Title: Mid-Atlantic Business Communications v. Virginia Dept. of Motor Vehicles

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
MID-ATLANTIC BUSINESS  
COMMUNICATIONS, INC. 
 
v.  Record No. 040967     OPINION BY JUSTICE ELIZABETH B. LACY 
 
 
 
January 14, 2005 
VIRGINIA DEPARTMENT OF 
MOTOR VEHICLES 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
Theodore J. Markow, Judge 
 
 
The Virginia Public Procurement Act, Code §§ 2.2-4300 
through -4377 (VPPA or the Act), requires that a claim against 
a public body based on a contract awarded under the Act must 
be filed within six months of the final decision of the public 
body.  Code § 2.2-4363(D).  Mid-Atlantic Business 
Communications, Inc.'s (MABC) claim against the Virginia 
Department of Motor Vehicles (the Department) was denied in a 
letter from the Department dated August 22, 2002 and in a 
letter from the Comptroller dated January 31, 2003.  MABC 
filed this litigation on February 27, 2003.  Because the 
August 22, 2002 letter was the final decision of the 
Department, the trial court correctly dismissed MABC's motion 
for judgment because it was not filed within the Act's six-
month limitation period. 
Facts 
 
The Department awarded MABC a contract to create and 
install an Internet Call Center.  The terms of the Vendors 
 
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Manual were incorporated into the Contract.  Code § 2.2-
4363(B) and (C); Department of General Services, Commonwealth 
of Virginia, Vendors Manual (Dec. 1998).  The contract was for 
a fixed price of $207,111.78 and was to be performed and paid 
in two phases.  The first phase was completed and paid for 
without incident.  In June 2002, the Department's Manager of 
MIS Budget and Procurement, George S. Goodman, Jr., notified 
MABC by letter that the Department was rejecting the work done 
under the second phase because MABC's product had a number of 
security issues.  MABC was given 30 days to redesign the 
system to meet the Department's requirements.  In a July 23, 
2002 letter, Goodman told MABC that its response was 
unsatisfactory, that the contract was cancelled, and that the 
Department would not pay the remaining $102,451.67 due under 
the contract for the second phase. 
 
MABC appealed the Department's decision to the 
Procurement Appeals Board but was notified that the Board had 
no jurisdiction to entertain the appeal.  MABC then sent a 
letter, dated July 31, 2002, to the Department arguing that 
the alleged security problems were new requirements not 
previously listed in the contract and requesting that the 
Department honor the full payment price under the contract.  
Goodman responded by letter on August 22, 2002, stating, "Your 
claim for payment is hereby denied." 
 
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MABC then sent a letter, dated August 26, 2002, to Asbury 
W. Quillan, Commissioner of the Department, requesting payment 
of the second phase amount.  The letter stated that legal 
action would be taken if no response was received within 10 
days.  On August 30, 2002, Thomas P. Falat, Assistant 
Commissioner of the Department, notified MABC that "the DMV 
stands by the decision to cancel."  On October 23, 2002, MABC 
mailed a certified letter to the Comptroller of the 
Commonwealth and the Commissioner of the Department seeking 
payment pursuant to Code § 2.2-814 (formerly Code § 2.1-
223.1).  As required by Code § 2.2-815, the Commissioner 
informed the Comptroller on January 29, 2003 that MABC's claim 
had been previously denied and he recommended that the 
Comptroller deny MABC's pecuniary claim.  In a letter dated 
January 31, 2003, the Comptroller denied MABC's claim. 
Proceedings 
 
MABC instituted this litigation on February 27, 2003 
against the Department and the Comptroller claiming breach of 
contract and seeking damages in the amount of $102,451.67, the 
remainder of the contract price for the second phase.  The 
defendants filed a Plea in Bar, Demurrer, and Grounds of 
Defense, arguing that the Comptroller was not a proper party 
and that the claim was filed beyond the Act's six-month 
limitations period and therefore was time-barred.  The trial 
 
