Present: All the Justices
UPPER OCCOQUAN SEWAGE AUTHORITY
OPINION BY
v. Record No. 062719 JUSTICE LAWRENCE L. KOONTZ, JR.
January 11, 2008
BLAKE CONSTRUCTION CO., INC./POOLE
& KENT, A JOINT VENTURE
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Randy I. Bellows, Judge
This appeal concerns the continuing litigation of claims
arising from a multi-million dollar contract subject to the
Virginia Public Procurement Act (“VPPA”), Code §§ 2.2-4300
through –4377,1 originally executed in December 1996 and subject
to numerous modifications and changes during the course of the
contractor’s performance. The principal issues we consider
relate to the circuit court’s determination regarding the
application of, and percentage rate for, pre-judgment and post-
judgment interest on various elements of the damages awarded to
the contractor in two separate jury verdicts. Additionally, we
consider whether the circuit court correctly determined that the
appellant, the defendant below, timely designated the allocation
of a payment made on the judgments.
1
At the time the first claims under this contract arose in
the circuit court, the VPPA was codified at Code § 11-35 et
seq., but was recodified at Code § 2.2-4300 et seq. by the
General Assembly in 2001. As applied to the issues raised in
this appeal, the recodification did not materially alter any
relevant provision of the Act and, accordingly, we will refer to
the current Code sections in this appeal.
BACKGROUND
The arduous history of the litigation arising from the
public contract that is the genesis of this case has been
previously recounted in detail in two prior appeals arising from
earlier stages of that litigation. See Blake Construction Co.
v. Upper Occoquan Sewage Authority, 266 Va. 564, 568-570, 587
S.E.2d 711, 713-14 (2003); Upper Occoquan Sewage Authority v.
Blake Construction Co., 266 Va. 582, 584-87, 587 S.E.2d 721,
722-23 (2003). Accordingly, we need not recite that background
here. It will suffice to state that Blake Construction Company,
Inc. and Poole & Kent Corporation (collectively, “the Joint
Venture”) formed a partnership to bid on a public contract with
the Upper Occoquan Sewage Authority (“UOSA”), a public authority
created pursuant to the Virginia Water and Waste Authorities
Act, Code §§ 15.2-5100 through –5158, for construction of a
waste water treatment facility to be located in Fairfax County
(“the Project”). The Joint Venture was the successful bidder on
the Project and was awarded the contract on December 10, 1996.
The oversight of the Project by UOSA was contentious and
resulted in the litigation that was the subject of the prior
cases decided by this Court in 2003.
The present case arises from a “Petition for Declaratory
Judgment and Appeal” filed by the Joint Venture in the Circuit
Court of Fairfax County on August 13, 2002 while the former
2
appeals were pending in this Court. Therein, the Joint Venture
sought to be permitted to terminate the December 1996 contract
based on UOSA’s alleged multiple material breaches of the
contract. The Joint Venture also appealed certain
administrative decisions of UOSA denying claims by the Joint
Venture regarding the contract and to have determined the
amounts owed under those claims as well as to be awarded
compensatory damages, most of which were for undisputed
liquidated amounts, on numerous claims for work already
performed. The Joint Venture also sought to be awarded “finance
charges” it contended were due under terms of the contract
governed by the prompt payment provisions of the VPPA, Code
§§ 2.2-4347 through –4356 (“the Prompt Payment Act”), for the
amounts it claimed were owed to it by UOSA as of various dates.2
The case was first tried to a jury in November 2003 (“the
First Trial”), and at the conclusion of the Joint Venture’s
case-in-chief, the circuit court sustained UOSA’s motion to
strike all or part of eighteen of the Joint Venture’s claims.
The remaining issues were submitted to the jury. As relevant to
2
Because the parties and the circuit court have each
referred to the statutes comprising Article 4 of the VPPA as
being the “Prompt Payment Act,” we will likewise employ that
short form reference to refer to those statutes in this opinion.
3
one of the principal issues in this appeal, the jurors were
instructed that
the terms of the contract do not provide for a rate of
interest. In any situation where you determine that
interest is due under [Code § 2.2-4352 of] the
Virginia Prompt Payment Act, you must determine the
payment amount subject to interest, the payment date
when payment is due, and the interest rate, which by
statute is not to exceed 1% per month.
The jury rendered its verdict on November 6, 2003, using an
interrogatory verdict form. In accord with the circuit court’s
instruction, the jury made express findings of the specific
amounts due the Joint Venture and the dates on which those
amounts had become due. The jury also determined that on all
those amounts interest at a rate of 1% per month was to apply,
but the jury did not calculate the amount of interest thus due.
The correctness of the jury’s findings and verdicts on the Joint
Venture’s various claims are not at issue in this appeal, nor is
there any dispute as to the amount of compensatory damages
awarded to the Joint Venture in those verdicts, which in
aggregate totaled $5,165,195.
In accord with the jury’s findings in the First Trial, the
circuit court awarded pre-judgment interest at the rate of 1%
per month on the compensatory damages to the Joint Venture from
the dates of the various claims to the date of the jury’s
verdict, which the court calculated to be $1,832,652. The
parties also do not dispute the accuracy of this figure.
4
The beginning of the subsequent dispute between the parties
in the case originated with an order of the circuit court dated
November 19, 2003, but entered nunc pro tunc to November 6,
2003, the date of the jury’s verdict. The order recited the
particulars of the court’s decision to strike certain of the
Joint Venture’s claims, the jury’s findings and verdicts on the
remaining claims, and the amount of compensatory damages awarded
by the jury in the First Trial. The order also recited the
court’s calculation of the “Total Interest due under the Prompt
Payment Act through November 6, 2003.” The court also entered a
declaratory judgment in favor of the Joint Venture, finding that
UOSA had materially breached the contract.
Although the circuit court styled the November 19, 2003
order as a “final order,” and despite having entered the order
“nunc pro tunc” to the date of the jury’s verdict, in the
concluding paragraphs the court expressly suspended the
effective date of the order until January 20, 2004 to permit the
parties to file “post trial [m]otions,” and included a briefing
schedule for those motions. The court also expressly stated in
the concluding paragraph that it would retain “jurisdiction to
reconsider all aspects of this judgment, including whether this
Order should be a ‘Final Order,’ and to consider and rule upon
such post trial [m]otions as may be filed pursuant to the
provisions of this Order, and to modify, vacate, or further
5
suspend this Order until January 20, 2004, or such later date as
may be established by further Order of this Court.”
On November 26, 2003, the Joint Venture filed a motion
pursuant to Code § 8.01-186 asserting that it was entitled to
additional compensatory damages. This statute permits a court
to award “[f]urther relief based on a declaratory judgment order
or decree . . . whenever necessary or proper.” UOSA opposed the
motion, and the circuit court conducted a hearing thereon on
January 7, 2004. By order dated January 15, 2004, the court
determined that it would grant the motion and consider awarding
the Joint Venture additional compensatory damages for UOSA’s
material breaches of the contract.
Also on January 15, 2004, the circuit court entered an
amended order that vacated the November 19, 2003 order,
reimposed the judgments under the same terms that had been
stated therein, but provided that “any execution . . . is
suspended and stayed as to the [November 19, 2003] judgments
. . . pending further order of this Court.” This order further
provided, however, “that the right is reserved to UOSA to
satisfy the judgments rendered [in the order] in whole or in
part.” The order also expressly continued the case on the
court’s docket.
Following an extended jury trial limited to the issue of
the compensatory damages to be awarded for the material breaches
6
of the contract (“the Second Trial”), the jury determined the
total value of the benefit conferred on UOSA by the work
performed by the Joint Venture to be $210,234,000. The jury’s
verdict was rendered on March 11, 2005.
