Present: All the Justices

LOCKHEED INFORMATION MANAGEMENT 

SYSTEMS COMPANY, INC., ET AL. 

 

v. Record No. 990500 

MAXIMUS, INC. 

OPINION BY JUSTICE ELIZABETH B. LACY 

 January 14, 2000 

MAXIMUS, INC. 

v. Record No. 990499 

LOCKHEED INFORMATION MANAGEMENT 

SYSTEMS COMPANY, INC., ET AL. 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Randall G. Johnson, Judge 

 This is the second appeal arising from the cancellation 

of a Notice of Intent to Award a contract to privatize two 

child support offices of the Virginia Department of Social 

Services (DSS). In 1995, Maximus, Inc. and Lockheed 

Information Management Systems Co., Inc. (Lockheed) submitted 

bids pursuant to a request for proposals issued by DSS. DSS 

issued a Notice of Intent to Award the contract to Maximus. 

Pursuant to Code § 11-66, Lockheed filed a protest to DSS's 

decision. Among the statements in the protest were 

allegations that two members of the evaluation panel had 

undisclosed conflicts of interest. The Notice of Intent to 

Award the contract was subsequently cancelled. 
 Maximus filed this action alleging that Lockheed had 

tortiously interfered with its contract expectancy and that 

Lockheed, The Center for The Support of Families, Inc., (the 

Center) and an employee of the Center engaged in a conspiracy 

to injure Maximus' reputation and business in violation of 

§§ 18.2-499 and -500.1 

 The trial court granted Lockheed's motion to strike at 

the close of Maximus' evidence at the first trial and entered 

judgment in favor of the defendants because it found that 

there was no showing of malice or other egregious conduct. We 

awarded Maximus an appeal and reversed, holding that such 

evidence was not required as an element of a claim for 

tortious interference with contract expectancy. The case was 

remanded for further proceedings. Maximus, Inc. v. Lockheed 

Inf. Mgmt. Systems, 254 Va. 408, 493 S.E.2d 375 (1997). 

 At the second trial, the jury returned a verdict in favor 

of Maximus for $1,500,000 on the tortious interference with 

contract expectancy claim, Count I, and for $3,000,000 on the 

conspiracy claim, Count II. Following post-trial motions and 

briefing, the trial court denied Lockheed's motions to strike 

the evidence and to set aside the verdict, but reduced the 

amount of the verdict. The trial court determined that the 

 1

 The claim against the employee was eventually nonsuited. 

2
damages claimed under both Count I and Count II were 

identical, and, accordingly, limited Maximus to a single 

damage recovery. The trial court further concluded that 

Maximus was not entitled to recover the costs it incurred in 

preparing the bid or the amounts assigned as lost overhead. 

The trial court then granted Maximus' motion for treble 

damages pursuant to § 18.2-500 and entered judgment in the 

amount of $2,223,372 in damages plus attorneys' fees and 

costs. 

 Lockheed filed an appeal challenging a number of rulings 

by the trial court. Maximus filed an appeal limited to the 

trial court's determination that Maximus could not recover 

lost overhead as part of lost profits. We granted both 

petitions for appeal and have consolidated the appeals. 

FACTS

 In November 1994, DSS issued a request for proposals 

pursuant to the Virginia Public Procurement Act, Code §§ 11-35 

through –80. DSS sought to privatize two child support 

enforcement offices in Northern Virginia. Lockheed and 

Maximus submitted timely responses. The proposals were 

evaluated by a five member committee, including Carolyn W. 

Davis and Ernest Lee Williams, employees of DSS. The 

committee was chaired by Jane Hollowell, contracts officer for 

3
DSS. A Notice of Intent to Award the contract to Maximus was 

issued on April 13, 1995. 

 Shortly thereafter, the two contracting officers for DSS, 

Jane Hollowell and Clifford Crofford, learned that Lockheed 

might file a protest, based on a number of issues, including a 

possible conflict of interest by two of the members of the 

evaluation committee. Joseph Crane, Assistant Director for 

Program Development and Administration of the Division of 

Child Support Enforcement, sent a memorandum to Michael Henry, 

Director of the Division, reciting the anticipated allegations 

and raising the possibility that the Notice of Intent to Award 

might have to be rescinded. Crane suggested, however, that 

assuming nothing new came out in the protest, the Notice of 

Intent to Award could stand as issued if the score of one of 

the persons alleged to have a conflict of interest were 

removed. Henry agreed with this recommendation. 

 Henry also received a telephone call from Harry W. 

Wiggins, the Lockheed Vice President in charge of the bid 

proposal and a former head of DSS, telling Henry that if DSS 

proceeded with awarding the contract to Maximus, things would 

get "ugly" or "bloody." 

 Lockheed filed its protest on April 25, 1995, accompanied 

by the affidavits of Wiggins, Robyn Large, a Center employee 

and a former DSS and Lockheed employee, and Christy Leavell, a 

4
Lockheed employee. In the protest, Lockheed asserted that 

within seven months preceding the posting of the Notice of 

Intent to Award, Ernest Lee Williams was an "active candidate 

for employment" with Lockheed but was not hired. Lockheed 

also stated that Carolyn Davis had been employed by Maximus 

while on leave from DSS and that she had been offered 

employment with Maximus in Tennessee. The protest also stated 

that Maximus asked Davis to submit a resume as a prospective 

employee on the bid at issue. Davis complied, and, according 

to Lockheed, indicated she would be willing to talk to Maximus 

if Maximus received the contract for the Virginia work. The 

protest also alleged that Davis called Wiggins seeking 

employment with Lockheed at some point after the request for 

proposals had been issued. 

