Title: Condominium Svcs, Inc. v. First Owners' Ass'n of Forty Six Hundred Condominium, Inc.
Citation: N/A
Docket Number: 100303
State: Virginia
Issuer: Virginia Supreme Court
Date: April 21, 2011

Present:  Kinser, C.J., Lemons, Goodwyn, Millette, and Mims, 
JJ., and Koontz, S.J. 
 
 
CONDOMINIUM SERVICES, INC. 
 
 
 
 
 
 
 
 
     OPINION BY 
v.     Record No. 100303             JUSTICE S. BERNARD GOODWYN 
 
   April 21, 2011 
FIRST OWNERS’ ASSOCIATION OF 
FORTY SIX HUNDRED CONDOMINIUM, INC. 
 
FROM THE CIRCUIT COURT OF THE CITY OF ALEXANDRIA 
Nolan B. Dawkins, Judge 
 
In this appeal, we consider whether the circuit court 
erred in its interpretation of a management agreement (the 
Management Agreement) between First Owners’ Association of 
Forty Six Hundred Condominium, Inc. (FOA) and Condominium 
Services, Inc. (CSI).  We also consider whether the circuit 
court erred in granting summary judgment on FOA’s conversion 
claim, in permitting certain expert testimony into evidence, 
and in upholding the jury’s award of punitive damages. 
I. Background 
FOA filed a complaint against CSI in the Circuit Court of 
the City of Alexandria, alleging that CSI had breached the 
terms of the Management Agreement and had wrongfully converted 
FOA’s funds.  CSI filed a counterclaim and an amended 
counterclaim for breach of contract.  The circuit court 
sustained FOA’s demurrers to the counterclaim and amended 
counterclaim.  FOA’s claims proceeded to trial before a jury.  
The jury returned a verdict in favor of FOA on both claims, and 
 
the circuit court entered judgment in favor of FOA consistent 
with the jury’s verdict.  CSI appeals. 
II. Facts 
FOA is a Virginia nonstock corporation that is a 
condominium unit owners’ association under the Virginia 
Condominium Act, Code § 55-79.39, et seq.  In August 2005, 
FOA’s Board of Directors (the Board), on FOA’s behalf, entered 
into a Management Agreement with CSI for a term of two years 
from November 1, 2005 to October 31, 2007.  FOA was to pay CSI 
a monthly fee of $6,075 in exchange for CSI acting as FOA’s 
management agent.  The Management Agreement provided that 
either party could terminate the Management Agreement without 
cause upon ninety days written notice, and FOA could terminate 
the Management Agreement with cause upon thirty days written 
notice to CSI. 
On July 1, 2006, the Board sent CSI a letter constituting 
thirty days notice of termination for cause effective August 1, 
2006.  FOA believed the termination was justified because CSI 
failed to provide FOA with correct financial documents, failed 
to file necessary tax returns, failed to pay payroll taxes, and 
prepared incorrect W-2 forms for FOA’s employees.  FOA received 
notifications from the IRS and the Commonwealth that penalties 
and interest were being assessed as a result of these failures.  
FOA retained a certified public accountant, Isaac Reitberger, 
 
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to prepare and file the various documents that CSI should have 
filed, and hired a new management agent. 
On August 1, 2006, CSI’s chief executive officer sent a 
letter to all of FOA’s unit owners directing them to continue 
sending their assessment payments to CSI.  CSI opened a new 
bank account, purportedly in FOA’s name, in which to keep the 
assessment money it collected from the unit owners.  CSI opened 
the account by having its president and controler falsely 
represent in documents filed with the bank that they were 
officers of FOA.  FOA did not authorize the opening of the 
account or have any signatory authority on it. 
After August 1, 2006, CSI continued to collect assessment 
payments due FOA and paid itself a monthly management fee of 
$6,075 out of funds deposited into the new bank account.  CSI 
paid itself fees totaling $91,125.1  CSI asserts that it was 
entitled to the management fees because FOA’s termination of 
CSI was in violation of FOA’s Bylaws (the Bylaws) which, 
according to CSI, were incorporated into the Management 
Agreement and required a vote of the unit owners prior to 
termination of the Management Agreement. 
Section 2 of the Management Agreement states: 
The documents governing this relationship consist of 
this Agreement, the Virginia Condominium Act, the 
                     
1 CSI has paid the additional FOA funds it collected to 
FOA; these funds are not in dispute. 
 
3
Association’s Declaration, the Bylaws, Rules and 
Regulations, and Board of Director Resolutions, 
including all modifications, amendments, and changes 
issued subsequent to the execution of this Agreement. 
 
