Case Title: Westmoreland-LG&E Partners v. Virginia Power

Citation: 

Docket Number: 961410

State: virginia

Court: Virginia Supreme Court

Date: 1997-06-06T00:00:00Z

Document:
Present:  All the Justices 
 
WESTMORELAND-LG&E PARTNERS 
                                         OPINION BY 
v.  Record No. 961410 
CHIEF JUSTICE HARRY L. CARRICO 
                                        June 6, 1997 
VIRGINIA ELECTRIC AND POWER COMPANY 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
 
Melvin R. Hughes, Jr., Judge 
 
 
In an amended motion for judgment, Westmoreland-LG&E 
Partners (Westmoreland) sought to recover from Virginia Electric 
and Power Company (Virginia Power) damages resulting from 
Virginia Power's alleged breach of a "Power Purchase and 
Operating Agreement" (the Contract).  Westmoreland appeals from 
the award of summary judgment in Virginia Power's favor and the 
dismissal of Westmoreland's action with prejudice. 
 
Westmoreland makes three complaints on appeal.  First, 
Westmoreland says the trial court erred in holding that evidence 
of trade custom and usage would not be permitted to explain the 
meaning of certain contractual terms.  Second, Westmoreland 
contends the Contract is ambiguous and that the trial court erred 
in ruling that parol evidence would not be allowed to show the 
parties' intent and understanding with respect to certain of the 
Contract's payment provisions.  Third, relative to an alternative 
basis for recovery, Westmoreland maintains the trial court erred 
in failing to recognize that certain contractual language might 
entitle Westmoreland to at least a partial recovery for Virginia 
Power's alleged breach of the Contract. 
 
The facts are not in dispute.  Westmoreland, a Virginia 
general partnership composed of Westmoreland Roanoke Valley, L.P. 
and LG&E Roanoke Valley, L.P., is an independent power producer. 
 Virginia Power is a public utility providing electrical service 
to its customers.  
 
In the late 1970s, Virginia Power began purchasing 
electricity from independent power producers.  In 1988, Virginia 
Power issued a request for proposals from a number of independent 
power producers, including Westmoreland, for the supply of 
electricity to Virginia Power.  A model contract prepared by 
Virginia Power accompanied the request for proposals. 
 
Westmoreland responded with a proposal, which Virginia Power 
accepted, and the two parties entered into the Contract on 
January 24, 1989.
1  On or about the same date, Virginia Power 
entered into agreements with approximately twenty other 
independent power producers as a result of its request for 
proposals. 
 
In order to fulfill its obligations under the Contract, 
Westmoreland constructed a $300 million power plant, known as 
"ROVA I" (the Facility), near Roanoke Rapids, North Carolina.
2  
The plant commenced commercial operations in May 1994 with the 
capacity to produce approximately 150 megawatts of electricity. 
Westmoreland is obligated under the Contract to supply this 
capacity to Virginia Power upon demand for a term of twenty-five 
                     
     
1The Contract was "amended and restated" in 1990 and 1991, 
but the provisions in issue here have remained unchanged since 
the 1989 version of the Contract was executed by the parties. 
     
2Virginia Power operates in North Carolina under the name 
North Carolina Power.  However, for convenience and clarity, we 
will continue throughout this opinion to refer to Virginia Power 
only. 
years. 
 
In the Contract, Westmoreland agrees to sell and Virginia 
Power agrees to purchase "the Net Electrical Output of the 
Facility."  Also, Westmoreland agrees to sell and Virginia Power 
agrees to purchase "Dependable Capacity from the Facility."  "Net 
Electrical Output" is defined in the Contract as "[a]ll of the 
Facility's generating output made available for sale."  
"Dependable Capacity" is defined as "[t]he amount of capacity set 
by [Westmoreland based upon prescribed tests] and delivered from 
the Facility" to Virginia Power. 
 
