Advanced Marine Enterprises, Inc. v. PRC Inc.

Present: All the Justices

ADVANCED MARINE
ENTERPRISES, INC., ET AL.

v. Record No. 971950 OPINION BY JUSTICE BARBARA MILANO KEENAN
June 5, 1998
PRC INC.

FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Paul F. Sheridan, Judge

In this appeal, we consider issues in a chancery proceeding

involving both equitable and legal claims arising from an

alleged business conspiracy and breach of an employment

agreement.

PRC Inc. (PRC) is a Delaware corporation that, among other

things, provided marine engineering services under contract to

the United States Navy. Included in those services was

"shipbuilding support" that PRC rendered to the Naval Sea

Systems Command (NAVSEA). Advanced Marine Enterprises, Inc.

(AME), a Virginia corporation engaged in the business of marine

engineering, also provided services under contracts with the

Navy, including NAVSEA.

PRC requires every new employee to sign a uniform

Employment Agreement as a condition of employment. The

Employment Agreement obligates PRC employees to protect PRC's

proprietary information and to refrain from disclosing such

information to individuals outside the company. The Employment
Agreement also contains a non-competition provision, which

provides in relevant part:

Employee agrees not to compete with PRC for a period of
eight months following termination of employee's
employment, by rendering competing services to or, with
respect to such services, solicit any customer of PRC for
whom Employee performed services while employed by PRC,
within 50 miles of a PRC office.

At various times during 1995, due to the loss of certain

marine engineering contracts, PRC informed some of its marine

engineering employees that they should look for other

employment. On December 13, 1995, PRC announced that the

company would be sold to Litton Industries, Inc. (Litton). 1

In November 1995, prior to the announcement of the sale, C.

Michael Pirrera, a senior manager in PRC's marine engineering

department, contacted AME and inquired whether AME would be

interested in employing all seven managers from PRC's marine

engineering department (PRC Managers). When AME expressed

interest in hiring the PRC Managers, AME and the PRC Managers,

led by Pirrera, formed a plan (the Plan) under which AME would

attempt to hire every employee in the PRC marine engineering

department.

1
Due to a conflict of interest caused by the sale to Litton,
PRC was later required to sell one of its primary marine
engineering contracts, the 400D contract, to a buyer other than
Litton. In April 1996, PRC entered into a contract with Tracor,
Inc., the parent company of Vitro Corporation (Vitro), for the
sale of the "400D unit," which covered the 400D contract and
approximately 80 PRC employees.

2
 Under the Plan, AME agreed to make secret job offers to all

employees in PRC's marine engineering department. These

employees would be required to resign on the same day, December

29, 1995, without notice to PRC, despite PRC's requirement that

employees provide two weeks notice of their intent to leave

PRC's employ. The Plan's objective was to transfer PRC's entire

marine engineering department to AME, including the PRC

Managers, the other employees, all customer relationships, and

all existing contracts. As one PRC Manager stated, the idea was

"to put together an entity that the [PRC] customer can't live

without."

AME knew about the terms of PRC's Employment Agreement

before implementing the Plan. AME was aware that it faced a

potential lawsuit by PRC to enforce the Employment Agreement,

and that PRC could assert other causes of action against AME,

such as tortious interference with contract. After projecting

the nature and amount of damages that might result from a

lawsuit by PRC, AME decided that the benefits of the Plan

outweighed the potential consequences of a lawsuit.

To implement the Plan, some of the PRC Managers developed a

"matrix" describing how the PRC Managers would obtain the

business of PRC's marine engineering department. This "matrix"

included detailed confidential and proprietary information about

PRC's workload, the value of certain work, and the amount of

3
government funding available for each job in PRC's marine

engineering department. The "matrix" also evaluated each of

PRC's jobs regarding the ease with which the job could be

"pulled" from PRC or "diverted" to AME.

Based on employee information supplied by the PRC Managers,

AME prepared "offer" letters to each of the PRC Managers and

other marine engineering employees and authorized Pirrera to

negotiate salaries with each employee. The "offer" letters

included a provision in which AME agreed to indemnify and hold

harmless each PRC employee against any claim, demand, damage, or

injury asserted by PRC in connection with the employee's

employment by AME.

The PRC Managers devised a schedule for distributing the

"offer" letters to the PRC employees based on the PRC Managers'

concern that some employees might "blab" to PRC after receiving

their AME "offer" letter. Under this schedule, the PRC Managers

planned to give job offers to those PRC employees who might

"blab" only after offers were given to the employees who were

unlikely to "blab."