 
FOA’s Bylaws contain various provisions concerning the 
rights and obligations of FOA’s members, FOA’s Board and FOA 
itself.  Article I identifies FOA as the “Owners’ Association.”  
Article V addresses the formation of FOA’s Board and the 
Board’s duties and responsibilities.  Section 1 of Article V 
states that “the affairs of the Owners’ Association shall be 
governed” by the Board, and Section 3 of Article V states that 
the Board “shall have all the powers and duties necessary for 
the administration of [FOA’s affairs] and the Condominium 
Project and may do all such acts and things as are not by law 
or by these By-Laws directed to be exercised and done by the 
members.”  Section 4 of Article V of the Bylaws permits the 
Board to delegate any of its duties, powers or functions to a 
management agent by written contract. 
 
In support of its position, CSI relies upon Article VIII, 
Section 2 of the Bylaws, which states: 
The Board of Directors shall employ for the Owners’ 
Association a management organization (the “Management 
Agent”) at a rate of compensation and such other terms 
and conditions as shall be established by the Board of 
Directors to perform such duties and services as the 
Board of Directors shall from time to time authorize 
in writing, . . . .  The Owners’ Association shall not 
change Management Agents or undertake self-management, 
without the prior affirmative vote of members 
representing three-fourths (3/4ths) of the votes of 
 
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the Residential and Commercial Unit owners present at 
any meeting of the members duly called for such 
purpose . . . . 
 
On January 5, 2009, FOA initiated this action against CSI. 
CSI filed its answer to the complaint, raising the affirmative 
defense that its termination was invalid because, prior to 
terminating CSI, FOA did not obtain the necessary votes 
required under Article VIII, Section 2 of the Bylaws, which CSI 
alleged was incorporated into the Management Agreement.  CSI 
also filed a counterclaim and later an amended counterclaim, 
alleging that FOA breached the Management Agreement by 
attempting to terminate CSI without the prior affirmative vote 
of the unit owners, and that the Management Agreement could 
never be terminated without such a vote.  
FOA filed a demurrer to CSI’s counterclaim and to the 
amended counterclaim, contending that the Management Agreement 
merely referenced rather than incorporated the Bylaws.  
Further, it asserted that even if the Bylaws were incorporated 
into the Management Agreement, the Bylaws did not require a 
vote of the unit owners for FOI to terminate its Management 
Agreement with CSI.  The circuit court sustained the demurrers 
and dismissed the amended counterclaim with prejudice. 
Prior to trial, FOA filed a motion in limine seeking to 
exclude any testimony or argument by CSI relating to its 
affirmative defense that the termination was invalid because 
 
5
FOI did not obtain the necessary votes of the unit owners 
allegedly required by Article VIII, Section 2 of the Bylaws.  
The circuit court granted FOA’s motion in limine and excluded 
CSI’s affirmative defense at trial.   
 
In response to CSI’s interrogatories concerning expert 
witnesses, FOA identified Reitberger as an expert witness.  
FOA, in its interrogatory response, disclosed that Reitberger 
would opine that the failures of CSI resulted in the 
underpayment of taxes and that FOA would incur interest and 
penalties as a result of those failures.  It also stated that 
Reitberger’s opinions would be based upon his experience and 
expertise and his review of relevant documents.  It did not 
state the amount of the interest and penalties Reitberger 
believed FOA would incur.  Reitberger was deposed by CSI 
approximately six weeks before trial, and he testified 
regarding the specific amount of the taxes and penalties at 
issue and the bases for his opinions regarding those amounts. 
The Thursday before the Monday trial date, CSI filed a 
motion in limine to exclude the testimony of Reitberger about 
the potential tax penalties and interest FOA could face due to 
CSI’s failure to pay certain taxes on FOA’s behalf.  CSI 
asserted that the testimony should be excluded because FOA’s 
response to CSI’s expert witness interrogatory failed to 
identify the amount of the penalties and interest claimed and 
 
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failed to state the basis for any such damages.  The circuit 
court denied CSI’s motion in limine. 
 
The parties then proceeded to a jury trial.  At the 
conclusion of FOA’s case, CSI moved to strike FOA’s evidence on 
three grounds:  (1) Reitberger’s testimony on the tax penalties 
and interest was speculative and not offered to a reasonable 
degree of accounting certainty; (2) the conversion claim was 
improper because it arose from the alleged breach of contract 
and was not an independent tort; and (3) FOA presented 
insufficient evidence to support a claim for punitive damages.  
The circuit court denied the motion as to these grounds.2  At 
the conclusion of all the evidence, CSI renewed its motion to 
strike on the same grounds.  The circuit court again denied the 
motion. 
 
