Present: Carrico, C.J., Compton,1 Lacy, Hassell, Keenan, 

Koontz, and Kinser, JJ. 

VIRGINIA ELECTRIC AND POWER COMPANY 

 

v. Record No. 990489 OPINION BY JUSTICE ELIZABETH B. LACY 

 March 3, 2000 

WESTMORELAND-LG&E PARTNERS 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Theodore J. Markow, Judge 

 The dispositive issue in this appeal is whether the trial 

court correctly limited parol evidence to the intent of the 

parties when executing a 1989 contract. 

 In 1988, Virginia Electric and Power Company (Virginia 

Power) issued a request for proposals seeking independent 

power producers who would supply electric power to Virginia 

Power. One responding company was Beckley Cogeneration 

Company (Beckley), a Delaware limited partnership. On January 

24, 1989, Virginia Power and Beckley entered into a contract 

under which Beckley agreed to build a waste-coal burning plant 

in West Virginia and sell the electricity produced from that 

plant to Virginia Power pursuant to the terms of the contract. 

Beckley, however, abandoned the project and the partnership 

was dissolved. 

Westmoreland Energy, Inc., an affiliate of one of 

Beckley's former general partners, along with another company, 

 1

 Justice Compton participated in the hearing and decision 

of this case prior to the effective date of his retirement on 
sought to continue the project by building the power plant in 

North Carolina, rather than in West Virginia, and using 

pulverized coal rather than waste coal to produce the 

electricity. A general partnership, Westmoreland-LG&E 

Partners (WLP), was created to undertake the revised project.2 

A contract between Virginia Power and WLP was executed in 

March 1990, reflecting these changes in the project. Another 

contract between WLP and Virginia Power was executed in 

November 1991, following WLP's request for amendments to the 

1990 contract. The 1991 contract remains in effect. 

 In 1994, WLP filed a motion for judgment against Virginia 

Power, alleging breach of the 1991 contract and seeking 

recovery of payments allegedly due WLP under that contract. 

The trial court held that the contract provisions in issue 

were unambiguous and entered summary judgment in favor of 

Virginia Power. On appeal, this Court determined that the 

contract provisions were ambiguous and, therefore, the trial 

court erred in refusing to allow parol evidence to ascertain 

the intent of the parties. The matter was remanded for 

further proceedings. Westmoreland-LG&E Partners v. Virginia 

Power, 254 Va. 1, 486 S.E.2d 289 (1997)(Westmoreland I). 

 

February 2, 2000. 

2

 The partnership consisted of Westmoreland-Roanoke 

Valley, L.P. and Hadson Valley, L.P. 

2
 Prior to trial on remand, WLP filed a motion seeking a 

determination that the parties' intent regarding the ambiguous 

provisions be determined as of the execution of the 1989 

contract. WLP argued that this determination was required by 

the decision in Westmoreland I. The trial court agreed and 

excluded parol evidence offered by Virginia Power concerning 

the parties' intent at the time of the 1990 and 1991 

contracts. 

Following a hearing, the trial court adopted the 

interpretation of the disputed provisions advanced by WLP and 

entered judgment in favor of WLP for approximately $19 million 

plus interest. We awarded Virginia Power an appeal. Because 

we conclude that the decision in Westmoreland I did not limit 

consideration of the parties' intent regarding the disputed 

sections to the intent existing in 1989, the judgment of the 

trial court will be reversed and the case remanded for further 

proceedings.

 The trial court's holding that the 1989 contract was the 

operative document for purposes of the parties' intent was 

based on the use of the 1989 contract in Westmoreland I to 

determine whether the provisions in issue were ambiguous. The 

trial court concluded that the opinion in Westmoreland I

"seems to say that what we're looking to determine is the 

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intent of the parties in the negotiation and execution of the 

1989 document." 

The issue in Westmoreland I, however, was whether the 

trial court's holding that the provisions at issue were 

unambiguous was correct. In reviewing that decision, it made 

no difference whether the 1989, 1990, or 1991 contract was 

considered, because the language of the relevant provisions 

was the same in all three contracts. Westmoreland I, 254 Va. 

at 4 n. 1, 486 S.E.2d at 291 n. 1. The reference to the 1989 

contract, therefore, was not material to the question of 

ambiguity under consideration in Westmoreland I. 

 Furthermore, in considering another issue raised in that 

appeal, Westmoreland I referred to "§ 1.20," for the 

definition of "Forced Outage Day," which is a reference to the 

1991 contract. Westmoreland I, 254 Va. at 5-6, 486 S.E.2d at 

291-92. In the 1989 contract, that definition was contained 

in § 1.21. 

