorize the opening of the

account or have any signatory authority on it.

After August 1, 2006, CSI continued to collect assessment

payments due FOA and paid itself a monthly management fee of

$6,075 out of funds deposited into the new bank account. CSI

paid itself fees totaling $91,125. 1 CSI asserts that it was

entitled to the management fees because FOA’s termination of

CSI was in violation of FOA’s Bylaws (the Bylaws) which,

according to CSI, were incorporated into the Management

Agreement and required a vote of the unit owners prior to

termination of the Management Agreement.

Section 2 of the Management Agreement states:

The documents governing this relationship consist of
this Agreement, the Virginia Condominium Act, the

1
CSI has paid the additional FOA funds it collected to
FOA; these funds are not in dispute.

3
 Association’s Declaration, the Bylaws, Rules and
Regulations, and Board of Director Resolutions,
including all modifications, amendments, and changes
issued subsequent to the execution of this Agreement.

FOA’s Bylaws contain various provisions concerning the

rights and obligations of FOA’s members, FOA’s Board and FOA

itself. Article I identifies FOA as the “Owners’ Association.”

Article V addresses the formation of FOA’s Board and the

Board’s duties and responsibilities. Section 1 of Article V

states that “the affairs of the Owners’ Association shall be

governed” by the Board, and Section 3 of Article V states that

the Board “shall have all the powers and duties necessary for

the administration of [FOA’s affairs] and the Condominium

Project and may do all such acts and things as are not by law

or by these By-Laws directed to be exercised and done by the

members.” Section 4 of Article V of the Bylaws permits the

Board to delegate any of its duties, powers or functions to a

management agent by written contract.

In support of its position, CSI relies upon Article VIII,

Section 2 of the Bylaws, which states:

The Board of Directors shall employ for the Owners’
Association a management organization (the “Management
Agent”) at a rate of compensation and such other terms
and conditions as shall be established by the Board of
Directors to perform such duties and services as the
Board of Directors shall from time to time authorize
in writing, . . . . The Owners’ Association shall not
change Management Agents or undertake self-management,
without the prior affirmative vote of members
representing three-fourths (3/4ths) of the votes of

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 the Residential and Commercial Unit owners present at
any meeting of the members duly called for such
purpose . . . .

On January 5, 2009, FOA initiated this action against CSI.

CSI filed its answer to the complaint, raising the affirmative

defense that its termination was invalid because, prior to

terminating CSI, FOA did not obtain the necessary votes

required under Article VIII, Section 2 of the Bylaws, which CSI

alleged was incorporated into the Management Agreement. CSI

also filed a counterclaim and later an amended counterclaim,

alleging that FOA breached the Management Agreement by

attempting to terminate CSI without the prior affirmative vote

of the unit owners, and that the Management Agreement could

never be terminated without such a vote.

FOA filed a demurrer to CSI’s counterclaim and to the

amended counterclaim, contending that the Management Agreement

merely referenced rather than incorporated the Bylaws.

Further, it asserted that even if the Bylaws were incorporated

into the Management Agreement, the Bylaws did not require a

vote of the unit owners for FOA to terminate its Management

Agreement with CSI. The circuit court sustained the demurrers

and dismissed the amended counterclaim with prejudice.

Prior to trial, FOA filed a motion in limine seeking to

exclude any testimony or argument by CSI relating to its

affirmative defense that the termination was invalid because

5
FOA did not obtain the necessary votes of the unit owners

allegedly required by Article VIII, Section 2 of the Bylaws.

The circuit court granted FOA’s motion in limine and excluded

CSI’s affirmative defense at trial.

In response to CSI’s interrogatories concerning expert

witnesses, FOA identified Reitberger as an expert witness.