The PRC Managers distributed the "offer" letters in mid-

December 1995. The PRC Managers delivered each letter

personally, encouraged each employee to accept AME's offer, and

emphasized the need to keep PRC from gaining knowledge of the

4
Plan prior to December 29, 1995, the date of the scheduled mass

resignation.

On December 20, 1995, Pirrera learned that rumors of the

Plan might "leak out" to PRC. In response, Pirrera sent an "e-

mail" message to the other PRC Managers on December 21, 1995,

which stated:

Subject: Execute
Gentlemen:

Based on yesterday's events we need to do the
following:

With the exception of the highest risk team
members (i.e., people we are absolutely sure will
blab), talk to the rest of the team today.

Determine task backlogs immediately.

Back up computer files immediately.

Transfer files to client sites immediately.

Remember gentlemen, we got to this point as a team and
we will see this through as a team. Let's roll!

Mike

On December 29, 1995, the whole group of 26 managers and

employees from PRC's marine engineering department submitted

letters resigning their employment with PRC, effective

immediately. Before leaving PRC and without PRC's knowledge or

consent, many of the PRC Managers and other PRC employees copied

their client files and sent the files to client sites so that

the files would be available once the employees began working at

5
AME. Many of the PRC Managers and employees also made "back up"

copies of PRC computer documents and files, which they removed

from PRC without PRC's knowledge. Some PRC Managers and

employees also removed, without PRC's consent, various documents

pertaining to ongoing projects and work in progress at PRC. In

many cases, there were no similar documents left at PRC. All of

the above-described information constituted confidential and

proprietary information of PRC.

In January 1996, PRC filed a bill of complaint against AME,

two AME executives, the former PRC Managers, and the other

former PRC marine engineering employees. 2 Among other things,

the bill of complaint contained a request for a temporary

restraining order to prevent the defendants from using or

disseminating PRC's confidential and proprietary information and

from soliciting or performing services for their former PRC

customers. The chancellor entered the temporary restraining

order on January 2, 1996, but later modified its terms to

exclude AME's business with governmental entities.

As amended, the bill of complaint also asserted both legal

and equitable claims for relief. The five Counts relevant to

this appeal are: 1) breach of fiduciary duty (Count I); 2)

intentional interference with contractual relations (Count II);

2
In April 1996, AME signed a letter of intent with Nichols
Research Corporation (Nichols) to sell AME to Nichols.

6
3) intentional interference with prospective business and

contractual relations (Count III); 4) specific performance and

breach of the Employment Agreement (Count IV); and 5) violation

of Code § 18.2-499 (Count VII).

The matter was tried before a chancellor, who heard

testimony from two expert witnesses and 41 other witnesses. PRC

presented the testimony of Mark Bleiweis, a certified public

accountant, who is an expert in the area of damage calculation

in contract disputes. Bleiweis estimated that, of the several

types of economic damage suffered by PRC in the loss of its

marine engineering unit to AME, the largest amount of damages

resulted from lost goodwill. Bleiweis defined goodwill as the

excess of the sales price of a business over the fair market

value of the business' identifiable assets.

To estimate the lost goodwill associated with the departure

of the PRC Managers and employees, Bleiweis examined two sales

of comparable businesses, PRC's sale of its 400D unit to Vitro

and the sale of AME to Nichols. Bleiweis subtracted the value

of each "comparable company's" assets from its sales price to

determine the goodwill associated with each comparable sale.

With respect to the Vitro sale, he then adjusted this figure to

reflect the value to Vitro associated with the funded 400D

contract. To account for the larger number of employees

involved in both comparable sales, Bleiweis apportioned the

7
estimated goodwill figure for each of the two comparable

businesses among the total number of employees involved in each

transaction.

This calculation yielded a ratio or percentage that

Bleiweis applied to calculate the goodwill lost by AME's

acquisition of the 26 PRC employees. Using the Vitro sale,

Bleiweis estimated that PRC sustained $925,123 in goodwill

damages from the loss of its marine engineering unit to AME.

Using the sale of AME to Nichols, Bleiweis estimated that PRC's

lost goodwill damages were $841,965.

Bleiweis also testified that PRC will suffer a loss of

profits as a result of the departure of the PRC Managers and

employees. Bleiweis estimated that the present value of the

expected lost profits was $265,655, based on the revenues that

the former employees' labor would have generated for PRC.

However, he testified that these damages were included in his

estimate of lost goodwill.

