Present: Lacy, Keenan, Koontz, Kinser, Lemons, Agee, JJ., and
Compton, S.J.
VIRGINIA POLYTECHNIC INSTITUTE AND
STATE UNIVERSITY, ET AL.
OPINION BY
v. Record No. 050710 JUSTICE LAWRENCE L. KOONTZ, JR.
March 3, 2006
INTERACTIVE RETURN SERVICE, INC.
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Theodore J. Markow, Judge
The sole issue in this appeal is whether the Setoff Debt
Collection Act, Code §§ 58.1-520 through -535, (the “Act”)
permits an agency of the Commonwealth to offset the amount of a
monetary judgment in favor of a judgment creditor against a
larger debt owed by that judgment creditor to the agency.
BACKGROUND
The events ultimately leading to this appeal began in the
mid-1990s when Interactive Return Service, Inc. (“Interactive
Service”) entered into certain research contracts with Virginia
Polytechnic Institute and State University (“Virginia Tech”) and
Virginia Tech Intellectual Properties, Inc. (“VTIP”).1 We have
previously related in some detail the subject matter of those
contracts and the specific obligations and performances of the
parties under those contracts in Virginia Polytechnic Inst. &
1
David A. Von Moll is an appellant to this appeal in his
official capacity as Comptroller for the Commonwealth of
Virginia pursuant to Code § 8.01-193.
State University v. Interactive Return Serv., Inc., 267 Va. 642,
595 S.E.2d 1 (2004). The significance of that case to the
present appeal is that a jury returned a verdict on a breach of
contract claim against Virginia Tech and VTIP, jointly and
severally, in the amount of $110,000. Id. at 646, 595 S.E.2d at
2. The Circuit Court of the City of Richmond entered judgment
in that amount in favor of Interactive Service, and we affirmed
that judgment. Id. at 656, 595 S.E.2d at 9. Additionally, we
noted that Interactive Service “admitted at trial that it owed
Virginia Tech approximately $750,000.” Id. at 647, 595 S.E.2d
at 3.
Thereafter, on June 21, 2004, Virginia Tech notified
Interactive Service, pursuant to a provision of the Act, that it
would satisfy the above referenced monetary judgment by applying
that amount against $749,611.06 Interactive Service owed to
Virginia Tech. Interactive Service contested the setoff on
several grounds and demanded a hearing before a debt setoff
panel established by Virginia Tech under its operating statutes
to “determine whether the claim is valid” and whether the
“claimed sum asserted as due and owing is correct.” Code
§ 58.1-526.
The panel held a hearing on September 1, 2004 in which it
received and considered the testimony of the parties’ witnesses
2
and the argument of the parties’ counsel. On September 28,
2004, the panel issued a written opinion listing its findings of
fact and rendering its decision. The panel found that, in
pertinent part, under a valid contract Virginia Tech had
performed research services for Interactive Service with a value
in excess of $122,833.56 (the amount of the prior judgment in
favor of Interactive Service and post-judgment interest at the
time of the hearing). The panel concluded that the “sum of
$122,883.56 is a valid claim subject to the provisions of the
. . . Act . . . and that the sum of $122,883.56 shall be
released to” Virginia Tech. Interactive Service did not appeal
the panel’s decision.
Pursuant to Code § 8.01-455, Virginia Tech and VTIP
subsequently filed a motion in the circuit court applying to
have Interactive Service’s breach of contract judgment against
them marked satisfied. Following a hearing on the motion, the
circuit court issued a final order dated December 27, 2004.
