Court Opinion

ID: 2655798
Source: CourtListenerOpinion
Date Created: 2014-03-06 20:13:34.534097+00
Date Added: 2024-06-11T12:59:36.922874
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-1143

CARNELL CONSTRUCTION CORPORATION,

                Plaintiff - Appellant,

          v.

DANVILLE REDEVELOPMENT & HOUSING AUTHORITY; BLAINE SQUARE,
LLC,

                Defendants - Appellees.

                             No. 13-1229

CARNELL CONSTRUCTION CORPORATION

                Plaintiff – Appellee,

          v.

DANVILLE REDEVELOPMENT & HOUSING AUTHORITY

                Defendant – Appellant,

          and

BLAINE SQUARE, LLC

                Defendant.

                             No. 13-1239

CARNELL CONSTRUCTION CORPORATION

                Plaintiff – Appellee,
           v.

BLAINE SQUARE, LLC

                 Defendant – Appellant,

           and

DANVILLE REDEVELOPMENT & HOUSING AUTHORITY

                 Defendant.

Appeal from the United States District Court for the Western
District of Virginia, at Danville.    Glen E. Conrad, Chief
District Judge. (4:10-cv-00007-GEC)

Argued:   December 11, 2013                  Decided:   March 6, 2014

Before AGEE, KEENAN, and FLOYD, Circuit Judges.

Affirmed in part, vacated in part and remanded, vacated in part
and final judgment by published opinion. Judge Keenan wrote the
opinion, in which Judge Agee joined.        Judge Floyd wrote a
separate opinion concurring in part and dissenting in part.

ARGUED: Rhonda M. Harmon, THE HARMON FIRM LLC, Manakin-Sabot,
Virginia, for Appellant/Cross-Appellee.     John Dickens Eure,
JOHNSON, AYERS & MATTHEWS, PLC, Roanoke, Virginia;   Joseph Ray
Pope, WILLIAMS MULLEN, Richmond, Virginia, for Appellees/Cross-
Appellants. ON BRIEF: Lori J. Bentley, Joshua D. Goad, JOHNSON,
AYERS & MATTHEWS, PLC, Roanoke, Virginia, for Blaine Square,
LLC.   J. Nelson Wilkinson, James V. Meath, WILLIAMS MULLEN,
Richmond,  Virginia,  for   Danville  Redevelopment  &  Housing
Authority.

                                  2
BARBARA MILANO KEENAN, Circuit Judge:

       In this appeal, we review a judgment entered after a jury

trial on certain claims of race discrimination, retaliation, and

breach of contract brought by a “minority-owned” corporation.

We primarily consider: (1) whether a minority-owned corporation

has standing to sue for race discrimination under Title VI of

the    Civil   Rights    Act     of   1964    (Title     VI);       (2)        whether   the

district court erred in holding at the summary judgment stage

that one of the defendants could not be held liable on the

alleged race discrimination and retaliation (collectively, race

discrimination)        claims;    (3)    whether        the        court       abused    its

discretion by permitting the use of certain impeachment evidence

at    trial;   (4)    whether    the    court    erred        in    deciding       certain

contract issues arising under the Virginia Public Procurement

Act, Virginia Code §§ 2.2-4300 through 4377; and (5) whether the

court erred in modifying the jury’s award of contract damages.

       Upon our review, we hold that a corporation can acquire a

racial    identity     and   establish       standing    to    seek        a    remedy   for

alleged    race      discrimination      under    Title        VI,     but       that    the

district court properly dismissed one of the defendants from

liability on the plaintiff’s race discrimination claims.                                 We

further conclude that the district court abused its discretion

in permitting the use of particular impeachment evidence, which

should have been excluded as unfairly prejudicial under Federal

                                         3
Rule of Evidence 403.             Finally, we agree that the district court

properly reduced certain damages awarded to the plaintiff on its

contract claims, but decide that the strict notice requirements

of the Virginia Public Procurement Act required the court to

narrow    further        the      scope     of       recoverable          contract       damages.

Accordingly, we affirm the district court’s judgment in part.

We     also     vacate     the      court’s           judgment      on      both       the    race

discrimination claims and certain contract damages awarded, and

remand those aspects of the case for further proceedings.

                                                I.

                                                A.

       This     appeal    involves        work       performed       by    a    contractor       in

Danville, Virginia, on the Blaine Square Project (the project),

a large public housing venture intended to provide subsidized

rental units to low-income residents of Danville.                                   The project

was    funded    in   part     by    a    $20        million   grant       to    the     Danville

Redevelopment and Housing Authority (the Housing Authority) from

the    Hope     VI    Program,       an     initiative         of     the       United       States

Department of Housing and Urban Development (HUD), which allows

private       investors      to     contribute          capital      to        public     housing

projects in exchange for tax credits.

       In March 2008, the Housing Authority solicited bids for

site    preparation       work      (site    preparation            work,      or   the      work),

                                                 4
which included clearing the construction site for the project,

grading the land, and installing proper drainage and erosion

controls.         Carnell Construction Corporation (Carnell) submitted

a     bid   for    the        work,    proposing         a     price    of     $793,541      and

representing that Carnell was certified as a minority business

enterprise because its owner is African-American.

       After determining that Carnell was the lowest bidder, the

Housing     Authority          entered    into       a     contract      with    Carnell     to

complete the site preparation work (the contract).                              The contract

specified a June 2009 completion date, stipulated a total price

of     $793,541,        and     included       a     set      of    enumerated        contract

documents.

       Shortly      after      executing       the       contract      with     Carnell,     the

Housing     Authority         leased     the       project      site    and     assigned     its

interest in the contract to Blaine Square, LLC (Blaine) based on

tax    considerations.            Blaine       is    a       limited    liability      company

managed      by     a    non-profit        instrumentality               of     the    Housing

Authority.         Blaine       was   created       to     obtain      and    distribute     tax

credits to private investors.                      The Housing Authority agreed to

provide funds from the Hope VI Program to Blaine and, under a

Development        Services      Agreement         (DSA),      Blaine    agreed       that   the

Housing Authority would continue to provide actual supervision

of the construction, including the site preparation work.

                                               5
     Carnell          began    the     work     on     the     project       in        June    2008.

However,        the     relationship       between        Carnell          and     the        Housing

Authority         steadily          deteriorated          as        each         party         became

dissatisfied          with     the     other’s         performance.               The         Housing

Authority       attributed          expensive        delays    to    Carnell’s           allegedly

unacceptable          work,    particularly          regarding       the    grading           of   the

project    site       and     Carnell’s       failure     to    conduct          due     diligence

concerning        the     contract’s       requirements.               Carnell,           however,

maintained       that       its     work   was       satisfactory          and     that       delays

chiefly    were        attributable        to    poor     planning          by     the     Housing

Authority, especially with respect to a strategy for completing

grading work and controlling erosion at the project site.

     Additionally,             in     December         2008,        Carnell’s           president,

Michael    Scales,          complained     about       race     discrimination                to   the

Housing    Authority’s            Executive      Director,      Gary       Wasson.             Scales

explained his perception that Carnell was “being singled out as

a minority contractor,” and was “expected . . . to work for

free”     on     “excessive”         project         modifications.               At     Carnell’s

request, the parties attempted to mediate their grievances, but

were unsuccessful in their efforts.

     In May 2009, the Housing Authority advised Carnell that it

would     not     extend       Carnell’s        contract       beyond        the        stipulated

completion date, and that Carnell would be required to remove

its equipment and personnel from the project site the following

                                                 6
month regardless whether the work had been completed.                               Carnell

left the project site more than two weeks before the June 2009

completion     date,       and       requested    reimbursement             for    numerous

instances    of     unpaid       work.      The       Housing    Authority         rejected

Carnell’s     request       and      declared     a     default       under       Carnell’s

performance bond.

     Carnell filed a lawsuit against the Housing Authority and

Blaine (the defendants) based on claims of race discrimination

and breach of contract. 1                The race discrimination claims were

based on the defendants’ alleged violations of Title VI and 42

U.S.C.    § 1981.         As    ultimately       developed       in   the     litigation,

Carnell’s     race     discrimination            claims        centered      on     certain

statements    made     by      the    Housing     Authority’s         Hope    VI    Program

Director    and   Contracting          Officer,       Cedric    Ulbing,      as    well   as

alleged     disparate          treatment     with        respect       to     contracting

practices    such    as     “prepayment”        for     materials,      “retainage”       of

progress     payments,         and    approval     of     change      order       requests.

