COURT OF APPEALS OF VIRGINIA 

Present: Judges Willis, Bray and Annunziata 

Argued at Alexandria, Virginia 

MOTOR VEHICLE DEALER BOARD 

 

v. Record No. 3220-01-4 

JOEY L. MORGAN OPINION BY 

 JUDGE JERE M. H. WILLIS, JR. 

JOEY L. MORGAN AUGUST 20, 2002 

v. Record No. 3245-01-4 

 

MOTOR VEHICLE DEALER BOARD 

 FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 

Alfred D. Swersky, Judge 

 Eric K. G. Fiske, Assistant Attorney General 

(Jerry W. Kilgore, Attorney General, on 

briefs), for Motor Vehicle Dealer Board. 

 Stephen L. Swann for Joey L. Morgan. 

 The Motor Vehicle Dealer Board ("Board") contends that the 

trial court erred: (1) in ruling that the Board improperly 

excluded from recovery under the Motor Vehicle Transaction 

Recovery Fund ("Fund") payment of attorney's fees and court costs 

that were awarded in an underlying judgment, and (2) in ruling 

that the Board improperly reduced the actual damages portion of 

the underlying judgment. 

 Joey Morgan contends on cross-appeal that the trial court 

erred in denying him attorney's fees pursuant to Code 
§ 9-6.14:21.1 For the following reasons, we affirm the judgment 

of the trial court. 

I. BACKGROUND

 In September 1998, Joey Morgan purchased a car from Aquia 

Motors, Inc. ("Aquia"). The purchase price was $5,120. Aquia 

represented that the car was in good condition and had been 

inspected for safety and emissions. Aquia further represented 

that it had available and could transfer to Morgan clear title 

to the car. 

 Shortly after the purchase, Morgan began experiencing 

mechanical problems involving the engine, brakes, cooling 

system, and suspension. He also discovered that the frame was 

bent and needed repair. Aquia failed to provide registration. 

Morgan attempted to return the vehicle, but Aquia refused to 

take it back and assigned the financing documents to Mercury 

Finance, which subsequently repossessed the car. 

 In August 1999, Morgan initiated a lawsuit against Aquia on 

four grounds: (1) fraud; (2) violation of the Consumer 

Protection Act, Code § 59.l-196, et seq.; (3) breach of express 

and implied warranties; and (4) statutory recission of the 

thirty-day temporary certificate of ownership pursuant to Code 

§ 46.2-1542. On April 12, 2000, he was awarded a default 

judgment against Aquia for actual damages of $9,668.48, 

 1

 Effective October 1, 2001, Code § 9-6.14:21 was recodified 

as Code § 2.2-4030. 

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exemplary damages of $20,000, expert witness fees of $350, 

attorney's fees of $7,285, and court costs of $156. The court 

awarding the judgment recited evidence that Aquia had caused 

Morgan loss or damage "by practicing fraud on [Morgan], or by 

making fraudulent representations to him; or caused loss or 

damage to [Morgan] by reason of one or more violations of the 

Motor Vehicle Act, Virginia Code, § 46.2-1575 . . . ." 

 Morgan filed with the Board a claim under the Motor Vehicle 

Transaction Recovery Fund, Code §§ 46.2-1527.1, et seq.2 He 

sought satisfaction of the judgment for the following elements: 

 Actual damages: $9,668.48 

 Expert witness fees: $ 350.00 

 Attorney's fees: $7,285.00 

 Court costs: $ 156.00 

Recognizing that the maximum recoverable amount allowed by 

statute was $15,000, he reduced the net amount of his claim to 

$15,000.3

 On June 7, 2000, the Board notified Morgan that his claim 

provided insufficient information as to how the court had 

 2

 The Virginia General Assembly created the Motor Vehicle 

Transaction Recovery Fund in 1988. Its purpose is to satisfy 

unpaid judgments that have been obtained against a licensed 

motor vehicle dealer or salesperson for fraud, fraudulent 

practices, or any loss or damage resulting from the violation of 

any of the provisions of this chapter. 

3

 Effective July 1, 2001, the statutory recovery limit was 

increased to $20,000. 

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determined "actual damages" and requested additional 

information. Morgan provided the following breakdown: 

 Purchase price of warranty: $5,286.10 

 Finance charges: $ 547.37 

 Repair costs: $2,500.00 

 Loss of use/rental costs: $1,020.00 

 Loss of wages: $ 315.00 

 The Board concluded that the full amount of Morgan's 

judgment was not compensable. It awarded him $5,120, the 

purchase price of the car. Based on its prior practice and 

interpretation of the statutes involved, it held that his 

attorney's fees, court costs, and expert witness fees were not 

compensable from the Fund. It further held that his repair 

costs and loss of use/rental costs were merely incidental to 

ownership and operation and did not result from fraud. 

 Morgan appealed the Board's decision to the trial court 

pursuant to the Administrative Process Act, Code § 9-6.14:21. 

The trial court ruled that Morgan was entitled to satisfaction 

of his judgment by the Fund, including compensation for his 

"actual damages" and attorney's fees as ascertained in his 

lawsuit. It further held that the Board's decision was "not 

substantially justified" and awarded Morgan attorney's fees and 

costs under Code § 9-6.14:21 (recodified as Code § 2.2-4030).4 

However, it reconsidered its allowance of attorney's fees 

pursuant to Code § 9-6.14:21. Recognizing that the Board had 

 4 See 2001 Va. Acts, c. 844. 

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followed a long-standing practice and belief that the Fund could 

not compensate for attorney's fees and costs, it held that 

Morgan had failed to show that the Board's decision not to 

compensate attorney's fees and costs was "not substantially 

justified." It denied Morgan's request for interest on the 

$15,000 award from the Fund. 

