Present: Hassell, C.J., Koontz, Kinser, Lemons, and Millette, 

JJ., and Russell and Lacy, S.JJ. 

VIRGINIA ELECTRIC 

 AND POWER COMPANY, ET AL. 

OPINION BY SENIOR JUSTICE 

v. Record No. 081294 ELIZABETH B. LACY 

 September 18, 2009 

NORFOLK SOUTHERN RAILWAY COMPANY 

FROM THE CIRCUIT COURT OF HALIFAX COUNTY 

William R. Shelton, Judge Designate 

This appeal arises from a contract dispute between a 

railway company and two utility companies over periodic cost 

adjustments of rates charged by the railway company for 

transportation of coal to an electricity generating facility in 

Halifax County. The principal issue we consider is whether the 

circuit court correctly determined that the contract in question 

was unambiguous in requiring the application of a specific rail 

cost adjustment factor for calculating quarterly adjustments to 

the coal transportation rates. We also consider whether the 

circuit court erred in striking certain affirmative defenses 

raised by the utilities to the railway company’s claim for 

breach of the contract and subsequently entering a judgment of 

more than $77 million plus interest in favor of the railway 

company. 

BACKGROUND 

The essential facts are not in dispute. On April 5, 1989, 

Old Dominion Electric Cooperative (“ODEC”) entered into a 
contract with Norfolk and Western Railway Company, the 

predecessor in interest to Norfolk Southern Railway Company 

(“Norfolk Southern”), for the regular transportation of coal to 

an electricity generating facility ODEC was constructing in 

Clover, Virginia. ODEC subsequently sold an undivided one-half 

interest in the Clover facility to Virginia Electric and Power 

Company (“VEPCO”).1

The contract, which was styled as a “Coal Transportation 

Agreement” (“CTA”), addressed the transportation rates for coal 

deliveries to the Clover facility in Article 25, which provided 

in relevant part: 

Unless specified otherwise, all rates and charges 

in this Agreement shall be subject to adjustment in 

accordance with this Article. Rate adjustments shall 

be based upon the ICC generated RCAF. During the term 

of this Agreement, should the RCAF described in this 

Agreement . . . be modified or changed other than 

renormalizing, a new factor which closely tracks the 

RCAF shall be agreed to by the Parties. 

. . . . 

The amount of each such adjustment shall be 

determined according to the applicable procedures 

prescribed by the ICC in Ex Parte No. 290 (Sub. No. 2) 

and published in Title 49 C.F.R., Part 1102, Section 

1102.1 and Interstate Commerce Act, Section 10707, as 

may be amended, incorporated herein by reference. 

 1

 There is no dispute that VEPCO and Norfolk Southern are 

the real parties in interest in this contract dispute. 

Accordingly, we will refer hereafter to ODEC and VEPCO where 

context permits as “the utilities” and the contracting railway 

company as “Norfolk Southern.” 

2
The CTA defines the term “RCAF” as the Rail Cost Adjustment 

Factor, as “prescribed by the ICC in Ex Parte No. 290.”2 The 

ICC-generated RCAF refers to an index for coal transportation 

rates first established pursuant to Section 203 of the Staggers 

Rail Act of 1980. See former 49 U.S.C. § 10707a(a)(2)(B) 

(1980). In general, the purpose of the index was to create a 

calculation methodology by which rail freight delivery rates in 

long-term contracts could be adjusted for evolving costs and, 

where required to be applied, such rates would be protected from 

challenge as to their reasonableness. Railroad Cost Recovery 

Procedures–Productivity Adjustment, Ex Parte No. 290 (Sub. No. 

4), 5 I.C.C.2d 434 (1989). 

Accordingly, the ICC initiated regulatory proceedings 

designated “Ex Parte No. 290 (Sub. No. 2)” in which it developed 

first an interim, and later a final, RCAF index. See Railroad 

Cost Recovery Procedures, Ex Parte No. 290 (Sub. No. 2), 1 

I.C.C.2d 207 (1984) (establishing the final index); Railroad 

Cost Recovery Procedures, Ex Parte No. 290 (Sub. No. 2), 364 

I.C.C. 841 (1981) (creating the interim index). The RCAF index 

established in Ex Parte No. 290 (Sub. No. 2) did not use rail 

 2

 The parties agree that when the United States Congress 

abolished the ICC in 1995, the function of calculating and 

publishing RCAF indices was transferred to the Surface 

Transportation Board. See Pub. L. No. 104-88 § 102, 109 Stat. 

803, 822-29 (1995), codified in part at 49 U.S.C. §§ 10101 et 

seq. 

3
productivity as an element of the calculation used for 

determining the adjustment factor for rail rates. See Railroad 

Cost Recovery Procedures–Productivity Adjustment, Ex Parte No. 

290 (Sub. No. 4), 5 I.C.C.2d 434 (noting that in the original 

rail cost adjustment factor the Commission “considered, but 

rejected, proposals to . . . recogniz[e] the impact of improved 

productivity on the cost of rail outputs”). This version of 

RCAF became known as the Rail Cost Adjustment Factor-Unadjusted 

(“RCAF–U”). 

On March 22, 1989, the ICC adopted a modified RCAF index 

that was based on RCAF-U, but further adjusted that index by 

accounting for improvements in rail productivity. Railroad Cost 

Recovery Procedures–Productivity Adjustment, Ex Parte No. 290 

(Sub. No. 4), 5 I.C.C.2d 434. This cost adjustment factor 

became known as the Rail Cost Adjustment Factor-Adjusted (“RCAFA”). RCAF-A was created in a separate sub-docket of Ex Parte 

No. 290 from RCAF-U, and modifications to RCAF-U continued 

independently from the calculation of RCAF-A. See, e.g., 

Railroad Cost Recovery Procedures, Ex Parte No. 290 (Sub. No. 

2), 6 I.C.C.2d 956 (1990) (adopting change in materials and 

supplies component of RCAF-U); see also Edison Electric Inst. v. 

ICC, 969 F.2d 1221, 1222, 1230 (D.C. Cir. 1992) (holding that, 

although the Act neither prohibited nor required a productivity 

adjustment, the ICC was statutorily authorized and properly 

4
exercised its discretion to prospectively improve RCAF by a 

productivity adjustment). 

Although RCAF-A is presently the only index permitted to be 

used in regulated rail transportation contracts that must apply 

a rate adjustment factor, Congress requires the Surface 

Transportation Board, the successor to the ICC, to continue to 

publish both the RCAF-U and RCAF-A indices, recognizing that 

there are contracts remaining in force that use RCAF-U and 

parties to unregulated contracts may continue to use RCAF-U as 

the basis for rate adjustment provisions if they choose to do 

so. See 49 U.S.C. § 10708 (2006); see also Burlington N. R.R. 

Co. v. Nebraska Pub. Power Dist., 931 F. Supp. 1470, 1476 (D. 

Neb. 1996) (noting that “[t]he ICC has remained neutral about 

whether particular [unregulated] contracts required the use of 

RCAF(U) or RCAF(A)”). 

In the present case, the parties agree that at the time the 

CTA was executed, they were free to select either RCAF-U or 

RCAF-A to adjust the rates to be charged under the CTA. It is 

also not disputed that because of the differences in the method 

of calculating the two indices, use of RCAF-U for adjusting coal 

transportation rates under the CTA would result over time in 

significantly higher amounts being owed by the utilities to 

Norfolk Southern than would be owed under rates adjusted by 

RCAF-A. 

5
On June 29, 1989, William B. Bales, Norfolk Southern’s Vice 

President for Coal and Ore Traffic, sent a memorandum to ODEC 

detailing the quarterly rate adjustment for transportation of 

coal under the CTA. In each subsequent quarter thereafter 

through the third quarter of 2003, Bales or another Norfolk 

Southern executive prepared and transmitted to ODEC a similar 

memo detailing the adjusted coal transportation rates for the 

Clover facility for the upcoming quarter. Although none of the 

memoranda indicated specifically whether the adjustment factor 

being used to determine the rates was RCAF-U or RCAF-A, 

beginning with the fourth quarter of 1991, Bales referred in his 

cover memo to the contract providing for “an adjustment of 50% 

of the adjusted RCAF” as the basis for determining the coal 

transportation rates for the Clover facility. (Emphasis added.) 

