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ADVANCED MARINE ENTERPRISES, INC., ET AL. V. PRC INC.


ADVANCED MARINE
ENTERPRISES, INC., ET AL.

v.

PRC INC.


June 5, 1998

Record No. 971950

ADVANCED MARINE ENTERPRISES, INC., ET AL.

v.

PRC INC.

OPINION BY JUSTICE BARBARA MILANO KEENAN

FROM THE CIRCUIT COURT OF ARLINGTON COUNTY

Paul F. Sheridan, Judge

Present: All the Justices


In this appeal, we consider issues in a chancery proceeding
involving both equitable and legal claims arising from an alleged
business conspiracy and breach of an employment agreement.

PRC Inc. (PRC) is a Delaware corporation that, among other
things, provided marine engineering services under contract to
the United States Navy. Included in those services was
"shipbuilding support" that PRC rendered to the Naval
Sea Systems Command (NAVSEA). Advanced Marine Enterprises, Inc.
(AME), a Virginia corporation engaged in the business of marine
engineering, also provided services under contracts with the
Navy, including NAVSEA.

PRC requires every new employee to sign a uniform Employment
Agreement as a condition of employment. The Employment Agreement
obligates PRC employees to protect PRC’s proprietary information
and to refrain from disclosing such information to individuals
outside the company. The Employment Agreement also contains a
non-competition provision, which provides in relevant part:

Employee agrees not to compete with PRC for a period
of eight months following termination of employee’s
employment, by rendering competing services to or, with
respect to such services, solicit any customer of PRC for
whom Employee performed services while employed by PRC,
within 50 miles of a PRC office.

At various times during 1995, due to the loss of certain
marine engineering contracts, PRC informed some of its marine
engineering employees that they should look for other employment.
On December 13, 1995, PRC announced that the company would be
sold to Litton Industries, Inc. (Litton). [1]

In November 1995, prior to the announcement of the sale, C.
Michael Pirrera, a senior manager in PRC’s marine engineering
department, contacted AME and inquired whether AME would be
interested in employing all seven managers from PRC’s marine
engineering department (PRC Managers). When AME expressed
interest in hiring the PRC Managers, AME and the PRC Managers,
led by Pirrera, formed a plan (the Plan) under which AME would
attempt to hire every employee in the PRC marine engineering
department.

Under the Plan, AME agreed to make secret job offers to all
employees in PRC’s marine engineering department. These employees
would be required to resign on the same day, December 29, 1995,
without notice to PRC, despite PRC’s requirement that employees
provide two weeks notice of their intent to leave PRC’s employ.
The Plan’s objective was to transfer PRC’s entire marine
engineering department to AME, including the PRC Managers, the
other employees, all customer relationships, and all existing
contracts. As one PRC Manager stated, the idea was "to put
together an entity that the [PRC] customer can’t live
without."

AME knew about the terms of PRC’s Employment Agreement before
implementing the Plan. AME was aware that it faced a potential
lawsuit by PRC to enforce the Employment Agreement, and that PRC
could assert other causes of action against AME, such as tortious
interference with contract. After projecting the nature and
amount of damages that might result from a lawsuit by PRC, AME
decided that the benefits of the Plan outweighed the potential
consequences of a lawsuit.

To implement the Plan, some of the PRC Managers developed a
"matrix" describing how the PRC Managers would obtain
the business of PRC’s marine engineering department. This
"matrix" included detailed confidential and proprietary
information about PRC’s workload, the value of certain work, and
the amount of government funding available for each job in PRC’s
marine engineering department. The "matrix" also
evaluated each of PRC’s jobs regarding the ease with which the
job could be "pulled" from PRC or "diverted"
to AME.

Based on employee information supplied by the PRC Managers,
AME prepared "offer" letters to each of the PRC
Managers and other marine engineering employees and authorized
Pirrera to negotiate salaries with each employee. The
"offer" letters included a provision in which AME
agreed to indemnify and hold harmless each PRC employee against
any claim, demand, damage, or injury asserted by PRC in
connection with the employee’s employment by AME.

The PRC Managers devised a schedule for distributing the
"offer" letters to the PRC employees based on the PRC
Managers’ concern that some employees might "blab" to
PRC after receiving their AME "offer" letter. Under
this schedule, the PRC Managers planned to give job offers to
those PRC employees who might "blab" only after offers
were given to the employees who were unlikely to
"blab."