AME, the AME executives, and the PRC Managers and employees

(collectively, "AME") offered the testimony of Edward H. Ripper,

a certified public accountant, as an expert in government

contract accounting claims and valuation. Ripper testified that

Bleiweis' conclusions were "substantially overstated," "highly

speculative," and contained many "calculation[] errors." Ripper

provided several adjustments to Bleiweis' figures and concluded

8
that PRC suffered zero damages from lost goodwill when Bleiweis'

method was properly applied to the Vitro sale figures. Ripper

also testified that the Vitro and Nichols sales were not true

"comparable" sales.

On June 19, 1996, the chancellor found in favor of PRC on

all counts at issue in this appeal, stating, "I think the method

by which the [PRC Managers] elected to do this was covert,

surreptitious, violated civil duties, [and] was absolutely

wrong." During post-trial hearings, the chancellor stated that

"[t]he total impact of this thing was outrageous. This was a

group wrong, and they were intending to disadvantage their

employer while sitting there silent setting up their own

employer for the benefit of themselves and the benefit of AME."

Ruling from the bench, the chancellor awarded $1,245,062 in

compensatory damages on each of Counts I, II, III, and VII.

Although this amount was awarded on each of these four Counts,

the chancellor did not aggregate these amounts but entered a

single compensatory damage award of $1,245,062. Under Code

§ 18.2-500, the chancellor then trebled the $1,245,062

compensatory damage award entered on Count VII. Thus, the total

amount of non-punitive damages awarded was $3,735,186.

The chancellor awarded punitive damages in the amount of

$1,000,000 against AME, noting that he might be required to

reduce that amount to $350,000 under Code § 8.01-38.1. He also

9
awarded varying amounts of punitive damages against certain PRC

Managers and employees.

The chancellor took under advisement AME's argument that

the award of treble damages under Code § 18.2-500 was subject to

the punitive damages ceiling fixed by Code § 8.01-38.1. He also

awarded PRC attorney's fees and costs, but deferred computation

of those amounts to a later hearing.

On Count IV, based on breach of the non-competition clause

of the Employment Agreement, the chancellor enjoined certain PRC

Managers and employees for seven and one-half months from

performing services for and soliciting work from those NAVSEA

jobs for which each manager or employee provided services while

employed by PRC. The chancellor stayed the injunction pending

resolution of this appeal, and ruled that if the damages he

awarded are approved on appeal, the injunction will be

dissolved. 3

After a hearing on several post-trial motions, the

chancellor entered the final decree on June 18, 1997, about one

year after the trial. He essentially incorporated the terms of

his bench ruling, but reduced the punitive damage award against

AME to $350,000 to comply with the terms of Code § 8.01-38.1.

He awarded PRC $475,000 in attorney's fees under Count VII (Code

3
AME does not assign error to the conditional nature of the
chancellor's injunction.

10
§§ 18.2-499 and -500). He also awarded PRC $113,365.56 in costs

under Count VII. The costs awarded included $47,922.73 for

PRC's expert witness fees, $27,826.31 for transcripts, and

expenses for other costs such as meals, legal research, parking,

cab fare, law clerk "temporaries," overnight delivery services,

messenger services, telephone calls, and photocopying charges.

The chancellor also ruled that PRC was entitled to receive

prejudgment interest on the entire award from June 19, 1996, the

date of his bench ruling.

On appeal, AME argues that the chancellor erred in (1)

ruling that AME violated Code § 18.2-499, (2) enforcing the non-

competition covenant of the Employment Agreement, (3) his

calculation of PRC's lost goodwill and profits and his

determination that PRC met its burden of proving damages, (4)

awarding punitive and treble damages, (5) awarding PRC costs,

and (6) awarding PRC prejudgment interest.

I. VIOLATION OF CODE § 18.2-499

AME asserts that the chancellor erred in finding AME

conspired to injure PRC in its business in violation of Code

§ 18.2-499. AME contends that to establish a violation of the

statute, PRC was required to prove that AME acted with the

purpose of injuring PRC. AME argues that since the chancellor

failed to apply this evidentiary standard, his finding that AME

violated the statute constitutes reversible error. AME also

11
asserts that there was no evidence AME acted with the purpose of

injuring PRC. We disagree with AME's arguments.

In Commercial Business Systems, Inc. v. BellSouth Services,

Inc., 249 Va. 39, 453 S.E.2d 261 (1995), we addressed the

question whether a violation of Code § 18.2-499 requires proof

of actual malice. There, the plaintiff alleged that the

defendant's employee, in violation of Code § 18.2-499, conspired

to destroy the plaintiff's reasonable business expectancy for a

contract renewal with the defendant corporation by awarding a

contract to the plaintiff's competitor in exchange for

commercial bribes. The trial court granted the defendant's

motion for summary judgment on the ground that the plaintiff

failed to prove actual malice, which required the plaintiff to

establish that the conspirator's primary and overriding purpose

was to injure the plaintiff's trade or business. Id. at 46-47,

453 S.E.2d at 266-67.

We reversed the trial court, holding that the plaintiff was

not required to prove actual malice. We stated that Code

§§ 18.2-499 and –500 do not require a plaintiff to prove that a

conspirator's primary and overriding purpose is to injure

another in his trade or business. Id. at 47, 453 S.E.2d at 267.