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court sustained the defendants' Demurrer and Plea in Bar, 
dismissed the Comptroller as a party, and held that because 
the August 22, 2002 letter was the final decision of the 
Department, MABC's action was untimely.  The trial court also 
held that Code § 8.01-229(D) did not toll the running of the 
limitations period.  We awarded MABC an appeal. 
Discussion 
On appeal, MABC contends that the action was timely filed 
first because the January 31, 2003 letter from the Comptroller 
was the Department's final decision.  The VPPA states that a 
decision by a "public body" is final unless appealed within 
six months of the final decision of the "public body."  Code 
§ 2.2-4363(D).  MABC's first argument is based on the 
definition of "public body."  The Vendors Manual, which was 
promulgated pursuant to the VPPA and incorporated into the 
contract between the Department and MABC, recites that a claim 
denial is final if issued by an agency's "purchasing office."  
"Purchasing office" is not defined in the Manual, and MABC 
argues that "because of the significance attached to the final 
decision," the phrase should be interpreted as meaning the 
head of the agency involved. 
This interpretation is further supported, according to 
MABC, when considered in conjunction with the procedure for 
filing a pecuniary claim against the Commonwealth.  This 
 
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procedure, Code §§ 2.2-814 and –815, provides that pecuniary 
claims against the Commonwealth must be presented first to the 
"head of the . . . agency" against which the claim is lodged 
and that officer must make a recommendation on the claim to 
the Comptroller.  Reading these provisions together, MABC 
concludes that the only decision of the head of the Department 
was contained in the January 31, 2003 letter and that letter, 
therefore, constitutes the final decision by the Department. 
 
This argument fails first because the absence of a 
definition of "purchasing office" in the Vendors Manual does 
not make the term ambiguous or in need of further 
interpretation.  As applied to these facts, there was no 
ambiguity about the position held by Goodman.  Each letter 
Goodman signed stated his title as Manager of the MIS/ITS 
Budget and Procurement Office.  This designation is also 
recited on the signature line of the contract. 
MABC's argument also fails because it seeks to 
incorporate into the VPPA terms contained in a separate, 
unrelated procedure.  The VPPA is a specific statute relating 
to the acquisition of goods and services by public bodies.  We 
have previously held that the provisions of that Act, not the 
predecessors to Code §§ 2.2-814 and 2.2-815, apply to disputes 
arising from goods or services provided under the VPPA.  The 
Dr. William E.S. Flory Small Bus. Dev. Ctr. v. Commonwealth, 
 
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261 Va. 230, 239, 541 S.E.2d 915, 920 (2001).  Therefore, we 
decline to interpret provisions of the VPPA by incorporating 
provisions relating to filing pecuniary claims against the 
Commonwealth. 
 
The next argument advanced by MABC in support of its 
position is that the Department did not consider its August 22 
letter to be a final decision because, by filing a 
recommendation on MABC's claim with the Comptroller, it 
acknowledged that MABC's claim was "authorized" under Code 
§ 2.2-814, and therefore, the Comptroller's letter of January 
31, 2003 was the final agency decision.  This argument is also 
without merit because it ignores the separate nature of the 
two statutory processes and would allow a litigant to extend 
the time limitations of the VPAA by instituting a claim under 
an entirely separate procedure.  The Department's 
recommendation to the Comptroller regarding MABC's claim was a 
task required by Code § 2.2-815 and had no effect on the 
finality of the Department's previous rejection of the claim 
under the VPPA. 
 
The trial court correctly concluded that the August 22, 
2002 letter was the final decision of the Department and the 
VPPA's six-month limitations period for filing suit began on 
that date. 
 
