Com. v. AMEC CIVIL, LLC

PRESENT: Koontz, Kinser, Lemons, Goodwyn, and Millette, JJ.,
and Carrico and Russell, S.JJ.

COMMONWEALTH OF VIRGINIA, ET AL.

v. Record No. 091430

AMEC CIVIL, LLC OPINION BY
JUSTICE LEROY F. MILLETTE, JR.
AMEC CIVIL, LLC September 16, 2010

v. Record No. 091662

COMMONWEALTH OF VIRGINIA, ET AL.

FROM THE COURT OF APPEALS OF VIRGINIA

This appeal concerns the performance of a construction

contract between AMEC Civil, LLC (AMEC) 1 and the Commonwealth of

Virginia, and the Department of Transportation (collectively,

VDOT). In addressing AMEC’s twenty-two assignments of error

and VDOT’s two assignments of error and seven assignments of

cross-error in the consolidated cases, we narrow the dispute to

five primary issues: (1) whether AMEC gave timely notice of

its claims to VDOT; (2) whether sustained elevated lake water

levels constitute a differing site condition under the

contract; (3) whether AMEC established its entitlement to home

office overhead damages; (4) whether the “Rental Rate Blue

Book” was properly used to calculate AMEC’s actual costs as a

basis for its award of damages; and (5) whether AMEC is
entitled to pre-judgment interest as an element of its damages.

We do not address those issues rendered moot by our holdings in

this opinion. We affirm the judgment of the Court of Appeals

in part, reverse in part, and remand for the circuit court to

recalculate damages awarded to AMEC.

BACKGROUND

In May 2000, VDOT awarded AMEC a $72,479,999.49 contract

for the construction of the Route 58 Clarksville Bypass in

Mecklenburg County. 2 The central element of the construction

project was a bridge (Bridge 616) spanning the John H. Kerr

Reservoir (Kerr Lake), which required work to be performed by

equipment floating on the water. The project also included ten

smaller bridges and several miles of roadway. The time

allotted to the project was 41 months, with a projected

completion date of November 1, 2003. However, the project was

not substantially completed until June 2005. Delays arose

primarily from difficulties in the construction of concrete-

filled drilled shafts that form the foundation of Bridge 616,

and sustained elevated water levels in Kerr Lake.

1
Morse Diesel Civil, LLC changed its name to AMEC Civil,
LLC on or about January 1, 2001, and assigned its interests in
the contract to AMEC.
2
In this opinion, we cite VDOT’s Metric Road and Bridge
Specifications (Jan. 1997) (the Specifications), which are
incorporated into the contract. We refer to individual
sections as “Specification § ___.” In addition to the

2
 In May 2006, AMEC submitted an administrative claim to

VDOT pursuant to Specification § 105.16, seeking $24,792,823.43

in additional compensation. 3 AMEC’s claim submission outlined

what it deemed major impacts, consisting of the 2003-04 winter

period, and differing site conditions, including unanticipated,

sustained high water levels, and other alleged impacts delaying

its performance of the contract. By letter, VDOT denied AMEC’s

claim.

AMEC then filed its breach of contract action against VDOT

in the circuit court, under Code § 33.1-387. Code § 33.1-387

provides in part that “[t]he submission of the claim to the

Department of Transportation within the time and as set out in

§ 33.1-386 shall be a condition precedent to bringing an action

under this chapter.” 4 The trial was conducted by the circuit

Specifications, special provisions were also included in the
contract.
3
According to Specification § 105.16, in pertinent part,

a written statement describing the act of
omission or commission by the Department or
its agents that allegedly caused damage to
the Contractor and the nature of the
claimed damage shall be submitted to the
Engineer at the time of occurrence or
beginning of the work upon which the claim
and subsequent action are based.
4
Code § 33.1-386 provides that upon the completion of any
contract for the construction of any state highway project
awarded by the Commonwealth Transportation Board or by the
Commonwealth Transportation Commissioner, a contractor may
submit a claim for payment under the contract of costs and

3
court without a jury. During litigation of the case, the

circuit court issued two letter opinions.

The first letter opinion was issued before trial

commenced, and addressed VDOT’s argument that AMEC failed to

satisfy the mandatory requirement for timely written notice, at

the time of the occurrence or beginning of the work, of an

intent to file claims under Code § 33.1-386 and Specification

§ 105.16. The circuit court held that “any writing that

memorializes the fact the VDOT had actual notice of a claim

could be sufficient” to satisfy the notice requirement of

Specification § 105.16.

The circuit court also held that “strict compliance with

legal form,” through the requirement in Code § 33.1-386 that

AMEC provide VDOT with written notice of its intention to bring

claims when such claims first arise, “must yield to achievement

of the law’s primary purpose” of giving VDOT the opportunity to

investigate such claims. The court determined that “AMEC’s

claim should not be dismissed since the public policy function

of the written notice provision was achieved through actual

notice” and, furthermore, that VDOT suffered no prejudice from

expenses caused by VDOT’s acts or omissions. Code § 33.1-386
states, in part, that “[t]he claim shall set forth the facts
upon which the claim is based, provided that written notice of
the contractor’s intention to file such claim shall have been
given to [VDOT] at the time of the occurrence or beginning of
the work upon which the claim and subsequent action is based.”

4
AMEC’s failure to abide by the statute’s written notice

provision.

After the trial concluded, the circuit court issued its

second letter opinion. The circuit court rendered a “general

verdict” and awarded AMEC $21,181,941.00, without interest or

attorney’s fees. The circuit court revisited the issue of

notice, finding that VDOT had written notice through minutes of

meetings and memoranda addressing the issues, exchanged between

the parties, and concluded that every factual assumption made

in its first letter opinion was established by the evidence at

trial. VDOT and AMEC each appealed the circuit court’s

judgment to the Court of Appeals, which reversed in part,

affirmed in part, and remanded the case for further

proceedings. Commonwealth v. AMEC Civil, LLC, 54 Va. App. 240,

246, 677 S.E.2d 633, 636 (2009). We awarded these appeals.

ANALYSIS

Although AMEC’s amended complaint segregated its claim

into 12 separate allegations of damages, the Court of Appeals

grouped the dispute into four principal issues, which we

analyze as we address the issues presented in this appeal.

I. Notice

The Court of Appeals determined that the following claims

were barred due to AMEC’s failure to fulfill the notice

requirement of Code § 33.1-386(A): drilled shaft work; defects

5
in the drilled shaft concrete specification; concrete formwork

for foundation caps, piers, and columns; pier 17 foundation cap

repair; and work authorized by work orders 4, 6, 7, and 16.

AMEC Civil, LLC, 54 Va. App. at 257-60, 677 S.E.2d at 642-43.