Initially, the circuit court ruled that Interactive Service
was barred from challenging the amounts owed because it failed
to appeal the panel’s findings regarding those amounts within
the 30 days allowed by Code § 58.1-527. Next, addressing
Interactive Service’s assertion that the Act applies only to tax
refunds, the circuit court concluded that “the Act is intended
3
to allow agencies of the Commonwealth such as [Virginia Tech] to
set off debts owed such agencies against tax refunds owed by the
Commonwealth to the debtor.” Since funds due to Interactive
Service on a breach of contract judgment, not a tax refund, were
implicated in the case, the circuit court denied Virginia Tech
and VTIP’s motion to have the breach of contract judgment marked
satisfied. We awarded Virginia Tech this appeal.2
DISCUSSION
Our resolution of the question whether the circuit court
erred in denying the motion to have the monetary judgment in
favor of Interactive Service marked satisfied requires our
interpretation of the Act. In doing so, we are guided by well-
established principles. Interpretation of a statute is a pure
question of law subject to de novo review by this Court.
Ainslie v. Inman, 265 Va. 347, 352, 577 S.E.2d 246, 248 (2003).
In interpreting a statute, we are required to “ascertain and
give effect to the intention of the legislature,” which is
usually self-evident from the statutory language. Chase v.
DaimlerChrysler Corp., 266 Va. 544, 547, 587 S.E.2d 521, 522
(2003). When the language in a statute is clear and
unambiguous, we apply the statute according to its plain
2
We also awarded VTIP a separate appeal. Because of the
view we take in the present appeal, by separate order entered
4
language. HCA Health Servs. v. Levin, 260 Va. 215, 220, 530
S.E.2d 417, 419-20 (2000).
We begin our analysis by emphasizing that the issue in this
case is not whether the Act applies to tax refunds but, rather,
whether the Act applies only to such refunds. Beyond question,
the statutory scheme of the Act applies to Virginia state and
local income tax refunds due any individual having a delinquent
debt or account with a state agency or institution which
obligation has not been satisfied or set aside by court order,
or discharged in bankruptcy. See Code § 58.1-520 (defining
claimant agency, debtor, delinquent debt, and refund). In
general, this statutory scheme provides the procedures to be
followed by the claimant agency to establish the validity of its
claim, to establish the correctness of the amount of that claim
against the debtor, and to secure the assistance of the
Department of Taxation to accomplish a setoff of the debtor’s
tax refund against the debt. See Code § 58.1-526 (hearing by
agency established by its operating statutes); Code § 58.1-527
(appeal to a designated circuit court); Code § 58.1-523
(Department of Taxation shall render assistance in collection of
delinquent account or debt owing to claimant agency by debtor);
today we have dismissed VTIP’s appeal as moot.
5
and Code § 58.1-529 (Department of Taxation to setoff refund
against debt).
To resolve the question whether this statutory scheme is
limited in its application to tax refunds, our focus turns to
Code § 58.1-535. In doing so, we note that there is no
ambiguity in the language of that statute.
Code § 58.1-535(A) states that:
In addition to the collection remedy provided in
this article, if a claimant agency has on deposit any
funds which are due to the debtor, the claimant agency
may apply such funds to the payment of any delinquent
debt which the debtor owes to the claimant agency,
provided that the claimant agency first provides
written notification to the debtor of its intent to
apply the funds against the debt.
Code § 58.1-535(D) defines “funds on deposit” as “any
funds of a debtor that a claimant agency may have in its
possession including . . . any funds due to a debtor arising
from a contractual agreement with a claimant agency.” In
contrast to Code § 58.1-520, this subsection defines “debtor” as
“any individual, business or group having a delinquent debt or
account with any claimant agency which obligation has not been
satisfied by court order, set aside by court order, or
discharged in bankruptcy.”
The plain language of Code § 58.1-535 evinces a clear
legislative intent to extend the scope of the collection remedy
provided a claimant agency by the other provisions of the Act
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beyond instances in which the debtor is due a tax refund.
Initially, that intent is signaled by the language “[i]n
addition to the collection remedy provided in this article” in
the introductory language of subsection (A). The language in
subsection (D) defining “funds on deposit” to include “any funds
due a debtor arising from a contractual agreement with a
claimant agency” clearly broadens the scope of the remedy
provided by the statute beyond instances involving a tax refund
due the debtor. Additionally, the definition of “debtor” in
subsection (D) is broadened to include not merely an individual
as defined in Code § 58.1-520, but also “any business or group
having a delinquent debt or account with any claimant agency.”