FOA, in its interrogatory response, disclosed that Reitberger

would opine that the failures of CSI resulted in the

underpayment of taxes and that FOA would incur interest and

penalties as a result of those failures. It also stated that

Reitberger’s opinions would be based upon his experience and

expertise and his review of relevant documents. It did not

state the amount of the interest and penalties Reitberger

believed FOA would incur. Reitberger was deposed by CSI

approximately six weeks before trial, and he testified

regarding the specific amount of the taxes and penalties at

issue and the bases for his opinions regarding those amounts.

The Thursday before the Monday trial date, CSI filed a

motion in limine to exclude the testimony of Reitberger about

the potential tax penalties and interest FOA could face due to

CSI’s failure to pay certain taxes on FOA’s behalf. CSI

asserted that the testimony should be excluded because FOA’s

response to CSI’s expert witness interrogatory failed to

identify the amount of the penalties and interest claimed and

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failed to state the basis for any such damages. The circuit

court denied CSI’s motion in limine.

The parties then proceeded to a jury trial. At the

conclusion of FOA’s case, CSI moved to strike FOA’s evidence on

three grounds: (1) Reitberger’s testimony on the tax penalties

and interest was speculative and not offered to a reasonable

degree of accounting certainty; (2) the conversion claim was

improper because it arose from the alleged breach of contract

and was not an independent tort; and (3) FOA presented

insufficient evidence to support a claim for punitive damages.

The circuit court denied the motion as to these grounds. 2 At

the conclusion of all the evidence, CSI renewed its motion to

strike on the same grounds. The circuit court again denied the

motion.

At the conclusion of all the evidence, FOA moved for

summary judgment on its conversion claim. The circuit court

granted FOA summary judgment on the conversion claim in the

amount of $91,125. On the remaining issues, the jury returned

a verdict in favor of FOA. With respect to the breach of

contract claim concerning payroll administration and taxes, the

2
The court granted the motion to strike with regard to
damages for health insurance and for failure to file the 2004
Form 941.

7
jury awarded damages in the amount of $70,667. On the

conversion claim, the jury awarded prejudgment interest

beginning on October 1, 2007 and punitive damages in the amount

of $275,000.

CSI filed a motion to strike the jury verdict and for

judgment notwithstanding the verdict with regard to punitive

damages or, alternatively, for remittitur. The circuit court

denied the motion.

III. Analysis

A. FOA’s Demurrers and Motion to Strike

CSI argues that the circuit court erred by sustaining

FOA’s demurrers and motion to strike CSI’s affirmative defense.

CSI contends that because the Bylaws are one of the documents

that governs the relationship established by the Management

Agreement, the Bylaws are incorporated into the Management

Agreement, giving CSI the right to invoke termination

protections it claims are contained in the Bylaws. CSI claims

FOA’s termination of CSI was invalid because the Bylaws

required FOA to obtain the affirmative vote of three-fourths of

the unit owners prior to terminating the Management Agreement

with CSI. Thus, according to CSI, the circuit court erred by

ruling to the contrary and sustaining FOA’s demurrers to its

counterclaim and amended counterclaim and by striking CSI’s

claimed affirmative defense.

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 FOA responds that the purpose of the reference to the

Bylaws in the Management Agreement was not to incorporate the

Bylaws into the Management Agreement so as to confer upon CSI

termination rights contrary to those expressly stated in the

Management Agreement, but rather to identify documents that CSI

must be aware of and comply with in performing its duties. We

agree with FOA.

This Court reviews the circuit court’s sustaining of a

demurrer de novo. Hubbard v. Dresser, Inc., 271 Va. 117, 122,

624 S.E.2d 1, 4 (2006). In reviewing the granting of a motion

to strike, “this Court will consider the evidence and all

reasonable inferences arising therefrom in the light most

favorable to the appellant, resolving any doubt as to the

sufficiency of the evidence in favor of the appellant.”

McGowan v. Lewis, 233 Va. 386, 387, 355 S.E.2d 334, 334 (1987).

Because the Management Agreement references a separate

writing, the Bylaws are construed as part of the Management

Agreement for the purpose indicated. See W.D. Nelson & Co. v.