In September 1993, VEPCO and Norfolk Southern held 

negotiations in an effort to form a separate contract for 

transportation of coal to the Clover facility. Among other 

matters, VEPCO and Norfolk Southern specifically discussed 

changing the rate adjustment factor under the CTA to “75% of the 

Unadjusted RCAF.” Despite these negotiations, no new contract 

was agreed upon, and all coal subsequently transported to the 

Clover facility by Norfolk Southern remained subject to the 

provisions of the CTA, and all adjustments to the coal 

6
transportation rates under the CTA before December 1, 2003 were 

made using RCAF-A to calculate the quarterly change in the rate. 

In a letter dated October 17, 2003 which summarized 

communications made in a meeting on October 14, 2003, Thomas E. 

Rappold, Norfolk Southern’s Assistant Vice President for Utility 

and Industrial Coal Marketing, advised Jeff Dowhan, the Coal 

Contracts Manager for Dominion Resources, Inc., the parent 

company of VEPCO, that Norfolk Southern intended to begin making 

quarterly adjustments to the coal transportation rates under the 

CTA using RCAF-U, and that all deliveries beginning on December 

1, 2003 would be subject to these higher rates. In that letter, 

Rappold “acknowledged that, when RCAF-A was first introduced, 

[Norfolk Southern] applied this index for what was intended to 

be the short-term benefit of [the] Clover [facility].” Rappold 

maintained, however, that the CTA “contract language specifies 

use of RCAF-U,” and that “due to [Norfolk Southern’s] attention 

to other matters, the benefit of RCAF-A was extended to [the 

utilities] far longer than anticipated” resulting in an 

“extraordinary windfall” to the utilities. 

The utilities rejected Norfolk Southern’s assertion that 

RCAF-U could be used to adjust transportation rates under the 

CTA and this litigation ensued. 

PROCEEDINGS 

7
On November 26, 2003, the utilities filed in the circuit 

court a bill of complaint seeking a declaratory judgment that 

the CTA unambiguously specified use of “the Contract ratio” as 

the rail cost adjustment factor and sought specific performance 

of the contract for future transportation of coal to the Clover 

facility applying rates adjusted by “the Contract ratio.” The 

utilities argued that the “Contract ratio” referred to in the 

Bill of Complaint was RCAF-A. The Bill of Complaint, however, 

did not state that the CTA required the use of RCAF-A; rather, 

it stated that the CTA contained a “Contract ratio” that was to 

be applied. The utilities alleged that the representations made 

by Norfolk Southern at the October 14, 2003 meeting constituted 

an anticipatory breach of the CTA and that using RCAF-U to 

adjust the future coal transportation rates “would wrongfully 

inflate [the utilities’] rates by hundreds of millions of 

dollars.” 

Norfolk Southern filed a demurrer to the bill of complaint, 

asserting that the utilities had failed to state a claim upon 

which relief may be granted because the CTA was unambiguous in 

requiring the utilities to pay for the transportation of coal to 

the Clover facility in accord with the application of RCAF-U in 

the quarterly adjustment of coal transportation rates. Norfolk 

Southern also filed an answer and cross-bill seeking a 

declaratory judgment and specific performance of the CTA using 

8
RCAF-U to adjust the future coal transportation rates.3 Norfolk 

Southern also sought damages for breach of contract “for all 

amounts underpaid by [the utilities] since December 1, 2003” and 

“interest on all such amounts.” 

Following a hearing, limited to the issue of determining 

whether the CTA specified the use of RCAF-U or RCAF-A as the 

rate adjustment factor, the circuit court issued an opinion 

letter dated December 22, 2004. In that opinion letter the 

court found that “the language of [the CTA] is clear and 

unambiguous” and that Article 25 “refers to the unadjusted Rail 

Cost Adjustment Factor.” The court further opined that it was 

“not convinced that a latent ambiguity exists, or that the RCAFA is an amendment to the RCAF-U as contemplated by the 

contract.” An order embodying this ruling and granting Norfolk 

Southern’s demurrer was entered nunc pro tunc March 9, 2005.

In an order entered February 11, 2005, the circuit court 

denied the utilities’ motion for leave to amend their bill of 

 3

The pleading was styled as an “answer and counterclaim,” 

but the style was subsequently amended to “answer and crossbill” to reflect that the action had been brought on the equity 

side of the court’s docket. This action was brought before we 

amended our rules, effective January 1, 2006, effectively 

abolishing the division of trial court dockets into legal and 

equity proceedings by providing that any civil suit, which 

includes legal and equitable causes of action, is commenced by 

filing a “complaint” and claims made in responsive pleadings are 

either “counterclaims,” if against the original plaintiff, or 

“cross-claims,” if against a co-defendant. See Rules 3:1, 3:2, 

3:9 and 3:10. 

9
complaint. The court found “that the proposed amendment would 

accomplish nothing more than provide [an] opportunity [to the 

utilities] for reargument of questions already decided and that 

the proposed amendment seeks determination of disputed issues 

rather than an adjudication of the parties’ rights and is 

therefore an inappropriate use of declaratory judgment.” 

However, the court granted the utilities leave to file an 

amended answer to Norfolk Southern’s cross-bill, so long as the 

amended answer did not allege “that [the CTA] is ambiguous, or 

that the CTA provides for the use of RCAF-A, those issues having 

been decided by this court.” 

The utilities filed an amended answer to the cross-bill in 

which they made extensive allegations regarding the parties’ 

dealings both before and after the execution of the CTA. Based 

on these allegations, the utilities contended that Norfolk 

Southern was estopped from asserting the application of RCAF-U, 

that Norfolk Southern had implicitly accepted a modification or 

novation of the CTA requiring the use of RCAF-A, and that 

Norfolk Southern’s actions in this regard constituted fraud in 

the inducement. The amended answer also reasserted that Norfolk 

Southern’s claims were barred by the doctrines of laches and 

waiver and, in whole or in part, by the statute of limitations. 

Norfolk Southern filed a motion to strike various 

allegations relating to actions occurring prior to the execution 

10
of the CTA and allegations that Norfolk Southern had agreed to 

the use of RCAF-A as the rate adjustment schedule under the 

agreement. Norfolk Southern contended that these factual

allegations were contrary to the circuit court’s determination 

that the CTA was not ambiguous with regard to the specification 

of RCAF-U as the applicable rate adjustment factor. Thus, 

Norfolk Southern asserted that these allegations and the 

affirmative defenses of novation, modification, fraud in the 

inducement, waiver and estoppel were barred by the doctrine of 

judicial estoppel. Norfolk Southern also contended that even if 

these defenses were not barred by judicial estoppel, the 

allegations of the amended answer were insufficient to establish 

these defenses as well as the defense of the statute of 

limitations. 

 The utilities responded to Norfolk Southern’s motion to 

strike their factual allegations relating to pre-contract events

by asserting that it was “facially absurd” to conclude that the 

circuit court’s determination that the CTA was unambiguous in 

requiring application of RCAF-U to coal transportation rate 

adjustments at the time of its execution barred the utilities 

from pleading allegations germane to its affirmative defenses. 

The utilities next contended that judicial estoppel did not 

apply because the record did not reflect that the court relied 

on the assertion that the CTA had not been amended in reaching 

11
its conclusion that RCAF-U was the specified rate adjustment 

factor. Moreover, they contended that judicial estoppel only 

bars a party from changing its position after having 

successfully prevailed under the prior position in the same or 

prior proceedings, whereas here, the position maintained by the 

utilities under their bill of complaint had failed. The 

utilities also asserted that their amended answer contained only 

pleading in the alternative, and “there is no contradiction 

between an allegation that a contract was not formally amended 

and an allegation that it was modified for consideration, by 

estoppel, or by waiver.” Finally, in response to Norfolk 

Southern’s motion to strike the affirmative defenses on 

alternate grounds, the utilities asserted that they “more than 

sufficiently pled facts which create a jury question” and 

therefore Norfolk Southern’s alternative motion to strike should 

be denied. 

On November 1, 2005, following additional briefing and oral 

argument by the parties, the circuit court entered a decree in 

which it stated that, in construing Article 25 of the CTA, it 

had relied on the factual assertions in the bill of complaint 

that the CTA contained the rate adjustment schedule and that 

schedule had not been amended. The court also held that the 

amended answer now alleged that the terms of the CTA “were 

amended after all, whether through theories of estoppel, 

12
modification, novation, fraud in the inducement, or waiver.” 