Rather, we explained that these statutes merely require proof of

legal malice, that is, proof that the defendant acted

12
intentionally, purposefully, and without lawful justification.

Id.

PRC's evidence was plainly sufficient to meet this standard

of proof. The individuals in the business conspiracy

participated in a scheme to take the entire marine engineering

department from PRC and relocate the department at AME. As

stated above, AME and the PRC Managers and employees planned and

implemented this scheme in secrecy while the PRC Managers and

employees were still employed by PRC. The PRC Managers and

employees planned and executed a mass resignation without notice

to PRC. They took from PRC original client documents and copies

of documents containing confidential and proprietary information

without PRC's permission or knowledge. Thus, we conclude that

the evidence supports the chancellor's finding that AME

conspired to injure PRC in its business in violation of Code

§§ 18.2-499 and -500.

II. NON-COMPETITION CLAUSE OF EMPLOYMENT AGREEMENT

AME asserts that the non-competition clause in the

Employment Agreement was unenforceable because it was

unreasonably broad, unduly harsh, and oppressive. We disagree.

To determine whether a non-competition agreement may be

enforced, a chancellor must consider the following criteria:

(1) Is the restraint, from the standpoint of
the employer, reasonable in the sense that it
is no greater than necessary to protect the

13
 employer in some legitimate business interest?

(2) From the standpoint of the employee, is the
restraint reasonable in the sense that it is not
unduly harsh and oppressive in curtailing his
legitimate efforts to earn a livelihood?

(3) Is the restraint reasonable from the standpoint
of a sound public policy?

New River Media Group, Inc. v. Knighton, 245 Va. 367, 369, 429

S.E.2d 25, 26 (1993)(quoting Roanoke Eng. Sales v. Rosenbaum,

223 Va. 548, 552, 290 S.E.2d 882, 884 (1982)); accord Blue Ridge

Anesthesia & Critical Care, Inc. v. Gidick, 239 Va. 369, 371-72,

389 S.E.2d 467, 468-69 (1990).

In New River Media, we enforced a non-competition agreement

in which a radio disc jockey contracted not to engage in a

competing business within 60 air miles of his employer's radio

station for 12 months after leaving his employment. 245 Va. at

369-70, 429 S.E.2d at 26-27. In Roanoke Engineering Sales, we

enforced an agreement that prohibited a corporate officer from

competing with his employer for three years in any similar

business located in Virginia or North Carolina that covered the

same sales territory served by the employer. 223 Va. at 553,

290 S.E.2d at 885.

When compared with these agreements, the non-competition

provision before us is not unduly harsh and oppressive in

curtailing the legitimate efforts of former PRC employees to

earn a livelihood. The restraints imposed also are reasonable

14
from the standpoint of a sound public policy. The non-

competition provision does not contain a blanket prohibition

against working for a competitor. Instead, the covenant merely

prohibits an employee for eight months from "rendering competing

services to or, with respect to such services, solicit[ing] any

customer of PRC for whom Employee performed services while

employed by PRC, within 50 miles of a PRC office."

The agreement's geographic limitation is not rendered too

burdensome because PRC has approximately 300 offices worldwide.

In the context of the brief time period involved and the narrow

definition of prohibited services, the geographic restriction

does not pose an unreasonable restraint on departing employees.

Likewise, the restriction on solicitation of PRC customers is

reasonable because the restriction is limited to the same eight-

month period and was interpreted by the chancellor as applying

only to certain specialized engineering areas of NAVSEA and

individuals serviced by each employee while employed by PRC.

Thus, the record supports the chancellor's conclusion that the

non-competition provision is valid and enforceable.

We also find no merit in AME's contention that the eight-

month period provided in the non-competition clause has expired

and may not be enforced. On January 2, 1996, the chancellor

entered a temporary injunction enforcing the terms of the non-

competition clause. For "public policy" reasons relating to

15
nature of the work and the governmental status of actual and

potential "customers," the chancellor lifted the injunction two

weeks later with regard to AME's business with governmental

entities. Thus, since the portion of the injunction involving

governmental entities was in effect only for two weeks, the

chancellor did not err in ruling that seven and one-half months

out of the eight-month prohibition on competition still may be

enforced with respect to such governmental entities. See Blue

Ridge Anesthesia, 239 Va. at 374, 389 S.E.2d at 470; Paramount

Termite Control Co. v. Rector, 238 Va. 171, 176-77, 380 S.E.2d

922, 926 (1989); Roanoke Eng. Sales, 223 Va. at 556, 290 S.E.2d

at 886.