At the conclusion of all the evidence, FOA moved for 
summary judgment on its conversion claim.  The circuit court 
granted FOA summary judgment on the conversion claim in the 
amount of $91,125.  On the remaining issues, the jury returned 
a verdict in favor of FOA.  With respect to the breach of 
contract claim concerning payroll administration and taxes, the 
                     
2 The court granted the motion to strike with regard to 
damages for health insurance and for failure to file the 2004 
Form 941. 
 
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jury awarded damages in the amount of $70,667.  On the 
conversion claim, the jury awarded prejudgment interest 
beginning on October 1, 2007 and punitive damages in the amount 
of $275,000.   
CSI filed a motion to strike the jury verdict and for 
judgment notwithstanding the verdict with regard to punitive 
damages or, alternatively, for remittitur.  The circuit court 
denied the motion. 
III. Analysis 
A.  FOA’s Demurrers and Motion to Strike 
 
CSI argues that the circuit court erred by sustaining 
FOA’s demurrers and motion to strike CSI’s affirmative defense.  
CSI contends that because the Bylaws are one of the documents 
that governs the relationship established by the Management 
Agreement, the Bylaws are incorporated into the Management 
Agreement, giving CSI the right to invoke termination 
protections it claims are contained in the Bylaws.  CSI claims 
FOA’s termination of CSI was invalid because the Bylaws 
required FOA to obtain the affirmative vote of three-fourths of 
the unit owners prior to terminating the Management Agreement 
with CSI.  Thus, according to CSI, the circuit court erred by 
ruling to the contrary and sustaining FOA’s demurrers to its 
counterclaim and amended counterclaim and by striking CSI’s 
claimed affirmative defense.   
 
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FOA responds that the purpose of the reference to the 
Bylaws in the Management Agreement was not to incorporate the 
Bylaws into the Management Agreement so as to confer upon CSI 
termination rights contrary to those expressly stated in the 
Management Agreement, but rather to identify documents that CSI 
must be aware of and comply with in performing its duties.  We 
agree with FOA. 
 
This Court reviews the circuit court’s sustaining of a 
demurrer de novo.  Hubbard v. Dresser, Inc., 271 Va. 117, 122, 
624 S.E.2d 1, 4 (2006).  In reviewing the granting of a motion 
to strike, “this Court will consider the evidence and all 
reasonable inferences arising therefrom in the light most 
favorable to the appellant, resolving any doubt as to the 
sufficiency of the evidence in favor of the appellant.”  
McGowan v. Lewis, 233 Va. 386, 387, 355 S.E.2d 334, 334 (1987). 
 
Because the Management Agreement references a separate 
writing, the Bylaws are construed as part of the Management 
Agreement for the purpose indicated.  See W.D. Nelson & Co. v. 
Taylor Heights Dev. Corp., 207 Va. 386, 391, 150 S.E.2d 142, 
146 (1966) (“Writings referred to in a contract are construed 
as a part of the contract for the purpose and extent 
indicated.”).  Section 1 of the Management Agreement appoints 
CSI as FOA’s agent, states that the term of such appointment is 
two years and specifies the compensation CSI is to receive.  
 
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Section 2 of the Management Agreement states that the documents 
governing the relationship between FOA and CSI consist of the 
Management Agreement, “the Virginia Condominium Act, the 
Association’s Declaration, the Bylaws, Rules and Regulations, 
and Board of Directors Resolutions.”  Then, in the next section 
of the Agreement, Section 3, titled “Responsibilities and 
Duties of the Agent,” the Agent acknowledges that it “has read, 
and is familiar with, the Condominium Act, Declaration, the 
Bylaws, the Rules and Regulations of the Association, and 
particularly with the duties and obligations of the Board of 
the Association.”  The Bylaws are not mentioned at any other 
place in the Management Agreement.  Later in the Management 
Agreement, in Section 19, there is a separate section titled 
“Termination,” which states that the Management Agreement may 
be terminated by either party without cause upon ninety days 
written notice and that FOA can terminate the Management 
Agreement with cause upon thirty days written notice to CSI.  
 