Taylor Heights Dev. Corp., 207 Va. 386, 391, 150 S.E.2d 142,

146 (1966) (“Writings referred to in a contract are construed

as a part of the contract for the purpose and extent

indicated.”). Section 1 of the Management Agreement appoints

CSI as FOA’s agent, states that the term of such appointment is

two years and specifies the compensation CSI is to receive.

9
Section 2 of the Management Agreement states that the documents

governing the relationship between FOA and CSI consist of the

Management Agreement, “the Virginia Condominium Act, the

Association’s Declaration, the Bylaws, Rules and Regulations,

and Board of Directors Resolutions.” Then, in the next section

of the Agreement, Section 3, titled “Responsibilities and

Duties of the Agent,” the Agent acknowledges that it “has read,

and is familiar with, the Condominium Act, Declaration, the

Bylaws, the Rules and Regulations of the Association, and

particularly with the duties and obligations of the Board of

the Association.” The Bylaws are not mentioned at any other

place in the Management Agreement. Later in the Management

Agreement, in Section 19, there is a separate section titled

“Termination,” which states that the Management Agreement may

be terminated by either party without cause upon ninety days

written notice and that FOA can terminate the Management

Agreement with cause upon thirty days written notice to CSI.

The express language of the Management Agreement allows

FOA to terminate CSI without a vote of FOA’s members. Section

3 is the only section of the Management Agreement other than

Section 2 that mentions the Bylaws, and Section 3 concerns

“Responsibilities and Duties of the Agent.” When considering

the Management Agreement as a whole, it does not appear that

the purpose of the reference to the Bylaws was to incorporate

10
the Bylaws into the Management Agreement as they related to the

termination of the management agent; the term and method of

termination of the management agent is explicitly stated in the

Management Agreement without reference to the Bylaws. Instead,

the indicated purpose of the reference to the Bylaws and other

documents in Section 2 was to identify documents that CSI, as

the management agent, needed to be aware of and comply with in

performing its duties and responsibilities under the Management

Agreement.

To adopt CSI’s argument concerning the Management

Agreement would render express terms of the Management

Agreement meaningless, including the two-year term and

termination provisions. Indeed, CSI claimed as part of its

damages in its counterclaim that it is entitled to the monthly

management fee until the allegedly necessary vote is taken by

FOA’s members, making the two-year term stated in the

Management Agreement meaningless and of no effect.

“[C]ontract language will not be treated as meaningless

where it can be given a reasonable meaning.” Ross v. Craw, 231

Va. 206, 214, 343 S.E.2d 312, 317 (1986). “When two provisions

of a contract seemingly conflict . . . they [should] be

harmonized so as to effectuate the intention of the parties as

expressed in the contract considered as a whole.” Plunkett v.

Plunkett, 271 Va. 162, 168, 624 S.E.2d 39, 42 (2006) (quoting

11
Ames v. American Nat’l Bank of Portsmouth, 163 Va. 1, 39, 176

S.E. 204, 217 (1934)). FOA’s interpretation of the purpose and

intent of Section 2 of the Management Agreement, accepted by

the circuit court, harmonizes the reference to the Bylaws with

the express terms of the Management Agreement. CSI’s

interpretation of the Management Agreement, on the other hand,

cannot be harmonized with the plain language of the Management

Agreement.

Furthermore, a specific provision of a contract governs

over one that is more general in nature. Mutual Life Ins. Co.

v. Hill, 193 U.S. 551, 558 (1904) (“where there are two clauses

in any respect conflicting, that which is specially directed to

a particular matter controls in respect thereto over one which

is general in its terms”); see also Asphalt Roads & Materials

Co. v. Commonwealth, 257 Va. 452, 460, 512 S.E.2d 804, 809

(1999) (Lacy, J., concurring) (“specific section of the

contract overrides the more general contract provisions”). The

reference to the Bylaws in the Management Agreement is general—

the Bylaws “govern” the Management Agreement. On the other

hand, the provisions in the Management Agreement regarding the

term of the Management Agreement and means of termination are

specific. CSI’s interpretation would allow the general

reference to the Bylaws to control over the specific

12
termination and term provisions, a result that is contrary to

principles of contract interpretation.