Under the Contract, Westmoreland must "control and operate 
the Facility consistent with [Virginia] Power's Dispatch of the 
Facility."  "Dispatch" is defined in the Contract as "[t]he right 
of [Virginia] Power . . . to schedule and control . . . the 
generating level of the Facility in order to commence, increase, 
decrease, or cease the delivery of Net Electrical Output" to 
Virginia Power.  When Virginia Power dispatches the Facility by 
providing notice to Westmoreland of the estimated needs for the 
following week, Westmoreland must comply with the notice. 
 
Virginia Power is obligated by the Contract to make two 
types of payments to Westmoreland, one for net electrical output, 
termed "Energy Payments," and the other for dependable capacity, 
termed "Capacity Payments," based upon the different types of 
costs incurred by Westmoreland.  Energy Payments are designed to 
compensate Westmoreland for the actual amount of electricity it 
generates and delivers to Virginia Power and to reimburse 
Westmoreland for its variable costs incurred to produce the 
electricity.   
 
Energy Payments are not in dispute here, but Capacity 
Payments are.  Capacity Payments are designed to compensate 
Westmoreland for the costs it incurred in constructing the 
Facility and for the fixed costs it incurs in operating and 
maintaining the Facility.   
 
Under § 10.15(a) of the Contract, Virginia Power is required 
to make Capacity Payments in a fixed amount for a 25-year term, 
"so long as the plant is available as required by the Contract." 
 Although paid monthly, the Capacity Payment is calculated at the 
rate of approximately $200,000 per day. 
 
The present controversy arose when Virginia Power withheld 
Capacity Payments for each day it deemed to be a "Forced Outage 
Day" within the meaning of the Contract.  In its amended motion 
for judgment, Westmoreland sought recovery for the total amount 
withheld by Virginia Power. 
 
Section 1.18 of the Contract defines a "Forced Outage" as 
"[a]n interruption . . . of the Facility's delivery of the Net 
Electrical Output [that] is not . . . the result of a Scheduled 
Outage."
3  Section 1.20 defines a "Forced Outage Day" as 
 
[e]ach continuous twenty-four (24) hour period 
beginning with the start of a Forced Outage (regardless 
of the number of actual outages that may occur during 
such twenty-four (24) hour period(s)) 
 
 
 
(a) designated by [Westmoreland] as a Forced 
Outage Day, 
 
 
 
 
(b) a Forced Outage Day which is determined 
                     
     
3The Contract allows 30 days annually for scheduled outages. 
 Westmoreland says it is undisputed that Capacity Payments are 
"never reduced on account of Scheduled Outages." 
 
pursuant to Section 10.15(d). 
 
 
 
Section 10.15(d) forms the entire basis of Virginia Power's 
defense in this case.  It is a unique section, found only in the 
contract involved here and not in the agreements Virginia Power 
executed with other independent power producers at or about the 
same time.
4  Section 10.15(d) provides as follows: 
 
For each instance where [Westmoreland] fails, after the 
second oral notification (such notification shall not 
be less than fifteen (15) minutes from the first 
notification) from [Virginia] Power, to maintain the 
operating level specified by [Virginia] Power pursuant 
to Section 7.6, to within + five (5%) percent of the 
Dispatched level then for each percent or portion of a 
percent deviation from the above allowed + five (5%) 
percent, then at [Virginia] Power's option, the payment 
for that Day's Dependable Capacity shall be reduced two 
(2%) percent.  If such deviation reduces that Day's 
payment for Dependable Capacity to zero (0) then that 
Day shall be a Forced Outage Day.  Example:  If the 
Facility is Dispatched at 100MW but is only able to 
deliver 87MW then the payment for Dependable Capacity 
for that Day would be reduced by 16%. 
 