II. PAYMENT OF ACTUAL DAMAGES, COURT COSTS, AND ATTORNEY'S FEES

 The Motor Vehicle Transaction Recovery Fund Act provides, 

in pertinent part: 

Whenever any person is awarded a final 

judgment . . . for (i) any loss or damage in 

connection with the purchase or lease of a 

motor vehicle by reason of any fraud 

practiced on him or fraudulent 

representation made to him by a licensed or 

registered motor vehicle dealer or one of 

dealer's salespersons . . . or (ii) any loss 

or damage by reason of the violation by a 

dealer or salesperson of any of the 

provisions of this chapter in connection 

with the purchase of a motor vehicle . . . 

the judgment creditor may file a verified 

claim with the Board, requesting payment 

from the Fund of the amount unpaid on the 

judgment. 

Code § 46.2-1527.3 (emphasis added). The Act provides, in 

relevant part: 

If the judgment debt is not fully satisfied 

. . . the Board shall make payment from the 

Fund subject to the other limitations 

contained in this article. 

Excluded from the amount of any unpaid final 

judgment on which a claim against the Fund 

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is based shall be any sums representing 

interest, or punitive or exemplary damages. 

Code § 46.2-1527.5 (emphasis added).5

 Considering Morgan's claim against the Fund, the Board 

reviewed the underlying judgment. It held that it was not 

satisfied that his judgment against Aquia was based solely on 

the grounds of fraud. It "carefully examined each item that was 

included in the calculation of 'actual damages'" and decided 

that some of those items related to routine ownership and 

maintenance. Thus, it reduced the element of actual damages to 

$5,120, the purchase price of the car. In so doing, the Board 

exceeded its authority. 

 Morgan's lawsuit against Aquia was couched in terms of 

fraud, violation of the Consumer Protection Act, and breach of 

express and implied warranties. His case was tried and judgment 

was rendered based on findings of "fraud," "fraudulent 

representations," and "violations of the Motor Vehicle Act." 

The court that rendered the judgment tried Morgan's allegations. 

It assessed his actual damages as resulting from the proven 

fraudulent conduct of Aquia. The Board had no authority to 

retry those issues. Its duty was limited to satisfaction of the 

judgment, subject to the statutory limit. 

 5

 Morgan filed a claim against the Fund on or about May 25, 

2000. At that time the statutory limit for recovering from the 

Fund was $15,000. As a result, the current statutory recovery 

limit, which was increased to $20,000 on July 1, 2001, is not 

applicable. 

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 Noting that the Act makes no express provision for the 

Fund's satisfaction of a judgment for attorney's fees and costs, 

the Board adhered to its previous position that such elements of 

a judgment could not be satisfied out of the Fund. In this, it 

erred. 

 Code §§ 46.2-1527.3 and 46.2-1527.5 provide that a judgment 

against a motor vehicle dealer for fraud shall be satisfied by 

the Fund. "[T]he judgment creditor may file a verified claim 

with the Board, requesting payment from the Fund of the amount 

unpaid on the judgment." Code § 46.2-1527.3 (emphasis added). 

"If the judgment debt is not fully satisfied . . . the Board

shall make payment from the Fund subject to the other 

limitations contained in this article." Code § 46.2-1527.5 

(emphasis added). Thus, the entire judgment against Aquia, 

including actual damages, court costs, and attorney's fees, is 

compensable by the Fund. 

III. ATTORNEY'S FEES PURSUANT TO CODE § 9-6.14:21

 Morgan contends that the trial court erred in denying his 

request for attorney's fees and costs, pursuant to Code 

§ 9-6.14:21. He argues the Board's position was "not 

substantially justified." We disagree. 

 The Administrative Process Act outlines the criteria for 

obtaining attorney's fees when a party contests an agency 

action. 

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A. In any civil case brought under Article 

5 (§ 2.2-4025 et seq.) of this chapter or 

§§ 2.2-4002, 2.2-4006, 2.2-4011, or 

§ 2.2-4018, in which any person contests any 

agency action, such person shall be entitled 

to recover from that agency . . . reasonable 

costs and attorneys' fees if such person 

substantially prevails on the merits of the 

case and the agency's position is not 

substantially justified, unless special 

circumstances would make an award unjust. 

Code § 2.2-4030 (formerly Code § 9-6.14:21). 

 The trial court noted that the Board had adhered to its 

long-standing practice and belief that the Fund could not 

compensate attorney's fees and costs. The trial court held that 

Morgan failed to prove that the Board's position was "not 

substantially justified." The record supports that holding. 

 While the Board's position on compensability of a judgment 

for attorney's fees and costs was rejected by the trial court 

and is rejected by us, that position was substantially plausible 

and was based on the Board's long-standing practice, which had 

never been tested in court. The same is true of the Board's 

review of Morgan's "actual damages." Consequently, Morgan is 

not entitled to attorney's fees for the proceedings in the trial 

court. 

 The judgment of the trial court is affirmed. 

 Affirmed. 

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