More importantly, nothing in Westmoreland I directed or 

limited consideration on remand to the 1989 contract. The 

order remanding the case likewise did not restrict the 

proceedings on remand to the 1989 contract. As explained in 

Nassif v. Board of Supervisors of Fairfax County, 231 Va. 472, 

481, 345 S.E.2d 520, 525 (1986), "[w]hen we limit issues on 

remand we do so with words of limitation or restriction." In 

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the absence of such limitations or restriction, the trial 

court was not limited to consideration of the 1989 contract on 

remand. 

WLP asserts, however, that the trial court's conclusion 

was correct for other reasons. WLP asserts that, because it 

was a "constant" to all the contracts through affiliates and 

related partnerships and through its representative Charles 

Brown, consideration of the 1989 contract formation was 

proper. WLP also argues that the 1991 contract was merely a 

reenactment and amendment of the prior contracts. Therefore, 

WLP concludes, because the terms of the disputed provisions 

remained unchanged throughout, parol evidence was properly 

restricted to the parties' intent as to the meaning of those 

terms in 1989 when they were initially adopted. 

The trial court did not address these arguments because, 

as we have indicated, its decision was based solely on the 

restriction it believed was mandated by Westmoreland I. 

Furthermore, although Virginia Power disagrees with WLP's 

assertions and maintains that the 1991 contract was a novation 

of the prior contracts and not a reenactment of them, it does 

not seek to restrict parol evidence of the parties' intent to 

the 1991 contract. The error of the trial court, according to 

Virginia Power, was that it did not allow admission of 

5
evidence relevant to the parties' intent in 1991 in addition 

to, not as a substitute for, evidence of that intent in 1989. 

WLP sought recovery for a breach of the 1991 contract. 

Even though the disputed provisions in the 1991 contract have 

language identical to that in the 1989 contract, identical 

provisions in successive contracts may or may not carry the 

same meaning in each instance. See Galloway Corp. v. S.B. 

Ballard Constr., 250 Va. 493, 502-06, 464 S.E.2d 349, 355-57 

(1995). This is particularly true under the circumstances of 

this case, where the provisions themselves are ambiguous and 

the project at issue changed in material respects. Therefore, 

we conclude that the trial court erroneously limited parol 

evidence to the parties' intent at the time of the 1989 

contact. 

 WLP also asserts that Virginia Power should be estopped 

from seeking to introduce evidence of the intent of the 1991 

contract. WLP's position in this regard is that, in 

Westmoreland I, Virginia Power relied on events surrounding 

the execution of the 1989 contract in arguing that evidence of 

trade custom and usage was inadmissible to inform the meaning 

of the provisions at issue. Therefore, according to WLP, in 

this proceeding Virginia Power should not be allowed to seek 

admission of evidence relating to any contract other than the 

1989 contract. 

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WLP's argument overlooks the fact that in Westmoreland I, 

Virginia Power contended that the contract provisions were 

unambiguous and under those circumstances any meaning based on 

trade custom and usage attached in 1989 and remained 

unchanged. Virginia Power, however, did not prevail in its 

contention that the provisions were unambiguous and on remand 

was required to treat the provisions as ambiguous and thus 

subject to clarification by parol evidence of the parties' 

intent. Virginia Power's assertion on remand that evidence of 

the parties intent in 1991, as well as in 1989, should be 

admitted does not conflict with its earlier position that any 

unambiguous meaning of the provisions based on trade, custom, 

or usage arose in 1989. Therefore, we reject WLP's estoppel 

arguments. 

In light of our conclusion that the trial court erred in 

limiting parol evidence of intent to the parties' intent in 

executing the 1989 contract, we will remand the case for 

further proceedings consistent with this opinion. 

Accordingly, we need not address the assignments of error and 

cross-error regarding Virginia Power's proffer of evidence and 

the trial court's interpretation of the disputed provisions. 

However, we will address Virginia Power's assertion that the 

trial court erred in holding that a draft letter was protected 

by the attorney-client privilege and, therefore, was not 

7
subject to discovery by Virginia Power, because the issue is 

likely to arise on remand.

The letter in question was prepared in December 1990, by 

James S. Brown, then Chief Financial Officer of Westmoreland 

Energy, to memorialize a conversation he had with John Mable 

of Virginia Power regarding Mable's understanding of Virginia 

Power's liability for capacity payments on days determined to 

be forced outage days.3 At that time, Brown and his 

counterpart at Hadson Power Systems, Lawrence Sawyer Folks, 

were preparing a financial prospectus of the cogeneration 

project for use in obtaining financing. Prior to sending the 

letter to Mable, Brown sent the letter to Folks. Folks 

apparently sent the letter to Charles Schwenck, in-house 

counsel to Hadson Power Systems.4 Brown testified that, when 

he wrote the letter, he intended to seek legal advice both on 

its content and whether it should be sent. Schwenck conferred 

with Brown regarding the letter and it was discussed at a 

meeting of Brown, Folks, Schwenck, and Charles Brown, an 

official with Westmoreland Energy. The draft letter was never 

sent to Mable. 