The PRC Managers distributed the "offer" letters in
mid-December 1995. The PRC Managers delivered each letter
personally, encouraged each employee to accept AME’s offer, and
emphasized the need to keep PRC from gaining knowledge of the
Plan prior to December 29, 1995, the date of the scheduled mass
resignation.

On December 20, 1995, Pirrera learned that rumors of the Plan
might "leak out" to PRC. In response, Pirrera sent an
"e-mail" message to the other PRC Managers on December
21, 1995, which stated:

Subject: Execute

Gentlemen:

Based on yesterday’s events we need to do the
following:

With the exception of the highest risk
team members (i.e., people we are
absolutely sure will blab), talk to the
rest of the team today.

Determine task backlogs immediately.

Back up computer files immediately.

Transfer files to client sites immediately.

Remember gentlemen, we got to this point as a
team and we will see this through as a team.
Let’s roll!

Mike

On December 29, 1995, the whole group of 26 managers and
employees from PRC’s marine engineering department submitted
letters resigning their employment with PRC, effective
immediately. Before leaving PRC and without PRC’s knowledge or
consent, many of the PRC Managers and other PRC employees copied
their client files and sent the files to client sites so that the
files would be available once the employees began working at AME.
Many of the PRC Managers and employees also made "back
up" copies of PRC computer documents and files, which they
removed from PRC without PRC’s knowledge. Some PRC Managers and
employees also removed, without PRC’s consent, various documents
pertaining to ongoing projects and work in progress at PRC. In
many cases, there were no similar documents left at PRC. All of
the above-described information constituted confidential and
proprietary information of PRC.

In January 1996, PRC filed a bill of complaint against AME,
two AME executives, the former PRC Managers, and the other former
PRC marine engineering employees.
[2]

Among other things, the bill of complaint contained a request
for a temporary restraining order to prevent the defendants from
using or disseminating PRC’s confidential and proprietary
information and from soliciting or performing services for their
former PRC customers. The chancellor entered the temporary
restraining order on January 2, 1996, but later modified its
terms to exclude AME’s business with governmental entities.

As amended, the bill of complaint also asserted both legal and
equitable claims for relief. The five Counts relevant to this
appeal are: 1) breach of fiduciary duty (Count I); 2) intentional
interference with contractual relations (Count II); 3)
intentional interference with prospective business and
contractual relations (Count III); 4) specific performance and
breach of the Employment Agreement (Count IV); and 5) violation
of Code Sec.18.2-499 (Count VII).

The matter was tried before a chancellor, who heard testimony
from two expert witnesses and 41 other witnesses. PRC presented
the testimony of Mark Bleiweis, a certified public accountant,
who is an expert in the area of damage calculation in contract
disputes. Bleiweis estimated that, of the several types of
economic damage suffered by PRC in the loss of its marine
engineering unit to AME, the largest amount of damages resulted
from lost goodwill. Bleiweis defined goodwill as the excess of
the sales price of a business over the fair market value of the
business’ identifiable assets.

To estimate the lost goodwill associated with the departure of
the PRC Managers and employees, Bleiweis examined two sales of
comparable businesses, PRC’s sale of its 400D unit to Vitro and
the sale of AME to Nichols. Bleiweis subtracted the value of each
"comparable company’s" assets from its sales price to
determine the goodwill associated with each comparable sale. With
respect to the Vitro sale, he then adjusted this figure to
reflect the value to Vitro associated with the funded 400D
contract. To account for the larger number of employees involved
in both comparable sales, Bleiweis apportioned the estimated
goodwill figure for each of the two comparable businesses among
the total number of employees involved in each transaction.

This calculation yielded a ratio or percentage that Bleiweis
applied to calculate the goodwill lost by AME’s acquisition of
the 26 PRC employees. Using the Vitro sale, Bleiweis estimated
that PRC sustained $925,123 in goodwill damages from the loss of
its marine engineering unit to AME. Using the sale of AME to
Nichols, Bleiweis estimated that PRC’s lost goodwill damages were
$841,965.

Bleiweis also testified that PRC will suffer a loss of profits
as a result of the departure of the PRC Managers and employees.
Bleiweis estimated that the present value of the expected lost
profits was $265,655, based on the revenues that the former
employees’ labor would have generated for PRC. However, he
testified that these damages were included in his estimate of
lost goodwill.

