Present: Carrico, C.J., Lacy, Keenan, Koontz, and Lemons, JJ.
WELDING, INC.
v. Record No. 000836 OPINION BY JUSTICE ELIZABETH B. LACY
March 2, 2001
BLAND COUNTY SERVICE AUTHORITY
FROM THE CIRCUIT COURT OF BLAND COUNTY
J. Colin Campbell, Judge
Welding, Inc. (Welding), a construction company, sued the
Bland County Service Authority (the Authority), for payments
allegedly due pursuant to a contract between the parties. In
this appeal, Welding seeks reversal of the trial court's
judgment dismissing the action, asserting that the tolling
provision of Code § 8.01-229(E)(1) applies to actions filed in
a federal court located outside the Commonwealth and that the
allegations in its proposed amended motion for judgment were
sufficient to withstand a demurrer because they reflected
compliance with certain statutory and contractual provisions
required for recovery.
In 1995, the Authority 1 awarded a $981,000 contract to
Welding for the construction of a piping system through the
East River Mountain Tunnel located on Interstate Highway 77 at
the Virginia-West Virginia border. The contract required the
use of a specific type of plastic piping system. At a meeting
in 1996, Welding told the Authority that the plastic piping
was unsuitable because of the vibration from the automobile
traffic in the tunnel. The Authority acknowledged Welding's
concerns but decided to proceed using the plastic piping. The
piping failed repeatedly during testing, necessitating repairs
and delays.
Following completion of the work, Welding sought payment
of the full contract price and approved change orders. On
February 13, 1998, the Authority responded, notifying Welding
that it attributed the delay in completion to Welding and was
withholding $166,000 of the contract price, which represented
liquidated damages for the delay. The Authority also denied
Welding's claim for an additional $100,000 in extra work that
Welding claimed was required to fix the leaks in the piping
system.
On April 29, 1998, Welding filed suit against the
Authority in the United States District Court for the Southern
District of West Virginia. The federal court determined that
it did not have jurisdiction to entertain the litigation
because of a forum selection clause in the contract and
dismissed the suit without prejudice on November 17, 1998.
Welding filed the instant action in the Circuit Court of Bland
County on January 8, 1999. The Authority filed a plea in bar
1
At the time of the contract, the Authority was named the
Bland County Water Authority.
2
and a demurrer asserting that Welding failed to comply with
§ 11-69 of the Virginia Public Procurement Act, Code §§ 11-35
to -80 (the Procurement Act), because Welding did not give
notice of its intent to file a claim as required by subsection
A and did not institute legal action within the time
prescribed in subsection D of Code § 11-69.
The trial court granted the Authority's demurrer and plea
in bar. As to the plea in bar, the trial court found that
filing a suit in an "improper venue" or a forum "outside the
jurisdiction of the Commonwealth" does not invoke the tolling
provision of Code § 8.01-229(E)(1) and, therefore, the instant
litigation was not filed within six months of the final
decision of the Authority as required in Code § 11-69(D). In
sustaining the Authority's demurrer, the trial court held that
the claims were barred as a matter of law because Welding
failed to comply "with the contractual conditions precedent to
ascertain any claim" and with the "requisite statutory
conditions precedent to asserting any claims in this court."
Specifically, the trial court found that "[n]owhere in the
pleadings does it appear that the contractor ever gave
'written notice of its intention to file' [a] claim" as
required by Code § 11-69(A). The trial court denied Welding's
motion to reconsider and motion for leave to file an amended
motion for judgment and dismissed the motion for judgment.
3
On appeal, Welding raises a number of assignments of
error which generally challenge the trial court's construction
and application of the tolling provision of Code § 8.01-
229(E)(1) and the denial of Welding's motion to file an
amended motion for judgment.
I. Plea in Bar
We first address whether the trial court correctly
determined that the tolling provision of Code § 8.01-229(E)(1)
does not apply to actions filed in federal courts. The trial
court's decision was based on its comparison of subsections
(E)(1) and (E)(3) of Code § 8.01-229. Those subsections
provide respectively:
1. Except as provided in subdivision 3 of this
subsection, if any action is commenced within the
prescribed limitation period and for any cause
abates or is dismissed without determining the
merits, the time such action is pending shall not
be computed as part of the period within which
such action may be brought, and another action
may be brought within the remaining period.
. . . .
3. If a plaintiff suffers a voluntary nonsuit as
prescribed in § 8.01-380, the statute of
limitations with respect to such action shall be
tolled by the commencement of the nonsuited
action, and the plaintiff may recommence his
action within six months from the date of the
order entered by the court . . . . This tolling
provision shall apply irrespective of whether the
action is originally filed in a federal or a
state court and recommenced in any other court
. . . .