 
Because, under § 10.15(d), the 2% reduced payment scale 
applies to each percent of deviation from the dispatched level, 
or portion thereof, the reduction in the capacity payment reaches 
100% and a Forced Outage Day occurs on any day when power 
generation falls below 46% of the dispatched level, giving credit 
for the + 5% allowance.  This is the result derived from the 
                     
     
4The parties tell us on brief that the Model Agreement 
accompanying Virginia Power's request for proposals contained a 
provision that a Forced Outage Day would occur when the net 
electrical output deviated from the dispatched level by more than 
+ 5%.  However, because Westmoreland planned to use a low grade 
fuel to generate electricity, with likely reductions in power 
output below 95% of the dispatched level, the parties agreed to 
the inclusion of § 10.15(d) in the Contract, which increased from 
5% to 55% the permitted deviation from the dispatched level 
before a Forced Outage Day occurred. 
formula, 100 - 5 = 95 - 45 = 50 x 2 = 100. 
 
Sections 10.15(g) and 10.18 also relate to Forced Outage 
Days.  Section 10.15(g) provides in pertinent part as follows: 
 
[Westmoreland] shall be allowed thirty (30) Forced 
Outage Days per full Capacity Test Period (May 1 
through April 30). . . .  Payments for Dependable 
Capacity will be reduced five hundred thousand 
($500,000) dollars as liquidated damages for each 
Forced Outage Day that occurred or was designated by 
[Westmoreland] during that period in excess of the 
above allowances. 
 
 
And § 10.18 provides in pertinent part as follows: 
 
The parties agree that [Virginia] Power will be 
substantially damaged in amounts that will be difficult 
or impossible to determine if the Facility: 
 
 
 
. . . . 
 
 
  
(d) Exceeds the allowed number of Forced Outage 
Days in Section 10.15(g). 
 
 
 
Therefore, to the limited extent set forth in the 
Agreement, the Parties have agreed on sums which the 
Parties agree are reasonable as liquidated damages for 
such occurrences.  It is further understood and agreed 
that the payment of the liquidated damages is in lieu 
of actual damages for such occurrences. 
 
 
The relationship between § 10.15(d) and the terms "Forced 
Outage Days" and "Force Majeure Days" is also relevant to this 
dispute.  Under § 14.1, a delay in performance occurring on a 
given day is excused if Westmoreland designates such day a "Force 
Majeure Day."  A Force Majeure Day may be designated when a delay 
in performance is "due solely to circumstances beyond the 
reasonable control of the Party experiencing such delay, [for 
example,] acts of God; . . . war; riots; . . . or accidents." 
 
A Force Majeure Day does not count against the thirty Forced 
Outage Days allowed before the $500,000 per day liquidated damage 
provision of § 10.15(g) may be invoked.  However, under 
§ 10.15(b) of the Contract, if a forced outage is designated as 
an event of Force Majeure, "then [Virginia] Power's obligation to 
pay the payments for Dependable Capacity specified in Section 
10.15(a) above shall cease, prorated daily, until the condition 
of Force Majeure has been overcome." 
 
In awarding summary judgment in Virginia Power's favor, the 
trial court found that the Contract was unambiguous and, 
therefore, that evidence of trade custom and usage as well as 
parol evidence concerning the parties' intent and understanding 
would be inadmissible.  The court found further that Westmoreland 
had "failed to maintain power generation at greater than 45% of 
the specified level" on the days for which it sought recovery.  
Hence, the court held, § 10.15(d) of the Contract expressly 
permitted Virginia Power to withhold Capacity Payments for those 
days, including the days Westmoreland had designated as Forced 
Outage Days, and to charge Westmoreland with all such days "for 
the purpose of determining the liquidated damages provision of 
the parties' contract pursuant to § l0.15(g)." 
 
Admissibility of Evidence
 
Concerning Trade Custom and Usage
 
 
Westmoreland argues that it should have been permitted to 
introduce evidence showing that "the terms 'Capacity Purchase 
Price' and 'Forced Outage Day' have special meaning in the trade 
custom and usage, under which the occurrence of such Days does 
not diminish the monthly payment unless the annual Forced Outage 
Day allowance is exceeded."  Westmoreland submits that "[t]his 
trade custom and usage, reflected in all of the contracts 
resulting from the 1988 solicitation, 'form a part [of the 
Contract] ... unless the terms of the writing [clearly exclude] 
the usage or custom.'"  (Quoting Walker v. Gateway Milling Co., 
121 Va. 217, 224, 92 S.E. 826, 828 (1917)).  Westmoreland 
maintains there is no language in the Contract that clearly 
excludes consideration of custom and usage.  
 