The express language of the Management Agreement allows 
FOA to terminate CSI without a vote of FOI’s members.  Section 
3 is the only section of the Management Agreement other than 
Section 2 that mentions the Bylaws, and Section 3 concerns 
“Responsibilities and Duties of the Agent.”  When considering 
the Management Agreement as a whole, it does not appear that 
the purpose of the reference to the Bylaws was to incorporate 
 
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the Bylaws into the Management Agreement as they related to the 
termination of the management agent; the term and method of 
termination of the management agent is explicitly stated in the 
Management Agreement without reference to the Bylaws.  Instead, 
the indicated purpose of the reference to the Bylaws and other 
documents in Section 2 was to identify documents that CSI, as 
the management agent, needed to be aware of and comply with in 
performing its duties and responsibilities under the Management 
Agreement. 
To adopt CSI’s argument concerning the Management 
Agreement would render express terms of the Management 
Agreement meaningless, including the two-year term and 
termination provisions.  Indeed, CSI claimed as part of its 
damages in its counterclaim that it is entitled to the monthly 
management fee until the allegedly necessary vote is taken by 
FOA’s members, making the two-year term stated in the 
Management Agreement meaningless and of no effect. 
“[C]ontract language will not be treated as meaningless 
where it can be given a reasonable meaning.”  Ross v. Craw, 231 
Va. 206, 214, 343 S.E.2d 312, 317 (1986).  “When two provisions 
of a contract seemingly conflict . . . they [should] be 
harmonized so as to effectuate the intention of the parties as 
expressed in the contract considered as a whole.”  Plunkett v. 
Plunkett, 271 Va. 162, 168, 624 S.E.2d 39, 42 (2006) (quoting 
 
11
Ames v. American Nat’l Bank of Portsmouth, 163 Va. 1, 39, 176 
S.E. 204, 217 (1934)).  FOA’s interpretation of the purpose and 
intent of Section 2 of the Management Agreement, accepted by 
the circuit court, harmonizes the reference to the Bylaws with 
the express terms of the Management Agreement.  CSI’s 
interpretation of the Management Agreement, on the other hand, 
cannot be harmonized with the plain language of the Management 
Agreement. 
 
Furthermore, a specific provision of a contract governs 
over one that is more general in nature.  Mutual Life Ins. Co. 
v. Hill, 193 U.S. 551, 558 (1904) (“where there are two clauses 
in any respect conflicting, that which is specially directed to 
a particular matter controls in respect thereto over one which 
is general in its terms”); see also Asphalt Roads & Materials 
Co. v. Commonwealth, 257 Va. 452, 460, 512 S.E.2d 804, 809 
(1999) (Lacy, J., concurring) (“specific section of the 
contract overrides the more general contract provisions”).  The 
reference to the Bylaws in the Management Agreement is general—
the Bylaws “govern” the Management Agreement.  On the other 
hand, the provisions in the Management Agreement regarding the 
term of the Management Agreement and means of termination are 
specific.  CSI’s interpretation would allow the general 
reference to the Bylaws to control over the specific 
 
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termination and term provisions, a result that is contrary to 
principles of contract interpretation. 
 
The circuit court did not err in sustaining FOA’s 
demurrers and striking CSI’s affirmative defense.  The 
Management Agreement, although it referenced the Bylaws, did 
not require a three-fourths vote of the unit owners before FOA 
could terminate CSI as FOA’s management agent. 
B.  Conversion 
 
CSI argues that the circuit court erred in denying CSI’s 
motion to strike FOA’s conversion claim and in granting FOA 
summary judgment on its conversion claim.  CSI contends that 
the circuit court should have struck the conversion claim 
because there was no independent tort of conversion distinct 
from the contract.  Further, CSI asserts that summary judgment 
on the conversion claim was inappropriate because there was a 
dispute as to whether CSI had authority to continue to retain 
its management fees.   
 
FOA responds that its conversion claim was proper because 
CSI committed a separate, independent tort.  According to FOA, 
CSI’s conversion of FOA’s funds was distinct from the 
Management Agreement because it occurred after FOA properly 
terminated the Management Agreement.  FOA contends that summary 
judgment on its conversion claim was appropriate because FOA 
presented undisputed evidence that CSI took $91,125 of FOA 
 
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assessment money after being terminated as FOA’s management 
agent.  We agree with FOA. 
 
To recover for the tort of conversion, “the duty 
tortiously or negligently breached must be a common law duty, 
not one existing between the parties solely by virtue of the 
contract.”  Dunn Construction Co. v. Cloney, 278 Va. 260, 267, 
682 S.E.2d 943, 946 (2009) (internal quotation marks omitted).  
“A cause of action for conversion lies independent of an action 
in contract and may provide a separate basis, distinct from the 
contract upon which one [party] may sue another.”  PGI, Inc. v. 
Rathe Prods., Inc., 265 Va. 334, 344, 576 S.E.2d 438, 443 
(2003). 
 