Thus, the court held that the utilities were judicially estopped 

from taking inconsistent positions in their amended answer from 

those originally asserted in their bill of complaint and struck 

the affirmative defenses of estoppel, modification, novation, 

fraud in the inducement and waiver. The court also granted 

Norfolk Southern’s motion to strike certain factual allegations 

from the amended answer.4 The circuit court also found that the 

grounds stated in Norfolk Southern’s alternative motion to 

strike the utilities’ affirmative defenses provided an 

independent basis to support the court’s judgment. The court 

rejected the statute of limitations defense because Norfolk 

Southern did not seek damages for any underpayment before 

December 1, 2003. Finally, the court concluded that the 

equitable defense of laches would not apply to the legal claim 

for breach of contract and that, in any case, the utilities had 

not shown any actual harm caused by Norfolk Southern’s delay in 

enforcing its rights under the contract. 

Following entry of the November 1, 2005 decree, the 

utilities and Norfolk Southern continued to dispute the proper 

calculation of the rates for coal transportation to the Clover 

facility. On July 7, 2006, Norfolk Southern filed a motion 

requesting that the circuit court declare that, based on its 

 

13

4

 The utilities have not appealed this ruling. 
previous orders, the calculation of the rate to be imposed be 

based on RCAF-U applied from the inception of the CTA. 

The utilities, in a memorandum opposing Norfolk Southern’s 

motion, contended that the issue was not and could not be 

resolved under the court’s prior rulings, that the adjustment of 

the rates be based on an application of RCAF-U to the rate, as 

previously adjusted by RCAF-A, in effect in the quarter prior to 

the December 1, 2003, and requested the matter be set for trial. 

The circuit court rejected the utilities’ position and 

entered an order granting Norfolk Southern’s motion. The court 

directed the utilities to “calculat[e] the rates paid under the 

[CTA] as if the RCAF had been properly applied from the [CTA’s] 

inception.” The utilities were further ordered to pay the 

arrearage from December 1, 2003 along “with interest at the rate 

provided by the [CTA],” and to pay for all future deliveries of 

coal to the Clover facility in accord with the court’s 

determination that RCAF-U applied to the rates to be charged 

from the inception of the CTA.5

On June 11, 2007, the utilities filed a motion to vacate 

the September 1, 2006 order, while on June 27, 2007, Norfolk 

Southern filed a motion to schedule a status conference to 

 5

 The utilities noted an appeal from this order. This Court 

dismissed the appeal without prejudice, finding that there was 

not yet a final, appealable order in the case. VEPCO v. Norfolk 

Southern Railway Co., Record No. 062501 (May 11, 2007) (order). 

14
resolve all pending matters and to enter a final judgment. The 

parties filed memoranda supporting their respective positions as 

to whether the judgment, as expressed in the circuit court’s 

prior orders, should be confirmed by a final judgment, or if the 

court should set aside its prior determinations and set the 

matter for trial. Ultimately, the parties agreed to file a 

joint submission to the court setting out the matters they 

agreed had been resolved and those issues that the utilities 

contended remained in dispute. 

On April 17, 2008, the circuit court entered a final order 

and decree concluding the proceedings on the cross-bill. In 

that order, the court, without express comment, denied the 

utilities’ motion for setting aside the prior determinations of 

the court. In accord with the stipulations of the parties, the 

court entered judgment for Norfolk Southern in the amount of 

$77,708,000 for underpayment of coal delivery rates between 

December 1, 2003 and November 30, 2007, along with pre-judgment 

interest of $8,476,222.44 based on the short term prime rate 

published by J.P. Morgan Bank as provided for in the CTA. The 

court also imposed post-judgment interest based on the then 

applicable statutory rate of 7.5%. This appeal followed. 

DISCUSSION 

We awarded the utilities an appeal from the circuit court’s 

judgment based upon eight separate assignments of error. The 

15
first two assignments of error address the circuit court’s 

rulings regarding the interpretation and ambiguity of the 

contact. In its third assignment of error the utilities contend 

that the circuit court erred in striking its affirmative 

defenses and denying its motion to file an amended bill of 

complaint. The remaining assignments of error address the 

court’s actions enforcing those rulings and the entry of the 

judgment with interest against the utilities. We begin with a 

discussion of the first two assignments of error relating to 

contract interpretation. 

1. Contract Interpretation

The utilities’ first assignment of error challenges the 

circuit court’s ruling that Article 25 of the CTA specifies that 

RCAF-U, rather than the RCAF-A, is to be used as the rate 

adjustment factor for transportation of coal to the Clover 

facility. In the second assignment of error, the utilities 

contend that if Article 25 of the CTA does specify RCAF-U as the 

coal transportation rate adjustment factor, then the court erred 

in ruling that there is not a latent ambiguity in that article 

that would permit the utilities to present parol evidence that 

the parties had intended a different meaning of the rate 

adjustment factor under the CTA. 

In considering the issues raised by the first two 

assignments of error, we are guided by the well-settled 

16
principle that “[t]he interpretation of a contract presents a 

question of law subject to de novo review.” PMA Capital 

Insurance Co. v. US Airways, Inc., 271 Va. 352, 357-58, 626 

S.E.2d 369, 372 (2006). Moreover, it is equally settled that 

the primary focus in considering disputed contractual language 

is for the court to determine the parties’ intention, which 

should be ascertained, whenever possible, from the language the 

parties employed in the contract. Flippo v. CSC Assocs. III, 

L.L.C., 262 Va. 48, 64, 547 S.E.2d 216, 226 (2001); Langman v. 

Alumni Ass’n of the Univ. of Va., 247 Va. 491, 498-99, 442 

S.E.2d 669, 674 (1994). 

The utilities first contend that the circuit court erred in 

failing to find that Article 25 of the CTA unambiguously 

specifies that RCAF-U is to be used as the coal transportation 

rate adjustment factor. This is so, they contend, because the 

definition of RCAF in the CTA makes clear that the parties 

understood that there was only one official rate adjustment 

factor designated by the ICC for coal transportation contracts 

and, at the time of the execution of the CTA, that was RCAF-A. 

They point to the language of Article 25 that incorporates into 

the CTA “the applicable procedures described by the ICC in Ex 

Parte No. 290 (Sub. No. 2) and published in Title 49 C.F.R., 

Part 1102, Section 1102.1 and Interstate Commerce Act, Section 

10707, as may be amended,” contending, as they did in the 

17
circuit court, that RCAF-A was created by an amendment of the 

ICC regulations and superseded RCAF-U. (Emphasis added.) The 

utilities concede that under the ICC, and subsequently the 

Surface Transportation Board, RCAF-U continues to be calculated 

and published, but they contend that this is done only because 

RCAF-U is a component of RCAF-A and to accommodate contracts 

that were executed before RCAF-A became the official rate 

adjustment factor. We disagree. 

The circuit court correctly determined that the language of 

Article 25 expressly and unambiguously incorporates into the CTA 

“the applicable procedures prescribed by the ICC in Ex Parte No. 

290 (Sub. No. 2) and published in Title 49 C.F.R., Part 1102, 

Section 1102.1 and Interstate Commerce Act, Section 10707.” 

There can be no question that the RCAF-U index is the basis of 

the “applicable procedures” for determining adjustments to rail 

freight delivery rates “described by the ICC in Ex Parte No. 290 

(Sub. No. 2),” which is the only index described in the reports 

of those regulatory proceedings. To the extent that the term 

“as may be amended” can be applied to the entire clause, it is 

nonetheless clear that this would refer to an amendment of the 

procedures for calculating and applying RCAF-U under Ex Parte 

No. 290 (Sub. No. 2). 

It is equally clear that had the parties intended for the 

CTA to incorporate RCAF-A, they could have specified the 

18
applicable index as being that “prescribed by the ICC in Ex 

Parte No. 290 (Sub. No. 4),” which established the procedure for 

calculating and applying the RCAF-A index. Creation of RCAF-A 

had been under consideration by the ICC for some time and that 

the regulations for its calculation and application had been 

promulgated before the CTA was executed, albeit only by a matter 

of weeks. Thus, had ODEC and Norfolk Southern intended for the 

CTA to specify the use of RCAF-A, they could have done so 

expressly and without the need of any reference to the 

regulatory process that plainly prescribes RCAF-U. Accordingly, 

we hold that the circuit court did not err in finding that 

Article 25 of the CTA unambiguously specifies RCAF-U as the rate 

adjustment factor for transportation of coal to the Clover 

facility. 

