Opinion ID: 1058540
Heading Depth: 1
Heading Rank: 5

Heading: Accrual of Post-Judgment Interest on Pre-Judgment Interest

Text: UOSA contends that the circuit court erred in determining that post-judgment interest was to accrue not only on the compensatory damages awarded by the January 15, 2004 and June 27, 2005 orders, but on the pre-judgment interest awarded in those orders as well. Again relying on Code § 8.01-382, UOSA contends that post-judgment interest applies only to any principal sum awarded. UOSA, further relying on an Opinion of the Attorney General, asserts that the principal sum awarded in this case is limited to the compensatory damages awarded by the jury in the First Trial and the calculation by the circuit court of compensatory damages for the material breaches in the Second Trial. Thus, UOSA maintains that post-judgment interest is not to be applied to amounts awarded for pre-judgment interest because these are not part of the principal sum awarded. See 2004 Op. Att'y Gen. 26, 28. UOSA further asserts that this interpretation of the statute is correct because the plain and ordinary meaning of principal as used in this context, refers to [t]he amount of a debt . . . not including interest. Black's Law Dictionary, 1231 (8th ed. 2004). The Joint Venture responds that the circuit court correctly ruled that the principal sum awarded in a trial is the total amount of the damages awarded, including any award of pre-judgment interest on compensatory damages. The Joint Venture contends that UOSA's reliance on the Opinion of the Attorney General is misplaced because that opinion failed to take into account multiple decisions of this Court which establish that pre-judgment interest is an element of the damages and, thus, is part of the principal sum awarded to a plaintiff. While we agree with the Joint Venture that pre-judgment interest may be sought by a plaintiff as part of the damages it seeks to recover, see, e.g., Shepard v. Capitol Foundry of Va., Inc., 262 Va. 715, 722, 554 S.E.2d 72, 76 (2001), we do not agree that an award of pre-judgment interest is part of the principal sum awarded as that term is used in Code § 8.01-382. To the contrary, we agree with UOSA that the principal sum awarded as contemplated by Code § 8.01-382 is that element of the plaintiff's damages that compensates the plaintiff for the actual harm sustained, but not any pre-judgment interest on those damages that the trier of fact might also award. Rather, as we have just resolved, supra, pre-judgment interest is merely a discretionary award establishing the interest applied to an award of damages to a date certain prior to the entry of the verdict, order or decree awarding such damages. Accordingly, we hold that the circuit court erred in determining that post-judgment interest would accrue on that portion of the damages awarded in the First Trial and the Second Trial that constituted pre-judgment interest on the principal sums awarded. For these reasons, we will reverse the circuit court's award of $412,573 in post-judgment interest on the pre-judgment interest of the First Trial and the award of $75,009 in post-judgment interest on the pre-judgment interest of the Second Trial.