III. "GOODWILL" DAMAGES AND SUFFICIENCY
OF EVIDENCE OF DAMAGES

AME contends that the chancellor erred in accepting PRC's

evidence of damages, including its evidence of lost goodwill and

profits. AME argues that PRC's evidence was based on flawed

methodology and speculative calculations. Specifically, AME

asserts that the chancellor failed to consider that PRC's marine

engineering department made a profit of only $45,108 in 1995,

and that the price for the sale of PRC to Litton did not change

after the departure of the PRC Managers and employees. We

disagree with AME's arguments.

16
 As trier of fact, the chancellor evaluated the testimony

and the credibility of the witnesses. See RF&P Corp. v. Little,

247 Va. 309, 321, 440 S.E.2d 908, 916 (1994); Richardson v.

Richardson, 242 Va. 242, 246, 409 S.E.2d 148, 151 (1991). We

will not set aside his findings on appeal unless they are

plainly wrong or without evidentiary support. Willis v.

Magette, 254 Va. 198, 201, 491 S.E.2d 735, 736 (1997); RF&P

Corp., 247 Va. at 321, 440 S.E.2d at 916.

After hearing detailed testimony from Bleiweis, PRC's

expert, and Ripper, AME's expert, the chancellor accepted

Bleiweis' methodology and evidence of damages. We cannot say,

as a matter of law, that the chancellor's determination was

plainly wrong.

In determining PRC's damages for lost goodwill, the

chancellor accepted Bleiweis' variation of the market value

approach, a frequently-used method for computing goodwill

damages that is based on the difference between the price a

business would sell for and the value of its non-goodwill

assets. See Russell v. Russell, 11 Va. App. 411, 416, 399

S.E.2d 166, 169 (1990). Because there was no sale associated

with the transfer of the PRC Managers and employees to AME,

Bleiweis utilized a variation of this approach by determining

the value of goodwill associated with comparable sales and

adjusting this figure to approximate PRC's lost goodwill caused

17
by the departure of the PRC Managers and employees. Ripper

never criticized Bleiweis' use of the market value approach, but

only stated that Bleiweis made certain errors in applying this

method.

The chancellor found that the closest comparable sale for

purposes of measuring lost goodwill was PRC's sale of the 400D

unit to Vitro. The evidence showed that the purchase agreement

between Vitro and PRC identified the goodwill associated with

that sale by providing that Vitro would pay PRC $4,424,091 more

than the value of the tangible assets involved. Using Bleiweis'

methodology, the chancellor decreased this amount to reflect the

value that Vitro would receive from the funded 400D contract and

then adjusted the resulting figure to reflect the smaller number

of employees involved in the departure of the PRC Managers and

employees.

The chancellor concluded that the comparable sale of AME to

Nichols corroborated Bleiweis' damage estimate for lost goodwill

based on the Vitro comparable sale. Since there was no actual

sale by PRC to AME, the chancellor rejected Ripper's opinion

that the "best" transaction for measuring PRC's lost goodwill

was the actual transfer of the PRC Managers and employees to

AME.

Although Bleiweis estimated the amount of profit PRC lost

by the departure of its marine engineering unit to AME, he

18
stated that these damages were included in his calculation of

lost goodwill. Thus, in determining PRC's total damages,

Bleiweis concluded that a separate damage figure for lost

profits should not be added to the damage amount for lost

goodwill. The chancellor agreed with Bleiweis on this issue and

declined to award additional damages for lost profits, finding

that lost profits damages were "subsumed" within the court's

goodwill calculation.

The chancellor's conclusions reflected his acceptance of

Bleiweis' methodology as the most appropriate and accurate

measure of lost goodwill and profits. Thus, AME's complaint

essentially is reduced to the fact that the chancellor accepted

the testimony of PRC's expert witness, rather than the testimony

offered by AME's expert. Since the chancellor's findings

regarding PRC's lost profits and damages for lost goodwill are

supported by credible evidence, we will not disturb those

findings on appeal. See City of Manassas v. Board of

Supervisors, 250 Va. 126, 137, 458 S.E.2d 568, 574 (1995);

Jamerson v. Womack, 244 Va. 506, 510, 423 S.E.2d 180, 182

(1992); Russell, 11 Va. App. at 417, 399 S.E.2d at 169.