 Based on these allegations, Lockheed argued in its 

protest that Williams concealed a material fact regarding his 

connection with Lockheed, and that his failure to get the 

position could have materially interfered with his objectivity 

as a member of the evaluation committee. Lockheed stated that 

Davis' situation was "more egregious" than that of Williams, 

constituted two violations of the Public Procurement Act, and 

affected her ability to render a fair and impartial decision. 

Lockheed stated that it was "reluctant to suggest that the 

facts and circumstances surrounding Ms. Davis' participation 

5
on the Evaluation Committee [rose] to the level of 

'corruption.'" Nevertheless, "the seriousness of such an 

allegation cannot be trivialized" and "the question must be 

asked" whether she used her position on the evaluation 

committee "to procure an employment benefit for herself 

contrary to her duty and the rights of others." Lockheed also 

suggested that because Davis had a better chance of employment 

with Maximus than with Lockheed, Davis may have made some 

comments at the deliberations which "could have influenced 

other committee members in a manner inimical to Lockheed's 

interests." Following receipt of the protest, DSS cancelled 

the Intent to Award and sent out a new request for proposals. 

 At trial, Williams testified that he had never applied 

for employment with Lockheed and had not been an active 

candidate for employment within seven months preceding the 

request for proposals. Davis testified that in 1992 she had 

served as a consultant to Lockheed for one month while she was 

on annual leave from DSS. As shown by a letter, dated March 

25, 1992 and introduced into evidence, this arrangement was 

known to, and approved by, DSS. Davis also testified, among 

other things, that she sent out some resumes anticipating that 

she might be required to look for a new job because her 

husband was about to be transferred. 

6
 Finally, Henry testified that he recommended to the DSS 

Commissioners that the Notice of Intent to Award should be 

cancelled for reasons of expediency, because Lockheed was 

going to "tie us up" in proceedings, and "fear of a public 

spectacle" resulting from the strong allegations in the 

protest. 

 We begin by addressing the assignments of error raised by 

Lockheed in its appeal. 

I. 

Lockheed Information Management Systems

 Company, Inc., et al. v. Maximus, Inc.

Record No. 990500 

A. PRIVILEGE

 Lockheed asserts that the trial court erred in denying 

its motion for summary judgment because the statements made in 

its protest, even if false and misleading, were absolutely 

privileged. Lockheed further argues that even if the 

statements were not absolutely privileged, Lockheed was 

entitled to an affirmative defense of lawful justification or 

qualified privilege and the trial court erred in denying 

Lockheed's jury instruction on that defense. We first 

consider Lockheed's contention regarding the existence of an 

absolute privilege. 

1. Absolute Privilege 

a. Judicial Proceeding 

7
 Lockheed argues that because the statements at issue were 

made in the course of a quasi-judicial or administrative 

hearing, they were entitled to an absolute privilege. We 

disagree. We have held that false, misleading, or defamatory 

communications, even if published with malicious intent, are 

not actionable if they are material to, and made in the course 

of, a judicial or quasi-judicial proceeding. Penick v. 

Ratcliffe, 149 Va. 618, 636-37, 140 S.E. 664, 670 (1927). 

This absolute privilege has been extended to communications 

made in administrative hearings so long as the "safeguards 

that surround" judicial proceedings are present. Elder v. 

Holland, 208 Va. 15, 22, 155 S.E.2d 369, 374 (1967). Those 

safeguards include such things as the power to issue 

subpoenas, liability for perjury, and the applicability of the 

rules of evidence. Id. The bid protest proceeding in which 

the statements complained of in this case were made, however, 

did not have the safeguards inherent in a judicial proceeding. 

 Lockheed's protest was filed pursuant to § 11-66(A) which 

provides the procedure for an unsuccessful bidder to file a 

protest to the action of a public body in the procurement 

process. The public body or its designated agent must render 

a written decision on the protest within ten days of receiving 

the protest stating the reasons for the action. That decision 

is final unless appealed. Neither notice nor hearing is 

8
afforded any other party or bidder, including the successful 

bidder. This procedure contains none of the safeguards 

identified in Elder as prerequisites for the application of 

the absolute privilege defense.2 While these safeguards may 

attach in an appeal of the decision, the absence of the 

safeguards from the proceeding in which the statements are 

made precludes application of the absolute privilege defense 

to those statements. 

b. Affidavits 

 Lockheed also argues that it was entitled to an absolute 

privilege because the complained of statements were contained 

in affidavits. Lockheed asserts that the protection of 

absolute privilege was extended to affidavits in Donohoe 

Construction Co. Inc. v. Mount Vernon Associates, 235 Va. 531, 

538, 369 S.E.2d 857, 861 (1988), because the Court in that 

case described the execution of an affidavit as a "judicial 

act." Lockheed misconstrues Donohoe. 

Donohoe was a mechanic's lien case in which the Court 

concluded that, because filing the mechanic's lien affidavit 

to perfect the lien is a prerequisite to filing suit to 

 2

 Subsection C of § 11-66 requires notice and hearing 

prior to a determination that the bid award was based on 

fraud, corruption, or a violation of the Act. However, the 

provisions of that subsection are not relevant to our inquiry 

here because there was no proceeding under that subsection in 

connection with Lockheed's protest. 