Using the figure determined by the jury, the circuit court,
in a final order dated June 27, 2005, awarded the Joint Venture
additional compensatory damages in the amount of $7,509,239.62
and also awarded $1,453,192 in pre-judgment interest on this
amount.3 In that same order, the court also lifted the January
15, 2004 order’s suspension of the judgment from the First
Trial.
The parties filed cross-appeals from the June 27, 2005
final order, challenging various aspects of the two judgments
and the circuit court’s conduct of the case. On behalf of UOSA,
Wachovia Bank issued an irrevocable letter of credit for
$16,717,658.88 in favor of the Joint Venture as a suspension
bond for UOSA’s appeal. This Court refused those appeals, Blake
Construction Co. v. Upper Occoquan Sewage Authority, Record No.
052001 (February 23, 2006) and Upper Occoquan Sewage Authority
v. Blake Construction Co., Record No. 052003 (February 23,
3
The circuit court did not award an express amount in pre-
judgment interest in this order, but provided a formula for its
calculation. The parties do not dispute that the amount of pre-
judgment interest under this formula is $1,453,192.
7
2006), and denied subsequent petitions for rehearing filed by
the parties, Blake Construction Co. v. Upper Occoquan Sewage
Authority, Record No. 052001 (May 4, 2006) and Upper Occoquan
Sewage Authority v. Blake Construction Co., Record No. 052003
(May 4, 2006). Accordingly, the judgments became final and due
on May 4, 2006 upon entry of the orders denying the petitions
for rehearing.
On May 8, 2006, UOSA wired to counsel for the Joint Venture
a payment of $16,616,472.11, which it contended represented
payment in full for all amounts due under the June 27, 2005
order, including pre-judgment interest and post-judgment
interest to the date of payment.4 Counsel for the Joint Venture
requested that counsel for UOSA provide details as to how it
arrived at the $16,616,472.11 figure. In a letter dated May 10,
2006, counsel for UOSA provided an itemized calculation of the
payment, which UOSA contended was adequate to satisfy the total
4
The actual amount wired on May 8, 2006 was $16,613,386.17.
During subsequent communications between the parties, the Joint
Venture noted that UOSA had failed to include in its payment
$1,984.20 in costs that had been awarded to the Joint Venture.
UOSA subsequently made an additional payment to the Joint
Venture to cover this amount and to correct another
miscalculation that was not disputed. For purposes of this
appeal, these discrepancies and the remedial payment by UOSA are
not germane to the issues under consideration, and the Joint
Venture has stipulated that the total amount paid by UOSA,
$16,616,472.11, can be treated as if it were received on May 8,
2006.
8
amount due under the June 27, 2005 order. In that letter, UOSA
requested that the Joint Venture file a satisfaction of judgment
and return the letter of credit given as security for UOSA’s
appeal.
In a letter to UOSA’s counsel dated May 16, 2006, counsel
for the Joint Venture contended that $16,616,472.11 represented
only a “partial payment” of the total amount due under the June
27, 2005 order. Specifically, the Joint Venture maintained that
UOSA had improperly failed to include additional interest on the
compensatory damages awarded in the First Trial for the period
between the November 6, 2003 jury verdict and the entry of the
June 27, 2005 order,5 that UOSA had incorrectly calculated post-
judgment interest on the compensatory damages awarded in the
First Trial after June 27, 2005 at 6% per year, the then
effective rate of post-judgment interest under Code § 6.1-
330.54, rather than the 1% per month rate under the Prompt
Payment Act, and that UOSA had failed to calculate post-judgment
interest on the amount of pre-judgment interest related to the
5
The parties disagree as to the character of the interest,
as either pre-judgment or post-judgment, that the Joint Venture
sought to collect on the compensatory damages from the First
Trial for the November 6, 2003 to June 27, 2005 period. As this
issue is to be resolved by our consideration of this appeal, we
will avoid making any distinction within our recitation of the
facts, and refer to this element of the First Trial claim as
“additional interest.”
9
compensatory damages awarded in both the First Trial and the
Second Trial.
In an exhibit attached to the May 16, 2006 letter, the
Joint Venture presented its own calculations for the additional
interest payments it alleged were due and also how it would
allocate the $16,616,472.11 “partial payment” to the amounts as
it had calculated them.6
On May 19, 2006, in response to the Joint Venture’s
assertion that the $16,616,472.11 payment did not represent the
full amount due under the June 27, 2005 order, UOSA filed in the
circuit court a motion for satisfaction of the judgment pursuant
to Code § 8.01-455. In supporting memoranda, UOSA contended
that the amount of pre-judgment interest on the compensatory
damages awarded to the Joint Venture in the First Trial under
the Prompt Payment Act had been fixed by the November 19, 2003
order at $1,832,652 and that the November 19, 2003 order was
subsequently incorporated into the January 15, 2004 order and
6
Throughout the subsequent litigation of the issues
concerning the amount of interest due, the parties constantly
revised and restated their calculations, resulting in a
considerable amount of confusion in the record as to the amounts
being claimed and contested. Because the issues raised in this
appeal relate to the applicability of pre-judgment and post-
judgment interest, and not to the calculation of that interest,
we will not express any view as to the correctness of the Joint
Venture’s calculations or any alternative calculation asserted
by UOSA.
10
confirmed by the June 27, 2005 final order without modifying
that amount of interest or providing for the continuation of
pre-judgment interest until entry of the final order on June 27,
2005. UOSA maintained that the court lost jurisdiction to
modify the June 27, 2005 order 21 days after its entry and,
therefore, no additional pre-judgment interest on the
compensatory damages awarded in the First Trial was due for the
period between the November 6, 2003 nunc pro tunc date of entry
of the November 19, 2003 order and the entry of the June 27,
2005 final order. UOSA further contended that following the
entry of the final order post-judgment interest would accrue on
the compensatory damages only at the then effective statutory
rate of interest of 6% per year.
UOSA also contended that the Joint Venture was improperly
seeking to have post-judgment interest applied to the
pre-judgment interest on the compensatory damages awarded in
both the First Trial and the Second Trial because there was no
authority for the Joint Venture’s assertion that post-judgment
interest would accrue on an award of pre-judgment interest.
Finally, UOSA contended that if it was deemed to owe additional
amounts to the Joint Venture, it had a right to allocate the
$16,616,472.11 payment previously made first to those portions
of the judgment debt that it contended were subject to accrual
of interest, and that it had in fact made such an allocation by
11
providing the Joint Venture with UOSA’s calculation of the total
amount due by the attachment to the May 10, 2006 letter.
On June 2, 2006, the Joint Venture filed a memorandum
opposing the entry of an order of satisfaction of the judgment.
The Joint Venture contended that under the terms of Code § 8.01-
382 and the Prompt Payment Act, interest on the compensatory
damages awarded in the First Trial continued to accrue on any
unpaid portion of the judgment at 1% per month, including the
period between November 6, 2003 and June 27, 2005, until the
compensatory damages awarded by the jury were paid in full. The
Joint Venture further contended that it was entitled to post-
judgment interest on the amount of pre-judgment interest related
to the compensatory damages awarded in both the First Trial and
the Second Trial from the dates those two judgments were
rendered.
In a supplemental memorandum filed June 16, 2006, the Joint
Venture contended that UOSA had not made a timely allocation of
the May 8, 2006 payment. Thus, the Joint Venture contended that
the calculation of the amounts due and the allocation of the
payment to those amounts in its letter of May 16, 2006 was the
proper allocation of the May 8, 2006 payment.