 

3

 The draft letter was reviewed by the trial court in 

camera and submitted under seal to this Court. 

4

 The trial court stated in its opinion letter that Folks 

sent the letter to Schwenck, although the record also supports 

8
The attorney-client privilege does not attach to a 

document merely because a client delivers it to his attorney. 

However, the privilege does attach to a document prepared with 

the purpose of being sent to counsel for legal advice. 

Robertson v. Commonwealth, 181 Va. 520, 539-40, 25 S.E.2d 352, 

360 (1943). The party seeking to assert the attorney-client 

privilege bears the burden of persuasion on the issue. 

Commonwealth v. Edwards, 235 Va. 499, 509, 370 S.E.2d 296, 301 

(1988). 

Although Brown testified that he drafted the letter with 

the intent of getting legal advice, Virginia Power asserts 

that the Brown letter was not entitled to the attorney-client 

privilege because it does not qualify as a document prepared 

for the purpose of obtaining legal advice. Virginia Power 

apparently considers the privilege applicable only to a 

document which by its own terms conveys a request for legal 

advice. Such an application of the privilege requirement is 

too narrow. 

The privilege attaches to a document even if the document 

does not contain, or is not accompanied by, a written request 

for legal advice, if the proponent of the privilege sustains 

its burden of proof to show that the document was prepared 

 

the conclusion that Brown sent a copy of the letter to the 

attorney. 

9
with the intention of securing legal advice on its contents. 

Robertson, 181 Va. at 540, 25 S.E.2d at 360. As we have said, 

the record in this case contains the testimony of Brown that 

when he drafted the letter he intended to get legal advice on 

its content and on whether he should deliver it to Mable. 

Virginia Power also argues that any privilege that may 

have attached to the draft letter was waived when the draft 

letter was sent to Folks and to in-house counsel for Hadson 

Power Systems. We disagree. 

Communications between officers and employees of the same 

entity relayed to corporate counsel for the purpose of 

obtaining legal advice are entitled to the attorney-client 

privilege. Owens-Corning Fiberglas Corp. v. Watson, 243 Va. 

128, 141, 413 S.E.2d 630, 638 (1992)(citing Upjohn Co. v. 

United States, 449 U.S. 383 (1981)). Under the circumstances 

of this case, the relationship of Folks, Brown, and Schwenck 

is tantamount to that of employees of the same entity for 

purposes of the application of the privilege. WLP is the 

entity asserting the privilege. Folks and Brown are employed 

by parent corporations of the WLP partnership.5 Both Folks and 

Brown sought to secure legal advice regarding the letter. The 

 5

 Folks' direct employer, Hadson Power Systems, owns 

Hadson Power, Inc., which in turn owns Hadson Roanoke Valley 

L.P. Brown's direct employer, Westmoreland Energy, Inc., owns 

10
Brown letter was prepared in connection with the business of 

WLP and, as the trial court acknowledged, "the respective 

companies were partners on the project sharing a common 

concern." 

Finally, Virginia Power argues that it is only seeking 

factual material, the contents of the letter, not the advice 

counsel gave to Brown and Folks concerning the letter. 

However, the substance of the letter in this case constitutes 

the very matter for which legal advice was sought. There is 

no "factual material" apart from the substance of the letter 

itself. 

The record in this case does not support Virginia Power's 

assertion that the draft letter was "created, exchanged or 

discussed" outside of the attorney-client relationship. 

Rather, the record shows that the letter was created, 

exchanged and discussed within the perimeters of WLP, the 

party seeking to assert the privilege, with the expectation 

that legal advice would be secured prior to finalization and 

transmission of the letter. Considering this record, we 

conclude that the trial court did not err in its conclusion 

that WLP met its burden of producing evidence to show that the 

draft letter was entitled to the protection of the attorney-

 

90% of Westmoreland-Roanoke Valley, L.P., which along with 

Hadson Roanoke Valley, L.P., comprise WLP. 

11
client privilege and not subject to discovery by Virginia 

Power. 

For the reasons stated, we will reverse the judgment of 

the trial court and remand the case for further proceedings 

consistent with this opinion. 

Reversed and remanded.

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