Carnell’s contract claims focused on allegations that Carnell

was directed to perform work for which it was never paid, and

     1
       Carnell’s original and first amended complaints named only
the Housing Authority as a defendant.          A second amended
complaint listed Blaine as a defendant, but only with respect to
Carnell’s breach of contract claims. After the first jury trial
in this case, Carnell filed a third amended complaint alleging
race discrimination and breach of contract claims against both
the Housing Authority and Blaine.

                                            7
that       Carnell    improperly       was        removed   from    the        project    and

declared in default of its contract obligations.                                The Housing

Authority and Blaine filed a counterclaim for breach of contract

and,       at    trial,     framed    Carnell’s        lawsuit     as     an    example    of

“occasions when false claims of race discrimination are made in

order       to      cover    up      poor    performance,          [to]        excuse     poor

performance,          or     to   gain      an       advantage     in     a     contractual

situation.”

       After a two-week trial, a jury awarded Carnell more than

$3.1 million in damages on the race discrimination claims.                                The

jury found in favor of both Carnell and the defendants on their

respective breach of contract claims, but did not award damages

on any of the contract claims.                       However, based on a post-trial

ruling that certain testimony admitted on behalf of Carnell was

false, the district court ordered a new trial. 2

       Before the second trial began, the district court awarded

summary         judgment    to    Blaine     on      Carnell’s    race     discrimination

claims, holding that Blaine could not be held liable for the

allegedly discriminatory conduct because there was no evidence

that       Blaine    directly     participated         in   the   conduct       alleged    or

controlled the activities of a discriminating party.                              Following

       2
       Carnell does not argue on appeal that the district court
erred in vacating the jury award in the first trial and in
ordering a new trial.

                                                 8
the trial, after the jury was unable to agree on a verdict on

either the remaining race discrimination claims or the contract

claims, the district court declared a mistrial and scheduled the

case for a third trial.

      A recurring issue in the litigation that resurfaced during

the third trial involved certain impeachment evidence regarding

the   fact    that    Scales    had    hired          McGuireWoods       Consulting     LLC

(McGuireWoods) to “assist Carnell in reputation management and

media outreach” with respect to Carnell’s race discrimination

claims against the Housing Authority.                     The controversy centered

on an unsigned McGuireWoods document entitled “Assessment and

Proposal” (the proposal, or the McGuireWoods proposal), which

set forth goals to “[s]hape the initial story so that it is

sympathetic to Carnell and critical of [the Housing Authority]”

and to “[e]xpand on the initial story in Danville to garner

broader      interest    in    the    case       in    neighboring          counties,   and

potentially        statewide    interest . . . .”                    Carnell    repeatedly

objected to use of this evidence on the grounds that it was

irrelevant and unfairly prejudicial.

      During       cross-examination     of       Scales        in    the    third   trial,

counsel      for   the   Housing     Authority          asked    whether       Scales   had

“worked to shape and tone the content of this evidence” to “make

out a race claim” to the jury.               Scales denied these suggestions,

and stated that he had hired McGuireWoods “to tell who we are.”

                                             9
        After       much     discussion,        and     over      Carnell’s        repeated

objections that the proposed impeachment evidence was unfairly

prejudicial and irrelevant, the district court allowed counsel

for    the    Housing       Authority     to    recite      the    language       from    the

proposal quoted above, in an attempt to impeach Scales with the

allegedly       inconsistent        statements.         However,     Scales       testified

that    he    was    unfamiliar        with    the    unsigned     document       and    only

recalled reviewing a two-page consulting agreement in which he

agreed to hire McGuireWoods on Carnell’s behalf.                            Nevertheless,

during       closing       argument,    counsel       for   the     Housing       Authority

displayed the challenged language from the proposal on a poster

board that was shown to the jury, and referred to that language

multiple times in the context of impugning Scales’s credibility

and the motives underlying Carnell’s lawsuit.

        Ultimately, Carnell did not prevail at the third trial on

its    race     discrimination       claims.          However,     the     jury   found    in

favor of Carnell both on its breach of contract claims and on

the    Housing      Authority’s        counterclaim      for      breach    of    contract.

The jury awarded Carnell a total of $915,000 on its contract

claims, allocating $515,000 for the defendants’ failure to pay

Carnell for extra work and $400,000 for the defendants’ removal

of Carnell from the project without just cause.                             The district

court     later      issued     a    post-trial        ruling      that     significantly

limited the jury’s award of contract damages to a reduced total

                                              10
of   about    $215,000,    based     on    the    court’s     determination       that

Carnell had failed to plead special contract damages, and that

the Virginia Public Procurement Act, Virginia Code §§ 2.2-4300

through 4377, restricted the amount by which the parties’ fixed-

price, public contract lawfully could be increased. 3                   The parties

timely filed cross-appeals.

                                          II.

      We first address several issues related to Carnell’s race

discrimination        claims.       Those       issues     concern:    (1)   whether

Carnell,     as   a   corporate    entity,      had   standing    to   assert     race

discrimination claims under Title VI; (2) whether the district

court properly dismissed Blaine at the summary judgment stage

from liability for the allegedly discriminatory conduct; and (3)

whether the district court abused its discretion in allowing

certain    impeachment     of     Scales    based     on   the   contents    of    the

McGuireWoods proposal.

                                           A.

      3
        This amount reflects a reduced award that includes
$142,557.57 for contract claims relating to unpaid work, after
the district court implemented the Virginia Public Procurement
Act’s statutory cap, and $72,490.00 for contract claims relating
to removal from the project without just cause, based on the
court’s determination that Carnell failed to prove the full
extent of the general damages that it was awarded on those
claims.    On appeal, Carnell does not challenge the court’s
reduction of general damages on its unjust removal claims.

                                           11
       We begin by considering whether Carnell, as a corporate

entity, had standing to assert claims of race discrimination and

retaliation under Title VI.               We review this question of law de

novo.    Frank Krasner Enters., Ltd. v. Montgomery Cnty., 401 F.3d

230, 234 (4th Cir. 2005).

       The     standing       doctrine,    which       requires         us   to       consider

whether a plaintiff is entitled to a decision on the merits of a

dispute,       has    both    constitutional          and    prudential         dimensions.

Allen v. Wright, 468 U.S. 737, 751 (1984).                          The defendants do

not    dispute       that    Carnell     meets    the       constitutional            test   of

standing,      namely,       that   Carnell      has   alleged       that       (1)    it    has

suffered       an    actual    or   threatened         injury      that      is   concrete,

particularized, and not conjectural; (2) the injury is fairly

traceable      to     the    challenged    conduct;         and   (3)     the     injury     is

likely to be redressed by a favorable decision.                              See Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Miller v.

Brown, 462 F.3d 312, 316 (4th Cir. 2006).

       Instead,       the    defendants    assert       that      Carnell’s       Title      VI

claims run afoul of one of the standing doctrine’s judicially

imposed,       prudential       limits     on     federal         jurisdiction,          which

requires that “a plaintiff’s grievance must arguably fall within

the zone of interests protected or regulated by the statutory

provision . . . invoked in the suit.”                        Bennett v. Spear, 520

U.S.    154,    162    (1997).       Thus,      the    relevant      standing          inquiry

                                           12
before us is whether Carnell’s claims arguably fall within the

zone of interests protected by Title VI.          See id.

     Carnell’s race discrimination claims are based on 42 U.S.C.

§ 2000d, which provides that “[n]o person in the United States

shall, on the ground of race, color, or national origin, be

excluded from participation in, be denied the benefits of, or be

subjected    to   discrimination    under   any     program    or   activity

receiving Federal financial assistance.”            The defendants argue

that Carnell lacks standing to bring race discrimination claims

under Title VI because Carnell is not a “person” within the

meaning of the statute.     The defendants maintain that Carnell, a

corporate entity, lacks a “race, color, or national origin.”

See id.     In support of their position, the defendants primarily

rely on dictum from the Supreme Court’s decision in Village of

Arlington Heights v. Metropolitan Housing Development Corp., 429

U.S. 252, 263 (1977) (Arlington Heights), in which the Court

stated that a corporation “has no racial identity and cannot be

the direct target” of race discrimination.

     Our Circuit has not addressed this standing issue in any

published    opinion.    However,    we   observe    that     several   other

federal appellate courts have considered this question, and have

declined to bar on prudential grounds race discrimination claims

brought by minority-owned corporations that meet constitutional

standing requirements.      Cf. Domino’s Pizza, Inc. v. McDonald,

                                    13
546 U.S. 470, 473 n.1 (2006) (recognizing that “the Courts of

Appeals      to    have     considered    the    issue    have    concluded    that

corporations may raise [42 U.S.C.] § 1981 claims” for injuries

due   to   race     discrimination)       (citation      omitted).      Indeed,   in

various statutory contexts, several of our sister circuits have

concluded         that    corporations    have    standing       to   assert   race

discrimination claims, including claims brought under Title VI.