A claim for conversion requires proof of a “wrongful 
exercise or assumption of authority . . . over another’s goods, 
depriving him of their possession.”  Universal C.I.T. Credit 
Corp. v. Kaplan, 198 Va. 67, 75, 92 S.E.2d 359, 365 (1956) 
(internal quotation marks omitted).  “Any distinct act of 
dominion wrongfully exerted over the property of another, and 
in denial of his rights, or inconsistent therewith, may be 
treated as a conversion.”  Id. at 76, 92 S.E.2d at 365 
(internal quotation marks omitted). 
In support of its conversion claim, FOA provided evidence 
at trial that the Management Agreement already had been 
terminated when CSI opened a bank account by falsely 
 
14
representing authorization from FOA to do so, directed FOA’s 
unit owners to send money owed to FOA to it, and collected 
money owed to FOA.  Cf. Abi-Najm v. Concord Condo., LLC, 280 
Va. 350, 363, 699 S.E.2d 483, 490 (2010) (tort alleged by 
plaintiffs was perpetrated by defendant before a contract 
between the two parties came into existence, therefore it 
cannot logically follow that the duty the defendant allegedly 
breached was one that had its source in the contract).  Because 
the Management Agreement had terminated, CSI’s alleged acts did 
constitute the “independent, willful tort” of conversion, 
separate from the contract.  The circuit court did not err in 
denying CSI’s motion to strike FOA’s conversion claim. 
 
Likewise, the circuit court did not err in granting FOA’s 
motion for summary judgment on its conversion claim.  Summary 
judgment is only available when there are no material facts 
genuinely in dispute.  Fultz v. Delhaize Am., Inc., 278 Va. 84, 
88, 677 S.E.2d 272, 274 (2009).  Summary judgment is not 
appropriate if reasonable persons may draw different 
conclusions from the evidence.  Id.  Where there is no evidence 
to submit to a jury on an affirmative defense, and the evidence 
otherwise entitles a plaintiff to relief, summary judgment is 
appropriate.  See Whitt v. Godwin, 205 Va. 797, 802, 139 S.E.2d 
841, 845 (1965).  
 
15
The only defense CSI asserted to FOA’s conversion claim 
was that the Board’s termination of CSI was improper because 
the Board did not first obtain a vote of FOA’s unit owners.  
The circuit court struck that defense.  At trial, CSI did not 
present any evidence that created a question of fact concerning 
the proper termination of the Management Agreement by FOA.  The 
evidence was undisputed that CSI took $91,125 of FOA’s 
assessment money after being terminated and did not repay that 
money to FOA.  In light of this undisputed evidence and the 
proper denial of CSI’s defense of improper termination, there 
was no basis upon which the jury could have found in favor of 
CSI.  The circuit court did not err in granting summary 
judgment on FOA’s conversion claim.   
C.  Expert Witness Designation 
CSI argues that the circuit court erred in permitting 
FOA’s expert to testify regarding amounts of tax-related 
damages.  CSI contends that FOA’s interrogatory answer 
regarding the proposed expert testimony concerning tax 
penalties and interest was inadequate.   
FOA responds that its expert designation was sufficient 
and complied with Rule 4:1(b)(4).  FOA contends that the fact 
that the designation did not contain the precise amounts of 
penalties and interest does not make the designation deficient 
because the types of damages were clearly disclosed. 
 
16
This Court reviews a trial court’s decision to admit or 
exclude expert testimony under an abuse of discretion standard.  
John Crane, Inc. v. Jones, 274 Va. 581, 591, 650 S.E.2d 851, 
856 (2007); Blue Ridge Serv. Corp. v. Saxon Shoes, Inc., 271 
Va. 206, 212, 624 S.E.2d 55, 58 (2006) (citing Tarmac Mid-
Atlantic, Inc. v. Smiley Block Co., 250 Va. 161, 166, 458 
S.E.2d 462, 465 (1995)).  This Court must give deference to a 
trial court’s ruling to exclude or admit expert testimony and 
that ruling will not be disturbed on appeal unless it is 
plainly wrong and amounts to an abuse of discretion.  See 
Grattan v. Commonwealth, 278 Va. 602, 620, 685 S.E.2d 634, 644 
(2009). 
Rule 4:1(b)(4)(A)(i) requires a party, when asked in an 
interrogatory, to identify its trial experts and “to state the 
subject matter on which the expert is expected to testify, and 
to state the substance of the facts and opinions to which the 
expert is expected to testify and a summary of the grounds for 
each opinion.”  When applying Rule 4:1(b)(4)(A)(i), this Court 
begins by “determining whether the opinion at issue was 
disclosed in any form.”  John Crane, Inc., 274 Va. at 591, 650 
S.E.2d at 856. 
FOA’s expert designation for Reitberger, its accounting 
expert, stated: 
 
17
Mr. Reitberger will opine that the failures of CSI 
resulted in the underpayment of taxes and that the 
Association will now incur interest and penalties as 
a result of the failures of CSI as well as expenses 
in the form of fees paid to Mr. Reitberger’s firm to 
correct the errors of CSI and to resolve the claims 
of the IRS and the Commonwealth of Virginia. . . . 
 