Noting that the trial court excluded the evidence of trade 
custom and usage because it found the Contract unambiguous, 
Westmoreland cites Doswell Ltd. Partnership v. Virginia Electric 
& Power Co., 251 Va. 215, 468 S.E.2d 84 (1996), for the 
proposition that such evidence is admissible to show that 
contract phrases or terms have acquired a peculiar meaning by 
trade custom or usage "even though the phrases or terms 
themselves are unambiguous."  Id. at 225, 468 S.E.2d at 90.  
Hence, Westmoreland concludes, the trial court erred in excluding 
its evidence of trade custom or usage. 
 
While we confirm what we said in Doswell, we disagree with 
Westmoreland.  In our opinion, Westmoreland has not met the 
threshold requirement for admission of the disputed evidence. 
 
In Walker, supra, we said that evidence of trade usage is 
proper "to permit the jury to consider the situation of the 
parties and the circumstances leading up to the making of the 
contract for the purpose of determining whether the usage in 
question operated upon the minds of the parties in using the 
language which was employed in the contract."  121 Va. at 226, 92 
S.E. at 829 (emphasis added).  However, "knowledge of the 
existence of the custom must be brought home to the [contracting 
parties], unless the evidence shows that it is so uniform and 
notorious at the place where the parties to be affected by it 
reside, as to raise a prima facie presumption that they knew of 
it."  Bowles v. Rice, 107 Va. 51, 55, 57 S.E. 575, 577 (1907). 
 
Because the Contract and the other agreements resulting from 
the 1988 solicitation were made at or about the same time, what 
was done under the other contracts could not possibly have been 
brought home to, or have operated upon the minds of, the parties 
to the Westmoreland contract at the time of its execution.  In 
other words, Westmoreland has failed to establish the existence, 
at the time the Contract was executed, of any trade custom or 
usage relevant to the meaning of the language that was employed 
in the Contract.  The trial court did not err, therefore, in 
excluding evidence of trade custom and usage. 
 
Admissibility of Parol Evidence
 
Westmoreland contends that § 10.15(d) of the Contract is 
ambiguous, even when viewed in isolation, because it does not 
"define the financial consequence of treating a day as a Forced 
Outage Day."  And, Westmoreland says, when the Contract, 
including § 10.15(d), is read as a whole, it does not 
"unambiguously permit any reduction of the capacity purchase 
price on account of allowed Forced Outage Days."  Hence, 
Westmoreland concludes, "there was no justification for the 
Circuit Court's foreclosure of parol evidence of the parties' 
intent and understanding." 
 
Virginia Power contends on the other hand that § 10.15(d) is 
unambiguous.  Virginia Power says that the "2-for-1 reduced 
payment scale established by § 10.15(d) applies to all shortfalls 
in Westmoreland's generating capacity after the initial five 
percent variance."  Therefore, Virginia Power asserts, "[w]hen 
Westmoreland's generation is 45% or less of the Dispatched level, 
. . . Virginia Power has the right, in the words of § 10.15(d), 
to reduce 'that Day's payment for Dependable Capacity to zero 
(0).'"  This shortfall occurred, Virginia Power says, "on each 
day for which [it] made no Dependable Capacity payment" and, 
hence, it was excused from making payment for each of those days. 
 
But, Virginia Power insists, even when § 10.15(d) is read 
along with the other provisions of the Contract, no ambiguity 
appears. "Those other provisions," Virginia Power says, "have 
nothing to do with the situation addressed by § 10.15(d) and do 
not make that section ambiguous."  Hence, Virginia Power 
concludes, the trial court did not err in excluding parol 
evidence of the parties' intent and understanding. 
 