The Court of Appeals held that, with respect to these claims,

the circuit court erred as a matter of law by concluding that

AMEC gave timely written notice of its intention to file a

claim, because the court dispensed with the statutory

requirement of written notice. Id. at 262-63, 677 S.E.2d at

644. The Court of Appeals also held that the circuit court’s

alternate ruling that written notice had been given from

minutes of meetings and memoranda exchanged between the parties

is unsupported by the evidence. Id.

AMEC also made a claim for acceleration damages because on

some aspects of the contract, AMEC accelerated its efforts to

keep on track with expected timelines and claimed damages for

its acceleration efforts. The Court of Appeals held that the

notice given to VDOT was untimely as to AMEC’s claim for

acceleration damages incurred before April 2004, but was timely

as to acceleration damages incurred after April 2004. Id. at

260-62, 677 S.E.2d at 643-44.

Included in AMEC’s complaint was a claim for damages due

to a delay over two winter periods. In addressing AMEC’s claim

of damages, the Court of Appeals concluded that AMEC’s notice

6
as to the first winter period was timely. Id. at 261-62, 677

S.E.2d at 643-44. Notice of a claim as to the second winter

period was not addressed and is, therefore, not at issue.

AMEC, however, contends that VDOT had timely written

notice of all of AMEC’s claims, that the evidence supported the

circuit court’s ruling, and that the Court of Appeals erred

when it reversed the circuit court’s findings of proper notice.

AMEC contends that the Court of Appeals erred by failing to

consider that notice is timely when given at the time of the

occurrence, which can properly be regarded as when a dispute

over payment actually arises between the parties. AMEC argues

that the Court of Appeals erred by not considering the adequacy

of the written notice in context of the fact that VDOT had

actual knowledge and suffered no prejudice, that actual notice

followed by written notice may be timely, and that the writings

exchanged by the parties documenting the various problems

giving rise to the claims, the written requests for additional

compensation, and the administrative claim package are

sufficient to satisfy Code § 33.1-386.

A. Notice Under Code § 33.1-386(A)

Code § 33.1-387 gives government contractors the right to

file a civil action for any claim “under the contract” that has

previously been submitted to and denied by VDOT. We have

stated that this statute must be “strictly construed.” XL

7
Specialty Ins. Co. v. Commonwealth, 269 Va. 362, 371, 611

S.E.2d 356, 361 (2005). Code § 33.1-387 further provides that

“[t]he submission of the claim to the Department of

Transportation within the time and as set out in § 33.1-386

shall be a condition precedent to bringing an action under this

chapter.” By using the language “condition precedent,” Code

§ 33.1-387 makes notice under Code § 33.1-386 a mandatory

prerequisite to filing suit against the Commonwealth.

In Sabre Construction Corp. v. County of Fairfax, 256 Va.

68, 71, 501 S.E.2d 144, 146 (1998), we addressed language in

the Public Procurement Act that allowed bidders to institute a

legal action within ten days of an adverse decision of a public

body. We held that when a statute imposes such a “condition

precedent” to maintaining a cause of action against the

Commonwealth, such limitation is “not merely a procedural

requirement, but a part of the newly created substantive cause

of action.” Id. at 72, 501 S.E.2d at 147. Thus, notice given

in accordance with Code § 33.1-386 is an element of AMEC’s

prima facie case.

Code § 33.1-386(A) details the proper form and procedure

for submitting a claim “under the contract.” Code § 33.1-

386(A) requires that the administrative claim “set forth the

facts upon which the claim is based, provided that written

notice of the contractor’s intention to file such claim shall

8
have been given to the Department at the time of the occurrence

or beginning of the work upon which the claim and subsequent

action is based.” (Emphasis added.) Compliance with this

notice requirement is mandatory, and part of the substantive

cause of action authorized by Code § 33.1-387.

In its first letter opinion, the circuit court ruled that

“AMEC did not provide VDOT with written notice of its claims as

required by Va. Code Ann. § 33.1-386.” Nevertheless, the

circuit court held that AMEC had actual notice of AMEC’s

claims, and concluded that “AMEC’s actual notice was a valid

substitute for written notice since it effectively accomplished

the purpose of the written notice requirement.” The circuit

court also noted that “although AMEC did not fully comply with

the written notice requirement of Va. Code Ann. § 33.1-386,

every purpose of the notice provision has been achieved and

VDOT has not suffered any prejudice since it is aware of every

fact and circumstance ‘essential to a just determination of the

plaintiff’s claim.’ ”

In its post-trial ruling, the circuit court reaffirmed its

ruling that actual notice is an acceptable substitute for

written notice under Code § 33.1-386(A). The circuit court

also stated:

The evidence presented at trial proves that the
Commonwealth had actual notice of the
plaintiff’s claims, ab initio, that the parties

9
 met on several occasions to discuss the issues
before the action was filed, that minutes of
those meetings were kept, and that memoranda
addressing the issues were exchanged between the
parties. It is clear, then, that [VDOT] also
had written notice of the plaintiff’s claims.

In neither of its letter opinions nor in its final order did

the circuit court identify the documents that supported its

conclusion that the written notice requirement for AMEC’s

various claims was satisfied, so we must consider whether the

record supports the circuit court’s blanket endorsement that

AMEC complied with the requirement of written notice or whether

the Court of Appeals correctly determined that proper written

notice was lacking as to certain claims.

B. Actual Notice

The Court of Appeals, in addressing the circuit court’s

ruling regarding actual notice, held that the “circuit court

erred in finding that anything other than written notice would

suffice” under Code § 33.1-386(A). AMEC Civil, LLC, 54 Va.

App. at 254, 677 S.E.2d at 640. The Court of Appeals stated

that “[t]o permit actual notice to suffice when the governing

statute requires written notice would create an exemption that

has no basis in the text of the statute.” Id. at 255, 677

S.E.2d at 640 (internal quotation marks omitted). We agree

with the Court of Appeals that written notice is required.

10
 Code § 33.1-386(A) is to be strictly construed, and is

clear and unambiguous, stating that contractors “shall” provide

“written notice” to VDOT. We hold that actual notice cannot

satisfy the written notice requirement in Code § 33.1-386(A),

and that written notice is required. See also BBF, Inc. v.

Alstom Power, Inc., 274 Va. 326, 331, 645 S.E.2d 467, 469

(2007) (“In construing a statute, we must apply its plain

meaning, and we are not free to add [to] language, nor to

ignore language, contained in statutes.” (internal quotation

marks omitted)).