On June 30, 2006, the circuit court issued an opinion
letter in which it addressed the issues raised in UOSA’s motion
for satisfaction of the June 27, 2005 judgment and the parties’
12
supporting memoranda. The court first opined that, under Code
§ 8.01-382, post-judgment interest accrued on the compensatory
damages awarded in the First Trial from November 6, 2003 until
paid at an annual rate of 6%, the statutory rate of interest
then applicable under Code § 6.1-330.54 as in effect on June 27,
2005. The court further opined that “it is necessary to apply
post-judgment interest to the entire award” and, thus, the court
concluded that the jury’s award of pre-judgment interest in the
First Trial and the pre-judgment interest awarded by the court
in the Second Trial were subject to accrual of post-judgment
interest at the 6% statutory rate also. Finally, the court
determined that the attachment to UOSA’s May 10, 2006 letter to
the Joint Venture was effective as an “essentially
contemporaneous” directive to the Joint Venture to allocate the
May 8, 2006 payment in accord with UOSA’s calculations.
In an order dated June 30, 2006, which incorporated by
reference the circuit court’s opinion letter of the same date,
the court entered judgment in accord with the views articulated
in that letter. The circuit court did not expressly address
UOSA’s contention that the June 27, 2005 order was a final order
and not subject to modification by an award of additional
interest not expressly called for in that order, but implicitly
rejected that contention by determining that additional interest
13
was due on the compensatory damages awarded in the First Trial
for the period between November 6, 2003 and June 27, 2005.
On July 12, 2006, the Joint Venture filed a motion for
reconsideration of the June 30, 2006 order. The Joint Venture
contended that the circuit court erred in applying the 6%
statutory annual rate of interest to the compensatory damages
awarded in the November 6, 2003 jury verdict. The Joint Venture
maintained that under the provisions of the Prompt Payment Act,
it was entitled to 1% interest per month on the compensatory
damages awarded in the First Trial until the judgment was paid,
and not merely as pre-judgment interest after which the
statutory rate of interest would apply for the imposition of
post-judgment interest. In the alternative, the Joint Venture
contended that the correct rate of statutory interest as to the
compensatory damages awarded in the First Trial, and to the pre-
judgment interest thereon, was 9% per year because that was the
applicable rate of interest under Code § 6.1-330.54 as it was in
effect on the date of the jury’s verdict in the First Trial.
The Joint Venture did not request that the circuit court
reconsider the determination that UOSA had made a timely
designation of the allocation of the May 8, 2006 payment, nor
did it contest that the 6% statutory annual rate of interest was
proper as to the compensatory damages and pre-judgment interest
awarded in the Second Trial.
14
In response to the Joint Venture’s motion for
reconsideration, UOSA reiterated its prior position that no
interest was due on the compensatory damages awarded in the
First Trial for the period from November 6, 2003 to June 27,
2005, but that if interest was due, the circuit court had
properly set that rate of interest based on the then effective
annual rate of interest of 6% established by Code § 6.1-330.54.
UOSA further contended that even if a 9% annual rate were to
apply based on the former provisions of Code § 6.1-330.54 as in
effect at the time of the jury’s verdict in the First Trial, the
subsequent amendment of the statute as effective July 1, 2004
lowering the annual rate of interest to 6% should apply to any
interest due on and after that date. UOSA also continued to
contest the award of post-judgment interest on the awards of
pre-judgment interest in both the First Trial and the Second
Trial.
On August 8, 2006, the circuit court issued a further
opinion letter in which it disagreed with the Joint Venture that
the court had improperly applied the statutory rate of interest
to the compensatory damages awarded in the First Trial instead
of the Prompt Payment Act rate of 1% per month. In reaching
this conclusion, the court relied upon Code § 8.01-382 for the
proposition that unless otherwise provided for in the order, a
judgment “shall bear interest at the judgment rate of interest
15
as provided for in [Code] § 6.1-330.54 from its date of entry or
from the date that the jury verdict was rendered.”
The circuit court agreed, however, that it should have
applied the 9% annual rate of interest, the rate effective on
January 15, 2004, to both the compensatory damages and the pre-
judgment interest awarded in the First Trial. The court further
opined that this rate of interest would continue despite the
amendment of Code § 6.1-330.54 effective July 1, 2004 lowering
the statutory annual rate of interest to 6%. In doing so, the
court recognized that a subsequent amendment to that Code
section effective July 1, 2005 included the addition of the
following language:
The rate of interest for a judgment shall be the
judgment rate of interest in effect at the time of
entry of the judgment and shall not be affected by any
subsequent changes to the rate of interest stated in
this section.
The court reasoned that this provision, while not applicable to
the June 27, 2005 order, was merely declarative of existing law,
and ruled that an award of statutory post-judgment interest is
fixed at the rate in effect at the time the judgment is
rendered.
By an order entered August 8, 2006, the circuit court,
adopting the reasoning of the opinion letter of that date,
entered judgment for the Joint Venture modifying the post-
judgment interest rate on the compensatory damages and pre-
16
judgment interest awarded in the First Trial verdict to 9% per
year from November 6, 2003 until paid. At the request of the
parties, in part because both the June 30, 2006 and August 8,
2006 orders had been entered without endorsement by counsel
under Rule 1:13, on September 29, 2006 the court entered a
further order clarifying and reiterating the effect of the two
prior orders addressing UOSA’s motion for satisfaction of the
June 27, 2005 judgment. The order was endorsed by counsel for
both parties, with each party reserving all arguments and
objections raised during the course of the proceedings on the
motion for satisfaction of the judgment.
UOSA appealed the circuit court’s judgment, presenting
seven assignments of error, and the Joint Venture assigned
cross-error to two additional issues in its brief in opposition
to UOSA’s petition for appeal. By an order dated April 11,
2007, we awarded UOSA an appeal and also awarded an appeal on
the assignments of cross-error.
DISCUSSION
As our recitation of the background of the protracted
litigation in this case reflects, the issues raised here relate
to proceedings in the circuit court beginning with an initial
jury verdict on November 6, 2003 in favor of the Joint Venture,
the entry of an order on January 15, 2004 establishing the
amount of principal and pre-judgment interest due as of the date
17
of the jury’s verdict, a second jury verdict in favor of the
Joint Venture and a final order entered on June 27, 2005
establishing the amount of principal and pre-judgment interest
due on that verdict as well as confirming the January 15, 2004
judgment amounts, a payment by UOSA on May 8, 2006 purporting to
satisfy the amounts due the Joint Venture under the June 27,
2005 final order, and the order entered on September 29, 2006
addressing UOSA’s motion for satisfaction of the June 27, 2005
judgment. For clarity, the following charts illustrate which
aspects of the two judgments are not disputed, and are no longer
subject to review given this Court’s refusal of the petitions
for appeal previously filed by both parties, and the amounts and
rates of interest ultimately awarded by the circuit court which
the parties dispute.
Table 1: Judgment Items Not Disputed
JUDGMENT ITEM AMOUNT
Compensatory damages awarded in the First Trial effective as of
$ 5,165,195
the November 6, 2003 jury verdict
Pre-judgment interest on the compensatory damages awarded in the
$ 1,832,652
First Trial effective as of the November 6, 2003 jury verdict
Compensatory damages awarded in the Second Trial effective as of
$ 7,509,240
the June 27, 2005 order of judgment
Pre-judgment interest on the compensatory damages awarded in the
$ 1,453,192
Second Trial effective as of the June 27, 2005 order of judgment
Post-judgment interest on the compensatory damages awarded in
$ 387,600
the Second Trial verdict from June 27, 2005 to May 8, 2006
Table 2: Disputed Judgment Items
JUDGMENT ITEM CIRCUIT JOINT UOSA
COURT VENTURE
Additional interest on the $ 266,606
$ 1,162,805 $ 1,550,408
compensatory damages awarded (calculated at 6%
(calculated at 9% (calculated at 1%
in the First Trial from November per year from June
per year) per month)
6, 2003 to May 8, 2006 27, 2005)
18
Post-judgment interest on pre-
judgment interest on the $ 412,573 $ 412,573
compensatory damages awarded (calculated at 9% (calculated at 9% -0-
in the First Trial from November per year) per year)
6, 2003 to May 8, 2006
Post-judgment interest on pre-
judgment interest on the $ 75,009 $ 75,009
compensatory damages awarded (calculated at 6% (calculated at 6% -0-
in the Second Trial from June 27, per year) per year)
2005 to May 8, 2006
Amount due as of May 8, 2006 $1,383,778 $1,771,380 -0-
UOSA contends that no interest is due on the judgment from
the First Trial for the period between November 6, 2003 and June
27, 2005 and the circuit court erred in awarding post-judgment
interest on the pre-judgment interest awarded in both trials.