The utilities next contend that if Article 25 of the CTA 

must be construed as requiring the use of RCAF-U, the circuit 

court nonetheless erred in failing to find that there was a 

latent ambiguity in the CTA. They contend that the existence of 

the latent ambiguity is established by the fact that RCAF-A 

rather than RCAF-U was used as the rate adjustment factor for 

the first fourteen years of the contract, and that this course 

of dealing between the parties reflects their true intent. 

An ambiguity exists when the contract’s language is of 

doubtful import, is susceptible of being understood in more than 

19
one way or of having more than one meaning, or refers to two or 

more things at the same time. Tuomala v. Regent Univ., 252 Va. 

368, 374, 477 S.E.2d 501, 505 (1996); Galloway Corp. v. S.B. 

Ballard Constr., 250 Va. 493, 502, 464 S.E.2d 349, 355 (1995). 

Normally, an ambiguity in a contact is “patent,” that is, the 

language of the contract itself reveals that it can be 

interpreted in more than one way. A latent ambiguity exists 

where language “while appearing perfectly clear at the time the 

contract[] [is] formed, because of subsequently discovered or 

developed facts, may reasonably be interpreted in either of two 

ways.” Galloway, 250 Va. at 503, 464 S.E.2d at 355; Zehler v. 

E.L. Bruce Co., Inc., 208 Va. 796, 799 n.5, 160 S.E.2d 786, 789 

n.5 (1968). 

Quoting from footnote 5 in Zehler, the utilities contend 

that “[i]f two RCAFs exist, the term ‘RCAF’ would be ‘a term 

which, upon application to external objects, is found to fit two 

or more of them equally.’” Thus, they contend that the circuit 

court should have found that there was a latent ambiguity in the 

CTA and looked to the parties’ subsequent dealings to determine 

that, regardless of the apparent meaning of the language of 

Article 25, the parties’ intention at the time of the execution 

of the CTA was to use RCAF-A as the rate adjustment factor. 

This is so, they maintain, because “the construction placed upon 

the ambiguous term by the parties is practically conclusive.” 

20
The difficulty with the utilities’ position on this issue 

is that it necessarily presumes that at the time of the CTA’s 

execution, the parties were unaware that there was a distinction 

between RCAF-U and RCAF-A based on an erroneous belief that 

RCAF-A had superseded RCAF-U as “the RCAF.” The parties’ 

subsequent dealings, however, demonstrate that this was not the 

case. The utilities focus solely on those portions of the 

parties’ subsequent dealings with regard to the CTA that show 

Norfolk Southern actually used RCAF-A to adjust the rates for 

coal transportation to the Clover facility until late 2003. 

However, it is equally clear, especially from the September 1993 

negotiations between VEPCO and Norfolk Southern, that the 

parties knew that RCAF-U was available as to rate adjustment 

factors for calculating adjustments to the coal transportation 

rates under the CTA. 

The mere fact that RCAF-A was used to calculate the rate 

adjustments for transportation of coal to the Clover facility 

for an extended period of time is insufficient to establish that 

Article 25, which plainly refers to RCAF-U as the rate 

adjustment factor, must have resulted from a mutual 

misunderstanding of the parties as to the import of that 

language. Norfolk Southern’s assertion that it applied RCAF-A 

in making rate adjustments for transportation of coal to the 

Clover facility initially through forbearance and subsequently 

21
by lack of diligence is contrary to the utilities’ position that 

the parties intended for Article 25 of the CTA to specify RCAF-A 

as the rate adjustment factor. The mere fact that the parties 

disagree about the meaning of the CTA’s terms is not evidence 

that the CTA language is ambiguous. Pocahontas Mining Ltd. 

Liab. Co. v. Jewell Ridge Coal Corp., 263 Va. 169, 173, 556 

S.E.2d 796, 771 (2002); Galloway, 250 Va. at 502, 464 S.E.2d at 

354. 

For these reasons, we hold that the circuit court did not 

err in failing to find that the CTA contained a latent ambiguity 

and in holding that the CTA unambiguously specifies RCAF-U as 

the coal transportation rate adjustment factor for the Clover 

facility. 

2. Judicial Estoppel

 In their third assignment of error, the utilities claim 

that the circuit court erred in striking certain affirmative 

defenses on the basis of judicial estoppel and also claim that 

the alternative reasons given for striking those defenses were 

error. We begin with the circuit court’s ruling that the 

affirmative defenses of waiver and estoppel are barred by 

judicial estoppel.6

 6

 The affirmative defenses of novation, modification, fraud 

in the inducement, estoppel and waiver were struck on the basis 

of judicial estoppel. However, in this appeal the utilities 

22
The doctrine of judicial estoppel prevents a party from 

assuming successive positions in the course of a suit or series 

of suits with regard to the same fact or set of facts if those 

facts are inconsistent or mutually contradictory. Bentley 

Funding Group, L.L.C. v. SK&R Group, L.L.C., 269 Va. 315, 325, 

609 S.E.2d 49, 53-54 (2005). The purpose of the doctrine is to 

protect the integrity of the judicial process. Parson v. 

Carroll, 272 Va. 560, 564, 636 S.E.2d 452, 454 (2006). While 

this doctrine is widely recognized, it is an equitable doctrine, 

not amenable to an “exhaustive formula” for determining its 

applicability. Bentley Funding Group, 269 Va. at 325-26, 609 

S.E.2d at 54 (quoting New Hampshire v. Maine, 532 U.S. 742, 751 

(2001)). 

 In considering this doctrine we have identified certain 

conditions as prerequisites for its application. The 

inconsistent or contradictory assertions must be assertions of 

fact, not law, Bentley Funding Group, 269 Va. at 326, 609 S.E.2d 

at 54 (quoting Lowry v. Stovall, 92 F.3d 219, 224 (4th Cir. 

1996)), the parties must be the same if the inconsistent 

positions involve different proceedings, Lofton Ridge, LLC v. 

Norfolk S. Ry. Co., 268 Va. 377, 382, 601 S.E.2d 648, 651 

(2004), and the prior inconsistent position must have been 

 

address only the affirmative defenses of estoppel and waiver. 

Accordingly, we limit our review to those two defenses. 

23
relied upon by the court or prior court in rendering its 

decision. See Bentley Funding Group, 269 Va. at 327, 609 S.E.2d 

at 54-55. 

The inconsistent positions in this case stem from the 

circuit court’s ruling on the utilities’ bill of complaint for a 

declaratory judgment interpreting provisions of the CTA. In 

that proceeding the utilities alleged that the CTA was the 

contract agreed upon by the parties, that the contract contained 

the contractually agreed upon rate adjustment ratio for the 

transportation of coal to the Clover Facility, and that the 

parties had never amended the contract to change the rate 

adjustment ratio from that contained in the contract. The 

circuit court relied on these factual assertions and held that 

the parties had agreed to be bound by the terms contained in the 

CTA and that those terms had not been amended. The circuit 

court held that the CTA required the use of the RCAF-U rate 

adjustment ratio. That was a legal conclusion that differs from 

the position advocated by the utilities. Nevertheless, the 

circuit court’s reliance on the utilities’ factual assertions in 

reaching this decision is beyond question. 

In the affirmative defenses in their amended answer to 

Norfolk Southern’s cross-bill, the utilities pled that “[t]he 

parties agreed to use the RCAF-A under the Agreement” and that 

Norfolk Southern “ratified the parties’ agreement to use the 

24
RCAF–A under the Agreement.” The circuit court held that these 

assertions of an amendment to the CTA were inconsistent with or 

contrary to the assertion previously made that the CTA had not 

been amended. 

The utilities argue that the assertion that the CTA had not 

been amended was not an assertion of fact but an assertion of 

law and the amended answer only contained “alternative legal 

theories.”7 However under our case law, the issue of contract 

amendment is a finding of fact, not of law.8 See Reid v. Boyle, 

259 Va. 356, 368, 527 S.E.2d 137, 144 (2000)(whether contract 

was amended reviewed applying the clear error standard.) 