C. Timely Written Notice

Having concluded that notice under Code § 33.1-386(A) must

be written, the issue becomes what constitutes “written notice”

under the statute. Code § 33.1-386(A) provides that the

“written notice” must announce the contractor’s “intention to

file [a] claim.” The statute also requires that such notice be

given at one of two times: 1) “at the time of the occurrence”

of the claim; or 2) at the “beginning of the work upon which

the claim . . . is based.” Code § 33.1-386(A).

Written notice under Code § 33.1-386(A) must be a written

document delivered to VDOT clearly stating the contractor’s

intention to file a claim. We reject AMEC’s argument that

minutes of meetings constitute written notice under Code

§ 33.1-386(A). To the extent such minutes may reflect a record

11
of a contractor’s stated intent to file a claim, they still do

not meet the written notice requirement of Code § 33.1-386(A),

because they are merely a recorded summary of what was said at

meetings. At a minimum, to satisfy the written notice

requirement, the written document at issue must clearly give

notice of the contractor’s intent to file its claim and must be

“given to [VDOT]” by letter or equivalent communication

directed to VDOT at the appropriate time.

In Flory Small Business Development Center v.

Commonwealth, 261 Va. 230, 237, 541 S.E.2d 915, 919 (2001),

this Court interpreted a notice requirement in the Virginia

Public Procurement Act (former Code §§ 11-35 through –80),

which required parties making claims under the Act to submit a

written notice of intent to file a claim given “at the time of

the occurrence or beginning of the work upon which the claim is

based.” The relevant language in the Code section at issue in

Flory is, for purposes of this case, identical to the notice

language in Code § 33.1-386(A). In interpreting the notice

provisions of the Procurement Act, this Court stated that the

Act

does not specifically require that the notice of
intent be separate and distinct from the claim
itself in time or in form. By identifying more
than one event that triggers the filing of an
intent to file a claim, the statute acknowledges
that not all claims will arise under the same
circumstances. For example, a dispute over

12
 payment under the contract may not arise until
the work is completed, preventing a contractor
from giving notice of an intent to file a claim
for such payment at the “beginning of the work
upon which the claim is based.” Thus, the
timing and form of an alleged notice of intent
pursuant to Code § 11-69(A) requires an
examination of the circumstances of each case.

Id. at 238, 541 S.E.2d 919 (emphasis added).

In determining whether AMEC has met its statutory

obligation to provide VDOT with written notice, we must examine

the documents sent by AMEC to VDOT regarding the various claims

alleged. Guided by the principles stated in Flory and the

plain language of Code § 33.1-386(A), we will examine the

circumstances of each particular claim at issue to determine

whether notice is timely and clearly shows AMEC’s intention to

file a claim.

1. Claim Involving Drilled Shaft Work

AMEC’s claim for drilled shaft work stemmed from problems

it encountered during construction of Bridge 616. The Court of

Appeals held that AMEC’s notice was untimely because it was

given in 2003, two years after the beginning of the work on the

drilled shafts. AMEC Civil, LLC, 54 Va. App. at 257-58, 677

S.E.2d at 642. We agree with the Court of Appeals that AMEC’s

notice for this claim was untimely.

The record contains letters and minutes from meetings

exchanged between AMEC and VDOT which show that the parties

13
were aware of problems with the drilled shaft work on Bridge

616 as early as 2000. However, it was not until 2003 that AMEC

sent VDOT a letter stating its intention to file a claim for

additional compensation due to the problems associated with the

drilled shafts. Clearly this notice was not given at the

“beginning of the work” on this claim because it was given two

years after work began. Code § 33.1-386. The notice was also

given long after a legitimate dispute regarding the problems

with the drilled shafts arose between the parties, as evinced

by the correspondence in the record. Therefore, the notice was

also given after the “time of the occurrence” of this claim,

rendering it untimely under Code § 33.1-386.

2. Claim for Defects in the Drilled
Shaft Concrete Specification

During construction of the drilled shafts, AMEC

encountered problems with the concrete mix specification

established by VDOT pursuant to the contract, requiring AMEC to

expend significant amounts of additional time and money. These

problems began in 2000, and persisted for more than a year.

AMEC claimed that VDOT was responsible for its loss in

productivity regarding concrete placement from 2000 until 2002,

when VDOT allowed the concrete mix specification to be changed,

which solved the problems AMEC was experiencing in laying the

concrete.

14
 The Court of Appeals held that there was no evidence

presented at trial that AMEC provided VDOT with written notice

of its intention to file a claim for damages resulting from the

concrete mix specification. AMEC Civil, LLC, 54 Va. App. at

258, 677 S.E.2d at 642. We agree with the Court of Appeals

that although the record contains letters exchanged between

AMEC and VDOT discussing the concrete mix specification and

problems associated with it, there is no evidence that AMEC

provided VDOT written notice of its intention to file a claim

for damages caused by the concrete mix specification.

3. Claim for Concrete Formwork for Foundation
Caps, Piers, and Columns

In its administrative claim, AMEC alleged that it suffered

damages for problems associated with certain foundation caps,

piers, and columns. With regard to these claims, the Court of

Appeals held that there was no evidence that AMEC provided

written notice of its intention to file independent claims for

these additional costs. Id. at 259, 677 S.E.2d at 642.

As part of its administrative claim, AMEC asserted a claim

for damages resulting from a plan error regarding the

construction of concrete shafts for pier 18 on Bridge 616. In

May 2004, AMEC sent VDOT a letter in response to VDOT’s denial

of AMEC’s request for additional compensation resulting from

this plan error. This letter affirmatively states that it

15
shall serve as notice that AMEC will file a claim for damages

resulting from this plan error. Therefore, we hold that AMEC

did provide VDOT with sufficient written notice for its claim

for damages resulting from the plan error for construction of

pier 18 on Bridge 616. AMEC’s letter clearly stated its

intention to file a claim, and it was timely because it was

made shortly after VDOT’s denial of AMEC’s request for

additional compensation, which was the “time of the

occurrence.”

With regard to AMEC’s claims for problems associated with

other foundation caps, piers, and columns, we agree with the

Court of Appeals that the record does not contain evidence that

AMEC provided VDOT with written notice of such claims.

4. Claim for Pier 17 Foundation Cap Repair

AMEC experienced problems constructing the pier 17

foundation cap on Bridge 616 because fluctuating lake levels

caused leakage around the seals of the foundation cap. This

leakage continued during placement of the concrete, which

ultimately rendered the foundation cap defective. VDOT

rejected the foundation cap, and AMEC had to construct a new

foundation cap for pier 17.

The Court of Appeals held that the record contained no

written notice from AMEC to VDOT indicating its intention to

file a claim for work on the pier 17 foundation cap. Id. at

16
259, 677 S.E.2d at 643. We agree with the Court of Appeals

that the record contains no evidence of such notice from AMEC

to VDOT.