For the same reasons, we find no merit in AME's contention

that the damage award was excessive as a matter of law.

Although the record shows that the price for the sale of PRC to

Litton did not change after the departure of the PRC Managers

19
and employees, Bleiweis emphasized that the departing group had

goodwill value for purposes of maintaining the customer

relationships necessary for contract retention. As stated

above, the chancellor based the award of damages on his

acceptance of Bleiweis' testimony, which constituted credible

evidence in support of that award.

IV. PUNITIVE AND TREBLE DAMAGES

AME argues that a chancellor in equity may not award

punitive damages because any award of damages in equity is

limited to compensating an injured party to make it "whole."

AME contends that punitive damages are in the nature of a

penalty and extend beyond mere compensation. AME also asserts

that treble damages are punitive in nature and, thus, are

likewise unavailable in a court of equity. We disagree with

AME's arguments.

When a court of equity acquires jurisdiction of a cause for

any purpose, the court may retain the entire cause to accomplish

complete justice between the parties. Thus, the chancellor may

hear legal claims and enforce legal rights by applying remedies

available only at law. Waskey v. Lewis, 224 Va. 206, 213, 294

S.E.2d 879, 882 (1982). This rule applies "even to the extent

of establishing legal rights and granting legal remedies which

would otherwise be beyond the scope of [the chancellor's]

authority." Erlich v. Hendrick Constr. Co., Inc., 217 Va. 108,

20
115, 225 S.E.2d 665, 670 (1976) (citing Johnston v. Bunn, 108

Va. 490, 493, 62 S.E. 341, 342 (1908)); see Iron City Sav. Bank

v. Isaacsen, 158 Va. 609, 625, 164 S.E. 520, 525 (1932).

The rule is based on the principle that once a court of

equity obtains jurisdiction in a case, the court has discretion

to transfer the parties to a court of law for adjudication of

their law claims or to conclude the litigation by giving

complete relief in the chancery cause. Iron City, 158 Va. at

625, 164 S.E. at 525. The purpose of this rule is to prevent a

"circuity of action and expense." See Smith v. Smith, 92 Va.

696, 698, 24 S.E. 280, 280 (1896). If a chancellor decides to

retain jurisdiction over legal claims, the chancellor acts "as a

substitute for the court of law." Id.; Iron City, 158 Va. at

637, 164 S.E. at 529.

PRC's bill of complaint sought both equitable and legal

remedies. AME could have moved to transfer PRC's legal claims

to the law side of the court under Code § 8.01-270, where it

would have been entitled to a jury trial, but chose not to

proceed in this manner. Thus, AME cannot now complain that the

chancellor improperly awarded legal relief to PRC. See Brown v.

May, 202 Va. 300, 309-10, 117 S.E.2d 101, 108 (1960). We also

observe that the chancellor awarded compensatory, punitive, and

treble damages under the various legal claims, not under any

equitable claims. Therefore, we conclude that the chancellor

21
acted within his discretion in awarding legal relief on the law

claims before him.

We disagree with AME that our decision in Colonna Dry Dock

Co. v. Colonna, 108 Va. 230, 61 S.E. 770 (1908), requires a

different conclusion. There, in an appeal from a decree denying

specific performance of a contract, we addressed the issue

whether the chancellor properly ruled that the forfeiture of a

deposit would constitute a penalty and, therefore, could not be

enforced in equity. Id. at 240, 61 S.E. at 774. Thus, unlike

the present case, Colonna did not involve legal claims, but only

a request for equitable relief. Since the chancellor here

restricted his award of damages that are available solely at law

to the law claims before him, Colonna is inapposite.

We also disagree with AME's contention that the chancellor

erred in awarding treble damages. Code § 18.2-500(a) provides

in relevant part:

Any person who shall be injured in his reputation, trade,
business or profession by reason of a violation of § 18.2-
499, may sue therefor and recover three-fold the damages by
him sustained, and the costs of suit, including a
reasonable fee to plaintiff's counsel; and without limiting
the generality of the term, "damages" shall include loss of
profits.

This subsection explicitly allows an award of treble

damages on proof of the cause of action provided under Code

§ 18.2-499. Nevertheless, AME asserts that treble damages may

not be awarded in equity because Code § 18.2-500(b), which sets

22
forth the equitable relief available for business conspiracy

claims brought under the statute, does not specifically state

that treble damages may be awarded in a chancery case. Code

§ 18.2-500(b) provides in relevant part:

Whenever a person shall duly file a bill in chancery in the
circuit court of any county or city against any person
alleging violations of the provisions of § 18.2-499 and
praying that such party defendant be restrained and
enjoined from continuing the acts complained of, such court
shall have jurisdiction to hear and determine the issues
involved, to issue injunctions pendente lite and permanent
injunctions and to decree damages and costs of suit,
including reasonable counsel fees to complainants' and
defendants' counsel.

