ANALYSIS OF JUNE 16, 2009 CAV OPINIONS[Posted June 16, 2009] The Court of Appeals of Virginia hands down two published opinions today, after last week’s lull in which all of the opinions were unpublished.
The proper case area for Commonwealth v. AMEC Civil, LLC should probably be administrative law; that’s the only way that construction litigation could possibly land in the Court of Appeals. But this one gives you a better idea of what’s really involved.
A couple of years ago, I drove along US 58 through Clarksville, Virginia and saw for the first time the magnificent new construction of a set of bridges, bypassing the town and leading over an arm of Kerr Reservoir. It’s both an engineering marvel and a thing of beauty, especially as it affords a wonderful view of the reservoir and the surrounding land. Little did I know as I drove along that the whole thing would wind up in court in an eight-figure dispute over cost overruns.
The whole thing was supposed to cost $72 million, but delays wound up adding two years to the project, and the contractor sought another $24 million for its additional expenses. That, you will agree, is a lot of zeroes. When VDOT wasn’t forthcoming with a munificent check, the contractor sued. At trial, it recovered 100 cents on the dollar of its claim – the trial was a complete washout for the Commonwealth Transportation Commissioner – except that the court declined to award prejudgment interest. That interest was probably no small matter; it was easily seven figures worth. But the contractor clearly won.
Both sides appealed, and since this is an appeal of right in the CAV, they went straight to the merits. Today’s published opinion is a long, meticulous trek through the several appellate claims advanced by the parties. While there’s something in this result for both sides, the Commissioner clearly comes out ahead today.
Two rulings in particular will interest my readers, especially those who primarily practice in other case areas. The first relates to the required written notice of the contractor’s claim, as mandated by statute. The contractor didn’t do what you’d call a sparkling job of submitting written claims, but there was lots of conversation going on about the problems. The trial court had held that VDOT had actual notice of the claims, so it ruled that the failure to submit written claims was immaterial. Perhaps sensing the vulnerability of that position to appellate review, the court added an alternative finding that certain memoranda did comport with the written-notice requirement.
The Court of Appeals reverses the first holding in memorable language:
To begin with, the circuit court’s pretrial ruling began its statutory analysis under the heading, “Legal Function Trumps Legal Form,” and ended on a similar note, “legal form must yield to the interests of legal function.” Our statutory analysis begins and ends with a less ambitious premise: “We can only administer the law as it is written.”
The CAV holds that when the statute says that written claims are mandatory, the trial court can’t “amend” the statute by effectively adding, “unless VDOT has actual knowledge” in an appropriate spot. The court also turns back the ruling relating to the memoranda, since it finds nothing in the record to indicate as much. (A quick practice tip: The court observes that a claim “does not require the sophistication of a legal pleading,” so if you’re representing a client who has submitted a layman’s version of the dispute, don’t despair.)
The other significant ruling relates to the contractor’s cross-appeal on the denial of prejudgment interest. The Commonwealth comes out ahead in this one, too, by virtue of the doctrine of sovereign immunity. Prejudgment interest is a form of the plaintiff’s damages, and the Commonwealth is immune from damage claims, except to the extent it has waived that immunity. The court notes that the Commonwealth has never waived its immunity from this type of damages, so the contractor will go away empty on this claim.
So will you, if you assert any sort of permitted claim where there is a limited waiver of sovereign immunity. You will be able to get the damages provided by law, up to the limit of the specific waiver; but you won’t be able to get prejudgment interest, as most other claimants from other entities can. Keep in mind that waiver is never implied; it has to be specific.
One last bit of advice: You really should take a drive along US 58 to see that bridge complex, and to check out where all this multimillion-dollar fuss arose. I suspect things haven’t been this exciting around Clarksville since The Monkees took the last train there back in 1966.
Let me get the attention of most of my readers here: Attorney’s fees. There; now all the lawyers are on board. Today’s ruling in Stroud v. Stroud might well have turned out to be a sweeping exposition on several issues, including the mandate rule (which was the subject of the memorable ruling from the Supreme Court in In re Commonwealth less than two weeks ago). But in the end, a single, narrow ruling makes all the other issues disappear.
This one has been to the Court of Appeals before. Husband and wife signed a separation agreement in their divorce proceeding, and that provided for spousal support to be paid to wife until either party died, until she cohabited with another person “in a situation analogous to marriage” for 30 days, or until February 2009, ten years after the date of the agreement. Wife didn’t last that long. No, she didn’t die; but she couldn’t stay out of “a situation analogous to marriage” for ten years. According to husband, she took up housekeeping (there’s a euphemism for you) about six years later. But here’s the rub – it was with another woman. That produced a legal dispute, resolved in the previous appeal in 2007, over whether one could have “a situation analogous to marriage” with a person of the same sex. (The CAV ruled in that one that the answer was yes.)
Fresh off the 2007 victory, husband returned to circuit court and asked for an award of his attorney’s fees for the successful handling of the first appeal. The agreement contained a provision that a party who breached the agreement had to pay the other party’s legal fees, and he must have incurred a ton of those in the appellate court. The trial court ruled against husband. Today, eschewing some juicy potential legal theories on appeal, the Court of Appeals affirms on the simple premise that wife didn’t actually breach the agreement by taking up with another lady. True, that event served to cut off her right to support (though not until a court ruled as such); but it there was no definition of breach of contract in the agreement that included such cohabitation. There’s a difference between a breach and a non-self-executing event of disqualification from a benefit. That means that the wife wins this round, as husband has to pay his own appellate legal fees.