PRESENT: Carrico, C.J., Keenan and Kinser, JJ., Poff, 

Stephenson, and Whiting, Senior Justices, and Cochran, Retired 

Justice 

CARMEN PEREZ, SUING INDIVIDUALLY AND ON 

 BEHALF OF ALL OTHERS SIMILARLY SITUATED 

 OPINION BY 

v. Record No. 990677 SENIOR JUSTICE ROSCOE B. STEPHENSON, JR. 

 November 5, 1999 

CAPITAL ONE BANK 

UPON A QUESTION OF LAW CERTIFIED BY THE 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT 

OF ILLINOIS 

 The United States District Court for the Northern District 

of Illinois entered an order of certification requesting that we 

exercise our certification jurisdiction, Va. Const. art. VI, 

§ 1; Rule 5:42, and answer the following question: 

Does § 6.1-330.63 of the Virginia Code preclude a 

challenge, under the common law doctrine of unlawful 

liquidated damages, to late fees included in contracts 

between credit-card issuers and card holders, where 

those contracts are governed by Virginia law? 

By order entered April 21, 1999, we accepted the question for 

consideration. 

I 

 On December 4, 1997, Carmen Perez filed in the United 

States District Court for the Northern District of Illinois her 

class action complaint against Capital One Bank (Capital One). 

In Count V of her complaint, Perez alleged that the late fees 

charged to her credit card account by Capital One constituted 
unlawful liquidated damages (i.e., penalties) under the common 

law of Virginia. 

 Capital One filed a motion for summary judgment as to Count 

V. The District Court reserved its ruling on the motion, 

pending this Court's answer to the certified question. 

II 

 The relevant facts as found by the certifying court are as 

follows: Perez is an Illinois resident and the only named 

plaintiff alleged to represent the putative class in the sole 

remaining count, Count V of the third amended complaint. 

Capital One is a Virginia limited-purpose credit card bank with 

its principal place of business in Glen Allen, Virginia. 

Capital One currently has in excess of sixteen million credit 

card account holders nationwide, and Perez has a credit card 

account with Capital One. 

Perez's account is governed by the terms of Capital One's 

Customer Agreement. Paragraph 23 of the Customer Agreement 

provides that the agreement is governed by Virginia and federal 

law. Virginia Code § 6.1-330.63(A) provides, in part, that: 

Notwithstanding any other provision of this chapter, 

any bank or savings institution may impose finance 

charges and other charges and fees at such rates and 

in such amounts and manner as may be agreed by the 

borrower under a contract for revolving credit or any 

plan which permits an obligor to avail himself of the 

credit so established. 

2
 Capital One's Customer Agreement provides that a late 

charge will be imposed when a customer fails to make a timely 

payment. The Customer Agreement at issue provides, in pertinent 

part: 

Late Payment Charge. A late payment charge of $18.00 

(Effective 01/01/97, the late charge will be $20) will 

be imposed if we do not receive your Minimum Payment 

in time for it to be credited within 3 days after the 

due date shown on your Periodic Statement. (Effective 

01/01/97, a late payment charge will be assessed if 

your payment is not received on the due date. There 

will be no grace period.) 

 At the time the question was certified, Capital One imposed 

late fees that ranged from $20.00 to $29.00. Perez's February 

1, 1997 statement from Capital One reflects an $18.00 late 

payment charge imposed on January 2, 1997, because of an 

untimely December 1996 payment. Her Minimum Payment Due at the 

time was $10.00, and her account balance was $305.53. There is 

no dispute that Perez did not pay the Minimum Payment Due within 

the time provided in the Customer Agreement. 

 On August 1, 1997, the late fee charged by Capital One to 

Perez's account increased to $20.00. From February 1, 1997, 

through July 2, 1998, Perez incurred $396.00 in various fees, 

$178.00 of which represented late fees. From June 1, 1996, 

through July 2, 1998, Perez made payments to her account 

totaling $415.00. 

III 

3
 Under the common law, contracting parties may agree in 

advance that, in the event the contract is breached, the 

breaching party shall pay liquidated damages. A liquidated 

damages provision is enforceable when the actual damages 

contemplated at the time of the contract are not certain and are 

difficult to measure with accuracy and when the fixed amount of 

damages is not out of all proportion to the probable loss. On 

the other hand, when the damages caused by the breach are prone 

to definite measurement or when the stipulated amount would 

grossly exceed actual damages, courts of law usually construe 

such a provision as an unenforceable penalty. 301 Dahlgren Ltd. 

Partnership v. Board of Sup., 240 Va. 200, 202-03, 396 S.E.2d 

651, 653 (1990); Taylor v. Sanders, 233 Va. 73, 75, 353 S.E.2d 

745, 746-47 (1987). 

 Perez, on her own behalf and on behalf of a putative 

nationwide class of Capital One's cardholders, challenges the 

amount of the late fees being imposed by Capital One as unlawful 

liquidated damages under the common law of Virginia. She 

contends that Code § 6.1-330.63(A) does not preclude her from 

bringing an unlawful liquidated damages claim against Capital 

One because the Code section does not abrogate the common law of 

contracts. Perez asserts that, in the absence of language that 

plainly manifests an intent to abrogate the common law, the 

common law remains intact. 

4
 Capital One argues that the common law was explicitly 

abrogated in 1987 when the General Assembly enacted Code § 6.1-

330.80, which provides, in pertinent part, as follows: 

 Any lender . . . may impose a late charge for 

failure to make timely payment of any installment due 

on a debt, . . . provided that such late charge does 

not exceed five percent of the amount of such 

installment payment and that the charge is specified 

in the contract between the lender . . . and the 

debtor. 

1987 Va. Acts ch. 622. Capital One further argues that the 

General Assembly, in also enacting Code § 6.1-330.63, merely 

removed the 5% limit and permitted the contracting parties to 

agree to fees in excess thereof with respect to a contract for 

revolving credit. 

 Both Perez and Capital One assert that the language of Code 

§ 6.1-330.63 is clear and unambiguous, and we agree. Therefore, 

we must accept its plain meaning and not consider rules of 

statutory construction, legislative history, or extrinsic 

evidence. Yates v. Pitman Manufacturing, Inc., 257 Va. 601, 

605, 514 S.E.2d 605, 607 (1999); Town of Blackstone v. Southside 

Elec. Coop., 256 Va. 527, 533, 506 S.E.2d 773, 776 (1998). 

 In 1987, the General Assembly enacted Chapter 7.3, entitled 

"Money and Interest," which is part of Title 6.1 of the Code, 

entitled "Banking and Finance." As previously noted, Code 

§ 6.1-330.80, a part of Chapter 7.3, permitted a lender and a 

debtor to agree to a late charge that did not exceed 5% of the 

5
amount of a past due installment. Thus, a lender could charge 

up to 5% without being required to show that the actual damages 

were uncertain and difficult to determine and that the amount 

charged was not out of proportion to the probable loss. 

 Manifestly, in enacting Code § 6.1-330.80, the General 

Assembly intended to abrogate the common law rule prohibiting a 

penalty. In also enacting Code § 6.1-330.63, the General 

Assembly removed the 5% cap on charges imposed by banks and 

savings institutions under contracts for credit, allowing such 

charges "at such rates and in such amounts . . . as may be 

agreed by the borrower." It logically follows, therefore, that 

Code § 6.1-330.63, which contains more specific language 

applicable to banks and revolving credit plans, perpetuates the 

abrogation of the common law rule. 

 Accordingly, we answer the certified question in the 

affirmative. 

Certified question answered in the affirmative. 

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