UOSA further contends that the court should have applied the 6%
per year statutory rate of interest on the compensatory damages
awarded in the First Trial, rather than a 9% rate, between June
27, 2005 and May 8, 2006 when payment was made. Accordingly,
UOSA contends that there is no balance due and, thus, the
circuit erred in not granting its motion for satisfaction of the
judgment.
The Joint Venture contends that the amount remaining due
under its calculation reflects the continuing accrual of post-
judgment interest at a rate of 1% per month on the compensatory
damages awarded in the First Trial. Alternately, if the circuit
court’s calculation is correct and the determination that UOSA
made a timely allocation of the May 8, 2006 payment is affirmed,
the Joint Venture concedes that the amount due reflects only
unpaid post-judgment interest.
19
The issues we are required to resolve in this case, under
the assignments of error and cross-error, may be summarized as
follows:
1. Whether the circuit court had jurisdiction to
determine that additional interest not expressly
called for in the June 27, 2005 order was due to
the Joint Venture;
2. Whether the circuit court erred in determining
that additional interest accrued on the
compensatory damages awarded in the First Trial
from November 6, 2003 until paid at the rate of
9% per year rather than 1% per month;
3. Whether the circuit court erred in determining
that post-judgment interest accrues on pre-
judgment interest;
4. Whether the circuit court erred in determining
that UOSA’s letter of May 10, 2006 was a timely
directive allocating the May 8, 2006 payment;
and,
5. Whether the circuit court erred in not granting
UOSA’s motion for satisfaction of the judgment.
Each of these issues, which we will address in the
order outlined above, presents a question of law.
Accordingly, we review the circuit court’s judgment de
novo. PMA Capital Ins. Co. v. US Airways, Inc., 271 Va.
352, 357-58, 626 S.E.2d 369, 372 (2006).
Jurisdiction
UOSA first contends that the circuit court, in considering
UOSA’s 2006 motion for satisfaction of the judgment, erred in
awarding any additional interest on the compensatory damages of
the First Trial to the Joint Venture beyond the express amounts
provided for in the January 15, 2004 order as incorporated in
20
the June 27, 2005 order. This is so, UOSA maintains, because
the June 27, 2005 order was a final order that was not modified,
vacated or suspended within 21 days of its entry and which was
subsequently affirmed by this Court’s refusal of the petitions
for appeal and petitions for rehearing filed by UOSA and the
Joint Venture. Thus, UOSA contends that the court lacked
jurisdiction to modify that order by determining that additional
interest was due and then awarding that interest.
More specifically, UOSA contends that the January 15, 2004
order fixed the amount of pre-judgment interest on the
compensatory damages of the First Trial at $1,832,652 and that
the court’s subsequent award of $762,892, as calculated by UOSA,
of additional interest for the period of November 6, 2003, the
date of the jury’s verdict, to June 27, 2005, the date of the
final order, was an impermissible modification of the judgment
more than 21 days after its entry. We disagree.
It is not disputed that the June 27, 2005 order was the
final order with respect to the declaratory judgment action
filed by the Joint Venture on August 13, 2002. “Generally
speaking, a final order for purposes of Rule 1:1 ‘is one which
disposes of the whole subject, gives all the relief
contemplated, . . . and leaves nothing to be done in the cause
save to superintend ministerially the execution of the order.’ ”
James v. James, 263 Va. 474, 481, 562 S.E.2d 133, 137 (2002)
21
(quoting Daniels v. Truck & Equipment Corp., 205 Va. 579, 585,
139 S.E.2d 31, 35 (1964)). Thus, UOSA is correct in asserting
that because the June 27, 2005 order was the final order in the
declaratory judgment action, the circuit court’s jurisdiction to
modify, vacate or suspend that order expired 21 days after the
entry of that order under this Court’s Rule 1:1. This rule,
however, does not resolve the matter.
When, as in this case, a judgment debtor files a motion
pursuant to Code § 8.01-455 to have the appropriate circuit
court “mark” a judgment satisfied, that motion necessarily
invokes the continuing jurisdiction of the court “to superintend
ministerially the execution of the order” in which the judgment
was granted. Contrary to the view asserted by UOSA, the court’s
jurisdiction in such matters is not limited to merely granting
or denying the relief requested based solely on the facts
asserted in the motion and the judgment debtor’s claim that its
payment represents the totality of the judgment debt. Rather, a
motion for satisfaction of a judgment, at a minimum, requires
the court to determine the amount of the judgment including any
interest that would have accrued in the interim between the
entry of the judgment and the alleged date of satisfaction.
Moreover, in making that determination, the court may be
required to resolve questions of law and disputed issues of
fact. See, e.g., Virginia Polytechnic Inst. & State Univ. v.
22
Interactive Return Service, 271 Va. 304, 308, 626 S.E.2d 436,
438 (2006) (determination of whether circuit court erred in
denying motion to have judgment marked satisfied required
interpretation of other statutes); Smock v. Dade, 26 (5 Rand.)
Va. 639, 645 (1826) (requests for satisfaction of a judgment
involve questions of fact that may be submitted to a jury). In
such cases the burden of proof as to entitlement to relief under
Code § 8.01-455 rests with the judgment debtor. Leasing Service
Corp. v. Justice, 243 Va. 441, 444, 416 S.E.2d 439, 441 (1992).
Additionally, it is a well-established principle in our
jurisprudence that circuit courts have the authority to
interpret their own orders. Fredericksburg Construction Co. v.
J.W. Wyne Excavating, Inc., 260 Va. 137, 143-44, 530 S.E.2d 148,
152 (2000). Here, by filing the motion pursuant to Code § 8.01-
455 to have the judgments obtained by the Joint Venture marked
satisfied, UOSA was requesting that the circuit court interpret
the June 27, 2005 final order, and by logical extension the
January 15, 2004 order that was made effective by that final
order, to determine the total amount that had been awarded to
the Joint Venture and whether that award had been satisfied by
the payment tendered by UOSA on May 8, 2006. UOSA may, and
indeed does, take exception to the circuit court’s
interpretation of the order and has the right to seek review of
that action on appeal. See id. at 144, 530 S.E.2d at 152
23
(holding that a circuit court’s interpretation of its own orders
is subject to review, but that deference is owed to the court’s
interpretation). Nevertheless, the court acted within its
jurisdiction to make that interpretation and, thus, to determine
the factual issue of whether the judgment was fully satisfied by
UOSA. Accordingly, we hold that when a circuit court is called
upon under Code § 8.01-455 to determine whether a judgment
awarded in a final order has been satisfied, it acts within its
jurisdiction to interpret that order and, where a proper
interpretation warrants, to determine whether any additional
interest is due on the judgment.
Accrual of Additional Interest on the
Suspended Judgment of the First Trial
UOSA contends that in interpreting the January 15, 2004
order, the circuit court erred in finding that the order
required additional interest, which it characterizes as “pre-
judgment interest,” to accrue on the compensatory damages
awarded in the First Trial while execution of that order was
suspended. UOSA contends that there was no provision in the
January 15, 2004 order for additional pre-judgment interest on
the compensatory damages awarded in the First Trial beyond the
$1,832,652 calculated by the circuit court. UOSA asserts that
this was a lump sum award made by the jury in the November 6,
2003 verdict and, thus, the court could not award additional
24
pre-judgment interest for the period during which execution on
the judgment was suspended. UOSA further contends that because
the January 15, 2004 order was interlocutory and not subject to
appeal, neither could post-judgment interest begin to accrue on
the compensatory damages until the suspension of the judgment
was lifted by the final order on June 27, 2005.