5. Claim for Work Authorized by Work
Orders 4, 6, 7, and 16

Work Orders 4, 6, 7, and 16 were authorized by VDOT for

additional work that was required during construction, but not

provided for in the contract. These work orders extended the

contract end date by a total of 41 days. In its administrative

claim, AMEC alleged that VDOT failed to compensate AMEC for

delay costs associated with these work orders. In addressing

this issue, the Court of Appeals held that notice was not

timely because AMEC provided such notice in July 2004, which

was “after commencement of the work authorized by Work Orders

4, 6, 7, and 16.” Id. at 260, 677 S.E.2d at 643.

We agree that AMEC did not provide timely written notice

for its claim regarding Work Orders 4, 6, 7, and 16. AMEC’s

notice was not timely under Code § 33.1-386 because it was made

after “beginning of the work” on which the claim was based, and

after the parties developed a legitimate dispute on this claim,

which served as the “time of the occurrence” of this claim.

6. Claim for Acceleration Damages

In its administrative claim, AMEC alleged that it is

entitled to acceleration damages resulting from its accelerated

17
effort to meet contractual timelines. The Court of Appeals

held that AMEC filed a written notice evincing its intention to

file a claim in April 2004. Id. at 260-61, 667 S.E.2d at 643.

The Court of Appeals held that this “notice was untimely as to

acceleration efforts prior to April 2004 but timely as to

acceleration efforts after April 2004 to the extent they were

reasonably attributable to contractually compensable delays not

‘correctly and fully addressed by Work Order No. 39.’ ” 5 Id. at

262, 677 S.E.2d at 644. The Court of Appeals directed the

circuit court on remand to “determine whether any such post-

notice efforts existed consistent with our views of the

contractual compensability of AMEC’s claims.” Id.

As an initial matter, we agree with the Court of Appeals

that AMEC first provided VDOT with written notice of its

intention to file a claim for its acceleration efforts in April

2004. However, this notice was not timely for all of AMEC’s

acceleration efforts during the contractual period. The notice

was not timely for AMEC’s acceleration efforts prior to April

2004 because the notice was given after the work that comprised

the acceleration began, and after the occurrence of the claim

because the parties’ dispute regarding the compensability of

AMEC’s acceleration efforts arose before April 2004.

5
Work Order 39 extended the contract end date to September
3, 2004 “due to the high lake elevations.”

18
Nevertheless, AMEC’s notice is timely for its claim for

acceleration efforts after April 2004 because the notice was

given prior to acceleration efforts made after that time.

Therefore, AMEC’s notice was timely under Code § 33.1-386 for

acceleration efforts after April 2004 because it was given at

the beginning of the work upon which AMEC’s claim was based.

7. Claim for Damages During the First Winter Period

The contract originally provided for three winter periods.

However, the contract contemplated the possibility of an

extension that would push the completion date into later winter

periods. Specification § 108.09(b) provides, in pertinent

part:

If there is a delay in the progress of the work
due to unforeseen causes . . . and the delay
extends the contract time limit into the period
between November 30 of one year and April 1 of
the following year and working conditions during
such period are unsuitable for completion of the
work, then consideration may be given to
granting an extension of time that will
encompass a suitable period during which such
work can be expeditiously and acceptably
performed.

In March 2003, AMEC sent a letter to VDOT stating its

intention to file a claim for damages resulting from extending

the contract from November 30, 2003 to April 1, 2004. AMEC

contended that this winter period extension was necessary

because work orders 6, 7, 12, and 16 extended the contractual

19
period into the winter period, a time when working conditions

were unsuitable under Specification § 108.09(b). The Court of

Appeals held that this was adequate written notice under Code

§ 33.1-386(A). AMEC Civil, LLC, 54 Va. App. at 262, 677 S.E.2d

at 644. We agree with the Court of Appeals. AMEC’s notice was

timely because it was given when the parties’ dispute regarding

the extension for the first winter period arose, which was the

time of the occurrence of the claim under Code § 33.1-386.

In summary, we agree with the Court of Appeals that AMEC

provided VDOT with timely written notice regarding its claims

for damages arising during the first winter period. We also

agree with the Court of Appeals that AMEC provided VDOT with

timely written notice regarding its acceleration claim as

applied to AMEC’s acceleration efforts after April 2004. On

remand, the circuit court should determine the amount of

compensation to which AMEC has proved it is entitled for

damages arising during the first winter period and for its

acceleration efforts from April 2004 to completion of the

contract.

Unlike the Court of Appeals, we hold that AMEC provided

VDOT timely written notice of its intention to file a claim for

damages resulting from the plan error regarding the

construction of concrete shafts on pier 18 on Bridge 616. On

20
remand, the circuit court should award AMEC damages that it

incurred regarding this claim.

With respect to the remaining claims discussed above, we

agree with the Court of Appeals that AMEC did not provide VDOT

with timely written notice of its intention to file a claim.

II. Elevated Lake Water Levels

A. Issue

The key feature of the contract was the construction of

Bridge 616 across Kerr Lake, a dam-controlled reservoir, which

is managed by the United States Army Corps of Engineers (the

U.S. Army Corps) in part to prevent flooding downstream on the

Roanoke River. The U.S. Army Corps regulates Kerr Lake’s water

level, usually maintaining a “normal level” of 300 feet. When

the water level rises to 305 feet, the U.S. Army Corps begins

releasing water at a certain rate and increases that rate as

the water continues to rise. The lake water level was critical

to the construction of Bridge 616 because AMEC could not access

the lake and complete the columns that hold up the bridge when

the water level was too high.

The contract contemplated routine fluctuations in the

water level of Kerr Lake. Specifically, the Site Information

section of the Special Provisions for Drilled Shafts states, in

pertinent part, that

21
 due to the method of operating the John H. Kerr
Reservoir and other factors beyond the control
of the Department, the power pool elevation in
the reservoir routinely fluctuates by several
feet. These fluctuations can take place within
a few days. It is the responsibility of the
Contractor to avail himself of the historical
records of the water levels maintained by the
U.S. Army Corps of Engineers, Wilmington
District and determine the impacts possible
fluctuations may have on planned construction
methods and operation.

At trial, Grant Ralston, AMEC’s estimate and engineering

manager, testified that AMEC knew that the lake water level

fluctuated and looked at the historical average lake water

levels before determining that AMEC could complete the project

even if it had to shut down construction for a while due to

high water. Ralston acknowledged that he “knew [Kerr Lake]

fluctuated over a long period of time” and that “[t]here was no

doubt in [his] mind that the water had been up and down for a

long period of time,” but asserted that he took into

consideration the U.S. Army Corps’ information regarding lake

water levels while preparing the estimate for the project.