 
Mr. Reitberger’s opinions are based upon his 
experience and expertise, his review of 
correspondence between the IRS and the Commonwealth 
of Virginia and the Association, his review of W-2s, 
general ledgers, and other financial documents of the 
Association relating to payroll withholdings and 
payment of payroll taxes.  
 
Although FOA did not itemize the specific amounts of penalties 
and interest, the interrogatory response disclosed that it was 
Reitberger’s opinion that CSI’s failures resulted in 
underpayment of taxes and FOA incurring interest and penalties.  
It was within the discretion of the circuit court to determine 
whether the interrogatory response sufficiently disclosed the 
subject matter on which Reitberger was going to testify, the 
substance of Reitberger’s opinions and a summary of the grounds 
for Reitberger’s opinions.  Compare John Crane, Inc., 274 Va. 
at 592-93, 650 S.E.2d at 856-57 (expert designations were 
insufficient because opinion was not disclosed in any form).  
There is evidence to support the circuit court’s determination 
that FOA’s designation was sufficient to satisfy the purpose of 
Rule 4:1(b)(4)(A)(i), which is to “allow the litigants to 
discover the expert witnesses’ opinions in preparation for 
trial.”  Woodbury v. Courtney, 239 Va. 651, 654, 391 S.E.2d 
 
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293, 295 (1990).  The circuit court did not abuse its 
discretion in finding the expert designation sufficient and 
permitting Reitberger to testify. 
D.  Expert Witness Testimony on Damages 
 
CSI argues that the circuit court erred in denying CSI’s 
motion to strike FOA’s claim for certain tax penalties and 
interest damages because Reitberger’s testimony regarding those 
matters was speculative and did not meet the standard of 
“reasonable certainty.”  Specifically, CSI alleges that the 
penalties related to its failure to file W-2 forms had been 
assessed but had not been paid by FOA and might be reduced.  CSI 
also asserts that testimony regarding the claimed tax penalties 
and interest for failure to file the last quarter 2005 and the 
first quarter 2006 federal Form 941 and payroll tax withholdings 
was speculative because, as of the date of the trial, no 
assessment had been made by the IRS for those liabilities. 
 
FOA responds that it proved its tax-related damages with 
reasonable certainty.  Reitberger unequivocally testified 
concerning the penalties and interest the IRS had already 
assessed.  He also testified that under applicable IRS 
regulations, FOA is now liable for and will be assessed 
additional specific interest and penalties.   
 
FOA, as the plaintiff below, bore the “burden of proving 
with reasonable certainty the amount of damages and the cause 
 
19
from which they resulted; speculation and conjecture cannot form 
the basis of the recovery.”  Shepherd v. Davis, 265 Va. 108, 
125, 574 S.E.2d 514, 524 (2003) (quoting Carr v. Citizens Bank & 
Trust Co., 228 Va. 644, 652, 325 S.E.2d 86, 90 (1985)); see also 
SunTrust Bank v. Farrar, 277 Va. 546, 555, 675 S.E.2d 187, 191 
(2009) (“damage calculations based on unsupported projections 
are improper”).  “[E]xpert testimony . . . cannot be speculative 
or founded upon assumptions that have an insufficient factual 
basis.”  Blue Ridge Serv. Corp., 271 Va. at 213, 624 S.E.2d at 
59 (quoting Tittsworth v. Robinson, 252 Va. 151, 154, 475 S.E.2d 
261, 263 (1996)). 
 
In the context of a breach of contract, a plaintiff need 
not establish the specific amount of the loss or damage with 
absolute certainty.  When it is “certain that substantial damage 
has been caused by the breach of a contract, and the uncertainty 
is not whether there have been damages, but only an uncertainty 
as to their true amount, then there can rarely be any good 
reason for refusing all damages due to the breach merely because 
of that uncertainty.”  E.I. DuPont de Nemours & Co. v. Universal 
Moulded Prods. Corp., 191 Va. 525, 570, 62 S.E.2d 233, 254 
(1950) (internal quotation marks omitted).  “Proof of absolute 
certainty as to the amount of loss or damage is not essential 
when the existence of loss is established and the facts and 
circumstances proven are such as to permit of intelligent and 
 
20
probable estimate of the amount of damage or loss sustained.”  
Id. at 572-73, 62 S.E.2d at 255. 
 