In support of these contentions, UOSA relies on Code
§ 8.01-382,7 which in relevant part provides:
In any action at law or suit in equity, the verdict of
the jury, or if no jury the judgment or decree of the
court, may provide for interest on any principal sum
awarded, or any part thereof, and fix the period at
which the interest shall commence. The judgment or
decree entered shall provide for such interest until
such principal sum be paid. If a judgment or decree
be rendered which does not provide for interest, the
judgment or decree awarded or jury verdict shall bear
interest at the judgment rate of interest as provided
for in § 6.1-330.54 from its date of entry or from the
date that the jury verdict was rendered.
The Joint Venture responds that the interest which the
circuit court imposed on the compensatory damages awarded in the
First Trial for the period between November 6, 2003 and June 27,
2005 is properly characterized as “post-judgment interest” and
that the court did not err in interpreting the judgment of the
January 15, 2004 order as being subject to accrual of such
7
Code § 8.01-382 was amended effective July 1, 2004 and, in
accord with UOSA’s choice on brief, we have quoted the current
version of the statute here.
25
interest even though execution of the judgment was suspended
until entry of the final order.8 This is so, the Joint Venture
maintains, because Code § 8.01-382 imposes post-judgment
interest from the “date of entry [of the judgment] or from the
date that the jury verdict was rendered” and there is no
requirement of finality of a judgment before post-judgment
interest can accrue. The Joint Venture further contends that to
deny it interest on the judgment entered on the jury’s November
6, 2003 verdict during the period in which execution on that
judgment was suspended would provide a windfall to UOSA and
penalize the Joint Venture for seeking to enforce its right to
additional compensatory damages in the Second Trial for the
material breaches of the contract.
The justification for the award of interest on damages –
whether pre-judgment, post-judgment, or both – in a civil
lawsuit, has been recognized since the earliest days of this
Commonwealth: “[N]atural justice [requires] that he who has the
use of another’s money should pay interest for it.” Jones v.
Williams, 6 Va. (2 Call) 102, 106 (1799); see also J.W. Creech,
Inc. v. Norfolk Air Conditioning Corp., 237 Va. 320, 325, 377
8
The Joint Venture notes that it nonetheless contends that
the circuit court erred in determining the rate of interest for
the compensatory damages awarded in the First Trial, which we
will consider, infra.
26
S.E.2d 605, 608 (1989) (quoting Jones with approval). The terms
“pre-judgment interest” and “post-judgment interest” are not
defined in the Code or in our case law. Nonetheless, the
principal distinction between pre-judgment and post-judgment
interest is that the decision whether to award pre-judgment
interest is discretionary with the trier of fact, while the
application of post-judgment interest for all money judgments is
mandatory. Code § 8.01-382; Dairyland Ins. Co. v. Douthat, 248
Va. 627, 631, 449 S.E.2d 799, 801 (1994). As we stated in
Dairyland Ins., “[u]nderlying this distinction is the principle
that [p]rejudgment interest is normally designed to make the
plaintiff whole and is part of the actual damages sought to be
recovered. In contrast, postjudgment interest is not an element
of damages, but is a statutory award for delay in the payment of
money actually due.” Id. at 631-632, 449 S.E.2d at 801
(internal citations and quotation marks omitted).
Given that an award of pre-judgment interest is
discretionary, but that application of post-judgment interest is
mandatory, the necessity for establishing the point at which the
former, when it has been awarded, ceases to accrue, and when the
latter will begin to accrue is self-evident. As the present
case amply demonstrates, clear guidelines as to the calculation
of such interest will resolve disputes regarding the amount of
the pre-judgment or post-judgment interest whenever there is a
27
delay between the rendering of a jury verdict, the entry of an
order confirming that verdict, the entry of an order ending the
cause if later than the order confirming the verdict, the
finality of the judgment following the exhaustion of appeals,
and the date tender of payment in satisfaction of the judgment
debt is made.
We are of opinion that Code § 8.01-382 is clear and
unambiguous as to when, and how, the application of post-
judgment interest begins. In simplest terms, that statute
provides that post–judgment interest shall begin to accrue on
the date that a fixed amount of a judgment debt is rendered by
the factfinder charged with making that determination. Thus, if
a jury determines through its verdict that money damages are
owed to a plaintiff, without regard to whether the jury has also
awarded pre-judgment interest, post-judgment interest will
accrue from the date of the verdict until the judgment is paid.9
Similarly, if a trial court sitting without a jury renders a
judgment for money damages, the rendition of that award in an
9
It should be self-evident that if in confirming the jury’s
award of damages a trial court properly reduces the award
because of a statutory cap or to bring the award into
conformance with the ad damnum of the complaint, post-judgment
interest shall accrue only on the amount of the award to which
the plaintiff is legally entitled. Nonetheless, the interest
shall accrue on that amount from the date of the verdict, not
the date of the trial court’s order confirming the adjusted
amount of the award.
28
order or decree shall fix the date upon which post-judgment
interest begins to accrue as to that award, even if the order or
decree rendering the award does not conclude the cause or
otherwise stays an immediate execution on the judgment.
As a corollary to this rule, it follows that if the
verdict, order or decree calls for an award of pre-judgment
interest, accrual of that interest will be for the period fixed
by the trier of fact until the date of the verdict, order or
decree. In effect, where a trier of fact exercises the
discretion to award pre-judgment interest, the result is to
extend the period for which interest accrues on the damages
awarded from the date of the verdict, order or decree back to
the date fixed by the trier of fact for the commencement of pre-
judgment interest.
In this context, the designation of interest on an award of
damages as “pre-judgment” or “post-judgment” is merely a
reference to the date, before, upon or after the date of the
verdict, order or decree awarding the damages, on which the
interest accrued. Thus, where a verdict, order or decree
provides for an award of “pre-judgment interest,” the effect is
simply to impose interest on the award of damages from a date
certain prior to the award, rather than as of the date of the
award as would otherwise be the case under Code § 8.01-382.
29
In the present case, the jury’s verdict in the First Trial
established that interest was to accrue on the compensatory
damages awarded therein from the dates specified for each claim
until those damages were paid. The circuit court’s calculation
of the interest due as of the date of the verdict did not fix
the amount of interest due. Rather, it merely recited the
amount of interest due as a result of the jury’s discretionary
act in awarding interest to the Joint Venture for the time
preceding the entry of the verdict. Thereafter, interest would
accrue on the award of compensatory damages as a matter of law,
and it was not necessary for the court to recite this in its
order. Accordingly, we hold that the circuit court did not err
in determining that post-judgment interest accrued on the
compensatory damages awarded in the First Trial from the
November 6, 2003 jury verdict, rather than from the June 27,
2005 final order, until paid.
We now turn to the question whether the circuit court erred
in setting the rate for the post-judgment interest on the
compensatory damages awarded in the First Trial at 9% per year.
The Joint Venture contends that as to the compensatory damages
awarded in the First Trial, the circuit court should have
applied the Prompt Payment Act 1% per month rate of interest
under Code § 2.2-4352, the rate of interest awarded by the jury.
UOSA responds that the 1% monthly rate of interest cannot be
30
applied as post-judgment interest on the compensatory damages
for the various breaches of the December 1996 contract. UOSA
maintains that this is so because the contract contained no
provision for interest, the 1% monthly rate was established by
the Prompt Payment Act, and the jury’s verdict applied that rate
only for pre-judgment interest. Accordingly, UOSA contends that
the circuit court should have looked to the third sentence of
Code § 8.01-382 and applied “the judgment rate of interest as
provided for in § 6.1-330.54” in effect on the date of the final
order.