AME, the AME executives, and the PRC Managers and employees
(collectively, "AME") offered the testimony of Edward
H. Ripper, a certified public accountant, as an expert in
government contract accounting claims and valuation. Ripper
testified that Bleiweis’ conclusions were "substantially
overstated," "highly speculative," and contained
many "calculation[] errors." Ripper provided several
adjustments to Bleiweis’ figures and concluded that PRC suffered
zero damages from lost goodwill when Bleiweis’ method was
properly applied to the Vitro sale figures. Ripper also testified
that the Vitro and Nichols sales were not true
"comparable" sales.

On June 19, 1996, the chancellor found in favor of PRC on all
counts at issue in this appeal, stating, "I think the method
by which the [PRC Managers] elected to do this was covert,
surreptitious, violated civil duties, [and] was absolutely
wrong." During post-trial hearings, the chancellor stated
that "[t]he total impact of this thing was outrageous. This
was a group wrong, and they were intending to disadvantage their
employer while sitting there silent setting up their own employer
for the benefit of themselves and the benefit of AME."

Ruling from the bench, the chancellor awarded $1,245,062 in
compensatory damages on each of Counts I, II, III, and VII.
Although this amount was awarded on each of these four Counts,
the chancellor did not aggregate these amounts but entered a
single compensatory damage award of $1,245,062. Under Code
Sec.18.2-500, the chancellor then trebled the $1,245,062
compensatory damage award entered on Count VII. Thus, the total
amount of non-punitive damages awarded was $3,735,186.

The chancellor awarded punitive damages in the amount of
$1,000,000 against AME, noting that he might be required to
reduce that amount to $350,000 under Code Sec.8.01-38.1. He
also awarded varying amounts of punitive damages against certain
PRC Managers and employees.

The chancellor took under advisement AME’s argument that the
award of treble damages under Code Sec.18.2-500 was subject
to the punitive damages ceiling fixed by Code Sec.8.01-38.1.
He also awarded PRC attorney’s fees and costs, but deferred
computation of those amounts to a later hearing.

On Count IV, based on breach of the non-competition clause of
the Employment Agreement, the chancellor enjoined certain PRC
Managers and employees for seven and one-half months from
performing services for and soliciting work from those NAVSEA
jobs for which each manager or employee provided services while
employed by PRC. The chancellor stayed the injunction pending
resolution of this appeal, and ruled that if the damages he
awarded are approved on appeal, the injunction will be dissolved.
[3]

After a hearing on several post-trial motions, the chancellor
entered the final decree on June 18, 1997, about one year after
the trial. He essentially incorporated the terms of his bench
ruling, but reduced the punitive damage award against AME to
$350,000 to comply with the terms of Code Sec.8.01-38.1. He
awarded PRC $475,000 in attorney’s fees under Count VII (Code
Sec.18.2-499 and -500). He also awarded PRC $113,365.56 in
costs under Count VII. The costs awarded included $47,922.73 for
PRC’s expert witness fees, $27,826.31 for transcripts, and
expenses for other costs such as meals, legal research, parking,
cab fare, law clerk "temporaries," overnight delivery
services, messenger services, telephone calls, and photocopying
charges. The chancellor also ruled that PRC was entitled to
receive prejudgment interest on the entire award from June 19,
1996, the date of his bench ruling.

On appeal, AME argues that the chancellor erred in (1) ruling
that AME violated Code Sec.18.2-499, (2) enforcing the
non-competition covenant of the Employment Agreement, (3) his
calculation of PRC’s lost goodwill and profits and his
determination that PRC met its burden of proving damages, (4)
awarding punitive and treble damages, (5) awarding PRC costs, and
(6) awarding PRC prejudgment interest.

I. VIOLATION OF CODE Sec.18.2-499

 

AME asserts that the chancellor erred in finding AME conspired
to injure PRC in its business in violation of Code
Sec.18.2-499. AME contends that to establish a violation of
the statute, PRC was required to prove that AME acted with the
purpose of injuring PRC. AME argues that since the chancellor
failed to apply this evidentiary standard, his finding that AME
violated the statute constitutes reversible error. AME also
asserts that there was no evidence AME acted with the purpose of
injuring PRC. We disagree with AME’s arguments.