Therefore, the allegations asserting that the CTA was amended 

are factual assertions inconsistent with the factual assertions 

made by the utilities in their bill of complaint. 

The utilities next argue, citing Bentley Funding Group, 

that judicial estoppel should not have been applied because 

judicial estoppel requires “a successful judgment in favor of 

the non-moving party on any such positions of fact” and the 

utilities “did not prevail . . . on their purportedly 

 7 The utilities abandoned the argument made in the circuit 

court that their allegation that the CTA had not been amended 

meant only that the CTA had not been amended in writing. 8

 The utilities attempt to distinguish their pleading from 

an “amendment” of a contract by using words such as “alter” or 

“modify.” These semantic differences do not change the nature 

of the action alleged which is nothing more or less than an 

amendment of the contract. 

25
inconsistent prior position.” However neither Bentley Funding 

Group nor any other case has required that the non-moving party 

secure a favorable judgment based on the prior inconsistent 

position as a prerequisite for the application of judicial 

estoppel. Rather, our cases only require that the court relied 

upon the prior inconsistent position in rendering a prior 

judgment or ruling.9 In Bentley Funding Group the circuit court 

found that judicial estoppel should be applied to the 

defendant’s claim that he owned certain escrow accounts because 

the defendant had not listed those accounts as an asset in a 

prior bankruptcy proceeding. 269 Va. at 323, 609 S.E.2d at 52. 

In reversing the circuit court’s application of judicial 

estoppel, this Court’s inquiry was directed to whether the prior 

factual position reflecting non-ownership of the escrow accounts 

was relied upon by the bankruptcy court in rendering the 

decision approving a contract for the purchase of property. See

id. at 327-29, 609 S.E.2d at 54-55. The Court made no mention 

or inquiry regarding whether the non-moving party received a 

favorable judgment based on the prior inconsistent position. 

The utilities’ assertion that application of the doctrine 

requires that the non-moving party must obtain a “successful 

judgment” based on the inconsistent position apparently stems 

 9

 As stated above, the doctrine can be applied in the course 

of a single action or a series of actions. 

26
from certain language used in the Bentley Funding Group opinion 

to describe the elements and rationale for the application of 

judicial estoppel. In this portion of the opinion, the Court in 

Bentley Funding Group quoted the following passage from New 

Hampshire v. Maine, 532 U.S. 742, 750-51 (2001): 

Courts regularly inquire whether the party has 

succeeded in persuading a court to accept that party’s 

earlier position, so that judicial acceptance of an 

inconsistent position in a later proceeding would 

create the perception that either the first or the 

second court was misled. Absent success in a prior 

proceeding, a party’s later inconsistent position 

introduces no risk of inconsistent court 

determinations, and thus poses little threat to 

judicial integrity. 

Bentley Funding Group, 269 Va. at 327, 609 S.E.2d at 54-55. 

Although this passage uses the phrase “success in a prior 

proceeding,” the context shows that the phrase refers to the 

prior sentence which addresses the persuasion of the court to 

accept the nonmoving party’s earlier position.10 The Court in 

Bentley Funding Group then went on to say that “[w]ithout the 

requirement that the prior court accepted the earlier 

inconsistent position, facts not material or relevant in the 

prior proceeding could be asserted as a bar to a party’s cause 

 10 The statement from New Hampshire v. Maine was also quoted 

in Matthews v. Matthews, 277 Va. 522, 529, 675 S.E.2d 157, 161 

(2009), in the context of reciting the elements of judicial 

estoppel. The doctrine was not applied in that case because the 

alleged prior inconsistent position was one of law, not fact. 

Id. at 530, 675 S.E.2d at 161. 

27
of action in a later proceeding.” Id. at 327, 609 S.E.2d at 55 

(emphasis added). Nothing in Bentley Funding Group states or 

implies that the non-moving party must have succeeded in 

obtaining a favorable judgment based on the prior inconsistent 

factual position. 

Based on our prior consideration of judicial estoppel, we 

conclude that application of the doctrine requires only that the 

prior inconsistent factual position must have been relied upon 

by the court in reaching its decision. In this case, the 

circuit court, as reflected in its order, relied on the 

utilities’ position that the CTA was binding on the parties and 

had not been amended. Therefore that element of judicial 

estoppel has been met. 

Finally, the utilities, citing Lofton Ridge, 268 Va. at 

382, 601 S.E.2d at 651, argue that judicial estoppel should not 

be applied because Norfolk Southern prevailed in its 

interpretation of the CTA and therefore was not prejudiced by 

the prior inconsistent position. The utilities’ reliance on 

Lofton Ridge for the proposition that prejudice is a 

prerequisite for the application of judicial estoppel is 

misplaced. “Prejudice” is mentioned only three times in the 

opinion in discussing judicial estoppel. The word first appears 

in a parenthetical description of another case cited to support 

the statement that judicial estoppel may bar a litigant from 

28
taking inconsistent actions within a single proceeding. Id. at 

381-82, 601 S.E.2d at 650-51. The second use of the word 

“prejudice” is found in a statement discussing inconsistent 

legal theories,11 and the third appears in a recitation of the 

appellant’s reasons for asserting that judicial estoppel was 

improperly applied in that case. Id. at 382, 601 S.E.2d at 651. 

The Court’s holding that the doctrine was improperly applied in 

Lofton Ridge was based on the lack of identity of parties, not 

the lack of prejudice. Id. at 383, 601 S.E.2d at 651-52. In 

sum, Lofton Ridge does not incorporate prejudice as a condition 

for the application of judicial estoppel. 

The doctrine of judicial estoppel, as stated above, is a 

doctrine addressing the integrity of the court and its decrees, 

preventing litigants from “playing fast and loose” with court 

rules and litigation strategy. Wilroy v. Halbleib, 214 Va. 442, 

445, 201 S.E.2d 598, 601 (1974) (quoting Rohanna v. Vazzana, 196 

Va. 549, 553, 84 S.E.2d 440, 442 (1954)). It is not a doctrine 

primarily directed to the interests of the litigants. 

Nevertheless it is an equitable doctrine and the United States 

Supreme Court in New Hampshire v. Maine identified prejudice as 

 11 “However, ‘[a] person who has taken an erroneous position 

on a question of law is ordinarily not estopped from later 

taking the correct position, provided his adversary has suffered 

no harm or prejudice by reason of the change.’ ” Lofton Ridge, 

268 Va. at 382, 601 S.E.2d at 651 (quoting The Pittston Co. v. 

29
a “third consideration” that can be used in determining whether 

the doctrine should be applied. 532 U.S. at 751 (considering 

“whether the party seeking to assert an inconsistent position 

would derive an unfair advantage or impose an unfair detriment 

on the opposing party if not estopped”). The Supreme Court did 

not, however, consider this factor, along with others, as 

establishing “inflexible prerequisites or an exhaustive formula 

for determining the applicability of judicial estoppel.” Id. 

Thus, neither this Court nor the United States Supreme Court has 

made a showing of prejudice a prerequisite to the application of 

judicial estoppel. Nevertheless, in this case the circuit court 

found that Norfolk Southern would suffer an unfair detriment if 

the inconsistent position was advanced because it would incur 

the expense and delay of relitigating the meaning of the CTA, 

which the circuit court had already determined in Norfolk 

Southern’s favor. 

For these reasons, we conclude that the circuit court did 

not err in striking the utilities’ affirmative defenses because 

the elements of judicial estoppel were established in this case. 

Based on this holding, we also reject the utilities’ challenge 

to the circuit court’s order entering a protective order with 

 

O’Hara, 191 Va. 886, 904, 63 S.E.2d 34, 43 (1951))(emphasis 

added). 

30
regard to any discovery on communications prior to the execution 

of the CTA or alleged amendments subsequent to its execution. 

In light of this holding we need not address the circuit 

court’s alternative grounds for striking the defenses of waiver 

and estoppel.12 We turn now to the circuit court’s ruling 

striking the utilities affirmative defense of the statute of 

limitations. 

3. Statute of Limitations

The utilities contend that the circuit court erred in 

striking their assertion of a plea in bar of the statute of 

limitations. The utilities advance two separate theories for 

the application of the statute of limitations to this case. 

