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

Heading: facts

Text: The arduous history of the litigation arising from the public contract that is the genesis of this case has been previously recounted in detail in two prior appeals arising from earlier stages of that litigation. See Blake Construction Co. v. Upper Occoquan Sewage Authority, 266 Va. 564, 568-570, 587 S.E.2d 711, 713-14 (2003); Upper Occoquan Sewage Authority v. Blake Construction Co., 266 Va. 582, 584-87, 587 S.E.2d 721, 722-23 (2003). Accordingly, we need not recite that background here. It will suffice to state that Blake Construction Company, Inc. and Poole & Kent Corporation (collectively, the Joint Venture) formed a partnership to bid on a public contract with the Upper Occoquan Sewage Authority (UOSA), a public authority created pursuant to the Virginia Water and Waste Authorities Act, Code §§ 15.2-5100 through -5158, for construction of a waste water treatment facility to be located in Fairfax County (the Project). The Joint Venture was the successful bidder on the Project and was awarded the contract on December 10, 1996. The oversight of the Project by UOSA was contentious and resulted in the litigation that was the subject of the prior cases decided by this Court in 2003. The present case arises from a Petition for Declaratory Judgment and Appeal filed by the Joint Venture in the Circuit Court of Fairfax County on August 13, 2002 while the former appeals were pending in this Court. Therein, the Joint Venture sought to be permitted to terminate the December 1996 contract based on UOSA's alleged multiple material breaches of the contract. The Joint Venture also appealed certain administrative decisions of UOSA denying claims by the Joint Venture regarding the contract and to have determined the amounts owed under those claims as well as to be awarded compensatory damages, most of which were for undisputed liquidated amounts, on numerous claims for work already performed. The Joint Venture also sought to be awarded finance charges it contended were due under terms of the contract governed by the prompt payment provisions of the VPPA, Code §§ 2.2-4347 through -4356 (the Prompt Payment Act), for the amounts it claimed were owed to it by UOSA as of various dates. [2] The case was first tried to a jury in November 2003 (the First Trial), and at the conclusion of the Joint Venture's case-in-chief, the circuit court sustained UOSA's motion to strike all or part of eighteen of the Joint Venture's claims. The remaining issues were submitted to the jury. As relevant to one of the principal issues in this appeal, the jurors were instructed that the terms of the contract do not provide for a rate of interest. In any situation where you determine that interest is due under [Code § 2.2-4352 of] the Virginia Prompt Payment Act, you must determine the payment amount subject to interest, the payment date when payment is due, and the interest rate, which by statute is not to exceed 1% per month. The jury rendered its verdict on November 6, 2003, using an interrogatory verdict form. In accord with the circuit court's instruction, the jury made express findings of the specific amounts due the Joint Venture and the dates on which those amounts had become due. The jury also determined that on all those amounts interest at a rate of 1% per month was to apply, but the jury did not calculate the amount of interest thus due. The correctness of the jury's findings and verdicts on the Joint Venture's various claims are not at issue in this appeal, nor is there any dispute as to the amount of compensatory damages awarded to the Joint Venture in those verdicts, which in aggregate totaled $5,165,195. In accord with the jury's findings in the First Trial, the circuit court awarded pre-judgment interest at the rate of 1% per month on the compensatory damages to the Joint Venture from the dates of the various claims to the date of the jury's verdict, which the court calculated to be $1,832,652. The parties also do not dispute the accuracy of this figure. The beginning of the subsequent dispute between the parties in the case originated with an order of the circuit court dated November 19, 2003, but entered nunc pro tunc to November 6, 2003, the date of the jury's verdict. The order recited the particulars of the court's decision to strike certain of the Joint Venture's claims, the jury's findings and verdicts on the remaining claims, and the amount of compensatory damages awarded by the jury in the First Trial. The order also recited the court's calculation of the Total Interest due under the Prompt Payment Act through November 6, 2003. The court also entered a declaratory judgment in favor of the Joint Venture, finding that UOSA had materially breached the contract. Although the circuit court styled the November 19, 2003 order as a final order, and despite having entered the order nunc pro tunc to the date of the jury's verdict, in the concluding paragraphs the court expressly suspended the effective date of the order until January 20, 2004 to permit the parties to file post trial [m]otions, and included a briefing schedule for those motions. The court also expressly stated in the concluding paragraph that it would retain jurisdiction to reconsider all aspects of this judgment, including whether this Order should be a `Final Order,' and to consider and rule upon such post trial [m]otions as may be filed pursuant to the provisions of this Order, and to modify, vacate, or further suspend this Order until January 20, 2004, or such later date as may be established by further Order of this Court. On November 26, 2003, the Joint Venture filed a motion pursuant to Code § 8.01-186 asserting that it was entitled to additional compensatory damages. This statute permits a court to award [f]urther relief based on a declaratory judgment order or decree . . . whenever necessary or proper. UOSA opposed the motion, and the circuit court conducted a hearing thereon on January 7, 2004. By order dated January 15, 2004, the court determined that it would grant the motion and consider awarding the Joint Venture additional compensatory damages for UOSA's material breaches of the contract. Also on January 15, 2004, the circuit court entered an amended order that vacated the November 19, 2003 order, reimposed the judgments under the same terms that had been stated therein, but provided that any execution . . . is suspended and stayed as to the [November 19, 2003] judgments . . . pending further order of this Court. This order further provided, however, that the right is reserved to UOSA to satisfy the judgments rendered [in the order] in whole or in part. The order also expressly continued the case on the court's docket. Following an extended jury trial limited to the issue of the compensatory damages to be awarded for the material breaches of the contract (the Second Trial), the jury determined the total value of the benefit conferred on UOSA by the work performed by the Joint Venture to be $210,234,000. The jury's verdict was rendered on March 11, 2005. Using the figure determined by the jury, the circuit court, in a final order dated June 27, 2005, awarded the Joint Venture additional compensatory damages in the amount of $7,509,239.62 and also awarded $1,453,192 in pre-judgment interest on this amount. [3] In that same order, the court also lifted the January 15, 2004 order's suspension of the judgment from the First Trial. The parties filed cross-appeals from the June 27, 2005 final order, challenging various aspects of the two judgments and the circuit court's conduct of the case. On behalf of UOSA, Wachovia Bank issued an irrevocable letter of credit for $16,717,658.88 in favor of the Joint Venture as a suspension bond for UOSA's appeal. This Court refused those appeals, Blake Construction Co. v. Upper Occoquan Sewage Authority , Record No. 052001 (February 23, 2006) and Upper Occoquan Sewage Authority v. Blake Construction Co., Record No. 052003 (February 23, 2006), and denied subsequent petitions for rehearing filed by the parties, Blake Construction Co. v. Upper Occoquan Sewage Authority , Record No. 052001 (May 4, 2006) and Upper Occoquan Sewage Authority v. Blake Construction Co., Record No. 052003 (May 4, 2006). Accordingly, the judgments became final and due on May 4, 2006 upon entry of the orders denying the petitions for rehearing. On May 8, 2006, UOSA wired to counsel for the Joint Venture a payment of $16,616,472.11, which it contended represented payment in full for all amounts due under the June 27, 2005 order, including pre-judgment interest and post-judgment interest to the date of payment. [4] Counsel for the Joint Venture requested that counsel for UOSA provide details as to how it arrived at the $16,616,472.11 figure. In a letter dated May 10, 2006, counsel for UOSA provided an itemized calculation of the payment, which UOSA contended was adequate to satisfy the total amount due under the June 27, 2005 order. In that letter, UOSA requested that the Joint Venture file a satisfaction of judgment and return the letter of credit given as security for UOSA's appeal. In a letter to UOSA's counsel dated May 16, 2006, counsel for the Joint Venture contended that $16,616,472.11 represented only a partial payment of the total amount due under the June 27, 2005 order. Specifically, the Joint Venture maintained that UOSA had improperly failed to include additional interest on the compensatory damages awarded in the First Trial for the period between the November 6, 2003 jury verdict and the entry of the June 27, 2005 order, [5] that UOSA had incorrectly calculated post-judgment interest on the compensatory damages awarded in the First Trial after June 27, 2005 at 6% per year, the then effective rate of post-judgment interest under Code § 6.1-330.54, rather than the 1% per month rate under the Prompt Payment Act, and that UOSA had failed to calculate post-judgment interest on the amount of pre-judgment interest related to the compensatory damages awarded in both the First Trial and the Second Trial. In an exhibit attached to the May 16, 2006 letter, the Joint Venture presented its own calculations for the additional