9
enforce the lien, the filing of the lien and the suit to 

enforce the lien were inseparable. Id. at 539, 369 S.E.2d 

861. Therefore, because the filing of the memorandum of lien 

affidavit and the suit to enforce the lien constituted a 

single judicial proceeding, the contents of the affidavit were 

entitled to an absolute privilege. Id. The doctrine of 

absolute privilege was not extended to the mere execution of 

any affidavit. 

 In this case, even if affidavits were required as an 

integral part of the protest, which they are not, we have 

already concluded that the protest procedure under § 11-66(A) 

does not qualify as a judicial proceeding. Thus, Donohoe does 

not apply to clothe the statements made in Lockheed's protest 

with an absolute privilege because they were contained in 

affidavits. 

c. Noerr-Pennington Doctrine 

 Finally, Lockheed argues that it was entitled to an 

absolute privilege for its statements under the "NoerrPennington" doctrine. This doctrine is based on United Mine 

Workers v. Pennington, 381 U.S. 657 (1965), and Eastern 

Railroad Presidents Conference v. Noerr Motor Freight, Inc., 

365 U.S. 127 (1961). The doctrine developed because business 

entities seeking to influence legislative or executive policy 

which would benefit them and injure competitors were charged 

10
with violations of the federal anti-trust laws. Grounded in 

the constitutional right to free speech and to petition the 

government, the Noerr-Pennington doctrine provides that 

persons petitioning the government cannot be charged with 

violations of the Sherman Antitrust Act for attempts to 

influence legislative or executive action. Pennington, 381 

U.S. at 669; Noerr, 365 U.S. at 135. The doctrine also 

applies to adjudicatory proceedings before administrative 

agencies. California Motor Transport Co. v. Trucking 

Unlimited, 404 U.S. 508, 510-11 (1972). 

 Lockheed asserts that the Noerr-Pennington Doctrine has 

been applied to shield conduct from common law business tort 

claims as well as from antitrust claims. Citing Gunderson v. 

University of Alaska, 902 P.2d 323 (Alaska 1995), and Video 

International Production, Inc. v. Warner-Amex Cable 

Communications, Inc., 858 F.2d 1075 (5th Cir. 1988), cert.

denied 491 U.S. 906 (1989), Lockheed urges us to extend an 

absolute privilege based on the Noerr-Pennington doctrine to 

its actions in this case. While both cases cited by Lockheed 

applied the Noerr-Pennington doctrine in causes of action for 

business torts, we do not find those cases applicable here. 

Video International involved the actions of competing 

cable television providers and the City of Dallas. The 

plaintiff, an unfranchised cable television provider in 

11
Dallas, filed suit against the city and Warner-Amex alleging 

that the city, at the urging of Warner-Amex, adopted a certain 

interpretation of the city's cable franchise agreement with 

Warner-Amex3 and, also at Warner-Amex's urging, filed notices 

of zoning violations against the plaintiff based on that 

interpretation. This action, according to the plaintiff, 

violated its civil rights and antitrust laws and, because it 

adversely impacted the consummation of the sale of plaintiff 

to a third party, tortiously interfered with a business 

contract. On appeal, the Fifth Circuit affirmed the district 

court's holding that the Noerr-Pennington doctrine applied to 

both the antitrust claims and the business tort claim. 858 

F.2d at 1084. 

Warner-Amex's actions seeking a specific interpretation 

of an ordinance by the city are closely analogous to 

petitioning the government to influence public policy. Thus, 

the application of the Noerr-Pennington doctrine to the 

business tort claim in Video International was consistent with 

the traditional application of the doctrine. Here, however, 

 3

 The zoning ordinances included the franchise agreement 

between the city and Warner-Amex which provided that no cable 

television provider could use the city's streets or operate in 

the city without a franchise. The city interpreted "using the 

city streets" as including crossing public right of ways or 

property lines. Video International Production, Inc. v. 

Warner-Amex Cable Communications, Inc., 858 F.2d 1075 (5th 

Cir. 1988), cert. denied 491 U.S. 906 (1989). 

12
Lockheed did not petition DSS for a particular interpretation 

of the procurement law or attempt to influence any other 

governmental policy. Lockheed's actions in this case are not 

analogous to the "petitioning" of the city by Warner-Amex. 

Consequently, an extension of the Noerr-Pennington doctrine 

based on Video International is not warranted in this case. 

While the facts of Gunderson parallel the instant case, 

Gunderson provides no persuasive rationale for applying the 

Noerr-Pennington doctrine in this case. The Alaska Supreme 

Court allowed application of the doctrine to a common law 

business tort claim based on the plaintiff's concession that 

the doctrine was applicable. No such concession has been made 

by Maximus in this case. 

 Maximus does not assert that the Noerr-Pennington 

doctrine can never be applied in common law business tort 

cases. Instead, Maximus argues that, regardless of whether a 

claim is one for a violation of an antitrust statute or a 

common law business tort, the Noerr-Pennington doctrine should 

not be applied in actions involving bid protests because such 

activity is not the type of petitioning of the government 

which the doctrine was intended to protect. Maximus cites a 

number of cases in which courts have refused to apply the 

Noerr-Pennington doctrine, not based on the cause of action 

13
asserted, but because the activity complained of was not aimed 

at influencing governmental policy decisions. 