Ralston testified that while creating the project schedule,

“[they] were aware that [they] would have to deal with this

[sic] fluctuating lake elevations, so [they] would have to

adjust the amount of time [they were] out there to reflect

that.” Essentially, AMEC planned to do other tasks during the

time periods when the lake water level fluctuated to a higher

22
level. According to Ralston, AMEC also properly planned at bid

time for the usual high water period between February and June

of each year.

However, in 2003, the lake water level remained high for

six months, thereby substantially delaying AMEC’s work,

primarily the construction of Bridge 616. Charlie H. Guerrant,

VDOT’s construction manager, who lived in the area of the

project his entire life, testified that Kerr Lake had been at

higher levels than those encountered in 2003, “but not for that

long of a period.” Guerrant described the duration of the

elevated lake water levels as unusual and stated that when he

began the project, he did not expect the water level to remain

as high as it did for the length of time that it did in 2003.

Dale V. Goodman, VDOT’s resident administrator, also testified

that the duration of the high water at Kerr Lake was an unusual

circumstance. In March 2003, AMEC’s project manager, Peter

Buchardt, wrote a letter to VDOT informing it that “[c]ontrary

to the information provided [on the U.S. Army Corps’ website],

the levels actually encountered during the past month exceed

307.71 [feet],” and that “[t]hese conditions ha[d] stopped

[AMEC’s] critical path operations,” and advised VDOT that an

overall claim for the delays would be submitted.

A year later, as a result of the sustained elevated lake

water levels, VDOT issued two work orders extending the project

23
completion date from December 31, 2003 to October 14, 2004. In

an August 2004 letter to AMEC, VDOT asserted that the time

extension was granted because “the period of time from

approximately March 1, 2003 through July 27, 2003 represented

an unusual period of high water levels (148 days),” but VDOT

did not award AMEC compensation for the delays.

B. Discussion

Specification § 104.03 of the contract, titled “Differing

Site Conditions,” provided for relief in the form of additional

compensation to AMEC when either (1) “subsurface or latent

physical conditions” encountered during the work “differ[ed]

materially from those indicated in the Contract,” (Type I

condition) or (2) “unknown physical conditions of an unusual

nature, differing materially from those ordinarily encountered

and generally recognized as inherent in the work provided for

in the Contract” are encountered (Type II condition).

The Court of Appeals held that AMEC’s “high-water”

differing site condition claim was defeated by the contract as

a matter of law. AMEC Civil, LLC, 54 Va. App. at 264, 677

S.E.2d at 645. The Court of Appeals concluded that no Type I

condition existed because the elevated lake water levels did

not differ from any condition indicated in the contract, as the

contract established neither a baseline nor even a range of

fluctuations, but instead advised AMEC that the water level of

24
the lake routinely fluctuates by several feet and directed AMEC

to review the historical records to take into account non-

routine possible fluctuations. Id. at 265, 677 S.E.2d at 646.

The Court of Appeals also held that no Type II condition

existed. Id. at 266, 677 S.E.2d at 646. The Court of Appeals

reasoned that only an unknown, unforeseeable and unusual

physical condition can be a Type II condition under

Specification § 104.03. Id. In the Court of Appeals’ opinion,

routine and non-routine water level fluctuations presented

known conditional risks associated with the worksite, and such

known conditional risks, “whether of an unusual nature or not,”

should have been factored into AMEC’s risk assessment. Id.

On appeal to this Court, AMEC argues that the sustained

periods of elevated lake water levels constituted a differing

site condition, because they were sustained high water levels

beyond anything recorded by the U.S. Army Corps and unusual and

unexpected by everyone, including VDOT representatives.

According to AMEC, the Court of Appeals applied an improper

standard of review to the circuit court’s findings of fact, in

reviewing the circuit court’s findings de novo.

VDOT responds that the Court of Appeals correctly held

that the elevated water levels were neither a Type I or Type II

differing site condition. VDOT maintains that the sustained

water levels were not a Type I differing site condition because

25
they did not differ materially from any indication in the

contract, as the contract did not establish a baseline or even

a range of fluctuations and did not make any binding

representations on the subject. VDOT argues that the sustained

water levels also were not a Type II differing site condition

because they were a known, predicable condition, and AMEC knew

that there had previously been sustained periods of high water.

In Asphalt Roads & Materials Company, Inc. v.

Commonwealth, 257 Va. 452, 457, 512 S.E.2d 804, 806 (1999),

this Court stated, when interpreting a similar differing site

condition clause, that

[t]he purpose of the differing site
conditions clause and similar clauses, described
in a number of cases as the “changed conditions
clause,” has been stated in several cases. The
North Carolina Court of Appeals, for example,
has stated that its purpose is “[t]o encourage
low, competent bids,” Ray D. Lowder, Inc., v.
North Carolina State Highway Comm’n, 217 S.E.2d
682, 696, (N.C. Ct. App.) cert. denied, 218
S.E.2d 467 (N.C. 1975).

Similarly, the Court of Claims stated that
the purpose of the clause was:

[T]o take at least some of the gamble
on subsurface conditions out of bidding.
Bidders need not weigh the cost and ease of
making their own borings against the risk
of encountering an adverse subsurface, and
they need not consider how large a
contingency should be added to the bid to
cover the risk. They will have no
windfalls and no disasters. The Government
benefits from more accurate bidding,
without inflation for risks which may not

26
 eventuate. It pays for difficult
subsurface work only when it is encountered
and was not indicated in the logs.

Foster Constr. C. A. & Williams Bros. Co. v.
United States, 435 F.2d 873, 887 (Ct. Cl. 1970).

The differing site conditions clause is intended to “shift

the risk of adverse subsurface or latent physical conditions

from the contractor, who normally bears such risk under a

fixed-price contract, to the government.” Olympus Corp. v.

United States, 98 F.3d 1314, 1316 (Fed. Cir. 1996). The

differing site conditions clause is designed to ensure low,

competent bids. Asphalt Roads & Mat’ls Co., 257 Va. at 457,

512 S.E.2d at 806.

To determine whether a Type I differing site condition

existed requires the court first to interpret the contract,

which is a legal inquiry reviewed de novo on appeal, and then

to engage in a factual inquiry. Randa/Madison Joint Venture

III v. Dahlberg, 239 F.3d 1264, 1274 (Fed. Cir. 2001); Turnkey

Enterprises, Inc. v. United States, 597 F.2d 750, 755 n.12 (Ct.