4
The trial court reasoned that because the General Assembly
specifically made the tolling provision of subsection (E)(3)
applicable to suits filed in federal court, but did not
specifically include suits filed in federal courts in
subsection (E)(1), the tolling provision of subsection (E)(1)
was not applicable to suits in federal courts. We conclude
that the trial court's construction of subsection (E)(1) was
erroneous for the following reasons.
Subsection (E)(3) addresses a very specific circumstance
in which an action is abated or dismissed without determining
the merits — the use of a voluntary nonsuit. The term
"nonsuit" identifies a specific practice used in Virginia
civil procedure. Federal court practice does not include a
procedure labeled a "nonsuit," but does recognize procedures
which are substantially equivalent to Virginia's nonsuit. See
Fed. R. Civ. P. 41. In order to provide consistent treatment
for the federal procedural equivalent of the Virginia nonsuit,
specific reference to actions in federal courts in subsection
(E)(3) of Code § 8.01-229 was required.
However, unlike the circumstances compelling the
reference to federal courts in subsection (E)(3), no reference
to federal courts was needed to allow the tolling provision of
subsection (E)(1) to apply to suits filed in those courts.
Subsection (E)(1) applies a tolling period to "any action"
5
which abates or is dismissed without determining the merits.
The term "action" refers to civil litigation in both the state
and federal courts. 2 See Fed. R. Civ. P. 2 ("There shall be
one form of action to be known as 'civil action.' ") There is
no language in Code § 8.01-229(E)(1) which limits or restricts
its application to a specific type of action or precludes its
applicability to actions filed in a federal court.
Accordingly, we conclude that the trial court erred in
construing Code § 8.01-229(E)(1) as inapplicable to actions
filed in federal courts.
The Authority asserts alternative arguments in support of
the trial court's holding. The Authority argues that applying
the tolling provision of Code § 8.01-229(E)(1) would "Ignore
And Invalidate The More Specific, And Jurisdictional" time
limit and forum requirements of Code §§ 11-69(D) and –70(E)
and that the tolling provision cannot affect Code § 11-69(D)
because that statute is a statute of repose. These arguments
are not persuasive.
2
Although the Authority argued in the trial court that
the definition of "action" contained in Code § 8.01-2
restricts the subdivision's application to actions filed in
circuit court, that argument was not advanced on appeal and is
not persuasive. That Code section defines an "action" as
including actions brought "in circuit courts or district
courts." Thus, the term "action" is not limited to matters
filed in circuit courts or general district courts.
Furthermore, the purpose of the definition is to include
proceedings both at law and in equity.
6
The Authority asserts that the provisions of the
Procurement Act relating to filing suit within six months of
the agency's final decision in "the appropriate circuit court"
are statutes of specific application and take precedence over
the more general tolling statute. The principle upon which
the Authority relies applies when two statutes address the
same subject matter and are in conflict. Here, however, there
is no conflict because neither section of the Procurement Act
addresses the tolling of actions, which is the subject of Code
§ 8.01-229(E)(1). Cf. Dodson v. Potomac Mack Sales & Serv.,
Inc., 241 Va. 89, 94-95, 400 S.E.2d 178, 181 (1991)(Code
§ 8.01-229(E)(3) deals generally with tolling statutes of
limitations, whereas Code § 8.01-244(B) deals specifically
with tolling of wrongful death actions and prevails over
general statute). Because the provisions of the Procurement
Act and the tolling statute address separate matters, the
Procurement Act provisions relied upon here are not specific
statutes which take precedence over the general tolling
provision of Code § 8.01-229(E)(1).
The Authority next asserts that the two provisions at
issue are "jurisdictional" and would be rendered meaningless
if an action seeking relief under the Procurement Act could be
prosecuted beyond the six month appeal time after having been
filed in the wrong court. For purposes of this discussion, we
7
will assume without deciding that the General Assembly
intended the phrase "bring an action . . . in the appropriate
circuit court" to limit actions against it under the
Procurement Act to the circuit courts of this Commonwealth.
Nevertheless, the term "jurisdictional" has many
applications and the Authority does not explain precisely the
meaning it ascribes to the term in this context. These
provisions, however, do not implicate subject matter
jurisdiction and, thus, are not mandatory jurisdictional
requirements. See Morrison v. Bestler, 239 Va. 166, 169-70,
387 S.E.2d 753, 755-56 (1990). Rather, they are mandatory
procedural requirements; that is, conditions that must exist
in order for a court to resolve an action on its merits. The
failure to comply with these requirements renders an order
voidable, not void. Id.