The circuit court did not err in sustaining FOA’s

demurrers and striking CSI’s affirmative defense. The

Management Agreement, although it referenced the Bylaws, did

not require a three-fourths vote of the unit owners before FOA

could terminate CSI as FOA’s management agent.

B. Conversion

CSI argues that the circuit court erred in denying CSI’s

motion to strike FOA’s conversion claim and in granting FOA

summary judgment on its conversion claim. CSI contends that

the circuit court should have struck the conversion claim

because there was no independent tort of conversion distinct

from the contract. Further, CSI asserts that summary judgment

on the conversion claim was inappropriate because there was a

dispute as to whether CSI had authority to continue to retain

its management fees.

FOA responds that its conversion claim was proper because

CSI committed a separate, independent tort. According to FOA,

CSI’s conversion of FOA’s funds was distinct from the

Management Agreement because it occurred after FOA properly

terminated the Management Agreement. FOA contends that summary

judgment on its conversion claim was appropriate because FOA

presented undisputed evidence that CSI took $91,125 of FOA

13
assessment money after being terminated as FOA’s management

agent. We agree with FOA.

To recover for the tort of conversion, “the duty

tortiously or negligently breached must be a common law duty,

not one existing between the parties solely by virtue of the

contract.” Dunn Construction Co. v. Cloney, 278 Va. 260, 267,

682 S.E.2d 943, 946 (2009) (internal quotation marks omitted).

“A cause of action for conversion lies independent of an action

in contract and may provide a separate basis, distinct from the

contract upon which one [party] may sue another.” PGI, Inc. v.

Rathe Prods., Inc., 265 Va. 334, 344, 576 S.E.2d 438, 443

(2003).

A claim for conversion requires proof of a “wrongful

exercise or assumption of authority . . . over another’s goods,

depriving him of their possession.” Universal C.I.T. Credit

Corp. v. Kaplan, 198 Va. 67, 75, 92 S.E.2d 359, 365 (1956)

(internal quotation marks omitted). “Any distinct act of

dominion wrongfully exerted over the property of another, and

in denial of his rights, or inconsistent therewith, may be

treated as a conversion.” Id. at 76, 92 S.E.2d at 365

(internal quotation marks omitted).

In support of its conversion claim, FOA provided evidence

at trial that the Management Agreement already had been

terminated when CSI opened a bank account by falsely

14
representing authorization from FOA to do so, directed FOA’s

unit owners to send money owed to FOA to it, and collected

money owed to FOA. Cf. Abi-Najm v. Concord Condo., LLC, 280

Va. 350, 363, 699 S.E.2d 483, 490 (2010) (tort alleged by

plaintiffs was perpetrated by defendant before a contract

between the two parties came into existence, therefore it

cannot logically follow that the duty the defendant allegedly

breached was one that had its source in the contract). Because

the Management Agreement had terminated, CSI’s alleged acts did

constitute the “independent, willful tort” of conversion,

separate from the contract. The circuit court did not err in

denying CSI’s motion to strike FOA’s conversion claim.

Likewise, the circuit court did not err in granting FOA’s

motion for summary judgment on its conversion claim. Summary

judgment is only available when there are no material facts

genuinely in dispute. Fultz v. Delhaize Am., Inc., 278 Va. 84,

88, 677 S.E.2d 272, 274 (2009). Summary judgment is not

appropriate if reasonable persons may draw different

conclusions from the evidence. Id. Where there is no evidence

to submit to a jury on an affirmative defense, and the evidence

otherwise entitles a plaintiff to relief, summary judgment is

appropriate. See Whitt v. Godwin, 205 Va. 797, 802, 139 S.E.2d

841, 845 (1965).