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MABC also argues that its suit was timely filed because 
the date for filing an action against DMV was tolled under 
Code § 8.01-229(D) which provides that if a defendant 
obstructs the filing of an action by any "direct or indirect 
means," the "time that such obstruction has continued shall 
not be counted as any part of the period within which the 
action must be brought."  The trial court refused to apply the 
tolling provisions of Code § 8.01-229(D) because it concluded 
that tolling provisions "[c]an't run against the 
Commonwealth."  MABC assigns error to this holding.  We agree 
that the holding of the trial court is in error. 
We are aware of no case in which a plaintiff was denied 
the ability to assert the tolling provisions of Code § 8.01-
229 solely because the defendant was the Commonwealth or one 
of its agencies.  To the contrary, for example, in Douglas v. 
Chesterfield County Police Dept., 251 Va. 363, 467 S.E.2d 474 
(1996), the plaintiff sought to rely on the tolling provisions 
of Code § 8.01-229(B)(6) for the timely filing of its actions 
against the Chesterfield County Police Department.  Id. at 
365, 467 S.E.2d at 475.  Although this Court, in responding to 
a certified question from the United States District Court for 
the Eastern District of Virginia, determined that the tolling 
provisions were not available to the plaintiff because the 
plaintiff did not qualify as a personal representative at the 
 
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time she filed her federal action, the ability to raise the 
tolling provision against the governmental defendant was never 
questioned.  Moreover, the Court recognized the possibility 
that the plaintiff would also have been entitled to seek the 
benefit of the tolling provisions of Code § 8.01-229(E)(3).  
Id. at 367-68 & n.4, 467 S.E.2d at 476-77 & n.4.  The legal 
status of the defendant does not determine whether a plaintiff 
is entitled to seek the protection of the tolling provision 
provided by statute, and the trial court erred in holding 
otherwise.  Nevertheless, a plaintiff must meet its burden of 
proof under the statute to establish entitlement to its 
protection. 
To secure the tolling authorized by Code § 8.01-229(D), 
MABC had to establish that the Department "undertook an 
affirmative act designed or intended, directly or indirectly, 
to obstruct the [MABC's] right to file [its] action."  Grimes 
v. Suzukawa, 262 Va. 330, 332, 551 S.E.2d 644, 646 (2001).  
"Constructive fraud is not such as will toll the running of 
the statute of limitations . . . . A defendant must intend to 
conceal the discovery of the cause of action by trick or 
artifice and must have thus actually concealed it from the 
plaintiff in order for the exception to apply."  Richmond 
Redevelopment and Housing Authority v. Laburnum Const. Corp., 
195 Va. 827, 840, 80 S.E.2d 574, 582 (1954). 
 
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MABC argued at trial, as it does here, that internal 
documents obtained during discovery showed that the Department 
continued to consider MABC's claim unresolved after Goodman's 
August letter but did not reply to MABC's August 26 letter, 
and did not reply to MABC's October 23, 2002 letter to the 
Comptroller until January 29, 2003.  This evidence, according 
to MABC, shows that the Department "purposefully misled" MABC 
and "intended to prevent MABC from instituting litigation 
within six months" of Goodman's August 22, 2002 letter. 
Neither the failure to reply to MABC's letters nor the 
time taken to reply to the Comptroller's request is evidence 
of an affirmative act that was designed to thwart MABC's 
ability to file a lawsuit against the Department.  As the 
Department points out, the provisions of the Act allow the 
contractor to file suit, if the contractor has not received a 
response from the agency within the period specified in the 
contract at issue.  Code § 2.2-4363.  In this case, a 30-day 
period was set by § 7.19 of the Vendors Manual which was 
incorporated into the parties' contract.  Therefore, 
regardless of the Department's actions, if MABC did not 
believe that the August 22 letter was the final denial of 
MABC's claim, it was free to file an action 30 days after it 
failed to receive a response to its August 26 letter.  
Furthermore, MABC, not the Department, chose to seek relief 
 
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under two separate procedures.  Nothing in the pecuniary 
claims process prohibited MABC from filing its claim under the 
VPPA.  Therefore, the tolling provisions of Code § 8.01-229(D) 
were not available to MABC and the trial court did not err in 
refusing to apply those provisions in this case.* 
 
For the reasons stated, we will affirm the trial court's 
judgment sustaining the plea in bar and dismissing MABC's 
motion for judgment with prejudice. 
Affirmed. 
                     
* In light of this holding, we need not address whether 
the Department would be bound by actions of its agents in this 
circumstance.