The six month appeal period, like all limitations
periods, ensures that defendants do not suffer a disadvantage
caused by the passage of time making defense of a case more
difficult. Applying the tolling provision here does not give
rise to that disadvantage because, regardless of where an
action is filed, it must be filed within the six month period
for the tolling provision to be triggered. Furthermore, any
error stemming from the failure to file the action "in the
appropriate circuit court" does not prejudice the defendant,
8
because, as in this case, the original court cannot proceed to
resolve the case on the merits. We conclude that applying the
tolling provision of Code § 8.01-229(E)(1) is not precluded by
the language of the Procurement Act, does not defeat any
legislative purpose to impose an appeal period or forum
requirement, and does not render the limitations and venue
provisions of Code §§ 11-69(D) and –70(E) meaningless.
Finally, we reject the Authority's argument that the
appeal provision, Code § 11-69(D), is a statute of repose
which cannot be subjected to a tolling provision. At the
onset, the Authority admits that it has no legal support for
the proposition that tolling provisions do not apply to
statutes of repose. And, although the Authority correctly
recites the proposition that a statute of repose is one that
is based on the expiration of a specific time period,
unrelated to when a cause of action accrues, Sch. Bd. of
Norfolk v. United States Gypsum Co., 234 Va. 32, 37, 360
S.E.2d 325, 327-28 (1987), the six month period set out in
Code § 11-69(D) is triggered by the accrual of the cause of
action, that is, the point in time when the agency denies the
claim. Thus, Code § 11-69(D) operates in this regard as a
statute of limitations, not a statute of repose.
Having concluded that the tolling provision of Code
§ 8.01-229(E)(1) is applicable to this action, we will reverse
9
the judgment of the trial court sustaining the Authority's
plea in bar.
II. Demurrer
We now turn to Welding's assignments of error relating to
the failure of the trial court to allow it to file an amended
motion for judgment. In its June 21, 1999 letter opinion
sustaining the Authority's first demurrer, the trial court
concluded that the motion for judgment did not indicate that
Welding had filed a notice of intent to file a claim as
required by Code § 11-69(A) nor that Welding had complied
with the "contractual conditions precedent." After
consideration of Welding's motion to amend and a proposed
amended motion for judgment, the trial court entered an order
concluding that the proposed amended motion for judgment
"would not cure the deficiencies upon which the Court's
decision is based." Although Welding does not challenge the
trial court's action in granting the Authority's first
demurrer, because of the posture of this case, we must
consider the reasons given for granting the first demurrer in
light of the amended motion for judgment.
The principles we apply are familiar. A demurrer tests
the legal sufficiency of a pleading and can be sustained if
the pleading, considered in the light most favorable to the
plaintiff, fails to state a valid cause of action. W.S.
10
Carnes, Inc. v. Bd. of Supervisors, 252 Va. 377, 384, 478
S.E.2d 295, 300 (1996). We consider as admitted the facts
expressly alleged and those which fairly can be viewed as
impliedly alleged or reasonably inferred from the facts
alleged. Id.
There are two claims in this case: a claim for $166,000,
representing the amount withheld as liquidated damages for
delay the Authority attributed to Welding; and a claim for
$100,000 for additional expenses Welding asserts were
incurred as extra work to repair leaks to the piping system
caused by the Authority's decision to use plastic piping. In
considering whether the amended motion for judgment could
"cure the deficiencies" found in the original motion for
judgment, we apply the foregoing principles to both the
statutory and contractual requirements for each claim.
A. Statutory Requirements
Code § 11-69(A) requires that claims be submitted in
writing "no later than sixty days after final payment" and
that a written notice of intent to file a claim be submitted
"at the time of the occurrence or beginning of the work upon
which the claim is based." With regard to the $100,000 claim
for the additional work, the amended motion for judgment
states that "final payment" was made on February 13, 1998;
that by letter dated March 3, 1998, "Welding made [a] claim
11
for $100,000" for the additional work; and that the Authority
"previously had written notice of Welding's intention to file
[the claim for $100,000 in additional costs] at the time of
the occurrence or beginning of the work upon which the claim
was based."
The Authority asserts that these allegations are
insufficient to show a written intent to file a claim because
it is based on the written minutes of a progress meeting.
According to the Authority, the Procurement Act "envisions
written notice by the claimant," but these minutes were
reduced to writing by the Authority's architect. 3 The
Authority's argument is not sufficient to warrant sustaining
the demurrer on this point.