Cl. 1979). For a contractor to show the existence of a Type I

differing site condition, “the contractor must prove, by a

preponderance of the evidence, that the conditions indicated in

the contract differ materially from those it encounters during

performance.” Randa/Madison Joint Venture III, 239 F.3d at

1274 (quoting H.B. Mac, Inc. v. United States, 153 F.3d 1338,

27
1345 (Fed. Cir. 1998))(internal quotation marks omitted). The

contract must contain a “reasonably plain or positive

indication that the conditions to be encountered would be other

than those actually encountered at the time of performance,”

Turnkey Enterprises, Inc., 597 F.2d at 754-55, and “[t]he

conditions actually encountered must have been reasonably

unforeseeable based on all the information available to the

contractor at the time of bidding.” Meyers Cos., Inc. v.

United States, 41 Fed. Cl. 303, 309 (1998) (quoting Stuyvesant

Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed. Cir.

1987)) (internal quotation marks omitted).

Analysis of whether a Type II differing site condition

exists does not require contract interpretation, and is a

factual determination. Randa/Madison Joint Venture III, 239

F.3d at 1277; Turnkey Enterprises, Inc., 597 F.2d at 758. In

order to qualify as a Type II differing site condition, “the

unknown physical condition must be one that could not be

reasonably anticipated by the contractor from his [or her]

study of the contract documents, his [or her] inspection of the

site, and his [or her] general experience[,] if any, as a

contractor in the area.” Randa/Madison Joint Venture III, 239

F.3d at 1276 (quoting Perini Corp. v. United States, 381 F.2d

403, 410 (Ct. Cl. 1967)) (internal quotation marks omitted).

The contractor must show that “it did not [know] about the

28
physical condition, that it could not have anticipated the

condition from inspection or general experience, and that the

condition varied from the norm in similar contracting work.”

Walser v. United States, 23 Cl. Ct. 591, 593 (1991).

We hold that under the plain language of the

Specifications, the sustained elevated water levels did not

constitute a Type I differing site condition, as the water

levels were not a subsurface or latent physical condition in

existence at the time that the contract was executed. We

therefore do not need to engage in an interpretation of the

Site Information section of the Special Provisions for Drilled

Shafts or to determine if the sustained elevated water levels

differed materially from what was represented in the contract.

We conclude, however, that the sustained elevated water

levels formed a Type II differing site condition under

Specification § 104.03, as they were an unknown physical

condition of an unusual nature, which differed materially from

those ordinarily encountered and generally recognized as

inherent in the work provided for in the contract. The Court

of Appeals erred by deciding this issue as a matter of law, as

an inquiry into whether a Type II differing site condition

existed presents a question of fact. Randa/Madison Joint

Venture III, 239 F.3d at 1277; Turnkey Enterprises, Inc., 597

F.2d at 758.

29
 We stated in Asphalt Roads & Materials Company, Inc. that

“in the absence of clear evidence to the contrary in the

record, we presume that [the circuit court] correctly applied

the provisions of [Specification] § 104.03 to the facts and

that, in doing so, it resolved any conflict in the facts in

favor of the contractor.” 257 Va. at 458 n.6, 512 S.E.2d at

807 n.6. This presumption is bolstered by ample evidence in

the record, from both AMEC’s and VDOT’s witnesses, that the

sustained elevated water levels were of an “unusual duration,”

presenting an “unusual circumstance,” and not ordinarily

encountered as inherent in the construction work provided for

in the contract. Moreover, the unknown physical condition was

not one that could be reasonably anticipated by AMEC from its

study of the contract, inspection of the site, or general

experience as a contractor in the area. Randa/Madison Joint

Venture III, 239 F.3d at 1276.

The risk of sustained high water in Kerr Lake was unusual,

and not one that AMEC was charged with the responsibility of

including in its bid. AMEC properly incorporated only the

costs associated with routine fluctuations after consulting the

U.S. Army Corps’ website and reviewing historical water level

information. VDOT benefited from more accurate bidding,

without inflation for a risk that might not have eventuated,

but now must bear the costs associated with a risk that came to

30
fruition and adversely impacted AMEC’s ability to complete

construction as scheduled.

Additionally, we disagree with VDOT’s assertion that the

sustained elevated water levels were a natural event and

therefore an act of God. It is undisputed that Kerr Lake is a

dam-controlled reservoir and that its water level is managed by

the U.S. Army Corps, partly to prevent flooding downstream on

the Roanoke River. The sustained elevated water levels were

not a natural event, as they resulted from the U.S. Army Corps’

exercise of its control over the dam, which dictated the water

level of Kerr Lake. Thus, VDOT’s contention that the sustained

elevated water levels are barred from consideration as a

differing site condition on this basis is unsupported by the

evidence.

C. Calculation of Damages

With regard to calculation of AMEC’s additional

compensation, AMEC argues that it is entitled to compensation

on a force account basis per Specification § 109.05 for damages

it sustained from the elevated lake water levels. AMEC

contends that Specification § 109.05 provides that contractors

will be paid on a force account basis for extra work caused by

a differing site condition when the parties cannot agree on a

price for such extra work.

31
 VDOT argues that AMEC is not entitled to damages as

calculated under Specification § 109.05 because VDOT did not

require AMEC to perform work on a force account basis.

Additionally, VDOT asserts that “AMEC did not seek recovery

based on work VDOT ordered AMEC to perform on a force account

basis.”

Specification § 109.05, titled “Extra and Force Account

Work,” provides cost mark-ups for “extra work” and “force

account work” performed by contractors. Under Specification

101.02, “Extra work” is defined as an “item of work that is not

provided for in the Contract as awarded but that is found to be

essential to the satisfactory fulfillment of the Contract

within its intended scope.” Although the sustained elevated

water levels caused construction delays and problems, the work

performed, namely the construction of Bridge 616, was work

provided for in the contract. Thus, AMEC’s claim for damages

caused by the sustained elevated lake water levels is not a

claim for “extra work” because the work at issue was provided

by the contract.

“Force account work,” under Specification § 101.02, is

defined as “[p]rescribed work of a contractual status performed

by the Contractor and compensated for as specified in Section

109.05.” Specification § 109.05, in pertinent part, provides:

32
 Extra work performed in accordance with the
requirements of Section 104.03 will be paid for
at the unit prices or lump sum specified in the
work order. In lieu of such agreement, the
Department may require the Contractor to do such
work on a force account basis . . . .

The work performed by AMEC, which was required by the contract

but complicated due to the elevated lake water level, was also

not “force account work” because it was neither additional work

prescribed by VDOT, nor work that VDOT ordered be done on a

“force account basis.” Therefore, AMEC is not entitled to

compensation under Specification § 109.05 for damages caused by

the elevated lake water level.