First, they contend that because the CTA was not a divisible 

contract, the circuit court should have found that the first 

breach of the CTA occurred in 1989 when Norfolk Southern first 

used the RCAF-A to adjust the coal transportation rate and, 

 12 The utilities did not argue below and do not assert here 

that, even if the application of judicial estoppel is correct, 

the affirmative defenses of estoppel and waiver nevertheless 

remain viable. Therefore, the issue of whether these 

affirmative defenses remain viable even after the utilities are 

precluded from relying on the inconsistent position asserted in 

those defenses has not been preserved or raised in this appeal 

and is not before us for review. Furthermore, the utilities did 

not assign error to the trial court’s ruling striking from the 

amended answer certain factual allegations upon which the 

utilities’ waiver and estoppel defenses are based. Therefore, 

those factual allegations, which are recited in the dissent, 

cannot be considered in resolving the utilities’ legal arguments 

regarding estoppel and waiver. 

31
thus, Norfolk Southern’s breach of contract action is barred as 

untimely under Code § 8.01-246(2), the applicable five year 

statute of limitations. We disagree. 

Even accepting the utilities’ premise that the CTA is an 

indivisible contract, it is self-evident that as Norfolk 

Southern was responsible for calculating the quarterly 

adjustments to the coal transportation rates, its application of 

RCAF-A to that calculation prior to December 1, 2003, whether 

through forbearance or error, would not constitute a breach of 

the CTA by either Norfolk Southern or the utilities. Moreover, 

Norfolk Southern has consistently acknowledged that it is 

entitled to seek damages for underpayment only from December 1, 

2003, the date on which it first made the demand that the 

utilities begin paying for the transported coal applying the 

RCAF-U rate. It is only by virtue of the utilities’ failure to 

accede to that demand that an actionable breach of the CTA could 

have occurred. Thus, we hold that the circuit court did not err 

in rejecting the utilities’ assertions that the statute of 

limitations barred Norfolk Southern’s breach of contract claim 

entirely.13

 13In light of our disposition of the various issues on this 

appeal, we need not address the utilities’ further contention 

that the statute of limitations would bar Norfolk Southern from 

retroactively applying RCAF-U to adjust the coal transportation 

rates from the inception of the CTA even if Norfolk Southern has 

not waived its ability to do so. 

32
4. Amended Bill of Complaint

The utilities assert that the circuit court erred in 

refusing to allow the utilities to file an amended bill of 

complaint following the circuit court’s ruling on Norfolk 

Southern’s demurrer. The utilities argue that in the proposed 

amended bill of complaint they pled “additional facts and 

theories regarding new matters not contained in the original 

Bill of Complaint.” Specifically, the utilities argued that 

they “alleged new facts to establish estoppel, waiver, and other 

theories” in support of their claims and that none of these 

facts or theories were raised in the original bill of complaint. 

According to the utilities, the circuit court abused its 

discretion in denying the utilities leave to amend because the 

utilities were entitled to pursue them “as independent claims to 

insure that their rights were fully and finally declared, rather 

than be relegated to the status of cross-bill defendants.” 

Concluding, the utilities aver that absent any prejudice to 

Norfolk Southern, and absent any finding that the new theories 

were legally deficient, the circuit court abused its discretion 

in denying leave to amend.

 After reviewing the proposed amended bill of complaint, the 

circuit court concluded that it “would accomplish nothing more 

than provide opportunity for reargument of questions already 

decided.” The circuit court also concluded that the proposed 

33
amendment was not an appropriate use of the declaratory judgment 

mechanism because it sought determination of disputed issues 

rather than adjudication of the parties’ rights. 

The new factual allegations and legal theories in the 

proposed amended bill of complaint were essentially identical to 

those contained in the amended answer to the cross-claim. Many 

of the new factual allegations related to Norfolk Southern’s 

actions which the utilities asserted modified the terms of the 

agreement, an issue already decided as noted by the circuit 

court. Claims of estoppel, modification, novation, and fraud in 

the inducement contained in the proposed amended complaint are, 

as noted by the circuit court, not determinations of rights, and 

thus are not appropriate for a declaratory judgment proceeding. 

Accordingly, the circuit court did not abuse its discretion in 

denying the utilities’ motion to file an amended bill of 

complaint. 

5. Calculation of Damages

Assignments of Error Nos. 4, 5, and 6 are based on 

essentially one issue: the circuit court’s conclusion that 

Norfolk Southern was entitled to calculate the damages it 

claimed – underpayments by the utilities since December 1, 2003 

– by applying the RCAF-U rate adjustment schedule from the 

inception of the agreement in 1989. Utilizing the RCAF-U rate 

adjustment schedule as ordered by the circuit court resulted in 

34
underpayments of $77,708,000, as stipulated by the parties. 

Utilizing the RCAF-U rate to adjust the rates beginning in 

December 1, 2003 results in under payments of $3,816,000, 

according to the utilities.14

In July 2006, Norfolk Southern filed a motion for further 

relief and enforcement of orders, asserting that the circuit 

court’s prior orders granting Norfolk Southern’s demurrer to the 

utilities’ bill of complaint, holding that the CTA required the 

application of the RCAF-U rate adjustment schedule, denying the 

utilities’ motion to file an amended bill of complaint, and 

striking the utilities’ affirmative defenses left “nothing to be 

done in the case except to superintend ministerially” the 

circuit court’s orders. Norfolk Southern sought an order 

compelling the utilities to make the payments due Norfolk 

Southern “from December 1, 2003 forward in accordance with the 

rate adjustments provided by the [CTA].” The utilities opposed 

this motion arguing that the circuit court’s prior orders did 

not resolve the measure of Norfolk Southern’s claimed damages, 

specifically how the RCAF-U should be used in calculating those 

damages. The utilities relied on the prospective nature of the 

non-waiver provision and Paragraph 25 of the CTA. Paragraph 25 

 14 The parties presented a stipulation to the court 

regarding the damage calculation based on application of RCAF-U 

from the inception of the contract and the utilities proffered 

35
provides that the rate per ton shall be set for each calendar 

quarter by adjusting the previous quarter’s rates. The 

utilities argued that the RCAF-U rate schedule should have been 

utilized for determining underpayments beginning with rates 

existing in the calendar quarter prior to December 1, 2003, the 

date Norfolk Southern chose to assert the application of the 

RCAF-U rate schedule. 

The circuit court, by order entered September 1, 2006, 

agreed with Norfolk Southern and ordered that the RCAF-U rate 

adjustment schedule be utilized to calculate the underpaid 

amounts from December 1, 2003 as if the RCAF-U schedule had been 

used since the inception of the CTA. In appealing this ruling, 

the utilities claim the circuit court erred in allowing Norfolk 

Southern to apply the RCAF-U schedule from the inception of the 

CTA in determining its damages, in refusing to vacate its 

September 1, 2006 order, and in refusing to allow certain 

discovery and submission of evidence. 

We find that the circuit court’s order was erroneous. The 

court’s prior orders did not address the amount of damages to 

which Norfolk Southern was entitled under its cross-claim and 

did not address the manner in which those damages should be 

calculated. Only when the manner of calculating damages is 

 

the evidence regarding the amount of damages resulting from 

applying RCAF-U from December 1, 2003. 

36
determined would further action be merely the ministerial 

superintending of the calculation. 

The manner in which the underpayments should be calculated 

is, under the CTA, a matter of contract interpretation. As the 

utilities assert, two provisions of the CTA are relevant to this 

determination. Paragraph 25 provides in part that the specific 

rates contained in the agreement “shall be retained or adjusted 

up or down on a quarterly basis.” The adjustments are to be 

made on the first day of each quarter. This provision requires 

adjustment of rates every quarter. In this case, the rates were 

adjusted every quarter, applying the RCAF-A adjustment ratio. 

Thus, the contract term requiring rate adjustment every quarter 

was satisfied. 

The second provision, Paragraph 5, is a non-waiver 

provision. That provision provides that the “failure of either 

Party to demand strict performance of any or all of the terms of 

this Agreement . . . shall not be construed as a waiver or 

relinquishment of that Party’s right to assert or rely upon any 

such right in the future.” This section allows a contracting 

party to forego application of a term of the agreement but 

assert the term and demand compliance with it in the future. 