The amended motion for judgment in this case states only
that the Authority had previous written notice of Welding's
intention to file a claim. While reciting portions of the
written minutes of a progress meeting, the pleading does not
claim that these minutes constituted the previous written
notice of the intent to file a claim for the additional work.
Furthermore, even assuming the written minutes are the
3
A number of exhibits were attached to the amended motion
for judgment, including the contract between Welding and the
Authority, minutes of meetings, and various correspondence.
These documents are properly considered in determining whether
a valid cause of action has been pled. Flippo v. F&L Land
Co., 241 Va. 15, 17, 400 S.E.2d 156, 156 (1991).
12
previous written notice pled by Welding, whether such writing
complies with the requirements of Code § 11-69(A) is a
determination to be made at trial. A demurrer does not test
matters of proof and, unlike a motion for summary judgment,
does not involve evaluating and deciding the merits of a
claim; it tests only the sufficiency of factual allegations to
determine whether the pleading states a cause of action.
Riverview Farm Assocs. v. Bd. of Supervisors, 259 Va. 419,
427, 528 S.E.2d 99, 103 (2000); Concerned Taxpayers v. County
of Brunswick, 249 Va. 320, 327-28, 455 S.E.2d 712, 716 (1995);
Fun v. Va. Military Inst., 245 Va. 249, 252, 427 S.E.2d 181,
183 (1993).
With regard to Welding's claim for $166,000 in withheld
liquidated delay damages, the amended motion for judgment
states that on February 13, 1998 the Authority withheld the
$166,000 and that in a letter dated March 3, 1998 Welding
"objected to [the Authority's] decision to withhold
liquidated damages for delay" and "made a written claim for
the balance due." Welding asserts that these allegations are
sufficient to show compliance with the requirements of Code
§ 11-69(A) because the "occurrence" of the claim arose at the
time the Authority made the determination to withhold the sum
of $166,000 in liquidated delay damages.
13
The Authority asserts that these allegations are
insufficient because the attachments to the pleadings show
that disputes regarding responsibility for the delay and
extra work arose in October 1996 and that Welding "was aware
of" the disputes and "its intention to file claims" prior to
the actual withholding of the liquidated damages. Even if
the "occurrence" of the claim was at the time liquidated
damages were withheld, the Authority continues, the March 3
letter was not proper notice because it was not given on
February 13, "at the time of the occurrence."
Once again, however, the issues raised by the Authority
require construing the provisions of the Procurement Act and
applying them to the facts of this case. Issues such as
whether filing notice eighteen days after an alleged
"occurrence" or filing a notice of intent and a claim in a
single document comply with the Procurement Act are not
matters of pleading a cause of action, but of resolving the
merits of the cause. See Flory v. Commonwealth, 261 Va. ___,
___ S.E.2d ___ (2001), decided today.
We conclude that the allegations of the amended motion
for judgment and all inferences reasonably taken therefrom
"cure the deficiencies" found by the trial court in the
original motion for judgment regarding the requirements of
the Procurement Act because they sufficiently allege written
14
notice of Welding's intention to file a claim for the
withheld liquidated damages and the additional work as
required by Code § 11-69(A).
B. Contractual Provisions
The trial court also held that the amended motion for
judgment did not "cure the deficiencies" of the original
pleading regarding compliance with the "contractual
conditions precedent" to making a claim. Nothing in the
trial court's orders or letter opinions directly addresses
the contractual provisions in issue or the specific
deficiencies of the pleading. However, the Authority argues
that these deficiencies include failure to allege compliance
with contract provisions requiring written notice for an
exemption from delay damages and written change orders for
additional work.
Welding asserts that for the purposes of a demurrer, the
amended motion for judgment sufficiently states a cause of
action for breach of contract because it alleges that the
Authority was given notice of the delay through the progress
meetings and the minutes of those meetings and that the
parties agreed that the extra repair work should be undertaken
and "liability for delay and additional compensation for
repairs would be resolved after the work was done." This
15
agreement, the amended pleading asserts, was "in accordance
with paragraph 30A of the Supplementary General Conditions."
We conclude that these allegations sufficiently plead
compliance with the "conditions precedent" to making a claim
under the contract between the Authority and Welding. Like
the dispute involving compliance with the notice provisions of
Code § 11-69(A), the dispute here involves interpretation of
the various contract provisions and application of the
construed contract to the facts of this case. That is a
matter for trial. As we have said, resolution of such issues
is not appropriate for determination on demurrer and the trial
court erred in denying Welding's motion to file its proposed
amended motion for judgment.
Accordingly, for the above reasons, we will reverse the
judgment of the trial court and remand the case for further
proceedings consistent with this opinion.
Reversed and remanded.
16