Specification § 104.03, however, provides relief to

contractors when differing site conditions impede performance

of the contract. This Specification contains a clause that

allows for an adjustment to the contract for additional costs

resulting from differing site conditions, which states:

Upon written notification, the Engineer will
investigate the conditions, and if it is
determined that the conditions materially differ
and cause an increase or decrease in the cost or
time required for the performance of any work
under the Contract, an adjustment, excluding
anticipated profits, will be made and the
Contract modified in writing accordingly.

Therefore, Specification § 104.03 provides that “an adjustment,

excluding anticipated profits” is the proper measure of damages

for increased cost or time for performance of work caused by a

differing site condition.

33
 Upon remand, the circuit court shall calculate the

appropriate adjustment to the contract, excluding any profit,

based on costs incurred by AMEC through increased time required

to perform the contract, as a result of sustained elevated lake

water levels.

III. Home Office Overhead

The Court of Appeals held that AMEC failed to prove that

it could not recoup home office overhead costs from other

revenue-producing work. AMEC Civil, LLC, 54 Va. App. at 275,

677 S.E.2d at 651.

AMEC argues that the Court of Appeals improperly created

an unreasonable standard of proof concerning home office

overhead, and should have examined whether the circuit court’s

findings were plainly wrong or unsupported by the evidence.

AMEC asserts that because it kept its labor and equipment on

site and performing non-critical and less productive work, the

evidence showed that AMEC could not recoup the project’s pro

rata share of home office overhead elsewhere.

VDOT contends that AMEC failed to prove it could not

reasonably recoup its home office overhead from other revenue-

producing work during the periods of delay and therefore was

not entitled to an award of those expenses. According to VDOT,

the circuit court made no findings of fact or conclusions of

law on AMEC’s entitlement to home office overhead, and the

34
circuit court’s general verdict was contrary to the evidence

and to the contract.

This Court explained in Fairfax County Redevelopment and

Housing Authority v. Worcester Bros. Co., Inc., that

[h]ome office expenses, commonly called
overhead, include those costs that a contractor
must expend for the benefit of its business as a
whole. These expenses include, for example, the
salaries of office staff, accounting expenses,
dues and subscriptions, equipment costs, and
utility services. Unabsorbed home office
expenses comprise “those overhead costs
needlessly consumed by a partially or totally
idle contractor. A contractor continues to
incur overhead costs during periods of reduced
activity or delay on a particular contract.
When this occurs, the ‘reduced activity’
contract no longer ‘absorbs’ its share of
overhead costs.”

257 Va. 382, 387-88, 514 S.E.2d 147, 150 (1999) (quoting

Michael W. Kauffman and Craig A. Holman, The Eichleay Formula:

A Resilient Means for Recovering Unabsorbed Overhead, 24 Pub.

Contr. L.J. 319, 321 (1995)). Entitlement to home office

overhead is a question of fact. Id. at 388, 391, 514 S.E.2d at

151-52.

To prove that it suffered unabsorbed overhead damages, a

contractor is not required to show that its overhead was

increased due to the delay, “but only that it could not

otherwise reasonably recoup its pro rata home office expenses

incurred while its workforce was idled by the delay.” Id. at

388, 514 S.E.2d at 151.

35
 We agree with the Court of Appeals that AMEC did not meet

its burden of proving that it could not reasonably recoup its

home office overhead from other revenue-producing work. The

record contains no evidence addressing this issue. The

evidence presented by AMEC consisted of a mathematical model

that assumed that AMEC could not have directed employees to

other revenue-producing work, including other work under this

contract. AMEC’s expert merely calculated a per diem rate of

delay and multiplied the rate by the number of days of delay.

Neither AMEC’s expert or any fact witnesses presented any

evidence that AMEC could not have recouped its home office

overhead from other revenue-producing work. Lockheed Info.

Mgmt. Systems Co., Inc. v. Maximus, Inc., 259 Va. 92, 116, 524

S.E.2d 420, 433 (2000). Therefore, AMEC is not entitled to home

office overhead expenses.

IV. Calculation of Actual Costs

The equipment costs included in AMEC’s claim were priced

according to the “Rental Rate Blue Book” (the Blue Book),

utilizing specific portfolios of equipment for all the elements

of work that were performed. AMEC based its use of the Blue

Book on Specification § 109.05. Pursuant to Specification

§ 109.05(d),

Equipment: . . . The Contractor will be
paid hourly rental rates for pieces of
machinery, equipment, and attachments necessary

36
 for prosecution of the work that are approved
for use by the Engineer. Hourly rental rates
will not exceed 1/176 of the monthly rates of
the schedule shown in the Rental Rate Blue Book
modified in accordance with the Blue Book rate
adjustment tables that are current at the time
the force account is authorized. Adjustment
factors or rate modifications indicated on area
maps in the Blue Book will not be considered
when acceptable rates are determined. . . .

AMEC made no adjustments to the Blue Book rates for age or

region of the equipment.

The Court of Appeals held that the circuit court was not

plainly wrong in accepting the Blue Book as a standard used in

the profession to estimate actual costs for owner-furnished

equipment. AMEC Civil, LLC, 54 Va. App. at 277 n.32, 677

S.E.2d at 652 n.32. Therefore, the Court of Appeals held that,

on remand, the Blue Book estimates could be relied upon by the

circuit court as a basis to determine owner-furnished equipment

costs. 6 Id.

It is undisputed that the measure of damages in this case

is actual cost. However, the parties dispute whether the Blue

Book is an appropriate method of proving actual cost.

VDOT contends that AMEC did not make out a prima facie

case of damages because AMEC did not prove actual cost. VDOT

argues that the Blue Book provides only an estimate of costs

6
The Court of Appeals remanded to the circuit court to
determine whether the evidence provides a reasonable basis to

37
and does not prove actual cost, which is the measure of damages

required by Specification § 105.16. 7 Additionally, VDOT argues

that if it intended to allow AMEC to use the Blue Book to

calculate costs for claims under Specification § 105.16, VDOT

would have included a provision allowing the use of the Blue

Book.

Lastly, VDOT asserts that, assuming AMEC’s use of the Blue

Book was appropriate, AMEC failed to make adjustments to the

Blue Book’s estimated base equipment rental rates taking into

account such factors as the age of the equipment, the region

where the equipment was used, and purchase price. According to

VDOT, these adjustments would generally reduce the rental rates

to more closely approximate actual costs.

AMEC contends that, even if Specification § 109.05 is

inapplicable, the Blue Book was properly used to establish

AMEC’s actual damages for owner-furnished equipment under

establish the actual costs AMEC incurred. AMEC Civil, LLC, 54
Va. App. at 277, 677 S.E.2d at 652.
7
Specification § 105.16, “Submission and Disposition of
Claims,” provides, in pertinent part, that “[a]t the time of
occurrence or prior to beginning the work, the Contractor shall
furnish the Engineer an itemized list of materials, equipment,
and labor for which additional compensation will be claimed.
Only actual cost for materials, labor, and equipment will be
considered.” It further provides that, “[u]pon completion of
the Contract, the Contractor may, within 60 days from the time
the final estimate is paid, submit to the Department a written
claim . . . for the amount he deems he is entitled to under the
Contract. . . . Only actual cost for materials, labor, and
equipment will be considered.”