"The question whether a writing is ambiguous is one of law, 
not of fact."  Tuomala v. Regent University, 252 Va. 368, 374, 
477 S.E.2d 501, 505 (1996).  Thus, "we are not bound by the trial 
court's conclusions on this issue, and we are permitted the same 
opportunity as the trial court to consider the contract 
provisions."  Id.
 
In Doswell, supra, we reiterated the principle that 
"'[p]arol evidence of prior or contemporaneous oral negotiations 
are generally inadmissible to alter, contradict, or explain the 
terms of a written instrument provided the document is complete, 
unambiguous, and unconditional.'"  251 Va. at 222, 468 S.E.2d at 
88 (quoting Renner Plumbing, Heating & Air Conditioning, Inc. v. 
Renner, 225 Va. 508, 515, 303 S.E.2d 894, 898 (1983)).  We also 
said in Doswell: 
 
Contracts are not rendered ambiguous merely because the 
parties or their attorneys disagree upon the meaning of 
the language employed to express the agreement.  Even 
though an agreement may have been drawn unartfully, the 
court must construe the language as written if its 
parts can be read together without conflict. 
 
 
 
And, parol evidence may not be used to first 
create an ambiguity and then to remove it.  Finally, an 
agreement is not rendered ambiguous merely because it 
deals with a technical subject that may be considered 
complex to the uninformed lay person who is not 
familiar with the topic. 
  
Id. at 222-23, 468 S.E.2d at 88-89 (citations omitted). 
 
"A contract must be construed as a whole to determine the 
parties' intent with respect to specific provisions."  Hooper v. 
Musolino, 234 Va. 558, 569, 364 S.E.2d 207, 212, cert. denied, 
488 U.S. 823 (1988). "No word or clause in the contract will be 
treated as meaningless if a reasonable meaning can be given to 
it, and there is a presumption that the parties have not used 
words needlessly."  D.C. McClain, Inc. v. Arlington County, 249 
Va. 131, 135-36, 452 S.E.2d 659, 662 (1995). 
 
"'An ambiguity exists when language admits of being 
understood in more than one way,'" Doswell, 251 Va. at 222, 468 
S.E.2d at 88 (quoting Renner, 225 Va. at 515, 303 S.E.2d at 898), 
or when "'language is of doubtful import,'" Galloway Corp. v. 
S.B. Ballard Constr. Co., 250 Va. 493, 502, 464 S.E.2d 349, 355 
(1995) (quoting Allen v. Green, 229 Va. 588, 592, 331 S.E.2d 472, 
475 (1985)).  And an award of summary judgment is improper when 
"neither party has offered a construction of [contractual] 
provisions that could be deemed so clear that it unambiguously 
excludes the explanation offered by the opponent."  Cascades 
North Venture Ltd. Partnership v. PRC Inc., 249 Va. 574, 582, 457 
S.E.2d 370, 374-75 (1995). 
 
Guided by these principles, we reach the conclusion that the 
Contract is ambiguous.  In the first place, the language of 
§ 10.15(d), even when read in isolation, admits of being 
understood in more than one way, Doswell, 251 Va. at 222, 468 
S.E.2d at 88, and, hence, is of doubtful import, Galloway, 250 
Va. at 502, 464 S.E.2d at 355.  
 
The penultimate sentence of § 10.15(d) contains the crucial 
language.  The sentence states that "[if the deviation from the 
dispatched level on a given day] reduces that Day's payment for 
Dependable Capacity to zero (0) then that Day shall be a Forced 
Outage Day."  If emphasis is placed upon the words, "reduces that 
Day's payment for Dependable Capacity to zero," the language of 
(d) may be taken to mean that the result of such a deviation 
would be no capacity payment for that day.  If, however, emphasis 
is placed upon the words, "then that Day shall be a Forced Outage 
Day," the language of (d) may just as well be taken to mean that 
the only result of such a deviation would be the counting of the 
day in question against the thirty Forced Outage Day allowance 
provided by § 10.15(g) before the $500,000 per day liquidated 
damage provision may be invoked. 
 