In Commercial Business Systems, Inc. v. BellSouth Services,
Inc.
, 249 Va. 39, 453 S.E.2d 261 (1995), we addressed the
question whether a violation of Code Sec.18.2-499 requires
proof of actual malice. There, the plaintiff alleged that the
defendant’s employee, in violation of Code Sec.18.2-499,
conspired to destroy the plaintiff’s reasonable business
expectancy for a contract renewal with the defendant corporation
by awarding a contract to the plaintiff’s competitor in exchange
for commercial bribes. The trial court granted the defendant’s
motion for summary judgment on the ground that the plaintiff
failed to prove actual malice, which required the plaintiff to
establish that the conspirator’s primary and overriding purpose
was to injure the plaintiff’s trade or business. Id. at
46-47, 453 S.E.2d at 266-67.

We reversed the trial court, holding that the plaintiff was
not required to prove actual malice. We stated that Code
Sec.18.2-499 and –500 do not require a plaintiff to
prove that a conspirator’s primary and overriding purpose is to
injure another in his trade or business. Id. at 47, 453
S.E.2d at 267. Rather, we explained that these statutes merely
require proof of legal malice, that is, proof that the defendant
acted intentionally, purposefully, and without lawful
justification. Id.

PRC’s evidence was plainly sufficient to meet this standard of
proof. The individuals in the business conspiracy participated in
a scheme to take the entire marine engineering department from
PRC and relocate the department at AME. As stated above, AME and
the PRC Managers and employees planned and implemented this
scheme in secrecy while the PRC Managers and employees were still
employed by PRC. The PRC Managers and employees planned and
executed a mass resignation without notice to PRC. They took from
PRC original client documents and copies of documents containing
confidential and proprietary information without PRC’s permission
or knowledge. Thus, we conclude that the evidence supports the
chancellor’s finding that AME conspired to injure PRC in its
business in violation of Code Sec.18.2-499 and -500.

II. NON-COMPETITION CLAUSE OF EMPLOYMENT
AGREEMENT

 

AME asserts that the non-competition clause in the Employment
Agreement was unenforceable because it was unreasonably broad,
unduly harsh, and oppressive. We disagree.

To determine whether a non-competition agreement may be
enforced, a chancellor must consider the following criteria:

(1) Is the restraint, from the standpoint of

the employer, reasonable in the sense that it
is no greater than necessary to protect the
employer in some legitimate business interest?
 

(2)

From the standpoint of the employee, is
the restraint reasonable in the sense that it is not
unduly harsh and oppressive in curtailing his
legitimate efforts to earn a livelihood?

(3)

Is the restraint reasonable from the
standpoint

of a sound public policy?

New River Media Group, Inc. v. Knighton, 245 Va. 367,
369, 429 S.E.2d 25, 26 (1993)(quoting Roanoke Eng. Sales v.
Rosenbaum
, 223 Va. 548, 552, 290 S.E.2d 882, 884 (1982)); accord
Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick,
239 Va. 369, 371-72, 389 S.E.2d 467, 468-69 (1990).

In New River Media, we enforced a non-competition
agreement in which a radio disc jockey contracted not to engage
in a competing business within 60 air miles of his employer’s
radio station for 12 months after leaving his employment. 245 Va.
at 369-70, 429 S.E.2d at 26-27. In Roanoke Engineering Sales,
we enforced an agreement that prohibited a corporate officer from
competing with his employer for three years in any similar
business located in Virginia or North Carolina that covered the
same sales territory served by the employer. 223 Va. at 553, 290
S.E.2d at 885.

When compared with these agreements, the non-competition
provision before us is not unduly harsh and oppressive in
curtailing the legitimate efforts of former PRC employees to earn
a livelihood. The restraints imposed also are reasonable from the
standpoint of a sound public policy. The non-competition
provision does not contain a blanket prohibition against working
for a competitor. Instead, the covenant merely prohibits an
employee for eight months from "rendering competing services
to or, with respect to such services, solicit[ing] any customer
of PRC for whom Employee performed services while employed by
PRC, within 50 miles of a PRC office."

The agreement’s geographic limitation is not rendered too
burdensome because PRC has approximately 300 offices worldwide.
In the context of the brief time period involved and the narrow
definition of prohibited services, the geographic restriction
does not pose an unreasonable restraint on departing employees.
Likewise, the restriction on solicitation of PRC customers is
reasonable because the restriction is limited to the same
eight-month period and was interpreted by the chancellor as
applying only to certain specialized engineering areas of NAVSEA
and individuals serviced by each employee while employed by PRC.
Thus, the record supports the chancellor’s conclusion that the
non-competition provision is valid and enforceable.