For example, in Whitten v. Paddock Pool Builders, Inc., 

424 F.2d 25 (1st Cir. 1970), a contractor filed suit claiming 

that the defendant, its competitor, violated the antitrust 

laws by certain actions it took in persuading a public body to 

use specifications for swimming pools which could be met only 

by the defendant. The First Circuit refused to apply the 

Noerr-Pennington doctrine to the defendant's actions holding 

that the doctrine is intended to "insur[e] uninhibited access 

to government policy makers" and not intended to apply to 

instances in which public officials are engaged in purely 

commercial dealings. Id. at 32. The Court went on to 

conclude that when government officials engage in a 

competitive bidding process similar to the type engaged in by 

private corporations, no additional First Amendment 

protections should be provided. Id. at 33. 

Similarly, in F. Buddie Contracting, Inc. v. Seawright, 

595 F.Supp. 422 (N.D. Ohio 1984), an unsuccessful bidder sued 

the successful bidder and others claiming an antitrust 

violation. The plaintiff alleged that the defendants 

conspired to secure the award of the contract from the public 

body even though the successful bidder was not the lowest 

bidder. The trial court denied the defendants' summary 

14
judgment motion on a number of grounds including its 

conclusion that the activities of the defendants were not the 

type of activities protected by the Noerr-Pennington doctrine. 

Adopting the "commercial activities exception" developed by 

the United States Courts of Appeals for the First, Fifth, and 

District of Columbia Circuits, the court stated: 

Noerr-Pennington is concerned with the needs of a 

representative democracy in the field of public 

policy making. These needs are not at issue in 

this case, where the parties are concerned with the 

award of a competitively bid contract which only 

incidentally involves a government body. The basis 

for the exception, therefore, does not apply to 

this case. 

Id. at 439. Thus, under the commercial activities exception, 

the Noerr-Pennington doctrine does not apply to cases in which 

the government entity is acting as a market participant. 

 We find the rationale of these cases persuasive. The 

Noerr-Pennington doctrine was developed as a protection for 

entities petitioning the government in relation to legislative 

or policy making matters. The doctrine was not intended to 

shield false, misleading, or otherwise improper conduct by 

bidders for government contracts, particularly when the 

governmental body is acting as a private commercial entity. 

The extension of the Noerr-Pennington immunity to Lockheed's 

actions in this case would represent a significant step beyond 

the intended boundaries of the doctrine and would contravene 

15
the policy behind the establishment of the doctrine. 

Accordingly, we decline Lockheed's invitation to extend the 

application of the Noerr-Pennington doctrine in this case. 

2. Qualified Privilege 

Lockheed argues that even if it did not have an absolute 

privilege, it was entitled to an affirmative defense similar 

to a qualified privilege defense on the basis of "legitimate 

business competition and protection of the public interest." 

Because the trial court refused Lockheed's Jury Instruction I, 

Lockheed contends that the jury was erroneously limited to 

considering only legitimate business competition as the basis 

for its affirmative defense.4

We have previously acknowledged that an affirmative 

defense of justification or privilege applies in a claim for 

intentional interference in a business contract. Maximus v. 

Lockheed, 254 Va. at 412-13, 493 S.E.2d at 378. We also 

identified the five grounds upon which this affirmative 

defense is based, none of which includes "protection of the 

public interest" as Lockheed asserts. Id.; Duggin v. Adams, 

234 Va. 221, 229, 360 S.E.2d 832, 838 (1987); Chavis v. 

 4

 Jury Instruction I provided: "For Count I lawful 

justification includes conduct by Lockheed and The Center for 

reasons of legitimate business competition or protection of 

the public interest." 

16
Johnson, 230 Va. 112, 121, 335 S.E.2d 97, 103 (1985). The 

jury in this case was instructed that 

 Lockheed claims that its interference with 

Maximus' prospective business relationship with DSS 

was justified based upon legitimate business 

competition. On this issue, Lockheed has the 

burden of proof. 

 If you find by the greater weight of the 

evidence that Lockheed's actions constituted 

legitimate business competition with respect to 

Maximus' prospective business relationship with 

DSS, then you shall return your verdict in favor of 

Lockheed on Maximus' tortious interference claim. 

This instruction properly presented Lockheed's affirmative 

defense to the jury. Accordingly, the trial court did not err 

in denying Jury Instruction I. 

B. CONSPIRACY

Lockheed contends that Maximus was precluded from 

relitigating its conspiracy count in the remanded proceeding 

because Maximus did not assign error to the trial court's 

order in the first trial as it affected the conspiracy count. 

Thus, the trial court's ruling became final as to the 

conspiracy count, and, Lockheed argues, the trial court on 

remand erred in denying its motion for summary judgment on 

this count. 

Maximus argues that in the first trial, the trial court 

"did not rule at all, much less enter 'judgment' for Lockheed 

on Count II." The judgment in favor of Lockheed in the first 

case, according to Maximus, was based on the trial court's 

17
conclusion that Maximus failed to prove an element of the 

tortious interference claim, rather than the conspiracy claim, 

and Maximus contends that the language of the trial court's 

judgment order in the first case did not specifically refer to 

the conspiracy count. We disagree. 

At the close of Maximus' evidence in the first trial, the 

trial court granted Lockheed's motion to strike the evidence 

because it did not show that Lockheed had engaged in malicious 

or egregious conduct, elements which the trial court believed 

were necessary to sustain a claim of tortious interference 

with contract expectancy. Maximus v. Lockheed, 254 Va. at 

411, 493 S.E.2d at 376-77. The order entered by the trial 

court recited that the "plaintiff shall take nothing and that 

judgment be entered in favor of the defendants, plus costs." 