See, e.g., Thinket Ink Info. Res., Inc. v. Sun Microsystems,

Inc., 368 F.3d 1053, 1060 (9th Cir. 2004) (Section 1981 claim);

Oti Kaga, Inc. v. S.D. Hous. Dev. Auth., 342 F.3d 871, 882 (8th

Cir. 2003) (Fair Housing Act claims); Guides, Ltd. v. Yarmouth

Grp. Prop. Mgmt., Inc., 295 F.3d 1065, 1072 (10th Cir. 2002)

(Sections 1981 and 1982 claims); Gersman v. Group Health Ass’n,

931   F.2d    1565,       1568   (D.C.   Cir.   1991)    (Section     1981   claim),

vacated on other grounds, 502 U.S. 1068 (1992); Triad Assocs.,

Inc. v. Chi. Hous. Auth., 892 F.2d 583, 591 (7th Cir. 1989)

(Section 1983 claim), abrogated on other grounds, Bd. of Cnty.

Comm’rs v. Umbehr, 518 U.S. 668 (1996); Hudson Valley Freedom

Theater, Inc. v. Heimbach, 671 F.2d 702, 706 (2d Cir. 1982)

(Title VI claim); Des Vergnes v. Seekonk Water Dist., 601 F.2d

9, 13-14 (1st Cir. 1979) (Section 1981 claim). 4

      4
       We further observe that the plain language of the statute
may allow a corporation to have Title VI standing.      Title VI
does not specifically define “person,” but the Dictionary Act
(Continued)
                                          14
       Notably, in the context of a plaintiff asserting a claim

under Title VI, the Second Circuit observed that it is

       hard to believe that the Supreme Court would deny
       standing to the corporation because it “has no racial
       identity and cannot be the direct target” of the
       discrimination, while at the same time it would be
       obliged to deny standing to the stockholders on the
       sound ground that the injury was suffered by the
       corporation and not by them.

Hudson Valley, 671 F.2d at 706 (quoting Arlington Heights, 429

U.S.   at   263).    The   Second    Circuit    thus    held   that   when    a

corporation satisfies constitutional requirements for standing,

prudential considerations should not prohibit that corporation

from alleging that a defendant, on racial grounds, has acted to

obstruct    purposes   that    the        corporation    was    created      to

accomplish.    Id.

       We are persuaded by the Second Circuit’s reasoning, and

conclude that the dictum in Arlington Heights does not impede

our application of the Second Circuit’s analysis.              In Arlington

Heights, the Supreme Court was not required to consider whether

does: “In determining the meaning of any Act of Congress, unless
the context indicates otherwise,” the word person “include[s]
corporations.”   1 U.S.C. § 1.    Moreover, § 2000d prohibits a
“person” from being discriminated against “on the ground of
race, color, or national origin,” not “on the ground of his or
her race, color, or national origin.”     See Hudson Valley, 671
F.2d at 705 (observing the same); see also Mohamad v.
Palestinian Auth., 132 S. Ct. 1702, 1707-08 (2012) (observing
that Congress often uses the word “individual” to mean something
different from its use of the word “person”).

                                     15
a corporation had standing to assert that it suffered injury

based    on    racial    discrimination          in   violation     of    federal     law,

because one of the other plaintiffs in the case was an African-

American      individual      who   plainly      had    demonstrated       standing      to

bring the action. 5          429 U.S. at 263.           Thus, the quoted language

from Arlington Heights was surplusage unrelated to the Court’s

determination of the standing issue presented.

     We       agree   with    the   Ninth     Circuit      that     a    minority-owned

corporation        may   establish    an     “imputed       racial       identity”      for

purposes      of   demonstrating     standing         to   bring    a    claim   of   race

discrimination        under   federal   law.           Thinket     Ink,    368   F.3d    at

1059.     We hold that a corporation that is minority-owned and has

been properly certified as such under applicable law can be the

direct object of discriminatory action and establish standing to

bring an action based on such discrimination.                           Accordingly, we

agree with the conclusions reached by our sister circuits that

     5
       In Arlington Heights, a non-profit real estate developer
agreed to purchase land in order to build racially-integrated
housing for residents with low and moderate incomes.    429 U.S.
at 255-56.      When local authorities withheld the necessary
clearance to rezone the land from a single-family to a multiple-
family   housing   classification, the  developer   and  several
African-American individuals filed a lawsuit alleging that their
refusal to change the classification of the land was racially
discriminatory.    Id. at 258-59.  The Supreme Court ultimately
held that the developer and an individual plaintiff had standing
to bring the action, but failed to carry their burden of proving
that discriminatory intent was a motivating factor in the
rezoning decision. Id. at 263-64, 270.

                                            16
prudential considerations should not bar review of a claim of

race discrimination suffered by such a corporation during its

participation in a program that has received federal funding

assistance.

      Examining the present record, we conclude that Carnell has

standing to bring its race discrimination claims under Title VI.

It   is   undisputed    that    Carnell    properly       was   certified   by   the

Commonwealth of Virginia as a “Small, Women- and Minority-Owned

Business” because its president and sole shareholder is African-

American.     Carnell publicly represented that it was eligible for

consideration     as     a     minority        business    enterprise   when      it

contracted to work for the Housing Authority on a public project

receiving federal funding assistance.                Carnell alleged that the

defendants discriminated against Carnell during its performance

on the contract based on the minority status of its owner, and

that Carnell suffered direct injury as a result of that racial

discrimination.        Therefore, we hold that under the facts before

us, Carnell sufficiently has shown an imputed racial identity

permitting us to conclude that Carnell’s corporate status does

not prevent its race discrimination claims from falling within

the zone of interests protected by Title VI.                    See Bennett, 520

U.S. at 162.

      Our    conclusion        is   not        altered    by    the   defendants’

alternative contention that Carnell lacked standing because it

                                          17
was    not    an     intended          beneficiary        of    Hope    VI     Program         funding.

Title VI does not require that an injured party be the intended

beneficiary of federal funds.                        Instead, Title VI provides that

no person shall “be excluded from participation in, be denied

the benefits of, or be subjected to discrimination under any

program or activity receiving Federal financial assistance” on

the basis of race.                42 U.S.C. § 2000d.                 Thus, the determinative

inquiry       in    this        regard       is   whether       Carnell        alleged         that     it

suffered       injury          based    on    race      discrimination             and       was    either

participating or seeking to participate in a federally funded

activity,       or    was        the    intended        beneficiary           of     those         federal

funds.       Cf. Guardians Ass’n v. Civil Serv. Comm’n of N.Y., 463

U.S. 582, 633 (1983) (“Because Title VI is intended to ensure

that    ‘no    person’           is    subject       to   discrimination                in    federally

assisted       programs,          private         parties       function           as     third-party

beneficiaries         to       these     contracts.”);           United       States          v.    Harris

Methodist          Fort        Worth,     970     F.2d         94,     97     (5th        Cir.       1992)

(concluding that Title VI protects physician staff in hospitals

that    receive       federal          funding);        Soberal-Perez          v.        Heckler,       717

F.2d    36,    38     (2d       Cir.    1983)     (interpreting              Title       VI    to    cover

“situations         where        federal      funding      is        given    to     a    non-federal

entity       which,       in    turn,     provides        financial          assistance            to   the

ultimate beneficiary”).

                                                   18
      Carnell plainly has met this test.                    It is undisputed that

Carnell    submitted      a     successful       bid    proposal,    entered       into   a

federally    funded       contract        with    the    Housing     Authority,       and

performed    services          under    that     contract    for    nearly     a    year.

Carnell therefore undoubtedly has participated in the Hope VI

Program,    “a   program        or     activity    receiving       Federal   financial

assistance.”        42 U.S.C. § 2000d.                 Accordingly, we hold that

Carnell’s Title VI claim meets the requirements for prudential

standing, and we proceed to consider the merits of Carnell’s

appeal.

                                            B.

      Carnell argues that the district court erred in awarding

summary    judgment       to    Blaine    on     Carnell’s    race    discrimination

claims.     The district court held that there was no evidence that

Blaine    engaged    in       the    alleged     discriminatory       conduct      during

construction of the Project, either by participating directly in

that conduct or by controlling the conduct of Housing Authority

representatives under an agency relationship with the Housing

Authority.

      Carnell contests both these findings on appeal.                        We review

the   district   court’s        award     of   summary     judgment    de    novo,    and

consider the evidence and all inferences fairly drawn from the

evidence in the light most favorable to Carnell.                      See Matsushita

Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-

                                            19
88 (1986); Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1127

(4th Cir. 1987).