It is undisputed that CSI, while serving as FOA’s 
management agent, failed to file necessary tax returns and to 
pay payroll taxes and prepared incorrect W-2 forms.  Reitberger 
was qualified to testify as an expert on payroll administration 
and taxes.  Reitberger calculated the amounts of the tax 
deposits required and the timing for filing the returns.  He 
then used statutory rates for tax liability to determine what 
the penalties for failure to timely file the appropriate forms 
were. 
 
Reitberger’s testimony regarding damages included the IRS’s 
penalty assessment of $27,553 for CSI’s failure to file W-2s, 
although FOA had not paid the assessment.  However, a party that 
has incurred an obligation to pay a debt as a result of the 
wrongful or unlawful conduct of another, but that has not yet 
made payment on such debt, has suffered an actual loss.  Sykes 
v. Brown, 156 Va. 881, 887, 159 S.E. 202, 204 (1931) (“Payment 
of the expense of treatment is not essential to a recovery.  If 
plaintiff is liable for the debt incurred, that is all that is 
necessary.”); see also Virginia Farm Bureau Mut. Ins. Co. v. 
Hodges, 238 Va. 692, 696, 385 S.E.2d 612, 614 (1989) (“An 
expense can only be ‘incurred’ . . . when one has paid it or 
become legally obligated to pay it.”).  FOA was legally 
 
21
obligated to pay this assessment from the IRS.  Although the 
possibility of abatement by the IRS prevented FOA from 
establishing the amount of the tax penalty with absolute 
certainty, the assessment from the IRS provides “reasonable 
certainty” as to the amount of that tax penalty and constitutes 
an “intelligent and probable estimate of the amount of damage or 
loss sustained.”  See E.I. DuPont de Nemours, 191 Va. at 572-73, 
62 S.E.2d at 255. 
 
The IRS has not assessed the claimed tax penalties and 
interest for CSI’s failure to file the last quarter 2005 and 
first quarter 2006 federal Form 941 and to pay payroll tax 
withholdings.  “Where the wrongful act of the defendant is of 
such a nature as to constitute an entire breach of the contract, 
compensation therefor may be recovered at once for the whole 
loss.”  James v. Kibler, 94 Va. 165, 173, 26 S.E.2d 417, 418 
(1896).  Future damages are recoverable if they can be 
ascertained with certainty.  Id.  Reitberger’s testimony 
satisfies the standard of reasonable certainty.  Although the 
IRS had not yet issued an assessment for FOA’s failure to file 
Form 941 and to pay payroll tax withholdings, Reitberger’s 
estimates of those assessments were based on mandatory IRS 
guidelines and his experience and expertise concerning such 
matters.  They constitute intelligent and probable estimates of 
the penalties the IRS will assess. 
 
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The circuit court did not err in denying CSI’s motion to 
strike damages concerning the disputed tax penalties and 
interest.  There was evidence to support those damages in that 
FOA was already legally obligated to pay them or Reitberger 
established the amount of damages with reasonable certainty 
using calculations that were based upon statutory rates of tax 
liability. 
E.  Punitive Damages 
 
CSI argues that the circuit court erred in denying CSI’s 
motions to strike punitive damages.  CSI contends that FOA 
presented no evidence of actual malice or evil intent. 
 
FOA responds that the jury’s award of punitive damages was 
supported by the evidence and should not be disturbed on appeal.  
FOA contends that the evidence presented at trial plainly 
established CSI’s conscious disregard of FOA’s rights. 
 
“Punitive or exemplary damages are allowable only where 
there is misconduct or actual malice, or such recklessness or 
negligence as to evince a conscious disregard of the rights of 
others.”  Giant of Virginia, Inc. v. Pigg, 207 Va. 679, 685, 152 
S.E.2d 271, 277 (1967); see also Banks v. Mario Indus. of 
Virginia, Inc., 274 Va. 438, 460, 650 S.E.2d 687, 699 (2007).  A 
trial court may only set aside a jury verdict if it is plainly 
wrong or without evidence to support it.  Bussey v. E.S.C. 
Rests. Inc., 270 Va. 531, 534, 620 S.E.2d 764, 766 (2005). 
 