We conclude that this provision does not preclude an award

of treble damages in a law claim heard in chancery. Instead of

limiting the relief available in chancery, this subsection

grants a complainant the additional right to seek and obtain

injunctive relief, as well as "damages and costs of suit." The

term "damages" in subsection (b) refers to the "three-fold"

recovery of damages described in subsection (a).

Notably, much of the language from subsection (a) is not

repeated in subsection (b). For example, subsection (b) does

not expressly refer to a "person who shall be injured in his

reputation, trade, business or profession by reason of a

violation of § 18.2-499," yet this requirement is clearly a

predicate for recovery under the statute in equity, as well as

in law. Lost profits also are not mentioned in subsection (b),

23
but this subsection necessarily contemplates the right to seek

recovery of lost profits in equity as compensatory damages.

Thus, on consideration of the language of the entire statute, we

conclude that a chancery court is permitted to award treble

damages on a law claim under the provisions of Code § 18.2-500.

We also find no merit in AME's contention that our decision

in Porter v. Wilson, 244 Va. 366, 421 S.E.2d 440 (1992),

dictates a different result. Porter involved a trespass action

in which a plaintiff contended, among other things, that the

trial court erred in refusing to award him treble damages under

Code § 55-334 for the unauthorized removal of timber from his

property. Id. at 367, 421 S.E.2d at 441. Observing that treble

damages are in the nature of a penalty and are not favored, we

held that since the timber was removed by one acting under a

bona fide claim of right, the trial court did not abuse its

discretion in refusing to award treble damages. Id. at 371-72,

421 S.E.2d at 443. Thus, contrary to AME's assertion, Porter

did not involve the issue whether treble damages may be awarded

in a chancery case.

AME next contends that the chancellor's award of both

punitive and treble damages was duplicative. Although AME

concedes that the chancellor awarded punitive and treble damages

under separate counts of the bill of complaint, AME argues that

the conduct underlying the claims is the same and, therefore,

24
that the chancellor erred in awarding both types of damages. We

disagree with AME's argument.

The awards of punitive and treble damages were based on

separate claims involving different legal duties and injuries.

The chancellor awarded punitive damages under Counts I, II, and

III, for breach of fiduciary duty, intentional interference with

contractual relations, and intentional interference with

prospective business and contractual relations. The award of

treble damages was limited to the business conspiracy claim of

Count VII.

To prevail in its business conspiracy claim, PRC was

required to prove that the defendants combined, associated,

agreed, or acted in concert together for the purpose of

willfully and maliciously injuring PRC in its business "by any

means whatever." Code § 18.2-499. In contrast, the claims

asserted in Counts I through III do not require such proof and

relate solely to the employment relationship between PRC and the

PRC Managers and employees. Thus, the chancellor did not err in

awarding PRC both punitive and treble damages.

We also find no merit in AME's contention that an award of

treble damages is subject to the ceiling on punitive damages set

forth in Code § 8.01-38.1. When the words of a statute are

unambiguous, we accord the statutory language its plain meaning.

Haislip v. Southern Heritage Ins. Co., 254 Va. 265, 268, 492

25
S.E.2d 135, 137 (1997); Archambault v. Roller, 254 Va. 210, 213,

491 S.E.2d 729, 731 (1997).

Under the plain language of Code § 8.01-38.1, the

limitation of $350,000 applies only to an award of "punitive"

damages. If the General Assembly had intended for an award of

treble damages to be subject to this limitation, it would have

included an express reference to such damages in the statutory

language. See Jones v. Jones, 249 Va. 565, 570, 457 S.E.2d 365,

368 (1995); Allstate Ins. Co. v. Eaton, 248 Va. 426, 430, 448

S.E.2d 652, 655 (1994). In the absence of such a reference, we

will not construe the plain statutory language in a manner that

amounts to holding that the legislature meant other than what it

actually stated. See Davis v. Tazewell Place Assocs., 254 Va.

257, 260-61, 492 S.E.2d 162, 164 (1997); Haislip, 254 Va. at

268, 492 S.E.2d at 137; Jones, 249 Va. at 570, 457 S.E.2d at

368.

V. COSTS

AME challenges the chancellor's award of several items of

"costs." AME asserts that in the absence of an explicit

statutory provision, expert witness fees cannot be shifted to

the losing party. AME also contends that the chancellor abused

his discretion in including numerous charges, such as fees for

legal research and temporary employees, as costs in this case.