      We first address the district court’s determination that

the   record      lacked    evidence      supporting       a   claim     that    Blaine

participated directly in the allegedly discriminatory behavior.

According       to    Carnell,     the    district       court’s    conclusion       was

erroneous because Blaine “solely . . . controlled” the financing

for the project and directed that various contested payments be

withheld from Carnell.

      Carnell’s        argument,      however,        misrepresents       the    record

before    us.        The   deposition     testimony       of   Blaine’s        corporate

designee, Owen McCormick, plainly states that Blaine “did not do

anything directly in furtherance of its obligations under the

contract,” but was “a passive entity [that] would ensure that

the   checks     would     be   written    to    [the    Housing    Authority]      for

purposes of paying the contractors.”                   Written correspondence in

the   record         corroborated     that      the     allegedly       discriminatory

denials of Carnell’s requests for certain payments were made by

Housing Authority personnel, not by Blaine.

      Additionally, as the district court observed, Blaine is a

limited     liability      company       with    “no     individual      officers     or

employees”       acting    on   its   behalf.         According    to    the    relevant

version     of       Blaine’s    “Operating       Agreement,”       Blaine’s      three

shareholders         are   corporate      entities,       including      an     investor

                                           20
member, a special member, and the managing member, which is a

non-profit company led by Housing Authority Executive Director

Gary Wasson.            Moreover, the record fails to establish that Gary

Wasson acted in any respect on Blaine’s behalf when he engaged

in allegedly discriminatory acts against Carnell. 6

       Carnell argues, nevertheless, that Blaine was vicariously

liable          for    the   discriminatory          conduct    of   Housing          Authority

representatives.              Carnell asserts that the DSA designated Blaine

as the “Owner” of the project with full control over the Housing

Authority, which merely was an agent obligated to assist Blaine

in   performing           Blaine’s      contractual     obligations.             We    disagree

with Carnell’s position.

       Both           parties      agree    that      Virginia       law     governs         the

relationship between Blaine and the Housing Authority under the

DSA.       Under Virginia law, control is a necessary component of a

principal-agent relationship.                   Cf. Acordia of Va. Ins. Agency,

Inc.       v.    Genito      Glenn,     L.P.,   560    S.E.2d    246,      249    (Va.    2002)

(defining         agency      as   “a    fiduciary     relationship”        based       on   the

       6
        Carnell argues that Wasson was listed as Blaine’s
“President” on two documents he signed on Blaine’s behalf, and
therefore, that Wasson acted on Blaine’s behalf when he
participated in allegedly discriminatory conduct.  However, as
the district court correctly observed, those documents should
not be given significant weight because they predated the
clarification of Blaine’s management structure in the revised
version of its Operating Agreement.

                                                21
parties’     consent     that    one    party      “shall   act     on    [the    other’s]

behalf and subject to [the other’s] control”).

      Even    if    we       assume,    without         deciding,        that    vicarious

liability     may   be   asserted       in   the    context     of    a    Section      1981

claim, 7 Carnell’s argument fails.                 The plain language of the DSA

grants the Housing Authority sole responsibility for managing

construction of the project as an independent contractor.                                The

DSA   also    explicitly        forecloses        any   ability      to    construe      the

relationship       of   Blaine    and   the       Housing   Authority       as    that   of

principal and agent, by specifying that the Housing Authority

was not an agent or employee of Blaine.

      The DSA provides, in relevant part, that “[n]othing herein

contained    shall      be    construed      to    constitute     any     party    as    the

agent of another party,” and that “[the Housing Authority] shall

not at any time be deemed an employee of [Blaine].”                             Such clear

expressions of intent in the governing contract persuade us that

an agency relationship was not established between Blaine and

the Housing Authority.             See, e.g., Causey v. Sewell Cadillac-

      7
       Contrary to Carnell’s characterization of the holding in
General Building Contractors Ass’n v. Pennsylvania, 458 U.S.
375, 395 (1982), the Supreme Court did not decide in that case
that the doctrine of respondeat superior applied to Section 1981
lawsuits.     However, a concurring opinion suggested that a
defendant    could   be  held   vicariously   liable   for   the
discriminatory conduct of another party if the record contained
evidence that the defendant “maintain[ed] some control over
[that party’s] activities.”       Id. at 404 (O’Connor, J.,
concurring).

                                             22
Chevrolet, Inc., 394 F.3d 285, 290 (5th Cir. 2004) (affirming

dismissal     of    a     car        dealership’s            § 1981     claim     against     an

automobile manufacturer because relevant documents show that the

dealership    is    an     independent            business);          Arguello    v.   Conoco,

Inc., 207 F.3d 803, 807-08 (5th Cir. 2000) (reasoning that the

“plain language” of contracts between an energy company and its

individual    gas       stations          specified      that       each    station    was    an

“independent       business”             and   therefore           foreclosed     an      agency

relationship).       Indeed, we discern no evidence in the record to

suggest   that     Blaine       actually          controlled          any   of   the   regular

operations of the Housing Authority.

     Accordingly, we conclude that the district court correctly

determined that Blaine could not be held liable on Carnell’s

race discrimination claims on either a direct or a vicarious

basis.       We    therefore             affirm    the   court’s        award     of   summary

judgment to Blaine with respect to those claims.

                                                  C.

     We     turn    now        to    consider          one     of     Carnell’s     principal

arguments on appeal, namely, that the district court committed

reversible    error       by    allowing          defense      counsel      to   use   certain

impeachment       material          in    cross-examining           Carnell’s      president,

Michael Scales.         We review for abuse of discretion the district

court’s   decision        to        permit     counsel        to    impeach      Scales     with

portions of a document that Carnell contends should not have

                                                  23
been     allowed     for       any     purpose      under     the     Federal      Rules    of

Evidence.      See United States v. Grimmond, 137 F.3d 823, 831 (4th

Cir. 1998).

       The document at issue is the unsigned proposal prepared by

McGuireWoods.        As stated above, Scales testified that he did not

recall    viewing        the    document,      which     delineated        objectives       to

“[s]hape the initial story so that it is sympathetic to Carnell

and critical of [the Housing Authority],” and to “[e]xpand on

the initial story in Danville to garner broader interest in the

case     in    neighboring            counties,        and     potentially         statewide

interest.”         Before questioning Scales concerning this content,

defense counsel asked Scales whether he was trying to “shape”

the evidence to “make out a race claim.”                            Scales denied these

accusations        and     later       explained       that      he    had     sought      the

assistance of media relations consultants from McGuireWoods “to

tell who we are.”

       Carnell      argues           that    defense         counsel’s       use    of     the

McGuireWoods       proposal          was    unfairly    prejudicial        under     Federal

Rule of Evidence 403, because the defendants improperly used the

proposal      to    attack      Scales’s       credibility          when   there     was    no

evidence showing that Scales had adopted, or even had read, the

proposal’s contents.                 Carnell also asserts that the proposal

should have been excluded under Federal Rule of Evidence 613(b),

which limits the admissibility of a witness’s prior inconsistent

                                               24
statement.       In response, the defendants fail to address the Rule

403 question,          and solely argue that their use of the proposal

constituted        proper      impeachment         by    a      prior        inconsistent

statement.

       We find no merit in the defendants’ argument.                         Rule 613(b)

provides        that    “[e]xtrinsic     evidence         of     a     witness’    prior

inconsistent       statement    is    admissible        only     if    the    witness    is

given an opportunity to explain or deny the statement and an

adverse party is given an opportunity to examine the witness

about it, or if justice so requires.”                   The defendants’ argument

fails at the outset, because even if counsel’s cross-examination

of     Scales     about   a    statement      in    the        proposal      constituted

“[e]xtrinsic evidence” within the meaning of Rule 613(b), the

defendants did not establish that the contents of the proposal

qualified as a prior statement of Scales.

       For a statement to qualify as a witness’ prior inconsistent

statement under Rule 613(b), the statement must be one that the

witness has made or adopted, or to which the witness otherwise

has subscribed.         See United States v. Barile, 286 F.3d 749, 757-

58 (4th Cir. 2002) (indicating that a third party’s statement

only    is   admissible       under   Rule    613(b)      if     the    statement       was

adopted by the witness or otherwise is “reasonably attributable”

to the witness); see also United States v. Saget, 991 F.2d 702,

710 (11th Cir. 1993) (“[W]e conclude that a witness may not be

                                         25
impeached    with      a      third       party’s       characterization     or

interpretation of a prior oral statement unless the witness has

subscribed to or otherwise adopted the statement as his own.”).

      The record before us does not contain evidence that the

substance of the proposal reasonably was attributable to Scales.