15
 The only defense CSI asserted to FOA’s conversion claim

was that the Board’s termination of CSI was improper because

the Board did not first obtain a vote of FOA’s unit owners.

The circuit court struck that defense. At trial, CSI did not

present any evidence that created a question of fact concerning

the proper termination of the Management Agreement by FOA. The

evidence was undisputed that CSI took $91,125 of FOA’s

assessment money after being terminated and did not repay that

money to FOA. In light of this undisputed evidence and the

proper denial of CSI’s defense of improper termination, there

was no basis upon which the jury could have found in favor of

CSI. The circuit court did not err in granting summary

judgment on FOA’s conversion claim.

C. Expert Witness Designation

CSI argues that the circuit court erred in permitting

FOA’s expert to testify regarding amounts of tax-related

damages. CSI contends that FOA’s interrogatory answer

regarding the proposed expert testimony concerning tax

penalties and interest was inadequate.

FOA responds that its expert designation was sufficient

and complied with Rule 4:1(b)(4). FOA contends that the fact

that the designation did not contain the precise amounts of

penalties and interest does not make the designation deficient

because the types of damages were clearly disclosed.

16
 This Court reviews a trial court’s decision to admit or

exclude expert testimony under an abuse of discretion standard.

John Crane, Inc. v. Jones, 274 Va. 581, 591, 650 S.E.2d 851,

856 (2007); Blue Ridge Serv. Corp. v. Saxon Shoes, Inc., 271

Va. 206, 212, 624 S.E.2d 55, 58 (2006) (citing Tarmac Mid-

Atlantic, Inc. v. Smiley Block Co., 250 Va. 161, 166, 458

S.E.2d 462, 465 (1995)). This Court must give deference to a

trial court’s ruling to exclude or admit expert testimony and

that ruling will not be disturbed on appeal unless it is

plainly wrong and amounts to an abuse of discretion. See

Grattan v. Commonwealth, 278 Va. 602, 620, 685 S.E.2d 634, 644

(2009).

Rule 4:1(b)(4)(A)(i) requires a party, when asked in an

interrogatory, to identify its trial experts and “to state the

subject matter on which the expert is expected to testify, and

to state the substance of the facts and opinions to which the

expert is expected to testify and a summary of the grounds for

each opinion.” When applying Rule 4:1(b)(4)(A)(i), this Court

begins by “determining whether the opinion at issue was

disclosed in any form.” John Crane, Inc., 274 Va. at 591, 650

S.E.2d at 856.

FOA’s expert designation for Reitberger, its accounting

expert, stated:

17
 Mr. Reitberger will opine that the failures of CSI
resulted in the underpayment of taxes and that the
Association will now incur interest and penalties as
a result of the failures of CSI as well as expenses
in the form of fees paid to Mr. Reitberger’s firm to
correct the errors of CSI and to resolve the claims
of the IRS and the Commonwealth of Virginia. . . .

Mr. Reitberger’s opinions are based upon his
experience and expertise, his review of
correspondence between the IRS and the Commonwealth
of Virginia and the Association, his review of W-2s,
general ledgers, and other financial documents of the
Association relating to payroll withholdings and
payment of payroll taxes.

Although FOA did not itemize the specific amounts of penalties

and interest, the interrogatory response disclosed that it was

Reitberger’s opinion that CSI’s failures resulted in

underpayment of taxes and FOA incurring interest and penalties.

It was within the discretion of the circuit court to determine

whether the interrogatory response sufficiently disclosed the

subject matter on which Reitberger was going to testify, the

substance of Reitberger’s opinions and a summary of the grounds

for Reitberger’s opinions. Compare John Crane, Inc., 274 Va.

at 592-93, 650 S.E.2d at 856-57 (expert designations were

insufficient because opinion was not disclosed in any form).