In its appeal to this Court, Maximus assigned error to the 

trial court's ruling that malice was an essential element of 

the tortious interference. Id., 493 S.E.2d at 377. Maximus 

did not address conspiracy or Count II in an assignment of 

error. 

If the order entered by the trial court following the 

first trial did not dispose of the conspiracy count, it would 

not have been a final, appealable order. A final appealable 

order is one which terminates the action leaving nothing to be 

done by the trial court except that which is necessary to 

18
execute the decree. Lee v. Lee, 142 Va. 244, 250, 128 S.E. 

524, 526 (1925). An order is not final and appealable if 

claims against the defendant remain unresolved. Leggett v. 

Caudill, 247 Va. 130, 133, 439 S.E.2d 350, 351 (1994). Thus, 

to be a final appealable order, the order of the trial court 

following the first trial of this matter had to dispose of the 

entire case, including the conspiracy count.5 

 The order of the trial court quoted above entered 

judgment in favor of the "defendants" (emphasis added). 

Lockheed was the sole defendant in Count I, Tortious 

Interference. Maximus' allegations against the remaining 

defendants, Robyn Large and the Center, were limited to the 

conspiracy count, Count II. The language of the order, 

therefore, in entering judgment for all defendants, did 

dispose of the conspiracy count and was therefore a final 

appealable order.6

 Finally, Maximus relies on Nassif v. Board of 

Supervisors, 231 Va. 472, 345 S.E.2d 520 (1986), to support 

 5

 We have held that an order disposing of all claims 

against one defendant may be a final appealable order even if 

claims against other defendants remain. Dalloul v. Agbey, 255 

Va. 511, 515 n.2, 499 S.E.2d 279, 282 n.2 (1998). In this 

case, if the order entered sustaining Lockheed's motion to 

strike in the first trial had been limited to the tortious 

interference claim, it would not have been an appealable order 

under this rule because it did not fully dispose of all the 

claims against Lockheed. 

19
its contention that it was not required to assign error 

regarding the conspiracy count and was entitled to assert its 

conspiracy count on remand. Specifically, Maximus quotes 

language from the opinion that, unless limited by the order of 

remand, "the slate is wiped clean, with the result that on 

remand the parties begin anew." Id. at 480, 345 S.E.2d at 

525. However, in Nassif, the party seeking to "begin anew" 

was the appellee in the first appeal. The first appeal was 

taken from an order of the trial court sustaining the 

appellee's contention that a tax assessment was erroneous. 

This order was based on one of the several arguments raised by 

the appellee in support of its position but did not address 

the remaining contentions. In this context, the Court in 

Nassif stated, "[i]t would serve no useful purpose, we think, 

to require a prevailing party to assign error to his failure 

to win on all points in order to protect his right to a full 

and complete trial should his apparent victory be reversed and 

the case remanded." Id. at 480-81, 345 S.E.2d at 525. 

The Nassif case, at most, stands for the proposition that 

an appellee does not have to assign cross-error to the failure 

of the trial court to address additional arguments in order to 

reassert those arguments on remand. It does not, and cannot, 

 6

 Maximus did not seek clarification of the trial court's 

order. 

20
stand for the proposition asserted by Maximus, that an 

appellant does not have to assign error to a ruling disposing 

of a cause of action, and if the case is remanded, can then 

relitigate a dispositive ruling which was not appealed. Such 

a proposition contradicts the doctrine of the law of the case 

which provides that where no assignment of error or crosserror is taken to a part of a final judgment, the judgment 

becomes the law of the case and is not subject to 

relitigation. Searles' Adm'r v. Gordon's Adm'r, 156 Va. 289, 

294-99, 157 S.E. 759, 761-62 (1931). 

Maximus was not the prevailing party in the first appeal 

and, therefore, under the law of the case, Maximus was not 

entitled to relitigate unappealed issues on remand. 

For these reasons we conclude that the trial court erred 

in denying Lockheed's motion for summary judgment on its claim 

that Maximus' failure following the first trial to assign 

error to the trial court's judgment relative to its conspiracy 

count barred Maximus from litigating that count on remand.7

C. DAMAGES

 Lockheed assigns error to a number of the trial court's 

rulings regarding Maximus' damage recovery. These assignments 

 7

 In light of this holding, we need not consider 

Lockheed's assignments of error relating to the level of proof 

required for the conspiracy count and whether treble damages 

under § 8.2-500(a) are mandatory or discretionary. 

21
of error involve the application of the "new business rule," 

the qualification of Maximus' expert on lost profits, and 

Maximus' duty to mitigate damages. We consider these issues 

in order. 

1. New Business Rule 

 Lockheed argues that Maximus had not previously engaged 

in the collection of child support payments in Virginia. 

Therefore, the venture proposed by Maximus in its response to 

DSS's request for proposals was a new business for Maximus and 

Lockheed asserts that Maximus' evidence of lost profits should 

have been excluded under the "new business rule." 

In Mullen v. Brantley, 213 Va. 765, 768, 195 S.E.2d 696, 

699-700 (1973), we stated that evidence of the prior and 

subsequent earning record of a business can be used to 

estimate damages, in the case of an established business with 

an established earning capacity. But, where a new business is 

involved 

the rule is not applicable for the reason that 

such a business is a speculative venture, the 

successful operation of which depends upon future 

bargains, the status of the market, and too many 

other contingencies to furnish a safeguard in 

fixing the measure of damages. (Citations 

omitted.) 