Therefore, the provisions of the CTA specifically allowed 

Norfolk Southern to accept an adjustment rate other than RCAF-U 

and then require the use of the contract specified rate, RCAF-U, 

37
for future rate adjustments. The CTA does not, however, permit 

readjusting an already completed rate adjustment when a party 

later seeks to enforce a right which it did not previously 

enforce. To the contrary, the contract terms preclude 

retroactive enforcement of a previously unclaimed right. 

For these reasons, we will reverse the decision of the 

circuit court requiring the application of RCAF-U to the CTA 

from its inception in determining the amount of underpayment to 

which Norfolk Southern is entitled and order that RCAF-U be 

applied beginning December 1, 2003, in determining the amount of 

underpayment to which Norfolk Southern is entitled. 

6. Interest

In their last assignments of error the utilities challenge 

the circuit court’s orders imposing pre- and post- judgment 

interest. They argue that they should not be required to pay 

pre-judgment interest because Norfolk Southern did not make a 

specific claim for unpaid amounts until December 2007 or 

otherwise present invoices showing any underpayment. The 

utilities also argue that pre-judgment interest is only 

authorized under the CTA if the utilities are late in paying. 

Because Norfolk Southern never presented invoices for the 

amounts now claimed until the “eve of trial,” the utilities 

contend that their payments could not have been late. 

38
The utilities argue that post-judgment interest should not 

have been imposed because Paragraph 30 of the CTA provides that 

interest is payable if a party fails to comply with the contract 

by delaying payment. They also assert that the contract sets 

the interest rate as the Chase Manhattan Bank short-term prime 

rate in effect the first day after payment was due until the day 

the delay is cured. The utilities claim that Norfolk Southern 

provided no evidence as to the requisite Chase Manhattan rate 

and therefore post-judgment interest should not be 7.5% but the 

6.0% rate specified in Code § 6.1-330.54. 

The award of pre-judgment interest is a matter of judicial 

discretion. See Code § 8.01-382; Upper Occoquan Sewage Auth. v. 

Blake Constr. Co., 275 Va. 41, 63-64, 655 S.E.2d 10, 23 (2008); 

City of Richmond v. Blaylock, 247 Va. 250, 253, 440 S.E.2d 598, 

599 (1994). Under the circumstances of this case, we cannot 

conclude that the circuit court abused its discretion in the 

pre- and post- judgment interest rates awarded. Furthermore, 

with regard to post-judgment interest, the utilities 

acknowledged the Chase Manhattan rate in the stipulations it 

presented to the circuit court. While the amount of interest 

would vary from that stated in the order in light of our 

conclusion regarding the basis for calculating damages, 

nevertheless, we affirm the circuit court’s imposition of preand post- judgment interest rates. 

39
CONCLUSION 

 To summarize, we will affirm the judgment of the circuit 

court holding that the CTA is unambiguous and requires the use 

of RCAF-U rate adjustment schedule; striking the affirmative 

defenses of waiver and estoppel because they are barred by the 

doctrine of judicial estoppel; striking the affirmative defense 

of the statute of limitations; and denying the utilities’ motion 

to file an amended bill of complaint. We reverse the circuit 

court’s ruling regarding the calculation of damages and hold 

that the damages to which Norfolk Southern is entitled shall be 

calculated by applying the RCAF-U adjustment rate beginning 

December 1, 2003. Finally, we will affirm the circuit court’s 

decision to impose pre- and post-judgment interest. 

Accordingly, we will remand the matter to the circuit court for 

further proceedings consistent with this opinion. 

Affirmed in part, 

reversed in part,

 and remanded.

JUSTICE KOONTZ, with whom CHIEF JUSTICE HASSELL and JUSTICE 

MILLETTE join, concurring in part and dissenting in part. 

I respectfully dissent. Article I, Section 11 of the 

Constitution of Virginia provides, in pertinent part: “That in 

controversies respecting property, and in suits between man and 

man, trial by jury is preferable to any other, and ought to be 

held sacred.” Today, in my view, a majority of this Court 

40
effectively permits a circuit court to deny a party to a 

contract dispute the right to a trial by jury on the merits of 

that party’s assertion of the affirmative defenses of equitable 

estoppel and waiver. I cannot join a decision that results in 

the denial of such a fundamental right based upon what I believe 

to be the inappropriate application by the circuit court of the 

equitable doctrine of judicial estoppel in the factual and 

procedural context of this case. 

The pertinent procedural facts from which the issue arises 

are undisputed and may be fairly distilled to the following 

summary. The utilities initially filed in the circuit court a 

bill of complaint against Norfolk Southern seeking a declaratory 

judgment that the parties’ contract regarding the transportation 

of coal to the utilities’ electricity generating facility in 

Clover, Virginia required the application of the Rail Cost 

Adjustment Factor – Adjusted (“RCAF-A”) for calculating 

quarterly adjustments to the coal transportation rates. At the 

time this contract was executed, the parties had been free to 

select either RCAF-A or the Rail Cost Adjustment Factor – 

Unadjusted (“RCAF-U”); the latter rate factor would result in a 

higher rate for the transportation of coal. The utilities 

maintained in the bill of complaint that the rate factor to be 

applied under the contract was RCAF-A and that the contract had 

not been amended to provide for the application of any other 

41
rate factor. Norfolk Southern filed a demurrer to the bill of 

complaint asserting that the contract unambiguously required the 

application of RCAF-U. The circuit court granted the demurrer. 

Norfolk Southern also filed a cross-bill seeking specific 

performance of the contract using RCAF-U to adjust the future 

coal transportation rates under the contract and damages for 

breach of contract for all amounts allegedly underpaid by the 

utilities resulting from the application of RCAF-A rather than 

RCAF-U. The utilities filed an amended answer to the cross-bill 

asserting, among other things, that Norfolk Southern’s breach of 

contract claims were barred by equitable estoppel and/or waiver. 

The circuit court held that the utilities were judicially 

estopped from taking “inconsistent positions” in their amended 

answer from those originally asserted in their bill of complaint 

and, accordingly, struck the utilities’ affirmative defenses of 

equitable estoppel and waiver. 

The majority now concludes that “the circuit court did not 

err in striking the utilities’ affirmative defenses [of 

equitable estoppel and waiver] because the elements of judicial 

estoppel were established in this case.” In reaching that 

conclusion, the principal focus of the majority’s analysis is 

that the circuit court relied upon the utilities’ position that 

the parties’ contract had not been amended and, thus, that the 

42
utilities had asserted inconsistent factual positions in their 

bill of complaint and their amended answer. 

In my view, when these pleadings are considered in context 

there is no inconsistency in the assertions made by the 

utilities so as to support the application of judicial estoppel 

in this case. It is simply not inconsistent to assert, on the 

one hand, that the contract required the application of RCAF-A 

and had not been amended and, on the other hand, to assert that 

under the facts of the case Norfolk Southern is nevertheless 

estopped from relying upon the application of RCAF-U and/or has 

waived the application of RCAF-U in favor of the application of 

RCAF-A. In short, even though the utilities erroneously 

maintained in their bill of complaint that the parties’ contract 

required the application of RCAF-A rather than RCAF-U, their 

affirmative defenses of estoppel and waiver addressed an 

entirely different legal issue which was whether Norfolk 

Southern could recover damages based on the application of RCAFU after the utilities had paid and Norfolk Southern had accepted 

payments under the contract derived from the application of 

RCAF-A for fourteen years. Clearly, in the absence of judicial 

estoppel, the utilities had a right to submit the merits of 

those defenses to a jury for resolution. 

“ ‘[J]udicial estoppel forbids parties from assuming 

successive positions in the course of a suit, or series of 

43
suits, in reference to the same fact or state of facts, which 

are inconsistent with each other, or mutually contradictory.’” 

Bentley Funding Group, L.L.C. v. SK&R Group, L.L.C., 269 Va. 

315, 325, 609 S.E.2d 49, 53-54, (2005) (quoting Lofton Ridge, 

LLC v. Norfolk S. Ry. Co., 268 Va. 377, 380-81, 601 S.E.2d 648, 

650 (2004)); see also Matthews v. Matthews, 277 Va. 522, 529, 

675 S.E.2d 157, 160 (2009) (same). “The fundamental element of 

judicial estoppel is that ‘the party sought to be estopped must 

be seeking to adopt a position that is inconsistent with a 

stance taken in a prior litigation. And the position sought to 

be estopped must be one of fact rather than law or legal 

theory.’ ” Bentley Funding Group, 269 Va. at 326, 608 S.E.2d at 

54 (quoting Lowery v. Stovall, 92 F.3d 219, 224 (4th Cir. 