UOSA’s contention is in error for two reasons. First, the
Joint Venture’s right to seek interest of up to 1% per month
under the Prompt Payment Act, while not recited as a term in the
December 1996 contract, was a term to be implied in the contract
under Code § 2.2-4352, and the jury was so instructed. Thus,
contrary to UOSA’s contention, the 1% per month rate of interest
awarded by the jury in the November 6, 2003 verdict was a
contract rate of interest.
Second, the jury found that the compensatory damages were
subject to the Prompt Payment Act rate of interest, and, as we
have just demonstrated, under the provisions of the first and
second sentences of Code § 8.01-382 that rate of interest found
by the jury was to apply “until such principal sum be paid,” not
merely as pre-judgment interest. Accordingly, we hold that the
31
circuit court erred in not applying the 1% per month rate of
interest awarded by the jury on the compensatory damages in the
First Trial as the rate of post-judgment interest on those
damages from the date of the jury’s verdict until those damages
are paid.10
For these reasons, we will reverse the circuit court’s
award of $1,162,805 in post-judgment interest on the
compensatory damages of the First Trial, and we will remand the
case to the circuit court for a recalculation of the interest
actually due on those damages from November 6, 2003 to May 8,
2006 at the rate of 1% per month.
Accrual of Post-Judgment Interest on Pre-Judgment Interest
UOSA contends that the circuit court erred in determining
that post-judgment interest was to accrue not only on the
compensatory damages awarded by the January 15, 2004 and June
27, 2005 orders, but on the pre-judgment interest awarded in
those orders as well. Again relying on Code § 8.01-382, UOSA
contends that post-judgment interest applies only to “any
principal sum awarded.” UOSA, further relying on an Opinion of
10
Because we hold that Joint Venture is entitled to post-
judgment interest of 1% per month on the compensatory damages
from the First Trial, we need not address UOSA’s additional
assignment of error in which it contended that the circuit court
should have awarded only the statutory rate of interest in
effect on June 27, 2005, or in the alternative, a variable rate
of interest based on changes in the statutory rate of interest.
32
the Attorney General, asserts that the “principal sum awarded”
in this case is limited to the compensatory damages awarded by
the jury in the First Trial and the calculation by the circuit
court of compensatory damages for the material breaches in the
Second Trial. Thus, UOSA maintains that post-judgment interest
is not to be applied to amounts awarded for pre-judgment
interest because these are not part of the “principal sum
awarded.” See 2004 Op. Att’y Gen. 26, 28. UOSA further asserts
that this interpretation of the statute is correct because the
plain and ordinary meaning of “principal” as used in this
context, refers to “[t]he amount of a debt . . . not including
interest.” Black’s Law Dictionary, 1231 (8th ed. 2004).
The Joint Venture responds that the circuit court correctly
ruled that the “principal sum awarded” in a trial is the total
amount of the damages awarded, including any award of pre-
judgment interest on compensatory damages. The Joint Venture
contends that UOSA’s reliance on the Opinion of the Attorney
General is misplaced because that opinion failed to take into
account multiple decisions of this Court which establish that
pre-judgment interest is an element of the damages and, thus, is
part of the “principal sum awarded” to a plaintiff.
While we agree with the Joint Venture that pre-judgment
interest may be sought by a plaintiff as part of the damages it
seeks to recover, see, e.g., Shepard v. Capitol Foundry of Va.,
33
Inc., 262 Va. 715, 722, 554 S.E.2d 72, 76 (2001), we do not
agree that an award of pre-judgment interest is part of the
“principal sum awarded” as that term is used in Code § 8.01-382.
To the contrary, we agree with UOSA that the “principal sum
awarded” as contemplated by Code § 8.01-382 is that element of
the plaintiff’s damages that compensates the plaintiff for the
actual harm sustained, but not any pre-judgment interest on
those damages that the trier of fact might also award. Rather,
as we have just resolved, supra, pre-judgment interest is merely
a discretionary award establishing the interest applied to an
award of damages to a date certain prior to the entry of the
verdict, order or decree awarding such damages. Accordingly, we
hold that the circuit court erred in determining that post-
judgment interest would accrue on that portion of the damages
awarded in the First Trial and the Second Trial that constituted
pre-judgment interest on the principal sums awarded.
For these reasons, we will reverse the circuit court’s
award of $412,573 in post-judgment interest on the pre-judgment
interest of the First Trial and the award of $75,009 in post-
judgment interest on the pre-judgment interest of the Second
Trial.
UOSA’s Allocation of the May 8, 2006 Payment
The Joint Venture contends that the circuit court erred in
its determination that UOSA’s letter of May 10, 2006 reflecting
34
its calculation of the payment made on May 8, 2006 was a timely
directive as to the allocation of that payment. The Joint
Venture contends that because UOSA wired the payment to the
Joint Venture’s counsel without any instructions on how the
payment was to be applied, the subsequent letter and its
attached calculations were insufficient to act as a directive of
allocation because they were untimely.
UOSA responds that a debtor has the right to specify how a
payment is to be applied to the debt. By promptly responding to
the Joint Venture’s request to explain the manner in which UOSA
had calculated the amount of the debt, UOSA contends it made a
contemporaneous directive to allocate the payment in accord with
the amounts it asserted were due on the various elements of the
two judgments and the interest thereon. Because the Joint
Venture did not initially dispute the amount due or indicate
that it would use its own calculation to determine the
allocation of the payment before UOSA indicated its basis for
calculating the different elements of the judgments, and by
consequence allocate the payment in those amounts, UOSA contends
that the circuit court correctly ruled that the May 10, 2006
letter constituted a timely directive to allocate the payment in
accord with UOSA’s calculations.
The principles of law that govern the right to direct the
application of a payment by a debtor to a debt or debts owed to
35
a creditor are as ancient and venerable as the principle that
natural justice requires the debtor to pay interest to the
creditor until the debt is paid. The first of these principles
is that where there is but a single debt between debtor and
creditor, no directive to allocate is necessary by the debtor,
as “[t]he very idea of election supposes something to elect
between.” Donally v. Wilson, 32 Va. (5 Leigh) 329, 331 (1834).
But if the debt owed has different elements of principal and
interest, “[t]he debtor . . . has a right to say whether [the
payment] shall be applied to the principal or to the interest of
the debt due,” Howard v. McCall, 62 Va. (21 Gratt.) 205, 209
(1871), or if more than one debt is owed between the parties,
the debtor “may direct the application of [the payment], because
it is his: if he gives no direction, the creditor may apply it
to which of the two debts he chooses.” Donally, 32 Va. (5
Leigh) at 331. Inherent in these decisions is the concept that
a debtor has, at least initially, the right to have a partial
payment applied to his debts in the manner most advantageous to
him if he timely elects to do so, absent any applicable
statutory or contractual provision to the contrary.
Similarly, the creditor has the right to allocate the
payment to his advantage if the debtor fails to exercise this
election, but that right is not absolute. As this Court
observed in one of its first cases, “if the debtor neglect[s] to
36
make the application at the time of payment, the election is
then cast upon the creditor, yet it is incumbent upon the
latter, in such a case, to make a recent application, by entries
in his books or papers, and not to keep parties and securities
in suspense, changing their situation, from time to time, as his
interest, governed by events, might dictate.” Hill v.
Southerland, 1 Va. (1 Wash.) 128, 133 (1792).
In Chapman v. Commonwealth, 66 Va. (25 Gratt.) 721 (1875),
we summarized the law with regard to allocation of a partial
payment among several debts:
A payment by a debtor who owes several debts to a
creditor, is to be applied to one or the other of the
debts; first, as the debtor may direct at or before
the time of making such payment; and such direction
may be given expressly or by implication. Secondly,
if the debtor give no such direction then the creditor
may make the application, according to his pleasure;
and he may make it, either at the time of such
payment, or afterwards, before the commencement of any
controversy on the subject.