Id. at 768, 195 S.E.2d at 700. This principle has become 

known as the "new business rule." Commercial Business 

22
Systems, Inc. v. BellSouth Services, Inc., 249 Va. 39, 50, 453 

S.E.2d 261, 268 (1995). 

The trial court observed that if, as Lockheed suggests, 

the new business rule were applied as an absolute bar to 

damage recovery in this case, a cause of action for 

intentional interference with a contract expectancy would be 

meaningless, because "anybody anywhere in Virginia could lie, 

cheat, and steal to deprive any new business, or any existing 

business that has never operated in Virginia, of a contract 

expectancy with complete civil impunity." The trial court 

rejected this construction of Virginia law, and, relying on 

the principle discussed in Wood v. Pender-Doxey Grocery 

Company, 151 Va. 706, 144 S.E. 635 (1928), concluded that "the 

fact that Maximus had never engaged in collecting child 

support in Virginia cannot be used to deprive it of damages." 

In Wood, a plaintiff was allowed to recover damages for 

breach of contract including lost "good will" even though, as 

the appellant argued in that case, the evidence of the damages 

was difficult to calculate with mathematical precision or 

reasonable certainty. The Court in Wood allowed recovery, 

reasoning that in cases involving an intentional wrong 

the degree of proof necessary is much relaxed 

in favor of the injured party. Where the 

wrongdoer creates the situation that makes 

proof of the exact amount of damages 

difficult, he must realize that in such cases 

23
"juries are allowed to act upon probable and 

inferential, as well as direct and positive, 

proof." Chesapeake & Potomac Tel. Co. v. 

Carless, 127 Va. 5, 102 S.E. 569, 23 A.L.R. 

943 (1920). 

151 Va. at 713, 144 S.E. at 638. Applying this rationale, the 

trial court concluded that Maximus introduced sufficient 

evidence upon which "a reasonable estimate of Maximus' lost 

profits could be made." 

Based on this record, we cannot say the trial court erred 

by refusing to apply the new business rule to strike Maximus' 

evidence on lost profits. While most newly undertaken 

ventures may not have the requisite record of performance and 

thus come within the "new business rule," that is a decision 

to be made by the trial court in the first instance. In 

allowing the jury to consider Maximus' evidence of lost 

profits and other damage evidence, the trial court here did 

not eliminate the new business rule or the requirement that 

damages must be shown with reasonable specificity. The trial 

court only held that, in a claim for intentional interference 

with a business expectancy, recovery will not be defeated 

solely because the business expectancy is not one which is 

identical in every detail to the injured party's previous 

actual experience. The trial court concluded that in this 

case the evidence of previous child support collection 

ventures conducted by Maximus in other jurisdictions and 

24
evidence of such collections by the DSS in Virginia had 

sufficient specificity to allow "a reasonable estimate of 

Maximus' lost profits." Using this evidence, the jury was not 

required to speculate on Maximus' lost profits. Accordingly, 

we will affirm the trial court's ruling allowing evidence of 

Maximus' lost profits. 

2. Qualification of Expert Witness

 Lockheed next argues that even if the new business rule 

did not render Maximus' lost profits evidence inadmissible, 

the evidence should not have been admitted because it required 

expert testimony and Maximus' expert was not qualified to 

render such expert testimony. 

 Arthur Nerret, Maximus' expert, was a certified public 

accountant, had worked for a large, international accounting 

firm for five years, was a director of finance and vicepresident in private industry for 18 years, and had served as 

Maximus' chief financial officer for four years. His 

responsibilities included such tasks as financial reporting, 

budgeting, forecasting, cost proposal review, and banking and 

insurance matters. He testified that he had reviewed the bid 

proposal, and validated the direct costs associated with the 

project. In response to Lockheed's questions, Nerret 

explained the method he used to determine the revenue he 

estimated Maximus would receive from its contract with DSS. 

25
 Lockheed objected to the admission of Nerret as an expert 

to give an opinion on Maximus' potential profit from its 

contract with DSS because Nerret had not taken any special 

courses on lost profit or damage analysis and did not have 

personal involvement in preparing the revenue or cost 

information, but instead relied on the calculations of others. 

The trial court held that Lockheed's objection went to the 

weight of Nerret's testimony, not to his qualification as an 

expert witness, and allowed Nerret to give his opinion 

testimony. 

 Whether a witness is qualified to testify as an expert is 

a matter within the sound discretion of the trial court and 

the trial court's decision will not be set aside on appeal 

unless the record clearly shows that the witness is 

unqualified. Tazewell Oil Co., Inc. v. United Virginia Bank, 

243 Va. 94, 110, 413 S.E.2d 611, 620 (1992). We cannot say 

that this record clearly shows that Nerret was not qualified 

and, therefore, we will affirm the trial court's ruling 

allowing Nerret to testify as an expert witness on the issue 

of lost profits. 

3. Mitigation of Damages 

 Lockheed sought to introduce evidence of events occurring 

subsequent to cancellation of the initial Notice of Intent to 

Award the contract to Maximus. Specifically, Lockheed wanted 

26
placed before the jury the following evidence: the second 

request for proposals and award to Lockheed; Maximus' protest 

of the second award; reversal of that award by the appeals 

procurement board; a third request for proposals issued by 

DSS; the award of the contract to Lockheed pursuant to the 

third request; and Maximus' failure to file a protest to that 

award. Lockheed asserts that this evidence was relevant 

because, even though Maximus prevailed in having the second 

award set aside, by failing to pursue a protest and appeal of 

the third award, Maximus made "no attempt in the third 

procurement to undo the award to Lockheed in order that it 

might recapture what was lost in its contract expectancy." 