Hence, this case presents a situation in which "neither 
party has offered a construction of these provisions that could 
be deemed so clear that it unambiguously excludes the explanation 
offered by the opponent."  Cascades North Venture, 249 Va. at 
582, 457 S.E.2d at 374-75.  This alone is sufficient to justify 
the admission of parol evidence concerning the parties' intent 
and understanding at the time they entered into the contract. 
 
However, there is more.  When § 10.15(d) is read in context 
with other provisions of the Contract, the ambiguity becomes even 
more apparent.  First, a reading of § 10.15(b) demonstrates that 
when the parties wished to make clear under what circumstances 
Virginia Power would not be obligated to make Capacity Payments 
for a Forced Outage, they knew how to accomplish the task, using 
clear and precise language.  Section 10.15(b) states that when 
Westmoreland "designates [a] Forced Outage as an event of Force 
Majeure, then [Virginia] Power's obligation to pay the payments 
for Dependable Capacity . . . shall cease."
5  As Westmoreland 
suggests, the absence of such an explicit provision in § 10.15(d) 
casts doubt upon the correctness of Virginia Power's assertion 
that § 10.15(d) unambiguously relieves it from the obligation to 
make Capacity Payments for all Forced Outage Days, however they 
occur. 
 
Virginia Power argues that § 10.15(b) is consistent with  
§ 10.15(d) in that both "relieve[] Virginia Power of any 
obligation to pay Westmoreland for capacity Virginia Power does 
not receive."  However, this assumes the correctness of Virginia 
                     
     
5Similarly, § 5.3 of the Contract provides that Virginia 
Power "shall not be obligated to make payments for Dependable 
Capacity" during periods allowed to cure defaults under the 
Contract. 
Power's position and begs the question to be decided, i.e., 
whether § 10.15(d) really does relieve Virginia Power of the 
obligation to make Capacity Payments for Forced Outage Days 
occurring under § 10.15(d). 
 
Virginia Power also argues that § 10.15(d) applies only to 
those days on which Westmoreland's facility is dispatched to 
produce electrical power while § 10.15(b) applies even if 
Westmoreland is not so dispatched.  But this argument misses the 
point, viz., if it was necessary to say explicitly in 
§ 10.15(b) that Capacity Payments cease for Force Majeure Days 
occurring under that section, was it not just as necessary to say 
explicitly in § 10.15(d) that payments cease for Forced Outage 
Days occurring under that section?  In any event, we do not think 
it appears as a matter of law that the distinction drawn by 
Virginia Power would make a difference in its obligation with 
respect to Capacity Payments for Forced Outage Days, but perhaps 
parol evidence submitted by the parties on remand will reveal 
whether the distinction was intended to make a difference. 
 
Second, § 10.15(g) allows Westmoreland thirty Forced Outage 
Days annually before the provision for liquidated damages in the 
amount of $500,000 per day may be invoked.  Section 10.18 
provides that "the payment of the liquidated damages is in lieu 
of actual damages" Virginia Power may suffer if Westmoreland 
"[e]xceeds the allowed number of Forced Outage Days in Section 
10.15(g)."  As Westmoreland maintains, these provisions support 
the implication that liquidated damages may be the only penalty 
Westmoreland must suffer for Forced Outage Days, and such an 
implication is completely inconsistent with Virginia Power's 
position that § 10.15(d) permits it to withhold Capacity Payments 
for all Forced Outage Days in addition to collecting $500,000 per 
day in liquidated damages if the number of such days exceeds the 
thirty days allowed annually.    
 