Id. at 750 (emphasis added).11
It is not contested that the attachment to UOSA’s letter of
May 10, 2006 was an implicit attempt to allocate the May 8, 2006
payment according to UOSA’s calculation of the judgment debt.
11
The application of these principles in the present case
impacts whether UOSA’s payment to the Joint Venture is to be
applied to the satisfaction of the compensatory damages awarded
in the First Trial and the Second Trial so as to prevent the
continued accrual of post-judgment interest thereon.
37
Moreover, in the May 16, 2006 letter from its counsel, the Joint
Venture made an express attempt to allocate the May 8, 2006
payment to its advantage. Thus, the crux of the issue is
whether the circuit court erred in ruling that the May 10, 2006
letter was “essentially contemporaneous” with the May 8, 2006
payment such that it was a directive of the debtor made “at or
before the time of making such payment,” and, if not, whether
the Joint Venture’s attempt to allocate the payment to its
advantage occurred “before the commencement of any controversy
on the subject.”
The circumstances surrounding UOSA’s tendering of payment
on its judgment debt to the Joint Venture are not in dispute.
The funds were wired to the account of the Joint Venture’s
counsel on May 8, 2006. At 3:46 P.M. on that day, counsel for
UOSA sent an email to counsel for the Joint Venture asking for
him to “[p]lease verify that you have received the funds.”
Counsel for the Joint Venture responded to this email at 5:10
P.M. requesting UOSA’s counsel to “please provide the
calculation of the amount paid, including the interest
calculations, so that we can understand how the amount was
determined.” (Emphasis added.) This email is a de facto
acknowledgement that the payment had been received, but also
evidenced that the judgment creditor did not yet accept that the
debt was fully satisfied.
38
UOSA’s counsel responded by mailing the May 10, 2006 letter
and its attached exhibit and sending copies of these to counsel
for the Joint Venture by telefacsimile. That letter expressly
stated the position of UOSA that the judgment debt was fully
satisfied and, by implication, that it would contest any claim
by the Joint Venture that additional moneys were due. The Joint
Venture responded to this communication in the May 16, 2006
letter from its counsel with its own calculation of the judgment
debt, asserting that the May 8, 2006 payment was not sufficient
to cover that debt, and purporting to allocate the “partial
payment” in a manner advantageous to the Joint Venture.
In light of the sequence of events between May 8 and May
16, 2006, we find that the record is abundantly clear that UOSA
did not attempt to make an allocation of its payment, either
expressly or by implication, “at or before the time of making
such payment.” Thus, any action taken by UOSA thereafter to
justify its calculation of that payment in response to the query
from the Joint Venture cannot be treated as a timely allocation
because the payment had already been tendered and accepted.
Accordingly, we hold that the circuit court erred in finding
that the May 10, 2006 letter was an “essentially
contemporaneous” directive to allocate the May 8, 2006 payment
according to the calculations in the attachment to the letter.
39
On brief, the Joint Venture contends that its calculation
of the judgment debt, as expressed in the exhibit attached to
its May 16, 2006 letter to counsel for UOSA, was a timely
allocation of the May 8, 2006 payment to the debt. However,
because the circuit court ruled that UOSA’s May 10, 2006
calculation constituted a timely allocation by the debtor, the
court never reached the question whether the Joint Venture’s
calculation would have constituted a timely allocation by the
creditor in the absence of an allocation by the debtor. Thus,
the court was not called upon to decide whether the Joint
Venture made its allocation “before the commencement of any
controversy on the subject.” Moreover, in light of our holding
that certain of the awards made by the circuit court were in
error, neither of the calculations advanced by the parties
regarding their alleged allocations will be germane to the
judgment debt once it has been recalculated in accord with the
views expressed herein.
Accordingly, we will remand the case to the circuit court
with direction that it first recalculate the amount of the
judgment debt as of May 8, 2006. The court will then determine
whether the Joint Venture’s May 16, 2006 letter constitutes a
timely allocation of the May 8, 2006 payment, and, if so,
whether and how that allocation may be applied to the
recalculated debt. If the court determines that there was no
40
timely allocation by the Joint Venture, or that the calculations
of the May 16, 2006 letter, though a timely allocation, cannot
practicably be applied to the recalculated debt, then the court
shall apply the May 8, 2006 payment to the recalculated debt in
accord with the principle of law that, in the absence of an
effective allocation by either debtor or creditor, the courts
will apply the payment to the debts in order of age, starting
with the oldest. Northern Virginia Savings & Loan Ass’n v.
J. B. Kendall Co., 205 Va. 136, 145, 135 S.E.2d 178, 185 (1964);
Pope v. Transparent Ice Co., 91 Va. 79, 85, 20 S.E. 940, 942
(1895).
Failure to Grant Motion for Satisfaction of the Judgment
As we stated at the outset, the burden of proof as to
entitlement to relief under Code § 8.01-455 rests with the
judgment debtor, here UOSA, asserting that the judgment debt has
been paid and should be marked satisfied. Leasing Service Corp,
243 Va. at 444, 416 S.E.2d at 441. Because UOSA has not
prevailed in this Court on the issue of whether interest was to
accrue during the period between November 6, 2003 and June 27,
2005 and the Joint Venture has prevailed on the issue that post-
judgment interest on the compensatory damages from the First
Trial accrued at the rate of 1% per month, it is clear that
UOSA’s contention that it has fully satisfied the judgment debt
is no longer tenable. Accordingly, we need not address further
41
UOSA’s assignment of error asserting that the circuit court
erred in not granting UOSA’s motion for satisfaction of the
judgment. UOSA is not yet entitled to such relief.
CONCLUSION
In summary, we have determined that: (1) the circuit court
had jurisdiction to determine what interest was due to the Joint
Venture under the court’s June 27, 2005 judgment pursuant to
UOSA’s motion for satisfaction of that judgment; (2) the circuit
court did not err in determining that interest was to accrue on
the compensatory damages awarded in the First Trial between
November 6, 2003 and June 27, 2005, but it erred in setting the
rate of that interest at 9% per year, rather than the rate of 1%
per month provided for in the jury’s verdict; (3) the circuit
court erred in determining that post-judgment interest was to
accrue on the pre-judgment interest awarded in the First Trial
and the Second Trial; (4) the circuit court erred in determining
that UOSA made a timely allocation of the May 8, 2006 payment on
the judgment debt; and, (5) the circuit court did not err in
denying UOSA’s motion for satisfaction of the judgment.
Because we have determined that the circuit court erred in
awarding post-judgment interest on the pre-judgment interest and
also erred in not applying the 1% per month rate of interest to
calculate the post-judgment interest on the compensatory damages
awarded by the jury in the First Trial, we will remand the case
42
to the circuit court in order that, consistent with the views
expressed in this opinion, the court can make a proper
calculation of the judgment debt, determine the proper
allocation of the May 8, 2006 payment to that debt, and
determine the remaining balance due to the Joint Venture.
Affirmed in part,
reversed in part,
and remanded.
JUSTICE KINSER, with whom JUSTICE AGEE joins, concurring.
I agree with the majority’s conclusions on the issues
before us, but I write separately to discuss in more detail the
provisions of Code § 8.01-382 in relation to the concepts of
“pre-judgment interest” and “post-judgment interest.” I do so
because I disagree with the majority’s use of the labels “pre-
judgment interest” and “post-judgment interest” in the context
of Code § 8.01-382 and the implication that, when a trier of
fact provides for interest on the principal sum awarded and
fixes the period at which the interest commences, such interest
consists of only “pre-judgment interest.”