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CSI argues that even if its interpretation of the 
Management Agreement was wrong, a mistake is not a sufficient 
basis to infer “evil intent” and award punitive damages.  See 
Pigg, 207 Va. at 686, 152 S.E.2d at 277 (“Evil intent cannot be 
presumed or inferred from mere mistake.”).  The evidence 
presented at trial, however, provided many examples of how CSI’s 
actions exhibited a conscious disregard of FOA’s rights.  These 
actions include CSI opening a bank account four days after the 
effective date of its termination and failing to provide FOA 
with signatory authority on that account.  Furthermore, to open 
the bank account, CSI officers made knowing misrepresentations 
that they were officers of FOA.  CSI held FOA assessments in the 
account for more than a year and paid itself $91,125 in monthly 
management fees out of those funds between August 2006 and 
October 2007.  CSI acknowledged that it was experiencing 
financial difficulties and could not meet its financial 
obligations without the management fees it paid itself from FOA 
funds.  Despite becoming aware in 2008 that the circuit court, 
in a prior action brought by a company affiliated with CSI,3 
disagreed with CSI’s stated interpretation of the Management 
                     
3 In a prior proceeding, Gordon Properties, LLC, a company 
affiliated with CSI, filed an action against FOA, contesting 
the termination of CSI as a violation of the Bylaws, which 
Gordon Properties alleged were incorporated into the Management 
Agreement.  The circuit court disagreed that the Management 
 
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Agreement, CSI knowingly and intentionally continued to withhold 
FOA’s $91,125. 
 
The evidence of CSI’s “conscious disregard of FOA’s rights” 
was before the jury.  The trial court must accord the jury 
verdict the “utmost deference.”  Bussey, 270 Va. at 534, 620 
S.E.2d at 766.  It cannot be said that the jury’s verdict was 
plainly wrong or without evidence to support it.  Consequently, 
the circuit court did not err in denying CSI’s motion to strike 
punitive damages. 
F.  Remittitur 
 
Alternatively, CSI contends that the circuit court abused 
its discretion in not ordering a remittitur of the verdict.  CSI 
contends that the award of $275,000 in punitive damages shocked 
the conscience, was in excess of what was expected as 
punishment, and was oppressive. 
 
FOA responds that the circuit court did not err in denying 
CSI’s motion for remittitur.  FOA contends that the jury’s award 
of punitive damages was neither excessive nor disproportionate. 
 
This Court reviews the remittitur of punitive damage awards 
de novo upon independent review of the record, giving 
substantial weight to the trial court’s action.  Baldwin v. 
McConnell, 273 Va. 650, 656, 643 S.E.2d 703, 706 (2007).  
                                                                 
Agreement incorporated the Bylaws and entered summary judgment 
against Gordon Properties.   
 
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“Review of the amount of punitive damages includes consideration 
of reasonableness between the damages sustained and the amount 
of the award and the measurement of punishment required, whether 
the award will amount to a double recovery, the proportionality 
between the compensatory and punitive damages, and the ability 
of the defendant to pay.”  Poulston v. Rock, 251 Va. 254, 263, 
467 S.E.2d 479, 484 (1996) (citations omitted).  Remittitur 
should be awarded when “the verdict is so excessive as to shock 
the conscience of the court and to create the impression that 
the jury has been influenced by passion, corruption or 
prejudice.”  Smithey v. Sinclair Refining Co., 203 Va. 142, 146, 
122 S.E.2d 872, 875-76 (1961). 
 
In the instant case, the factors this Court must consider 
weigh in favor of affirming the circuit court’s decision not to 
order remittitur.  First, the punitive award of $275,000 was 
approximately two and a half times the compensatory award for 
conversion of $91,125, plus $11,390 in prejudgment interest.  
This ratio is not disproportionate.  See Poulston, 251 Va. at 
263, 467 S.E.2d at 484 (upholding punitive damages that were 2.5 
times greater than compensatory damages); Philip Morris, Inc. v. 
Emerson, 235 Va. 380, 414, 368 S.E.2d 268, 287 (1988) (affirming 
punitive damages that were 6.6 times the compensatory award).  
The amount of the damages award is not so excessive as to shock 
the conscience of the court, nor does it appear that the jury 
 
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was influenced by passion, corruption or prejudice.  Similarly, 
the award of punitive damages does not provide double recovery 
because the compensatory and punitive damages serve different 
purposes.  The punitive damages serve as a deterrent to ensure 
that CSI does not wrongfully convert other associations’ money 
in the future.  Finally, although CSI contends that it was 
experiencing financial difficulties, CSI did not introduce 
evidence of their financial situation at trial.  Therefore, CSI 
cannot prevail before this Court on its claim that the amount of 
punitive damages would be oppressive.  Given these factors, the 
circuit court did not err in refusing to order remittitur of the 
punitive damages award. 
IV. Conclusion 
Accordingly, for the reasons stated, we will affirm the 
circuit court’s judgment. 
Affirmed. 
 
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