Instead, the record shows that Scales denied any recollection of

the   proposal   and   stated     that   he   did   not   sign   the   document.

Moreover, the proposal, which was dated February 22, 2010, had

not been incorporated or referenced in the February 24, 2010

consulting   agreement      executed     by   Scales.      Also,   when   Scales

signed and returned the consulting agreement to McGuireWoods, he

did not refer to any proposal in his cover letter.                 Given these

undisputed facts, the record lacked any foundation for treating

the proposal as a prior inconsistent statement attributable to

Scales.

      We further observe that Rule 613(b) “speaks only to when

extrinsic    proof     of     a    prior      inconsistent       statement   is

inadmissible; it says nothing about the admissibility of such

evidence.”   United States v. Young, 248 F.3d 260, 268 (4th Cir.

2001).    Because the district court ruled that evidence of the

proposal could be used for impeachment purposes during cross-

examination, we turn to consider Carnell’s argument that the

district court abused its discretion by failing to exercise its

gatekeeping authority to exclude the evidence under Rule 403.

                                         26
See id. (stating that “even if all the foundational elements of

Rule   613     are     met”   a    district      court        “may    still    exercise       its

discretion        to     exclude”     evidence           of     a     prior     inconsistent

statement under Rule 403).               In support of its position, Carnell

contends       that    the    evidence      lacked        probative         value     and     was

unfairly     prejudicial,          particularly          in    view    of     the     types   of

claims being litigated.             We agree with Carnell’s argument.

       Among other things, Rule 403 provides for the exclusion of

otherwise      relevant       evidence      if     the    “probative        value”      of    the

evidence     is      “substantially      outweighed”            by    “unfair       prejudice”

that will result from its admission.                           Fed. R. Evid. 403.              An

assessment of probative value under Rule 403 requires more than

a determination that the evidence is “relevant” to a material

fact in the case.                 Rather, the trial court must assess the

proponent’s       need    for      admission       of    the    evidence       in     the    full

evidentiary context of the case.                        Old Chief v. United States,

519 U.S. 172, 184-85 (1997).

       After      evaluating       the   marginal          probative          value    of     the

proposed evidence, the trial court then must balance the value

of the evidence against the harmful consequences that may result

from its admission.               See United States v. Ham, 998 F.2d 1247,

1252 (4th Cir. 1993).              Foremost among those dangers is the risk

of   “unfair      prejudice,”       which     refers      to     an    undue    tendency       of

evidence to influence a jury to make a decision for reasons

                                              27
unrelated to the probative value of the evidence.                    United States

v. Mohr, 318 F.3d 613, 620 (4th Cir. 2003) (internal quotation

marks and emphasis omitted); Mullen v. Princess Anne Volunteer

Fire Co., Inc., 853 F.2d 1130, 1134 (4th Cir. 1988); see Old

Chief, 519 U.S. at 180.             Rule 403 provides for the exclusion of

unfairly    prejudicial       evidence    only    when      the   risk    of   unfair

prejudice “substantially” outweighs the probative value.                          See

Mohr, 318 F.3d at 620.

       In applying the Rule 403 analysis to the district court’s

decision in this case, we consider the evidence in the “light

most    favorable    to     [the]    proponent,   maximizing        its   probative

value and minimizing its prejudicial effect.”                     Mullen, 853 F.2d

at 1135 (citation and internal quotation marks omitted).                           We

first   examine     the    probative    value    of   the    evidence     at   issue.

Notwithstanding the deferential standard of review, we conclude

that any impeachment value of the quoted statements from the

McGuireWoods      proposal      was     negligible       given      the    lack    of

foundation for those statements.

       As we have stated above, no evidence was adduced to show

that Scales had read, let alone endorsed, the proposal.                        Indeed,

after counsel quoted the proposal’s language, Scales protested

that he was unfamiliar with the proposal and did not subscribe

to its contents.          Moreover, Scales already had testified that he

had hired McGuireWoods in connection with the litigation to help

                                         28
tell Carnell’s story to the public.                Because the proposal was an

internal document prepared by McGuireWoods that contained only

“propose[d]” goals for McGuireWoods’s relationship with Carnell,

the     proposal’s   negligible      probative         value     was   diminishingly

small    absent    any   evidence    that       Scales   approved      or   otherwise

adopted its contents.

      On the other hand, the danger that unfair prejudice would

result    from    allowing   counsel      to    quote    from    the   proposal   was

exceedingly high.         In allowing the impeachment, the district

court     lent    legitimacy    to   an        unfounded   attack      on   Scales’s

credibility based on a statement that was not his own.                      Although

the court earlier had excluded evidence of the proposal from the

defendants’ case-in-chief, the well-recognized problem remained

that juries find it difficult to distinguish between impeachment

and substantive evidence, and that, consequently, “there is a

significant danger of prejudice where evidence is adduced for

impeachment purposes that could not be presented directly on the

merits of the case.”         United States v. MacDonald, 688 F.2d 224,

234 (4th Cir. 1982) (citing United States v. Morlang, 531 F.2d

183, 190 (4th Cir. 1975)).             Under the present circumstances,

because    the    impeachment   evidence         had    little    or   no   probative

value and the danger of unfair prejudice was very great, we

conclude that the court’s decision to allow the use of this

impeachment evidence against Scales was an abuse of discretion.

                                          29
       Moreover, we are not persuaded by defendants’ argument that

any error was harmless because use of this impeachment material

was merely a “minor episode” in a lengthy trial.                           See Taylor v.

Va. Union Univ., 193 F.3d 219, 235 (4th Cir. 1999) (holding that

the harmless error test “appropriately focuses upon ‘whether the

error    itself     had     substantial          influence’”       on   the     judgment)

(quoting Kotteakos v. United States, 328 U.S. 750, 765 (1946)),

abrogated on other grounds, Desert Palace Inc. v. Costa, 539

U.S. 90 (2003).           On the contrary, the defendants’ entire theory

of the case was that Scales and his subordinates fabricated race

discrimination claims to conceal poor contractual performance.

To the extent that the defendants could attribute the contested

language in the proposal to Scales, the defendants’ theory of

the case would be significantly bolstered because the document

revealed      a    plan    to    “shape”       the    credibility          of   Carnell’s

discrimination claims.

       Defense counsel ultimately was allowed to impeach Scales

with    the   proposal      as   if    it   were     his    own    prior    inconsistent

statement.        The defendants took full advantage of this windfall

during closing argument, when counsel referred the jury to a

poster exhibit displaying the proposal’s language to illustrate

the    defense    theory     that      Carnell’s     discrimination          claims    were

manufactured,       despite      the    fact     that      the    proposal      was   never

formally admitted into evidence.

                                            30
      We    find        it   difficult      to     envision      circumstances     more

unfairly         prejudicial        and      damaging       to      Carnell’s      race

discrimination claims.              We express no opinion, however, whether

the   error      so     pervaded    the    proceedings     to     require    remand    of

Carnell’s contract claims, because Carnell represented at oral

argument in this appeal that Carnell is only asking for a new

trial      on     its     race     discrimination        claims     based     on   this

evidentiary error.               Therefore, we vacate the district court’s

judgment        with    respect     to    Carnell’s      race    discrimination       and

retaliation claims, and proceed to review the remaining issues

on appeal involving Carnell’s contract claims.

                                            III.

      Carnell presents several arguments related to the damages

awarded on its breach of contract claims.                         We first consider

Carnell’s arguments concerning its claims for unpaid work.

                                             A.

      In addressing the amount of damages that could be recovered

under Carnell’s unpaid work claims, we review certain provisions

of the Virginia Public Procurement Act (VPPA), Virginia Code

§§ 2.2-4300 through 4377.                The VPPA governs public contracts in

Virginia and was enacted, among other reasons, to ensure “that

public bodies in the Commonwealth obtain high quality goods and

services        at     reasonable        cost,”    and    “that     all     procurement

                                             31
procedures be conducted in a fair and impartial manner.”                     Id.

§ 2.2-4300(C).      Here,       we   consider:     (1)   whether    the   record

contains evidence that Carnell provided sufficient notice of its

unpaid work claims under the VPPA’s notice requirement; and (2)

whether   the   VPPA’s    monetary     cap   on    modifications     to   public

contracts limits Carnell’s recovery on its contract claims.

                                       1.

     The defendants argue that Carnell’s unpaid work claims are

barred by Carnell’s failure to offer evidence at the third trial

that Carnell complied with the VPPA’s notice requirement.                   Under

the statute, “written notice of the contractor’s intention to

file a claim shall be given at the time of the occurrence or

beginning of the work upon which the claim is based.”                        Id.