interest payments it alleged were due and also how it would allocate the $16,616,472.11 partial payment to the amounts as it had calculated them. [6] On May 19, 2006, in response to the Joint Venture's assertion that the $16,616,472.11 payment did not represent the full amount due under the June 27, 2005 order, UOSA filed in the circuit court a motion for satisfaction of the judgment pursuant to Code § 8.01-455. In supporting memoranda, UOSA contended that the amount of pre-judgment interest on the compensatory damages awarded to the Joint Venture in the First Trial under the Prompt Payment Act had been fixed by the November 19, 2003 order at $1,832,652 and that the November 19, 2003 order was subsequently incorporated into the January 15, 2004 order and confirmed by the June 27, 2005 final order without modifying that amount of interest or providing for the continuation of pre-judgment interest until entry of the final order on June 27, 2005. UOSA maintained that the court lost jurisdiction to modify the June 27, 2005 order 21 days after its entry and, therefore, no additional pre-judgment interest on the compensatory damages awarded in the First Trial was due for the period between the November 6, 2003 nunc pro tunc date of entry of the November 19, 2003 order and the entry of the June 27, 2005 final order. UOSA further contended that following the entry of the final order post-judgment interest would accrue on the compensatory damages only at the then effective statutory rate of interest of 6% per year. UOSA also contended that the Joint Venture was improperly seeking to have post-judgment interest applied to the pre-judgment interest on the compensatory damages awarded in both the First Trial and the Second Trial because there was no authority for the Joint Venture's assertion that post-judgment interest would accrue on an award of pre-judgment interest. Finally, UOSA contended that if it was deemed to owe additional amounts to the Joint Venture, it had a right to allocate the $16,616,472.11 payment previously made first to those portions of the judgment debt that it contended were subject to accrual of interest, and that it had in fact made such an allocation by providing the Joint Venture with UOSA's calculation of the total amount due by the attachment to the May 10, 2006 letter. On June 2, 2006, the Joint Venture filed a memorandum opposing the entry of an order of satisfaction of the judgment. The Joint Venture contended that under the terms of Code § 8.01-382 and the Prompt Payment Act, interest on the compensatory damages awarded in the First Trial continued to accrue on any unpaid portion of the judgment at 1% per month, including the period between November 6, 2003 and June 27, 2005, until the compensatory damages awarded by the jury were paid in full. The Joint Venture further contended that it was entitled to post-judgment interest on the amount of pre-judgment interest related to the compensatory damages awarded in both the First Trial and the Second Trial from the dates those two judgments were rendered. In a supplemental memorandum filed June 16, 2006, the Joint Venture contended that UOSA had not made a timely allocation of the May 8, 2006 payment. Thus, the Joint Venture contended that the calculation of the amounts due and the allocation of the payment to those amounts in its letter of May 16, 2006 was the proper allocation of the May 8, 2006 payment. On June 30, 2006, the circuit court issued an opinion letter in which it addressed the issues raised in UOSA's motion for satisfaction of the June 27, 2005 judgment and the parties' supporting memoranda. The court first opined that, under Code § 8.01-382, post-judgment interest accrued on the compensatory damages awarded in the First Trial from November 6, 2003 until paid at an annual rate of 6%, the statutory rate of interest then applicable under Code § 6.1-330.54 as in effect on June 27, 2005. The court further opined that it is necessary to apply post-judgment interest to the entire award and, thus, the court concluded that the jury's award of pre-judgment interest in the First Trial and the pre-judgment interest awarded by the court in the Second Trial were subject to accrual of post-judgment interest at the 6% statutory rate also. Finally, the court determined that the attachment to UOSA's May 10, 2006 letter to the Joint Venture was effective as an essentially contemporaneous directive to the Joint Venture to allocate the May 8, 2006 payment in accord with UOSA's calculations. In an order dated June 30, 2006, which incorporated by reference the circuit court's opinion letter of the same date, the court entered judgment in accord with the views articulated in that letter. The circuit court did not expressly address UOSA's contention that the June 27, 2005 order was a final order and not subject to modification by an award of additional interest not expressly called for in that order, but implicitly rejected that contention by determining that additional interest was due on the compensatory damages awarded in the First Trial for the period between November 6, 2003 