There is evidence to support the circuit court’s determination

that FOA’s designation was sufficient to satisfy the purpose of

Rule 4:1(b)(4)(A)(i), which is to “allow the litigants to

discover the expert witnesses’ opinions in preparation for

trial.” Woodbury v. Courtney, 239 Va. 651, 654, 391 S.E.2d

18
293, 295 (1990). The circuit court did not abuse its

discretion in finding the expert designation sufficient and

permitting Reitberger to testify.

D. Expert Witness Testimony on Damages

CSI argues that the circuit court erred in denying CSI’s

motion to strike FOA’s claim for certain tax penalties and

interest damages because Reitberger’s testimony regarding those

matters was speculative and did not meet the standard of

“reasonable certainty.” Specifically, CSI alleges that the

penalties related to its failure to file W-2 forms had been

assessed but had not been paid by FOA and might be reduced. CSI

also asserts that testimony regarding the claimed tax penalties

and interest for failure to file the last quarter 2005 and the

first quarter 2006 federal Form 941 and payroll tax withholdings

was speculative because, as of the date of the trial, no

assessment had been made by the IRS for those liabilities.

FOA responds that it proved its tax-related damages with

reasonable certainty. Reitberger unequivocally testified

concerning the penalties and interest the IRS had already

assessed. He also testified that under applicable IRS

regulations, FOA is now liable for and will be assessed

additional specific interest and penalties.

FOA, as the plaintiff below, bore the “burden of proving

with reasonable certainty the amount of damages and the cause

19
from which they resulted; speculation and conjecture cannot form

the basis of the recovery.” Shepherd v. Davis, 265 Va. 108,

125, 574 S.E.2d 514, 524 (2003) (quoting Carr v. Citizens Bank &

Trust Co., 228 Va. 644, 652, 325 S.E.2d 86, 90 (1985)); see also

SunTrust Bank v. Farrar, 277 Va. 546, 555, 675 S.E.2d 187, 191

(2009) (“damage calculations based on unsupported projections

are improper”). “[E]xpert testimony . . . cannot be speculative

or founded upon assumptions that have an insufficient factual

basis.” Blue Ridge Serv. Corp., 271 Va. at 213, 624 S.E.2d at

59 (quoting Tittsworth v. Robinson, 252 Va. 151, 154, 475 S.E.2d

261, 263 (1996)).

In the context of a breach of contract, a plaintiff need

not establish the specific amount of the loss or damage with

absolute certainty. When it is “certain that substantial damage

has been caused by the breach of a contract, and the uncertainty

is not whether there have been damages, but only an uncertainty

as to their true amount, then there can rarely be any good

reason for refusing all damages due to the breach merely because

of that uncertainty.” E.I. DuPont de Nemours & Co. v. Universal

Moulded Prods. Corp., 191 Va. 525, 570, 62 S.E.2d 233, 254

(1950) (internal quotation marks omitted). “Proof of absolute

certainty as to the amount of loss or damage is not essential

when the existence of loss is established and the facts and

circumstances proven are such as to permit of intelligent and

20
probable estimate of the amount of damage or loss sustained.”

Id. at 572-73, 62 S.E.2d at 255.

It is undisputed that CSI, while serving as FOA’s

management agent, failed to file necessary tax returns and to

pay payroll taxes and prepared incorrect W-2 forms. Reitberger

was qualified to testify as an expert on payroll administration

and taxes. Reitberger calculated the amounts of the tax

deposits required and the timing for filing the returns. He

then used statutory rates for tax liability to determine what

the penalties for failure to timely file the appropriate forms

were.