§ 2.2-4363(A).      At the third trial, unlike in the first two

trials,   Carnell   did   not    offer   into     evidence   a   November   2009

letter notifying the Housing Authority of “claims arising from

Carnell’s work on the [project].”            Instead, Carnell offered into

evidence an October 2008 letter, which sought reimbursement for

two particular instances of uncompensated work. 8                Carnell argues

     8
       Carnell briefly argues that the Housing Authority’s actual
knowledge of the unpaid work claims substantially satisfied the
VPPA’s notice requirement.    However, because the Supreme Court
of Virginia has rejected this position with respect to a similar
statutory notice requirement, we do not discuss further that
argument. See Commonwealth v. AMEC Civil, LLC, 699 S.E.2d 499,
506 (Va. 2010) (“We hold that actual notice cannot satisfy the
(Continued)
                                       32
that    the    October      2008    letter       independently     supplied       adequate

proof of notice under the VPPA.                  We disagree.

       The    VPPA’s      written    notice       requirement      is     a    “mandatory,

procedural requirement[]” that must be met before a court can

reach the merits of a claim.                 Dr. William E.S. Flory Small Bus.

Dev. Ctr., Inc. v. Commonwealth, 541 S.E.2d 915, 919 (Va. 2001).

Any notice submitted for purposes of satisfying this statutory

requirement must identify specifically each claim for damages

and “conspicuously declar[e] that, at least in the contractor’s

view, a serious legal threshold has been crossed,” and that the

contractor      intends      to    claim    reimbursement         for    the    particular

damages.       Commonwealth v. AMEC Civil, LLC, 677 S.E.2d 633, 641

(Va. Ct. App. 2009), rev’d in part on other grounds, 699 S.E.2d

499    (Va.    2010).        Although      the    notice    need    not       exhibit   “the

sophistication of a legal pleading,” the notice must “clearly

and timely state[] the contractor’s intention to later file an

administrative claim.”             Id.

       In     its    pleadings,      Carnell       alleged    numerous         claims   for

unpaid      work.      In    the   relevant       section    of    its    third    amended

complaint, Carnell requested, among other things, damages for

cleaning       out    a     sediment     pond,      removing       excess       dirt    from

written notice requirement in [Virginia] Code § 33.1-386(A), and
that written notice is required.”) (citation omitted).

                                             33
foundation     work   and    materials      left    by   another     contractor,

performing     additional     seeding,      relocating     a    fire      hydrant,

implementing    various     plan    revisions,     correcting      environmental

deficiencies,     incurring         additional      surveying       costs,       and

performing work on sidewalks, ramps, and driveway entrances.

     By   contrast,    the    October    2008      correspondence,        on   which

Carnell relies, refers to a very limited class of grievances.

In the letter, Michael Scales protested that Carnell was not

compensated for work required “to clean out the sediment pond #3

located on the north side of the Seeland Road construction site

for the second time,” and “to enter, remove siltation material,

and leave the property of Ms. Juanita Edwards.”                  As “redress,”

Scales requested reimbursement in the October 2008 letter for

the referenced work, which he defined as the “efforts of the

Contractor to get an approved stabilization plan for the north

side of Seeland Road and the associated removal of the sediment

from the area located on the north side of [the] Seeland Road

construction site.”         No mention was made in the October 2008

letter of the litany of other unpaid work claims described in

Carnell’s third amended complaint.

     Under     Virginia      law,      Carnell      satisfied       its        notice

requirements under the VPPA only with respect to the claims for

which Carnell specifically requested reimbursement and signified

an intent to file a claim.           See AMEC Civil, 677 S.E.2d at 641.

                                       34
Therefore,   we     conclude    that     Carnell’s     October   2008     letter

supplied   the    required     notice   only    with   respect   to     expenses

associated   with    cleaning    out    the    sediment   pond   and    removing

sediment from the north side of the specified construction site. 9

Further, with regard to those two aspects of the project, we are

unable to discern from the record the particular amounts that

the jury awarded as compensation for that work.              Accordingly, we

vacate the district court’s judgment with respect to Carnell’s

contract claims for unpaid work, and remand the two contract

claims referenced in the October 2008 letter to the district

court for a new trial on those claims on damages only.

                                        2.

     We next consider the district court’s decision to reduce

the amount of damages awarded on the unpaid work claims based on

the VPPA’s limitation of the amount by which public contracts

lawfully can be increased.        Under the VPPA,

     9
       The defendants claim that these issues were addressed by
the Housing Authority’s approval of two change orders that
authorized additional expenditures to rectify the underlying
problems with the construction site.     On the record before us,
we are unable to ascertain with certainty the amounts and nature
of the work reimbursed and how they correspond to the amounts
sought in the October 2008 letter. Nor are we in a position to
make factual findings on that point. Accordingly, we express no
opinion on that issue and leave it to the parties to present
their arguments on partial or full payment for these two
surviving unpaid work claims to the district court upon remand.

                                        35
       [a]   public   contract    may  include   provisions   for
       modification of the contract during performance, but
       no fixed-price contract may be increased by more than
       twenty-five percent of the amount of the contract or
       $50,000, whichever is greater, without the advance
       written approval of . . . the governing body, in the
       case of political subdivisions.      In no event may the
       amount     of    any     contract,    without     adequate
       consideration,    be    increased    for   any    purpose,
       including, but not limited to, relief of an offeror
       from the consequences of an error in its bid or offer.

Virginia Code § 2.2-4309.             Carnell raises three challenges to

the applicability and constitutionality of the statute, all of

which lack merit.

       First,   Carnell     asserts    that     the   VPPA    does    not   cap   all

recoveries      on   contract   claims,      but   solely     those    in   which    a

contractor has increased the contract price excessively without

providing additional work.            Seizing on the part of the statute

that   prohibits      any   increases      to   contracts      “without     adequate

consideration,” id., Carnell argues that the VPPA should not

limit increases to Carnell’s contract, which were justified by

the    valuable      consideration    of     additional      work     performed     by

Carnell.

       We disagree with Carnell’s argument.                  We conclude that on

its face, the statutory cap plainly applies to all fixed-price

public contracts and forbids an increase to any such contract

that exceeds a proportion of the contract’s price.                      A contrary

conclusion would permit the absurd result of allowing Carnell to

                                        36
recover, through a lawsuit, an amount that Carnell could not

lawfully have obtained through a mutually-agreed modification of

the contract terms.           Cf. Scofield Eng’g Co. v. Danville, 126

F.2d 942, 947 (4th Cir. 1942) (denying quantum meruit recovery

on a contract when the contract was forbidden by statute, and

citing “the absurdity of implying an obligation to do that which

[the law] forbids”) (citation omitted).

     Carnell separately asserts, however, that even if the VPPA

limits all fixed-price public contracts, Carnell’s contract with

the Housing Authority was a unit-price contract to which the

VPPA does not apply.          Under the parties’ contract, the Housing

Authority    agreed    to    pay    Carnell    “for   the   performance   of   the

Contract, in current funds, subject to additions and deductions

as provided in the Contract Documents, the sum of $793,541.00.”

Carnell     argues    that    because      the   total      contract   price   was

“subject    to   additions         and   deductions,”    and    because   Carnell

agreed to perform the site preparation work “for the above lump

sum and unit prices,” this contract language demonstrates that

the contract was negotiated on a unit-price basis.                 We disagree.

     The district court’s determination that the parties entered

into a fixed-price contract is well supported by the record.

Michael Scales represented in the signed, notarized bid form,

which was incorporated into the contract, that Carnell sought to

perform the site preparation work “for the firm, fixed price”

                                          37
specified.        Although      the    contract        contained      some     conditional

language      allowing       modifications      to     the    final     contract      price,

such a mechanism for negotiating modifications did not transform

a contract that proposed a “lump sum” payment into a unit-price

contract.      Therefore, we conclude that the parties’ contract was

a    fixed-price       contract       subject     to     the    modification          limits

imposed by the VPPA.

       Finally,       Carnell    argues    that        the     VPPA’s       statutory     cap

unconstitutionally abrogates the common law in the Commonwealth

of   Virginia,        and    constitutes     an      unlawful     taking       and    a   due

process       violation       under     both      the        Federal        and     Virginia

Constitutions.          See U.S. Const. amend. V; U.S. Const. amend.

XIV, § 1; Va. Const. art. I, § 11.                   In essence, Carnell contends

that    the    VPPA     is     unconstitutional          because       it    permits      the

government to obtain the benefit of a contractor’s additional

labor pursuant to contract modifications without being required

to pay fully for that additional work.                   Again, we disagree.

       We     adopt    the     district    court’s           reasons     for       rejecting

Carnell’s constitutional challenges under state and federal law.