and June 27, 2005. On July 12, 2006, the Joint Venture filed a motion for reconsideration of the June 30, 2006 order. The Joint Venture contended that the circuit court erred in applying the 6% statutory annual rate of interest to the compensatory damages awarded in the November 6, 2003 jury verdict. The Joint Venture maintained that under the provisions of the Prompt Payment Act, it was entitled to 1% interest per month on the compensatory damages awarded in the First Trial until the judgment was paid, and not merely as pre-judgment interest after which the statutory rate of interest would apply for the imposition of post-judgment interest. In the alternative, the Joint Venture contended that the correct rate of statutory interest as to the compensatory damages awarded in the First Trial, and to the pre-judgment interest thereon, was 9% per year because that was the applicable rate of interest under Code § 6.1-330.54 as it was in effect on the date of the jury's verdict in the First Trial. The Joint Venture did not request that the circuit court reconsider the determination that UOSA had made a timely designation of the allocation of the May 8, 2006 payment, nor did it contest that the 6% statutory annual rate of interest was proper as to the compensatory damages and pre-judgment interest awarded in the Second Trial. In response to the Joint Venture's motion for reconsideration, UOSA reiterated its prior position that no interest was due on the compensatory damages awarded in the First Trial for the period from November 6, 2003 to June 27, 2005, but that if interest was due, the circuit court had properly set that rate of interest based on the then effective annual rate of interest of 6% established by Code § 6.1-330.54. UOSA further contended that even if a 9% annual rate were to apply based on the former provisions of Code § 6.1-330.54 as in effect at the time of the jury's verdict in the First Trial, the subsequent amendment of the statute as effective July 1, 2004 lowering the annual rate of interest to 6% should apply to any interest due on and after that date. UOSA also continued to contest the award of post-judgment interest on the awards of pre-judgment interest in both the First Trial and the Second Trial. On August 8, 2006, the circuit court issued a further opinion letter in which it disagreed with the Joint Venture that the court had improperly applied the statutory rate of interest to the compensatory damages awarded in the First Trial instead of the Prompt Payment Act rate of 1% per month. In reaching this conclusion, the court relied upon Code § 8.01-382 for the proposition that unless otherwise provided for in the order, a judgment shall bear interest at the judgment rate of interest as provided for in [Code] § 6.1-330.54 from its date of entry or from the date that the jury verdict was rendered. The circuit court agreed, however, that it should have applied the 9% annual rate of interest, the rate effective on January 15, 2004, to both the compensatory damages and the prejudgment interest awarded in the First Trial. The court further opined that this rate of interest would continue despite the amendment of Code § 6.1-330.54 effective July 1, 2004 lowering the statutory annual rate of interest to 6%. In doing so, the court recognized that a subsequent amendment to that Code section effective July 1, 2005 included the addition of the following language: The rate of interest for a judgment shall be the judgment rate of interest in effect at the time of entry of the judgment and shall not be affected by any subsequent changes to the rate of interest stated in this section. The court reasoned that this provision, while not applicable to the June 27, 2005 order, was merely declarative of existing law, and ruled that an award of statutory post-judgment interest is fixed at the rate in effect at the time the judgment is rendered. By an order entered August 8, 2006, the circuit court, adopting the reasoning of the opinion letter of that date, entered judgment for the Joint Venture modifying the post-judgment interest rate on the compensatory damages and pre-judgment interest awarded in the First Trial verdict to 9% per year from November 6, 2003 until paid. At the request of the parties, in part because both the June 30, 2006 and August 8, 2006 orders had been entered without endorsement by counsel under Rule 1:13, on September 29, 2006 the court entered a further order clarifying and reiterating the effect of the two prior orders addressing UOSA's motion for satisfaction of the June 27, 2005 judgment. The order was endorsed by counsel for both parties, with each party reserving all arguments and objections raised during the course of the proceedings on the motion for satisfaction of the judgment. UOSA appealed the circuit court's judgment, presenting seven assignments of error, and the Joint Venture assigned cross-error to two additional issues in its brief in opposition to UOSA's petition for appeal. By an order dated April 11, 2007, we awarded UOSA an appeal and also awarded an appeal on the assignments of cross-error.