 The trial court was correct in its holding that this 

evidence was not admissible to show that Maximus failed to 

mitigate its damages. First, whether Maximus would not only 

have prevailed in its protest of the third award but also 

ultimately would have become the recipient of the contract 

award is entirely speculative. Furthermore, § 11-66 

authorizes the filing of a protest based upon matters relating 

to alleged deficiencies in the contract award, not for 

purposes of mitigating damages. 

D. ADMISSIONS

27
Lockheed asserts that the trial court erred because it 

allowed Maximus to introduce testimony that contradicted its 

responses to Lockheed's requests for admission. 

Prior to the first trial in 1996, Lockheed served Maximus 

with a number of requests for admissions. Two of those 

requests, Nos. 41 and 42, which Maximus admitted provide 

respectively: 

 Evaluation committee member Ernest Lee 

Williams, within seven months prior to the day the 

Notice of Intent to award was posted, was an active 

candidate for employment as district manager of the 

Lockheed IMS project in Chesapeake, Virginia. Mr. 

Williams was not selected for the position.

 All evaluation members including Mr. Williams 

stated verbally that they were unaware of any 

situation and/or relationship with either of the 

two offerors that could be perceived as a reason 

for conflict of interest.

At the first trial, Williams testified that he was not an 

active candidate for employment with Lockheed. Even though 

his testimony conflicted with these admissions, Lockheed did 

not object to the testimony, and therefore any reliance on the 

admissions was waived. TransiLift Equipment, Ltd. v. 

Cunningham, 234 Va. 84, 91, 360 S.E.2d 183, 187 (1987). 

Following remand of the case, no further discovery was 

undertaken. 

At the second trial, when Maximus again asked Williams if 

he had been an active candidate for employment with Lockheed 

28
within seven months of the Intent to Award, Lockheed objected 

based on Maximus' earlier admission. Maximus moved to 

withdraw the admissions pursuant to Rule 4:11(b).8 Lockheed 

objected to the motion, arguing that it had already quoted the 

admission in opening argument and, therefore, it would be 

prejudiced if Maximus were allowed to withdraw the admission 

at that point. 

After discussion with counsel out of the presence of the 

jury, the trial court sustained Lockheed's objection to 

Maximus' withdrawal of the admission, stating that whatever 

decision it made one of the parties would be prejudiced. 

Maximus then proceeded to ask Williams a number of questions 

such as whether he had ever submitted an application to 

Lockheed, whether he considered a lunch with a representative 

of Lockheed to be a job interview, if he was denied employment 

with Lockheed, if he harbored any latent resentment against 

Lockheed, and whether he had told anyone he had been to lunch 

with a Lockheed representative. The record shows that when 

 8

 Rule 4:11(b) states in part: 

Any matter admitted under this Rule is conclusively 

established unless the court on motion permits 

withdrawal or amendment of the admission . . . the 

court may permit withdrawal or amendment when the 

presentation of the merits of the action will be 

subserved thereby and the party who obtained the 

admission fails to satisfy the court that 

29
Lockheed objected to a question, the trial court considered 

whether the question and answer contradicted the admissions, 

and overruled objections when it determined the question was 

proper. The trial court also allowed Lockheed to read 

admissions No. 41 and No. 42 to the jury. The trial court 

explained to the jury that the rules of court allow one party 

to ask another to admit that certain things are true, thereby 

eliminating the need to bring in witnesses to prove those 

things. 

Decisions on whether testimony contradicts admissions are 

committed to the sound discretion of the trial court and will 

only be set aside on appeal if those decisions are shown to be 

an abuse of discretion. Coe v. Commonwealth, 231 Va. 83, 87, 

340 S.E.2d 820, 823 (1986). Based on our review of the record 

in this case, we cannot say that the trial court's 

determinations on whether the questions and testimony at issue 

contradicted the admissions made by Maximus were an abuse of 

discretion. Furthermore, if the denial of Lockheed's jury 

instruction that Maximus was bound by its admissions was 

error, such error was harmless in light of the trial court's 

instruction to the jury at the time the admissions were read. 

E. MOTION TO STRIKE 

 

withdrawal or amendment will prejudice him in 

maintaining his action or defense on the merits. 

30
 Following the close of all the evidence, Lockheed moved 

to strike Maximus' evidence. The trial court took the matter 

under advisement and, after further briefing, denied the 

motion. Lockheed assigns error to this ruling in two 

particulars: (1) the trial court erred in failing to strike 

the evidence because the evidence did not establish improper 

methods and improper conduct; and (2) the trial court erred in 

failing to strike the evidence because the evidence did not 

establish that Lockheed's protest was the proximate cause of 

the cancellation of the Notice of Intent to Award the contract 

to Maximus. We consider these arguments in order. 

1. Improper Conduct 

Lockheed's first argument, that Maximus' evidence should 

have been struck because it did not show intimidation, fraud, 

defamation, misrepresentation, deceit, unethical conduct, 

sharp dealing, overreaching, or unfair competition, can, in 

the words of the trial court, be disposed of quickly. Suffice 

it to say that, considering the evidence and all reasonable 

inferences therefrom in the light most favorable to the 

plaintiff Maximus, as we must, Austin v. Shoney's, Inc., 254 

Va. 134, 138, 486 S.E.2d 285, 287 (1997), Maximus' evidence 

was sufficient to present a prima facie case that Lockheed's 

actions were improper for purposes of Maximus' business tort 

claim. 