1996)); accord Lofton Ridge, 268 Va. at 382, 601 S.E.2d at 651. 

I agree, as noted by the majority here in citing Wilroy v. 

Halbleib, 214 Va. 442, 445, 201 S.E.2d 598, 601 (1974), that 

“[t]he doctrine of judicial estoppel . . . is a doctrine 

addressing the integrity of the court and its decrees, 

preventing litigants from ‘playing fast and loose’ with court 

rules and litigation strategy.” The record in the present case, 

however, does not support a conclusion that the utilities were 

engaged in such conduct by asserting their affirmative defenses. 

Certainly in view of the facts as stated in their amended 

44
answer, the assertion of these defenses was not facially 

frivolous. 

In Peerless Insurance Co. v. County of Fairfax, 274 Va. 

236, 246, 645 S.E.2d 478, 484 (2007), we recently stressed that 

the fundamental element of judicial estoppel is that the party 

sought to be estopped is seeking to adopt a factual position 

inconsistent with a stance it took in the course of a particular 

suit. Judicial estoppel does not apply to a position of law or 

legal theory. Bentley Funding Group, 269 Va. at 326, 608 S.E.2d 

at 54. Here, the utilities were not seeking to adopt an 

inconsistent factual position by the assertion of their 

affirmative defenses to Norfolk Southern’s breach of contract 

claims. Rather, the utilities were maintaining that the fact 

the utilities paid and Norfolk Southern accepted payments based 

on RCAF-A rates for fourteen years supported the legal theory of 

their defenses. If proven, this course of dealing between the 

parties is a matter entirely independent from the dispute over 

the interpretation of the contract language and, therefore, was 

properly asserted by the utilities as an alternate legal theory 

to that asserted in their bill of complaint. 

Moreover, the record does not support the circuit court’s 

conclusion, with which the majority apparently agrees, that 

Norfolk Southern would suffer an unfair detriment if the 

utilities were permitted to submit their affirmative defenses 

45
for resolution on their merits to a jury because Norfolk 

Southern would incur the expense and delay of relitigating the 

meaning of the parties’ contract. In my view, this conclusion 

misses the point. The utilities have never been afforded the 

opportunity to have their defenses to Norfolk Southern’s breach 

of contract claim resolved on the merits by a trial by a jury. 

Because the circuit court denied the utilities the 

opportunity to develop a factual record by the introduction of 

evidence, the question then becomes whether the amended answer 

to the cross-bill adequately pled the affirmative defenses of 

equitable estoppel and/or waiver. “[A] party seeking to invoke 

the doctrine of estoppel must prove by clear, precise, and 

unequivocal evidence the following elements: (1) A material 

fact was falsely represented or concealed; (2) The 

representation or concealment was made with knowledge of the 

facts; (3) The party to whom the representation was made was 

ignorant of the truth of the matter; (4) The representation was 

made with the intention that the other party should act upon it; 

(5) The other party was induced to act upon it; and (6) The 

party claiming estoppel was misled to his injury.” Boykins 

Narrow Fabrics Corp. v. Weldon Roofing & Sheet Metal, Inc., 221 

Va. 81, 86, 266 S.E.2d 887, 890 (1980). 

In the allegations supporting their affirmative defense of 

equitable estoppel, the utilities alleged, among other things, 

46
that the utilities were induced to locate the Clover facility 

where it could be serviced by Norfolk Southern, rather than by 

another railway company with which the utilities were also 

negotiating for coal transportation, based on an alleged 

representation by Norfolk Southern that RCAF-A would be used as 

the rate adjustment factor permanently, rather than as a 

temporary accommodation as Norfolk Southern later maintained. 

Similarly, the utilities alleged that VEPCO agreed to acquire 

its interest in the Clover facility based on express 

representations by Norfolk Southern that RACF-A would be the 

permanent rate adjustment factor. The utilities alleged that 

the Clover facility was constructed at considerable expense and 

in reliance on these representations. Furthermore, the 

utilities alleged that Norfolk Southern’s actions and 

representations over the next fourteen years were consistent 

with these representations. 

The circuit court ruled that the allegations in the amended 

answer were not sufficient to support the claim of equitable 

estoppel because the utilities’ reliance on any statements by 

Norfolk Southern, in light of the unambiguous specification of 

RCAF-U as the coal transportation rate adjustment factor 

contained in the parties’ contract, would be “wholly 

unreasonable.” I disagree. Even when a contract is 

unambiguous, a party nevertheless may be misled by the 

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deliberate misrepresentations of another as to the intended 

application of its terms and be induced to enter into the 

contract or make other changes in position as a result of those 

misrepresentations. Though ultimately unsuccessful, the 

utilities’ claim in this case that the contract specified RCAF-A 

and not RCAF-U as the rate adjustment factor was not frivolous 

and, as alleged in their amended answer, their reliance on 

statements and actions by Norfolk Southern that supported that 

view would not be unreasonable. If the utilities can establish 

that their misapprehension of the contract’s specification for 

the rate adjustment factor was in fact the result of deliberate 

misrepresentations by Norfolk Southern, then they could 

establish the necessary elements of equitable estoppel. 

Accordingly, I would hold that the circuit court erred in 

striking the utilities’ affirmative defense of equitable 

estoppel. 

Similarly, the circuit court’s determination that the 

contract’s “non-waiver” provision∗ barred the utilities from 

asserting that Norfolk Southern had waived its right to apply 

RCAF-U as the rate adjustment factor erroneously short circuited 

 ∗

 Article 5 of the contract provides that: “The failure of 

either Party to demand strict performance of any or all of the 

terms of this Agreement, or to exercise any or all rights 

conferred in this Agreement, shall not be construed as a waiver 

or relinquishment of that Party’s right to assert or rely upon 

any such right in the future.” 

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the fact finding process. The utilities contend that a party to 

a contract may, expressly or by its conduct, waive any provision 

of the contract, including a “non-waiver” provision, and that 

they sufficiently alleged that Norfolk Southern, by its 

representations, actions, and course of dealing had done so with 

regard to its right under the contract to apply the RCAF-U rate 

adjustment factor. 

As counterintuitive as the assertion initially may appear, 

it is a correct statement of the law. Generally, a party to a 

contract may waive any right conferred by the contract. Because 

the right is to the benefit of the party, the right may be 

waived by the party either expressly or impliedly by conduct, 

acts, or course of dealing inconsistent with the conferred 

right. When it is clearly established that the party charged 

with relinquishment of a right conferred by the contract had 

knowledge of the right and intended to waive it, the waiver will 

be enforced. Roenke v. Virginia Farm Bureau Mut. Ins. Co., 209 

Va. 128, 135, 161 S.E.2d 704, 709 (1968); Woodmen of the World 

Life Ins. Soc. v. Grant, 185 Va. 288, 299, 38 S.E.2d 450, 454 

(1946). Thus, a party may waive a non-waiver provision of a 

contract such as the one contained in the contract in this case. 

The utilities’ allegations that Norfolk Southern waived its 

right to apply RCAF-U as the rate adjustment factor entirely or 

to apply it retroactively to the calculation of the rate 

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beginning in December 2003, necessarily included the assertion 

that Norfolk Southern did so with the intention of waiving both 

that right and the right to assert the non-waiver provision of 

the contract. While this may be difficult for the utilities to 

establish to the satisfaction of the trier of fact after a full 

development of the record, the allegations in their amended 

answer to the cross-bill are sufficient to permit the utilities 

the opportunity to do so. Accordingly, I would hold that the 

circuit court erred in striking the utilities’ assertion of the 

affirmative defense of waiver. 

For these reasons, I would reverse the judgment of the 

circuit court applying the doctrine of judicial estoppel and 

striking the utilities’ affirmative defenses of equitable 

estoppel and waiver. I would remand the case to the circuit 

court to permit the utilities the opportunity, as requested in 

their amended answer, to have the merits of those defenses 

determined in a trial by jury. In all other respects, excepting 

that a finding of estoppel or waiver would bar any recovery by 

Norfolk Southern, I concur with the majority opinion on the 

issues presented and for the reasons stated. 

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