26
 In response, PRC contends that under the provisions of Code

§ 18.2-500, PRC was entitled to all reasonable litigation

expenses as the prevailing party at trial. We disagree with

PRC.

The taxing of costs in litigation was unknown at common law

and is purely a creature of statute. Ryan v. Davis, 201 Va. 79,

85, 109 S.E.2d 409, 414 (1959). Code § 18.2-500 provides that

"costs of suit, including a reasonable fee to plaintiff's

counsel" may be recovered on proof of a violation of Code

§ 18.2-499. Thus, with the exception of reasonable attorney's

fees, Code § 18.2-500 makes no provision for an award of costs

other than those ordinarily awarded under the general statutes

of Title 14.1 of the Code addressing the taxing of costs. See

Code §§ 14.1-177 through -201.

Since trial courts are vested with discretion under the

relevant provisions of Title 14.1 to determine what costs should

be taxed against a losing party, we examine the costs challenged

by AME to determine whether the chancellor abused his

discretion. AME takes exception to the chancellor's award of

expert witness fees, and expenses for express mail service,

messengers, meals, law clerk "temporaries," computer-based legal

research, "library research," photocopies, parking, taxicabs,

telephone calls, and transcripts. We conclude that the

chancellor abused his discretion in awarding PRC recovery for

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the above-challenged expenses. Generally, unless otherwise

specified by statute, a trial court's discretion to award costs

under Code § 18.2-500, or under the relevant provisions of Code

§§ 14.1-177 through –201, is limited only to those costs

essential for prosecution of the suit, such as filing fees or

charges for service of process.

Finally, we disagree with PRC's assertion that, in Ryan v.

Davis, we "did not question" the trial court's award of costs

for expert witness fees in a condemnation case. Since the State

Highway Commissioner did not assign cross-error to the award of

such "costs," the issue was not before us in that case.

VI. PREJUDGMENT INTEREST

AME asserts that the chancellor erred in awarding interest

from June 19, 1996, the date of the bench ruling, because some

of the damages still were unliquidated. PRC responds that the

chancellor did not err in awarding interest from that date,

because the chancellor did not reduce the original amount of the

award, with the exception of his reduction of the $1,000,000

punitive damage award to comply with Code § 8.01-38.1.

Generally, prejudgment interest is not allowed on

unliquidated damages in dispute between the parties. Skretvedt

v. Kouri, 248 Va. 26, 36, 445 S.E.2d 481, 487 (1994); Beale v.

King, 204 Va. 443, 447, 132 S.E.2d 476, 479 (1963). However,

the issue whether interest should be awarded, and from what date

28
any interest should run, is a matter submitted to the sound

discretion of the trial court. Code § 8.01-382; Skretvedt, 248

Va. at 36, 445 S.E.2d at 487-88; Marks v. Sanzo, 231 Va. 350,

356, 345 S.E.2d 263, 267 (1986).

When the chancellor ruled on June 19, 1996, that PRC was

entitled to $1,245,062 in compensatory damages, several matters

remained to be resolved. First, the chancellor ruled that the

parties would argue at a later date the issue whether treble

damages awarded under Code § 18.2-500 were subject to the

statutory "cap" of Code § 8.01-38.1. Second, although the

chancellor awarded $1,000,000 in punitive damages against AME,

he announced that he would determine at a later date whether

this amount should be reduced under the provisions of Code

§ 8.01-38.1. Third, in his bench ruling, the chancellor did not

determine the amount of attorney's fees or costs to be awarded

PRC. Thus, as of the date of the bench ruling, the amount of

AME's liability remained unliquidated as to all amounts except

the original compensatory damage award of $1,245,062.

The chancellor did not resolve these outstanding issues

affecting the amount of AME's liability until June 18, 1997, the

date of entry of the final decree. AME did not cause the delay

in the chancellor's entry of the decree. Rather, the chancellor

candidly acknowledged that he was the cause of the one-year

delay. Thus, we conclude that the chancellor abused his

29
discretion in awarding prejudgment interest on all amounts in

excess of $1,245,062.

For these reasons, we will affirm the chancellor's decree,

with the exception of the portion of costs and prejudgment

interest specified in this opinion, and will remand the case for

entry of a decree regarding costs and interest that is

consistent with the principles set forth herein. 4

Affirmed in part,
reversed in part,
and remanded.

4
Although AME argues that the chancellor erred in adopting
the findings of fact as drafted by PRC, AME does not suggest
that this constitutes ground for reversal of this appeal. Thus,
we do not address this argument on appeal.

30