The General Assembly’s use of the words “refund” and
“refunds” in several other subsections in the Act, and the
absence of the term in Code § 58.1-535, provide additional
support for the conclusion that the General Assembly did not
intend to limit the applicability of Code § 58.1-535 to tax
refunds. See Code §§ 58.1-523, -524, -525(A) & (B), -528(A), -
530, and -531.1 (all using the terms “refund” or “refunds”); see
also Industrial Dev. Auth. v. Board of Supervisors, 263 Va. 349,
353, 559 S.E.2d 621, 623 (2002)(stating that “when the General
Assembly includes specific language in one section of an act,
but omits that language from another section,” an appellate
7
court “presume[s] that the exclusion of the language was
intentional”).
There is no merit to Interactive Service’s contention that
the placement of the Act in the taxation title of the Code
supports the circuit court’s finding that it only applies to tax
refunds. Certainly, appellate courts read related statutes in
pari materia in order to give, when possible, consistent meaning
to the language used by the General Assembly. LZM, Inc. v.
Virginia Dept. of Taxation, 269 Va. 105, 111, 606 S.E.2d 797,
800 (2005). However, where a plain reading of a statute yields
a result that is not inconsistent with related provisions, the
statute’s mere placement in a certain section of the Code will
not negate or alter its clear and plain meaning. See HCA Health
Servs., 260 Va. at 220-21, 597 S.E.2d at 420.
We turn now to consider the application of Code § 58.1-535
to the undisputed facts in this case. At the time the panel
convened, Virginia Tech, the claimant agency, held $122,883.56
in funds that were due to Interactive Service under the breach
of contract judgment. Those funds clearly qualify as “funds on
deposit” under the broad definition of “any funds of a debtor
that a claimant agency may have in its possession, including
. . . funds due to a debtor arising from a contractual agreement
with a claimant agency.” (Emphasis added.) The panel found
8
that Interactive Service owed a delinquent debt to Virginia Tech
in an amount greater than the monetary judgment. Interactive
Service did not appeal that determination. Furthermore, we have
previously noted that Interactive Service admitted in the prior
breach of contract trial that it owed Virginia Tech
approximately $750,000. The precise amount of that indebtedness
is not at issue; it is sufficient for purposes of this appeal
that the amount of the indebtedness exceeds the amount of the
monetary judgment and that this indebtedness is delinquent.
Accordingly, it is clear that Interactive Service owes Virginia
Tech a “delinquent debt,” and that debt is eligible for setoff
against Interactive Service’s “funds on deposit” with Virginia
Tech as permitted by Code § 58.1-535. Thus, it necessarily
follows that the circuit court erred in denying Virginia Tech’s
motion to have the monetary judgment marked satisfied.3
3
Interactive Service contends that the issue of setoff is
barred by res judicata principles in this case. There is no
merit to this contention because a determination of the amount
of Interactive Service’s indebtedness to Virginia Tech was not
at issue in the breach of contract action in the circuit court.
Moreover, in the present case, the circuit court did not rule on
the res judicata issue and Interactive Service has not assigned
cross-error to the circuit court’s failure to do so. That issue
is not before us. Baumann v. Capozio, 269 Va. 356, 361, 611
S.E.2d 597, 600 (2005). We emphasize, however, that we do not
decide here the amount of the indebtedness which Interactive
9
CONCLUSION
For these reasons, we hold that the Setoff Debt Collection
Act is not limited in application to tax refunds, and that Code
§ 58.1-535 permits a claimant agency when in compliance with the
provisions of that statute to set off a monetary judgment debt.
Accordingly, the circuit court’s order denying the motion to
have the judgment against Virginia Tech marked satisfied will be
reversed, and the case remanded to the circuit court for the
sole purpose of entering an order marking the judgment
satisfied.
Reversed and remanded.
Service may owe to Virginia Tech after giving effect to the
setoff.
10