31
Lockheed also argues that even if Maximus established a 

prima facie case, the evidence was not "sufficient to overcome 

Lockheed's affirmative defense." As pointed out by Maximus, 

Lockheed seems to be arguing that because it presented 

evidence to support its affirmative defense, it was entitled 

to prevail, absent additional evidence by Maximus. However, 

whether Lockheed produced sufficient evidence to prevail on 

its defense was a matter for the jury to decide. As the trial 

court stated, "the presentation of defendants' evidence does 

nothing more than create a jury issue." Accordingly, there 

was no error in the trial court's denial of the motion to 

strike on this basis. 

2. Proximate Cause 

Lockheed argues that the evidence failed to show that its 

protest was the proximate cause of DSS' decision to cancel the 

notice of the Intent to Award the contract to Maximus. The 

evidence, according to Lockheed, was that the cancellation 

resulted from DSS' own investigation and not as a result of 

the protest. 

While there is evidence in the record to support 

Lockheed's assertion, there is also evidence that the Notice 

of Intent was cancelled because of the contents of Lockheed's 

protest, as well as Lockheed's actions surrounding the filing 

of the protest. The testimony of Henry and Crane, the call 

32
from Wiggins telling Henry that if the Intent to Award went 

forward, things "could get bloody," and Crane's memorandum 

suggesting that the procurement would proceed assuming there 

were no more damaging facts in Lockheed's protest, represent 

some of the evidence suggesting that the protest and its 

contents were the reasons the Notice of Intent to Award the 

contract to Maximus was rescinded.9 The evidence was not 

without conflict and it presented a jury question on the issue 

of proximate cause. 

Accordingly, the trial court correctly refused to strike 

Maximus' evidence for failure to establish proximate cause. 

II. 

Maximus, Inc. v. Lockheed Information Management

 Systems Company, Inc., et al.

Record No. 990499 

At trial the jury returned a verdict in favor of Maximus 

of approximately $1.5 million dollars on the tortious 

interference claim. Following post-trial motions, the trial 

court reduced this amount to $741,124, holding that Maximus 

was not entitled to recover damages for costs incurred in 

preparing its initial bid or certain overhead expenses. 

 9

 Although Lockheed argues that the proximate cause 

instruction was confusing, it did not object to the 

instruction in the trial court and we do not consider that 

argument here. Rule 5:25. 

33
Maximus appeals the trial court's determination that it was 

not entitled to recover the overhead expenses. 

The overhead expenses at issue were described by Nerret, 

Maximus' expert, as a "fixed sort of markup on top of those 

direct-expenses to absorb company-wide overhead expenses." 

Since Maximus did not obtain the contract, Nerret testified 

that "those costs had to be absorbed by our other contracts in 

the company over this five-year period. And thus . . . 

profitability of those other contracts was reduced by the 

[amount] those contracts will be absorbing." Essentially, the 

overhead was a fixed cost not attributable to the contract at 

issue. 

We have recently addressed recovery of fixed overhead in 

Fairfax County Redevelopment & Housing Authority v. Worchester 

Brothers Co., Inc., 257 Va. 382, 514 S.E.2d 147 (1999). We 

held that home office expenses, normally referred to as 

overhead, are costs that the business must expend for the 

benefit of its enterprise as a whole. Unabsorbed overhead is 

that overhead which continues regardless of the business 

activity. Thus, a contractor experiences unabsorbed overhead 

when idle. When a breach by a party causes a delay to the 

ability of the other party to perform, the injured party is 

entitled to recover, as damages, unabsorbed overhead expenses. 

To recover such damages, the injured party must show that it 

34
could not otherwise recoup its pro rata home office expenses 

incurred during the delay and it must prove the amount of 

these expenses with reasonable certainty. Id. at 387-88, 514 

S.E.2d 150-51.

In this case, the unabsorbed overhead sought by Maximus 

was not sought as part of its actual damages but as part of 

its lost profit. We need not address this distinction here 

because, whether lost overhead is sought as damages or as a 

component of lost profit, the plaintiff is required to show 

that it was reasonably unable to recoup its overhead costs. 

Id. There is no such evidence in this case. Nerret 

characterized Maximus' overhead costs as "unabsorbed" or 

"unavoided" because they did not arise from the contract at 

issue, and therefore, continued whether or not Maximus was 

awarded the contract. Neither Nerret nor any other witness 

addressed Maximus' ability or inability to reasonably recoup 

those expenses from another contract which could have been 

secured in the place of the contract with DSS. 

 Accordingly, although the trial court did not have the 

benefit of our decision in Fairfax County, we conclude that it 

did not err in holding that Maximus was not entitled to 

recover its overhead. 

III. 

Conclusion

35
 In summary, for the reasons stated above, we will affirm 

that part of the trial court's judgment imposing liability on 

Lockheed for intentional interference with a business 

expectancy and setting damages in the amount of $741,124. We 

will reverse that part of the trial court's judgment imposing 

liability on Lockheed and the Center for conspiracy in 

violation of § 18.2-499, and imposing treble damages, 

attorneys' fees and costs pursuant to § 18.2-500, and enter 

final judgment. 

Record No. 990500 — Affirmed in part,

reversed in part,

 and final judgment.

 Record No. 990499 — Affirmed.

36