In doing so, we agree with the district court that the VPPA only

affects     the   remedy      available    for       certain     breach       of    contract

actions under the common law, not the validity of the underlying

contractual obligations.              See Etheridge v. Med. Ctr. Hosps., 376

S.E.2d 525, 532 (Va. 1989) (stating that “[o]ne area in which

                                           38
the   General    Assembly’s    authority     has   not   been    forbidden     or

restricted is the common law,” and that “the legislature has the

power to provide, modify, or repeal a remedy”).                   Carnell was

presumed to be aware of statutory limitations on the Housing

Authority’s power to modify contracts.             See American-La France &

Foamite Indus., Inc. v. Arlington Cnty., 178 S.E. 783, 784 (Va.

1935) (“All persons dealing with a municipal corporation are

charged with notice of the limitations upon its power.                    Those

limitations may not be exceeded, defeated, evaded, or nullified

under guise of implying a contract.”) (citation and internal

quotation marks omitted).           Moreover, Carnell had no fundamental

right,     nor   “property,    in    the    constitutional      sense,”   to   a

particular remedy in contract.              See Gibbes v. Zimmerman, 290

U.S. 326, 332 (1993); Etheridge, 376 S.E.2d at 531 (citing Duke

Power Co. v. Carolina Envt’l Study Grp., 438 U.S. 59, 83-84

(1978)).     Thus, the VPPA provisions at issue are constitutional

because they reasonably are related to the legitimate government

purpose of promoting fair procurement procedures by which public

bodies in Virginia obtain goods and services at a reasonable

cost.    Virginia Code § 2.2-4300(C); see Etheridge, 376 S.E.2d at

531; see also Duke Power Co., 438 U.S. at 83-84 (holding that

economic     regulations      generally     are    presumed     constitutional

unless the legislature’s judgment is “demonstrably arbitrary or

irrational”).

                                       39
       Accordingly, we affirm the district court’s application of

the VPPA in reducing Carnell’s damages on its claims for unpaid

work.     On remand, therefore, when the district court considers

the   proper     measure   of     damages       for   the    two    items     for   which

Carnell proved it had provided the requisite VPPA notice, the

court must also ensure that any damages Carnell may be awarded

do not exceed the VPPA’s statutory cap.

                                           B.

       We next address Carnell’s argument that the district court

erred    in    limiting    the    types     of    damages      that    Carnell      could

recover    on    its   breach     of   contract       claims    for    being     removed

unjustly from the construction project.                  After the jury returned

a    verdict    awarding   Carnell       $400,000       on    its    claims      alleging

unjust removal, the district court allowed Carnell to recover

certain of those damages, including $12,000 in lost profits from

not being able to complete the site preparation work and $60,490

in    “retainage”      withheld    by     the    defendants,         but    ruled    that

Carnell    insufficiently        had     pleaded      “consequential        or   special

damages”      accounting   for     the    remainder      of    the    damages       award.

According to the court, such consequential damages included the

alleged destruction of Carnell’s business, loss of good will,

and attorneys’ fees and other expenses related to third-party

claims.       On appeal, Carnell argues that the foregoing items were

not consequential damages under Virginia law, but that, even if

                                           40
those claimed damages were consequential or special in nature,

they were pleaded sufficiently in the third amended complaint.

       In Virginia, the issue whether the contested damages are

direct or consequential damages presents a question of law.                            See

Roanoke Hosp. Ass’n v. Doyle & Russell, Inc., 214 S.E.2d 155,

160 (Va. 1975).              Under Virginia law, direct damages are those

that “flow ‘naturally’ from a breach of contract; i.e., those

that,       in    the   ordinary      course    of     human     experience,     can    be

expected to result from the breach, and are compensable.”                            R.K.

Chevrolet, Inc. v. Hayden, 480 S.E.2d 477, 481 (Va. 1997); see

also    Long       v.   Abbruzzetti,      487    S.E.2d        217,   220    (Va.    1997)

(analyzing         whether      damages    were      a    “direct      and     necessary

consequence” of the breach).

       By        contrast,     consequential         damages      “arise      from     the

intervention            of    ‘special     circumstances’             not     ordinarily

predictable and are compensable only if it is determined that

the special circumstances were within the contemplation of the

parties to the contract.”                 R.K. Chevrolet, 480 S.E.2d at 481

(citation         omitted).      We    agree    with     the    district     court     that

because the damages sought by Carnell did not flow directly from

the defendants’ decision to remove Carnell from the project,

they were consequential in nature.                   See, e.g., Atl. Purchasers,

Inc. v. Aircraft Sales, Inc., 705 F.2d 712, 716 n.4 (4th Cir.

1983) (barring a claim for attorney’s fees because the party

                                           41
“failed    to    state     specifically      the    claim   for    fees    in    the

complaint”).

       Although state law governs our determination of the nature

of   damages     sought,    the    procedural      requirements    for     pleading

damages are governed by the Federal Rules of Civil Procedure.

See Hogan v. Wal-Mart Stores, Inc., 167 F.3d 781, 783 (2d Cir.

1999)     (observing       that    state     substantive     law    applies       in

determining whether the elements of special damages are met, but

that “[t]he form in which claims for special damages must be

stated is a procedural question governed by Fed. R. Civ. P.

9(g)”); see also 5A Charles Alan Wright & Arthur R. Miller,

Federal Practice & Procedure: Civil 3d § 1311, at 361-62 (2004).

Federal Rule of Civil Procedure 9(g) requires that “special”

damages, namely, those that are not the “ordinary result” of the

conduct alleged, “shall be specifically stated.”                    Weyerhaeuser

Co. v. Brantley, 510 F.3d 1256, 1266 (10th Cir. 2007); see also

Avitia v. Metro. Club of Chi., Inc., 49 F.3d 1219, 1226 (7th

Cir.    1995)    (defining    special       damages    as   “damages      that   are

unusual    for   the   type   of    claim    in    question—that   are     not   the

natural damages associated with such a claim”).                     The primary

purpose of Rule 9(g) is one of notice, both to “inform defending

parties as to the nature of the damages claimed in order to

avoid surprise; and to inform the court of the substance of the

complaint.”       Great Am. Indem. Co. v. Brown, 307 F.2d 306, 308

                                        42
(5th Cir. 1962).                  Our conclusion that the damages cited above

were    consequential                in     that       they      were        “not          ordinarily

predictable,” R.K. Chevrolet, 480 S.E.2d at 481, compels the

further conclusion that those damages were “unusual for the type

of   claim        in     question”        and,    therefore,          were     special        damages

subject to the heightened pleading requirement of Rule 9(g).

Avitia, 49 F.3d at 1226.

       We        agree      with     the    district          court       that      under        these

circumstances, Carnell’s third amended complaint failed to plead

special      damages         in     connection         with     its    breach         of    contract

claims.          In particular, we note the contrasting level of detail

between      the        relief      requested       for       the     alleged         breaches      of

contract          and        that      requested          for       the        alleged           racial

discrimination              and     retaliation.              In      each       of        the    race

discrimination              and     retaliation        counts,        Carnell         specifically

recited damages for, among other things, “harm to its name and

reputation, the loss of integrity and good will, . . . , the

time        and        expense        of         defending          Carnell’s          name        and

reputation, . . . , and other compensatory damages to be proven

at   trial.”           By    contrast,      Carnell’s         breach      of     contract        count

merely prayed for aggregate damages “in an amount to be proven

at trial but not less than $419,575, plus interest.”

       Carnell argues, nevertheless, that the breach of contract

count       in    its       third     amended       complaint         incorporated            certain

                                                  43
paragraphs        from    the     complaint’s           introductory          section       that

sufficiently alleged Carnell’s special damages.                          In the relevant

sections,        Carnell      stated       that         it     was     damaged        by     the

“[d]efendants’ conduct,” by the costs relating to “investigating

and defending [the defendants’] claims and causes of action,”

and   by    “the     harm    to    its     name     and       reputation.”            However,

Carnell’s        declaration      that     it     was    injured       failed    to     convey

clearly     that    Carnell       sought    special          damages    with    respect      to

those injuries as part of its contract claims.                               In particular,

we credit the district court’s statement at the damages hearing

that “it is beyond dispute that notice for these sums, for these

costs, for these expenditures, was not given.”                           Accordingly, we

affirm the district court’s judgment with respect to Carnell’s

failure     to    plead     special      damages    on       its     claims    that    it   was

unjustly removed from the project.

                                            IV.