Reitberger’s testimony regarding damages included the IRS’s

penalty assessment of $27,553 for CSI’s failure to file W-2s,

although FOA had not paid the assessment. However, a party that

has incurred an obligation to pay a debt as a result of the

wrongful or unlawful conduct of another, but that has not yet

made payment on such debt, has suffered an actual loss. Sykes

v. Brown, 156 Va. 881, 887, 159 S.E. 202, 204 (1931) (“Payment

of the expense of treatment is not essential to a recovery. If

plaintiff is liable for the debt incurred, that is all that is

necessary.”); see also Virginia Farm Bureau Mut. Ins. Co. v.

Hodges, 238 Va. 692, 696, 385 S.E.2d 612, 614 (1989) (“An

expense can only be ‘incurred’ . . . when one has paid it or

become legally obligated to pay it.”). FOA was legally

21
obligated to pay this assessment from the IRS. Although the

possibility of abatement by the IRS prevented FOA from

establishing the amount of the tax penalty with absolute

certainty, the assessment from the IRS provides “reasonable

certainty” as to the amount of that tax penalty and constitutes

an “intelligent and probable estimate of the amount of damage or

loss sustained.” See E.I. DuPont de Nemours, 191 Va. at 572-73,

62 S.E.2d at 255.

The IRS has not assessed the claimed tax penalties and

interest for CSI’s failure to file the last quarter 2005 and

first quarter 2006 federal Form 941 and to pay payroll tax

withholdings. “Where the wrongful act of the defendant is of

such a nature as to constitute an entire breach of the contract,

compensation therefor may be recovered at once for the whole

loss.” James v. Kibler, 94 Va. 165, 173, 26 S.E.2d 417, 418

(1896). Future damages are recoverable if they can be

ascertained with certainty. Id. Reitberger’s testimony

satisfies the standard of reasonable certainty. Although the

IRS had not yet issued an assessment for FOA’s failure to file

Form 941 and to pay payroll tax withholdings, Reitberger’s

estimates of those assessments were based on mandatory IRS

guidelines and his experience and expertise concerning such

matters. They constitute intelligent and probable estimates of

the penalties the IRS will assess.

22
 The circuit court did not err in denying CSI’s motion to

strike damages concerning the disputed tax penalties and

interest. There was evidence to support those damages in that

FOA was already legally obligated to pay them or Reitberger

established the amount of damages with reasonable certainty

using calculations that were based upon statutory rates of tax

liability.

E. Punitive Damages

CSI argues that the circuit court erred in denying CSI’s

motions to strike punitive damages. CSI contends that FOA

presented no evidence of actual malice or evil intent.

FOA responds that the jury’s award of punitive damages was

supported by the evidence and should not be disturbed on appeal.

FOA contends that the evidence presented at trial plainly

established CSI’s conscious disregard of FOA’s rights.

“Punitive or exemplary damages are allowable only where

there is misconduct or actual malice, or such recklessness or

negligence as to evince a conscious disregard of the rights of

others.” Giant of Virginia, Inc. v. Pigg, 207 Va. 679, 685, 152

S.E.2d 271, 277 (1967); see also Banks v. Mario Indus. of

Virginia, Inc., 274 Va. 438, 460, 650 S.E.2d 687, 699 (2007). A

trial court may only set aside a jury verdict if it is plainly

wrong or without evidence to support it. Bussey v. E.S.C.

Rests. Inc., 270 Va. 531, 534, 620 S.E.2d 764, 766 (2005).

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 CSI argues that even if its interpretation of the