38
Specification § 105.16. AMEC asserts that the Blue Book rates

incorporate ownership and operating costs, including

depreciation costs, insurance, property taxes, costs of

facilities capital, repairs, and fuel. AMEC maintains that

expert testimony established that the Blue Book is accepted as

a standard used in the profession for determining owner-

furnished equipment costs. AMEC argues that the evidence at

trial also supported the circuit court’s finding that the Blue

Book rates accurately represented AMEC’s actual equipment

costs.

Theodore E. NeSmith testified as AMEC’s expert on

construction cost accounting and construction damage

calculations. NeSmith is a certified public accountant and a

certified valuation analyst for a certified public accounting

firm that specializes in forensic accounting and business

valuation, primarily in two areas: business damages and

construction damages. AMEC hired NeSmith to “review, assess,

and to the degree necessary, modify the damage claim that AMEC

had already prepared relating to [the] project.”

NeSmith testified as an expert that he has used the Blue

Book to calculate costs incurred by a contractor on multiple

occasions. With regard to the integrity of utilizing the Blue

Book, NeSmith stated, “if the objective is to get to the true

cost number of operating owned equipment, clearly Blue Book is

39
the most reflective of that.” When VDOT objected to NeSmith’s

testimony about the integrity of the Blue Book, the circuit

court stated, “It seems to me it’s been established thus far

that this Blue Book is a standard used in the profession for

estimating these costs, and I don’t think you need to go

further than that unless the validity is challenged by the

defense.” VDOT did not respond. NeSmith testified that the

equipment costs claimed by AMEC were “equivalent to and

represent[] the damages that were experienced by AMEC.”

The record supports the circuit court’s conclusion that

the Blue Book represents an industry standard for determining

the cost of operating owned equipment. According to the

unchallenged expert testimony, use of the Blue Book is an

accepted method to prove actual costs. Thus, the expert

testimony has established that the Blue Book is an appropriate

methodology of calculation so that VDOT’s challenge is a

challenge to the weight of the evidence rather than to its

admissibility. Because the Blue Book is recognized as an

appropriate tool for determining owner-furnished equipment

costs for purposes of proving actual costs, we hold that the

Court of Appeals properly affirmed the circuit court’s

acceptance of the Blue Book for the purpose of calculating such

costs.

40
 V. Pre-Judgment Interest

The circuit court did not award AMEC pre-judgment interest

“because it [could] find no authority giving it jurisdiction to

do so.” The Court of Appeals held the circuit court properly

denied AMEC’s request for pre-judgment interest, as Code

§ 33.1-386(A) says nothing about an allowance of pre-judgment

interest on contractually recoverable costs and expenses. AMEC

Civil, LLC, 54 Va. App. at 279-80, 677 S.E.2d at 652-53.

AMEC argues that the Court of Appeals erred by determining

that VDOT was not liable for pre-judgment interest and that a

separate and distinct waiver of sovereign immunity was required

before AMEC could recover pre-judgment interest. AMEC

maintains that the Commonwealth is like any other citizen and

is liable for interest on contractual debts.

VDOT contends that it is not liable for pre-judgment

interest, as the Commonwealth is not liable for interest absent

express statutory authority or a contract provision explicitly

imposing such liability, and neither Code § 8.01-382 nor the

contract make VDOT liable for pre-judgment interest. According

to VDOT, the Commonwealth does not waive its immunity simply by

entering into a contract.

We have previously held that the Commonwealth is “as

liable for its contractual debts as any citizen would be.”

Wiecking v. Allied Medical Supply Corp., 239 Va. 548, 553, 391

41
S.E.2d 258, 261 (1990). However, in order for the Commonwealth

to be liable for pre-judgment interest, there must be a

statutory or contractual waiver of sovereign immunity with

respect to this distinct item of damages.

Nearly a century ago, this Court stated, “it has never

been held by this court that a claim asserted against the State

or a county bears interest where there is no provision in the

statute or authorized agreement creating the liability for the

payment of interest.” City of Lynchburg v. Amherst County, 115

Va. 600, 608, 80 S.E. 117, 120 (1913). We continue to adhere

to this long-standing rule. Thus, in the absence of a

statutory or contractual waiver, the Commonwealth and its

agencies have sovereign immunity from liability for pre-

judgment interest on contract claims. In this case, there has

been no statutory or contractual waiver of VDOT’s sovereign

immunity and, therefore, the Court of Appeals correctly

affirmed the circuit court’s denial of pre-judgment interest

sought by AMEC.

CONCLUSION

For the reasons stated, we will affirm in part and reverse

in part the judgment of the Court of Appeals. We will affirm

the Court of Appeals’ judgment on all but two issues.

Specifically, we will reverse the Court of Appeals’ judgment

that the sustained elevated lake water levels did not

42
constitute a differing site condition, and that AMEC did not

provide timely written notice of its claim for plan error

regarding the construction of concrete shafts for pier 18 on

Bridge 616.

We will remand the case to the Court of Appeals with

instructions to remand the case to the circuit court for

further proceedings consistent with this opinion. On remand,

in deciding the issues addressed by this Court, the circuit

court shall review the evidence already presented in the case

and calculate damages to which AMEC is entitled for the

following claims: plan error regarding the construction of

concrete shafts for pier 18 on Bridge 616; acceleration damages

incurred after April 2004; and delay damages resulting from the

sustained elevated lake water levels, as calculated per

Specification § 104.03, which shall constitute actual costs

incurred by AMEC, excluding profit. Additionally, in computing

owned equipment costs, the circuit court shall calculate a

damage award based upon Blue Book estimates, as testified by

expert witnesses, which reflect actual costs.

On remand, the circuit court shall also consider the Court

of Appeals’ holdings that were not challenged on appeal to this

Court. Specifically, the circuit court shall follow the Court

of Appeals’ direction to: review the record and make findings

on whether AMEC is entitled to damages for conditions during

43
either or both of the winter periods, and if the court finds in

favor of AMEC, identify the contractual basis of such award and

make factual findings as to any damages awarded; review the

record and make findings on whether AMEC proved its entitlement

to damages resulting from the boulders at bridge B640; and

award damages associated with AMEC’s bond premium. Finally, on

remand, the circuit court shall apply actual costs as the

measure of damages for the claims surviving appeal.

Affirmed in part,
reversed in part,
and remanded.

44