The provisions of Code § 8.01-382 do not include the terms
“pre-judgment interest” or “post-judgment interest.” Instead,
the statute addresses two scenarios with regard to the accrual
of interest on a jury verdict or judgment of a trial court, when
the trier of fact elects to provide for interest on any
43
principal sum awarded and when it chooses not to do so. The
first two sentences of Code § 8.01-382 address the initial
circumstance, and the third sentence pertains to the latter.
The first sentence of Code § 8.01-382 allows a jury or a
court, sitting without a jury, to “provide for interest on any
principal sum awarded . . . and [to] fix the period at which the
interest shall commence.” Contrary to the labels used by the
majority, such interest is not just “pre-judgment interest” that
ceases to accrue on the date of the jury verdict or court’s
judgment. The time which the trier of fact may fix for interest
to commence is not limited by the statute and thus may be
before, at or after the rendering of judgment. The second
sentence of the statute directs that, when the trier of fact
does provide for such interest, the judgment or decree entered
“shall provide for such interest until such principal sum be
paid.” Code § 8.01-382. If the period thus fixed for the
commencement of interest predates the jury verdict or judgment
of the court, the interest that accrues before the date of the
jury verdict or court’s judgment is commonly referred to as
“pre-judgment interest,” and the interest accruing after that
date is commonly denominated as “post-judgment interest.”
However, the trier of fact could fix the commencement of the
running of interest, including the rate of interest, at or after
judgment, which would also commonly be referred to as “post-
44
judgment interest,” but under the plain terms of Code § 8.01-382
would not be controlled by Code § 6.1-330.54.
The third sentence of Code § 8.01-382 addresses the
situation when a jury or a court, sitting without a jury, elects
not to provide for any interest on the principal sum awarded.
It directs that, when “a judgment or decree be rendered which
does not provide for interest, the judgment or decree awarded or
jury verdict shall bear interest at the judgment rate of
interest as provided for in § 6.1-330.54 from its date of entry
or from the date that the jury verdict was rendered.” Code
§ 8.01-382. In other words, when a jury or court does not
provide for interest on any principal sum awarded, the judgment,
as a matter of law, will nevertheless bear interest at the rate
set forth in Code § 6.1-330.54 from the date of either the jury
verdict or entry of the judgment or decree. See Board of
Supervisors v. Safeco Ins. Co., 226 Va. 329, 339, 310 S.E.2d
445, 451 (1983) (under Code § 8.01-382, if the fact-finder does
not provide for interest on any principal sum awarded, “the
judgment bears interest at the judgment rate from date of
entry”). Obviously, interest in this circumstance accrues only
during the “post-judgment” period.
In the First Trial, the jury, acting pursuant to the first
sentence of Code § 8.01-382, provided for interest on the
various principal sums awarded to the Joint Venture, fixed the
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rate at one percent, and set the date from which the interest
commenced to accrue on each principal sum awarded. All those
dates preceded the November 6, 2003 jury verdict. Thus, the
jury awarded the Joint Venture interest that commenced to accrue
during the “pre-judgment” period and continued to accrue until
UOSA paid the principal sums awarded to the Joint Venture. In
accordance with the jury verdict, the circuit court, in its
orders of November 19, 2003, and January 15, 2004 (which was
incorporated into the final order of June 27, 2005), calculated
the amount of interest that had accrued on each principal sum
awarded from the date the one percent began to accrue through
November 6, 2003, the date of the jury verdict. The total
accrued interest as of that date was $1,832,652.
When UOSA filed its motion for satisfaction of the judgment
pursuant to Code § 8.01-455, the circuit court decided, among
other things, at what rate interest continued to accrue on the
principal sums awarded after November 6, 2003. In answering
that question, the circuit court concluded that the January 15,
2004 order did not comport with the second sentence of Code
§ 8.01-382 because that order did not specifically provide for
the one percent interest to continue to accrue until UOSA paid
the principal sums awarded to the Joint Venture. In other
words, the court decided that the January 15, 2004 order did not
provide for interest and was therefore “squarely on point with
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the third sentence” of Code § 8.01-382. For that reason, the
circuit court held that interest accrued after November 6, 2003
at the rate set forth in Code § 6.1-330.54.
In my view, the circuit court failed to correctly apply its
January 15, 2004 order. By setting forth in that order the one
percent rate of interest and fixing the date at which such
interest began to accrue on each principal sum, all in
accordance with the jury verdict, the circuit court’s order
provided for the continued accrual of that interest until UOSA
paid the various principal sums as a matter of law. Stated
differently, the order did not fail to provide for interest, and
the judgment, therefore, did not fall within the ambit of the
third sentence of Code § 8.01-382.*
Thus, I conclude that the Joint Venture was entitled
to interest on the principal sums awarded in the First
Trial at the rate of one percent per month from the
date fixed by the jury for the commencement of the
interest on each principal sum until such sum was
paid. I recognize that the majority reaches the same
conclusion, but in my view, its use of the labels
“pre-judgment” and “post-judgment” when discussing
interest provided by the trier of fact pursuant to the
* 1
If the circuit court’s January 15, 2004 order had failed
to provide for the interest awarded by the jury in the First
Trial until UOSA paid the principal sums, but instead had fixed
the amount of interest the Joint Venture was entitled to
receive, such an order would not have been in accordance with
the jury verdict and the requirements of Code § 8.01-382. The
Joint Venture would have been required to raise that error on
direct appeal. To do so now under the guise of responding to
UOSA’s motion for satisfaction of judgment under Code § 8.01-455
would violate the requirements of Rule 1:1.
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first two sentences of Code § 8.01-382 is confusing
because, under this statute, such interest necessarily
accrues until the principal sum is paid.
I further conclude that the circuit court’s failure to
interpret correctly its January 15, 2004 order and the
provisions of Code § 8.01-382 led to its erroneous award of
“post-judgment interest” on “pre-judgment interest.” As the
majority noted, a plaintiff may seek as part of its damages an
award of interest commencing on a date prior to a jury verdict
or court’s judgment, i.e. “pre-judgment interest.” See
Dairyland Ins. Co. v. Douthat, 248 Va. 627, 631, 449 S.E.2d 799,
801 (1994) (the purpose of pre-judgment interest is to make a
plaintiff whole and is part of the damages a plaintiff may seek
to recover). But, when the trier of fact provides for interest
on any principal sum awarded, that interest continues to accrue
until the principal sum is paid. Code § 8.01-382. It is not a
lump sum award of damages, nor does it consist of only “pre-
judgment interest,” as the majority suggests. Thus, it
compensates a plaintiff for the lost use of its money from the
date fixed by the trier of fact for the commencement of the
interest until the principal sum is paid. Stated differently,
interest provided pursuant to the first sentence of Code § 8.01-
382 compensates a plaintiff “ ‘for the loss sustained by not
receiving the amount to which he was entitled at the time he was
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entitled to receive it.’ " Marks v. Sanzo, 231 Va. 350, 356,
345 S.E.2d 263, 267 (1986) (quoting Employer-Teamsters Joint
Council No. 84 v. Weatherall Concrete, 468 F.Supp. 1167, 1171
(S.D. W.Va. 1979)). But, a plaintiff is entitled to be
compensated for that particular loss only once. By awarding
“post-judgment interest” on “pre-judgment interest,” the circuit
court, however, compensated the Joint Venture twice for that
loss during the “pre-judgment” period.
Furthermore, the term “principal” is defined as “[t]he
amount of a debt . . . not including interest.” Black’s Law
Dictionary, 1231 (8th ed. 2004). Thus, I conclude that the
phrase “principal sum awarded” as used in Code § 8.01-382 does
not include “pre-judgment interest” provided by a trier of fact.
Instead, the “principal sum awarded” refers to the amount that a
plaintiff was initially entitled to receive as damages from the
party in breach of some obligation or duty and is the monetary
figure on which interest, if provided for by the trier of fact
under Code § 8.01-382, accrues.
For these reasons, I respectfully concur.
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