Virginia Power says, however, that § 10.15(g) "relates to a 
different subject matter than § 10.15(d)," that "[n]either 
section refers to the other," and that § 10.15(g) "has nothing 
whatsoever to do with Virginia Power's obligation to make 
Dependable Capacity payments."  However, both sections mention 
and deal with the subjects of Forced Outage Days and payments for 
Dependable Capacity -- § 10.15(d) states that a Forced Outage Day 
occurs when the deviation on a particular day reduces that day's 
Dependable Capacity payment to zero and § 10.15(g) states that 
payments for Dependable Capacity will be reduced by $500,000 for 
each Forced Outage Day that exceeds the thirty-day allowance. 
 
Moreover, § 10.15(d) is implicitly incorporated by reference 
into § 10.15(g) because, in its final sentence, the latter 
section states that "[p]ayments for Dependable Capacity will be 
reduced five hundred thousand ($500,000) dollars as liquidated 
damages for each Forced Outage Day that occurred or was 
designated by [Westmoreland] during [a capacity test] period in 
excess of the above allowances."  (Emphasis added.)  If a Forced 
Outage Day is not designated by Westmoreland, it can only occur 
as a result of the reductions required by the sliding scale set 
forth in § 10.15(d).  
 
Therefore, it is not correct to say categorically, as 
Virginia Power would have us say, that § 10.15(g) has "nothing 
whatsoever to do with Virginia Power's obligation to make 
Dependable Capacity payments."  Rather, Westmoreland should have 
the opportunity to show by parol evidence on remand what the 
parties intended by the language they employed in the Contract. 
 
We hold that it was error for the trial court to exclude 
parol evidence concerning the parties' intent and understanding 
with respect to Forced Outage Days and Capacity Payments at the 
time they executed the Contract. 
 
Alternative Basis of Recovery
 
Westmoreland's amended motion for judgment contained an 
alternative claim of breach of contract for Virginia Power's 
withholding of Capacity Payments for days that Westmoreland 
designated as Forced Outage Days pursuant to § 1.20(a) of the 
Contract.  The trial court's award of summary judgment in favor 
of Virginia Power encompassed this alternative claim. 
 
Under § 1.20, a Forced Outage Day occurs when "(a) 
designated by [Westmoreland] as a Forced Outage Day," or "(b) 
determined pursuant to Section 10.15(d)."  Westmoreland argues 
that "[e]ven if § 10.15(d) could be read as depriving [it] of 
[capacity] payments attributable to days that are classified as 
Forced Outage Days by [the section's] own operation, its impact 
[should] be limited to such days."  Hence, Westmoreland 
concludes, it was "entitled, at a minimum, to a judgment for the 
amount attributable to the days covered by § 1.20(a)."  Virginia 
Power says the trial court did not err in denying Westmoreland a 
partial recovery for designated days.  
 
The trial court stated no reason for the inclusion of 
Westmoreland's alternative basis for relief in its award of 
summary judgment.  As Westmoreland suggests in a footnote to its 
brief, the trial court's disposition of this phase of the case 
may have been inextricably entwined in the court's conclusion 
that § 10.15(d) unambiguously "permits Virginia Power not to make 
dependable capacity payments on days for which [Westmoreland] 
seeks payment," which necessarily included Forced Outage Days 
designated by Westmoreland pursuant to § 1.20(a).  Since we hold 
supra that the Contract is ambiguous, we think the trial court on 
remand, if Westmoreland is unsuccessful on its principal claim 
for breach of contract, should have the opportunity to consider 
further the question whether Virginia Power is entitled to 
withhold Capacity Payments for Forced Outage Days designated by 
Westmoreland pursuant to § 1.20(a). 
 
Conclusion
 
We will affirm the trial court's action in excluding 
evidence of trade custom and usage.  For the error in excluding 
evidence concerning the parties' intent and understanding with 
respect to Forced Outage Days and Capacity Payments, we will 
reverse the judgment of the trial court and remand the case for 
further proceedings consistent with the views expressed in this 
opinion. 
 
Affirmed in part,
                                                reversed in part,
                                                and remanded.