Management Agreement was wrong, a mistake is not a sufficient

basis to infer “evil intent” and award punitive damages. See

Pigg, 207 Va. at 686, 152 S.E.2d at 277 (“Evil intent cannot be

presumed or inferred from mere mistake.”). The evidence

presented at trial, however, provided many examples of how CSI’s

actions exhibited a conscious disregard of FOA’s rights. These

actions include CSI opening a bank account four days after the

effective date of its termination and failing to provide FOA

with signatory authority on that account. Furthermore, to open

the bank account, CSI officers made knowing misrepresentations

that they were officers of FOA. CSI held FOA assessments in the

account for more than a year and paid itself $91,125 in monthly

management fees out of those funds between August 2006 and

October 2007. CSI acknowledged that it was experiencing

financial difficulties and could not meet its financial

obligations without the management fees it paid itself from FOA

funds. Despite becoming aware in 2008 that the circuit court,

in a prior action brought by a company affiliated with CSI, 3

disagreed with CSI’s stated interpretation of the Management

3
In a prior proceeding, Gordon Properties, LLC, a company
affiliated with CSI, filed an action against FOA, contesting
the termination of CSI as a violation of the Bylaws, which
Gordon Properties alleged were incorporated into the Management
Agreement. The circuit court disagreed that the Management

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Agreement, CSI knowingly and intentionally continued to withhold

FOA’s $91,125.

The evidence of CSI’s “conscious disregard of FOA’s rights”

was before the jury. The trial court must accord the jury

verdict the “utmost deference.” Bussey, 270 Va. at 534, 620

S.E.2d at 766. It cannot be said that the jury’s verdict was

plainly wrong or without evidence to support it. Consequently,

the circuit court did not err in denying CSI’s motion to strike

punitive damages.

F. Remittitur

Alternatively, CSI contends that the circuit court abused

its discretion in not ordering a remittitur of the verdict. CSI

contends that the award of $275,000 in punitive damages shocked

the conscience, was in excess of what was expected as

punishment, and was oppressive.

FOA responds that the circuit court did not err in denying

CSI’s motion for remittitur. FOA contends that the jury’s award

of punitive damages was neither excessive nor disproportionate.

This Court reviews the remittitur of punitive damage awards

de novo upon independent review of the record, giving

substantial weight to the trial court’s action. Baldwin v.

McConnell, 273 Va. 650, 656, 643 S.E.2d 703, 706 (2007).

Agreement incorporated the Bylaws and entered summary judgment
against Gordon Properties.

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“Review of the amount of punitive damages includes consideration

of reasonableness between the damages sustained and the amount

of the award and the measurement of punishment required, whether

the award will amount to a double recovery, the proportionality

between the compensatory and punitive damages, and the ability

of the defendant to pay.” Poulston v. Rock, 251 Va. 254, 263,

467 S.E.2d 479, 484 (1996) (citations omitted). Remittitur

should be awarded when “the verdict is so excessive as to shock

the conscience of the court and to create the impression that

the jury has been influenced by passion, corruption or

prejudice.” Smithey v. Sinclair Refining Co., 203 Va. 142, 146,

122 S.E.2d 872, 875-76 (1961).

In the instant case, the factors this Court must consider

weigh in favor of affirming the circuit court’s decision not to

order remittitur. First, the punitive award of $275,000 was

approximately two and a half times the compensatory award for

conversion of $91,125, plus $11,390 in prejudgment interest.

This ratio is not disproportionate. See Poulston, 251 Va. at

263, 467 S.E.2d at 484 (upholding punitive damages that were 2.5

times greater than compensatory damages); Philip Morris, Inc. v.

Emerson, 235 Va. 380, 414, 368 S.E.2d 268, 287 (1988) (affirming

punitive damages that were 6.6 times the compensatory award).

The amount of the damages award is not so excessive as to shock

the conscience of the court, nor does it appear that the jury

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was influenced by passion, corruption or prejudice. Similarly,

the award of punitive damages does not provide double recovery

because the compensatory and punitive damages serve different

purposes. The punitive damages serve as a deterrent to ensure

that CSI does not wrongfully convert other associations’ money

in the future. Finally, although CSI contends that it was

experiencing financial difficulties, CSI did not introduce

evidence of their financial situation at trial. Therefore, CSI

cannot prevail before this Court on its claim that the amount of

punitive damages would be oppressive. Given these factors, the

circuit court did not err in refusing to order remittitur of the

punitive damages award.

IV. Conclusion

Accordingly, for the reasons stated, we will affirm the

circuit court’s judgment.

Affirmed.

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