      In summary, we conclude that the district court correctly

held that Carnell had standing to assert race discrimination

claims against the Housing Authority, and that Blaine could not

be held liable for the misconduct alleged in those claims.                                   We

further hold that the court’s decision to allow defense counsel

to    use    the     McGuireWoods          proposal          to    impeach      Scales      was

reversible error.            Therefore, with respect to Carnell’s race

discrimination        and     retaliation          claims          against     the     Housing

                                             44
Authority, we vacate the district court’s judgment and remand

the case for a new trial.

      We    additionally     hold    that     the     district       court    properly

restricted     Carnell’s        recovery      on    its      contract      claims    by

concluding    that    the   VPPA    limited        damages    on     the   claims   for

unpaid     work,   and   that     Carnell     had    failed     to    plead    special

damages on its claims that it was unjustly removed from the

project.     However, we conclude that the VPPA further limited the

scope of relief available on Carnell’s claims for unpaid work to

the   two    claims      raised    in    Carnell’s        October      2008    letter.

Accordingly, with regard to Carnell’s contract claims for unpaid

work, we vacate the district court’s judgment and remand the

case for a new trial on damages limited to the two claims raised

in the October 2008 letter.

                                                          AFFIRMED IN PART,
                                              VACATED IN PART AND REMANDED,
                                        VACATED IN PART AND FINAL JUDGMENT.

                                         45
FLOYD, Circuit Judge, concurring in part and dissenting in part:

      I join the majority’s well-reasoned opinion in its entirety

except as to the three paragraphs of Part II.B pertaining to

Blaine’s potential liability as a direct discriminatory actor.

For   the    reasons      that    follow,      I    respectfully       dissent      on    this

issue and would remand the case for trial, or at a minimum, for

additional briefing at the summary judgment stage.

      As     best    I    can     glean     from        the   record,    Wasson      is     an

individual who wears multiple hats: he is both the President of

Danville     Housing      Corporation       (DHC),        Blaine’s     managing     member,

and Executive Director of the Housing Authority.                             Despite these

separate corporate designations, Wasson works out of the same

office      (e.g.,   same       physical    address,          same    telephone     number,

etc.)    when   he       acts    on   behalf       of    both   DHC    and    the   Housing

Authority.      As Blaine’s managing member, DHC—and thus impliedly

Wasson, in his role as DHC’s President—“ha[s] full, exclusive

and   complete       charge      of   the    management         of    the     business     of

[Blaine]” pursuant to Blaine’s amended 2008 Operating Agreement.

(J.A. 2445.)         Additionally, it is undisputed that the Housing

Authority’s Board of Commissioners is identical to DHC’s Board

of Directors.        In sum, the upper-level management personnel who

wield decision-making power for both the Housing Authority and

Blaine (by way of DHC) appear to be concentric, or at a minimum

exhibit a substantial overlap.

                                             46
     As the majority opinion correctly notes, Blaine provides

funding    to    the   Housing    Authority   for   the   Project,     and   the

Housing    Authority,     in   turn,   distributes    those    funds    to   the

project contractors, including Carnell.              Accordingly, pursuant

to Blaine’s organizational structure and DHC’s ability to act

unilaterally on Blaine’s behalf, 1 distribution of funds to the

Housing Authority is essentially controlled by DHC.               Thus, even

discounting      in    their     entireties   the    letters    that    Wasson

(allegedly erroneously) signed as Blaine’s President, see ante

at 21 n.6, Wasson appears to nevertheless control Blaine’s (and

thus the Housing Authority’s, and thus Carnell’s) purse strings

in a back-door fashion.          To wit, in his dual roles as Executive

Director    of   the   Housing    Authority   and    as   President    of    DHC,

Wasson is both puppet and puppeteer of the funding operation for

the project.

     Based on the aforementioned relationships, Blaine may be

liable pursuant to a theory similar to (although perhaps not

     1
         Blaine’s amended Operating Agreement provides as follows:

     [T]he Managing Member [DHC] is fully authorized,
     without the requirement of any act or signature of the
     other Members, to take any action of any type and to
     do anything and everything which a managing member of
     a limited liability company organized under the
     Uniform   [Limited  Liability   Company]  Act  may  be
     authorized to take or do thereunder . . . .”

(J.A. 2449 (emphasis added).)

                                       47
exactly the same as) “cat’s paw” (or “rubber-stamp”) liability,

which     “impos[es]       liability              upon     an     employer           for      the

discriminatory     motivations           of       a    supervisor,      even       though     the

supervisor did not formally take the adverse employment action.”

Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 288

(4th Cir. 2004); see Smith v. Bray, 681 F.3d 888, 897 n.3 (7th

Cir. 2012) (“In the law of employment discrimination, the ‘cat’s

paw’    theory   can    apply       when      a       biased    subordinate         who    lacks

decision-making power uses the formal decision-maker as a dupe

in a deliberate scheme to trigger a discriminatory employment

action.” (citation omitted) (internal quotation marks omitted)).

Here, the cast of characters is as follows: Blaine (via DHC, and

ultimately,      Wasson)      as    the       biased      shell       entity       that     lacks

decision-making        power       to    distribute            funds    to     the     project

contractors,     and    the    Housing            Authority      as    the     duped       formal

decision-maker     that    took         the    adverse         employment       actions       (at

least on paper) at Blaine’s behest.                        Although Carnell did not

advance this precise theory relating to Blaine’s liability for

direct    discrimination,          Carnell        did    put    all    of    the     pieces    in

place to connect these dots—namely, the massive overlap between

Housing Authority personnel and DHC personnel and the fact that

Wasson holds positions of authority within each entity.                                       For

example, in arguing that Blaine should be held directly liable,

Carnell    asserted     that       “money     [for       the    project]       was    funneled

                                              48
through [the Housing Authority], but the funds originated with

Blaine.”    (Carnell Reply Br. at 29.)

     In my view, we do not know from the record exactly which

entity—the Housing Authority or Blaine (by way of DHC)—Wasson

was acting on behalf of when he took certain actions adverse to

Carnell, and it is simply too easy for Blaine to look the other

direction   and   to   rely   exclusively   upon   Wasson’s   self-serving

deposition testimony that he was acting on behalf of the Housing

Authority “at all times.” 2      (E.g., Appellees’ Opening Br. at 32.)

As the nonmovant in the summary judgment proceedings, it is not

Carnell’s burden to show that Blaine acted in a discriminatory

manner and, based on the foregoing relationships, I do not think

that Blaine has met its own burden of “showing that there is an

     2
       Appellees, in their recitation of the             facts   in   their
Opening/Response brief, state the following:

          Under Section 14.2 of the Operating Agreement,
     Blaine’s members granted a limited power of attorney
     to the president of its managing member, DHC, to sign
     the Operating Agreement and certain other legal
     documents.   Pursuant to the limited authority granted
     by the power of attorney, DHC’s president, Garry [sic]
     Wasson signed the Operating Agreement.   The Operating
     Agreement also contemplated [the Housing Authority]’s
     involvement in the Project as the developer, and so
     Wasson signed on behalf of [the Housing Authority] as
     its Executive Director.

(Appellees’ Opening Br. at 7 (emphasis added).)    These actions
by Wasson, although facially insignificant, are exemplary of
Wasson taking off his DHC (i.e., Blaine) hat and putting on his
Housing Authority hat with little to no appreciation for the
distinction between his dual roles at each entity.

                                    49
absence of evidence to support [Carnell]’s case.”                                     Kitchen v.

Upshaw,    286       F.3d    179,       181    (4th       Cir.       2002)    (explaining       the

burden-shifting framework at summary judgment).                                      To the same

extent that we hold in this opinion that Carnell has an imputed

racial    identity         (and       thus     standing       to      sue)    based     upon    its

president and members, it follows that a defendant company can

likewise       maintain          an     imputed         racial       bias     based    upon     its

membership.          Although this analysis requires us to peel back an

additional layer off of the Blaine onion than off of the Carnell

onion—i.e.,          because      Blaine       has       no     individual          employees    or

officers, we must instead look to the individual employees of

Blaine’s managing member—all roads ultimately lead back to the

same individuals, and particularly Gary Wasson.

     Although I do not think that there is sufficient evidence

before    us    to       reverse      the     district        court’s        grant    of    summary

judgment to Blaine, I do think that the blurriness of Wasson’s

multiple roles (and the overlap of other individuals, as well,

namely the members of DHC’s Board and the Housing Authority’s

Board,    respectively)            is    an    issue      for    a    jury     to    consider    at

trial,    or    an       issue    that,       at    the    least,       warrants       additional

briefing       and       consideration         at       the     summary       judgment       stage.

Accordingly,         I    would       vacate       the     district         court’s     grant    of

summary    judgment         to        Blaine       on    Carnell’s          theory     of   direct

                                                   50
liability and respectfully dissent from the majority’s holding

pertaining to the same.

                              51