We also find no merit in AME’s contention that the eight-month
period provided in the non-competition clause has expired and may
not be enforced. On January 2, 1996, the chancellor entered a
temporary injunction enforcing the terms of the non-competition
clause. For "public policy" reasons relating to nature
of the work and the governmental status of actual and potential
"customers," the chancellor lifted the injunction two
weeks later with regard to AME’s business with governmental
entities. Thus, since the portion of the injunction involving
governmental entities was in effect only for two weeks, the
chancellor did not err in ruling that seven and one-half months
out of the eight-month prohibition on competition still may be
enforced with respect to such governmental entities. See Blue
Ridge Anesthesia
, 239 Va. at 374, 389 S.E.2d at 470; Paramount
Termite Control Co. v. Rector
, 238 Va. 171, 176-77, 380
S.E.2d 922, 926 (1989); Roanoke Eng. Sales, 223 Va. at
556, 290 S.E.2d at 886.

III. "GOODWILL" DAMAGES AND
SUFFICIENCY

OF EVIDENCE OF DAMAGES

AME contends that the chancellor erred in accepting PRC’s
evidence of damages, including its evidence of lost goodwill and
profits. AME argues that PRC’s evidence was based on flawed
methodology and speculative calculations. Specifically, AME
asserts that the chancellor failed to consider that PRC’s marine
engineering department made a profit of only $45,108 in 1995, and
that the price for the sale of PRC to Litton did not change after
the departure of the PRC Managers and employees. We disagree with
AME’s arguments.

As trier of fact, the chancellor evaluated the testimony and
the credibility of the witnesses. See RF&P Corp. v.
Little
, 247 Va. 309, 321, 440 S.E.2d 908, 916 (1994); Richardson
v. Richardson
, 242 Va. 242, 246, 409 S.E.2d 148, 151 (1991).
We will not set aside his findings on appeal unless they are
plainly wrong or without evidentiary support. Willis v.
Magette
, 254 Va. 198, 201, 491 S.E.2d 735, 736 (1997); RF&P
Corp.
, 247 Va. at 321, 440 S.E.2d at 916.

After hearing detailed testimony from Bleiweis, PRC’s expert,
and Ripper, AME’s expert, the chancellor accepted Bleiweis’
methodology and evidence of damages. We cannot say, as a matter
of law, that the chancellor’s determination was plainly wrong.

In determining PRC’s damages for lost goodwill, the chancellor
accepted Bleiweis’ variation of the market value approach, a
frequently-used method for computing goodwill damages that is
based on the difference between the price a business would sell
for and the value of its non-goodwill assets. See Russell
v. Russell
, 11 Va. App. 411, 416, 399 S.E.2d 166, 169 (1990).
Because there was no sale associated with the transfer of the PRC
Managers and employees to AME, Bleiweis utilized a variation of
this approach by determining the value of goodwill associated
with comparable sales and adjusting this figure to approximate
PRC’s lost goodwill caused by the departure of the PRC Managers
and employees. Ripper never criticized Bleiweis’ use of the
market value approach, but only stated that Bleiweis made certain
errors in applying this method.

The chancellor found that the closest comparable sale for
purposes of measuring lost goodwill was PRC’s sale of the 400D
unit to Vitro. The evidence showed that the purchase agreement
between Vitro and PRC identified the goodwill associated with
that sale by providing that Vitro would pay PRC $4,424,091 more
than the value of the tangible assets involved. Using Bleiweis’
methodology, the chancellor decreased this amount to reflect the
value that Vitro would receive from the funded 400D contract and
then adjusted the resulting figure to reflect the smaller number
of employees involved in the departure of the PRC Managers and
employees.

The chancellor concluded that the comparable sale of AME to
Nichols corroborated Bleiweis’ damage estimate for lost goodwill
based on the Vitro comparable sale. Since there was no actual
sale by PRC to AME, the chancellor rejected Ripper’s opinion that
the "best" transaction for measuring PRC’s lost
goodwill was the actual transfer of the PRC Managers and
employees to AME.

Although Bleiweis estimated the amount of profit PRC lost by
the departure of its marine engineering unit to AME, he stated
that these damages were included in his calculation of lost
goodwill. Thus, in determining PRC’s total damages, Bleiweis
concluded that a separate damage figure for lost profits should
not be added to the damage amount for lost goodwill. The
chancellor agreed with Bleiweis on this issue and declined to
award additional damages for lost profits, finding that lost
profits damages were "subsumed" within the court’s
goodwill calculation.

The chancellor’s conclusions reflected his acceptance of
Bleiweis’ methodology as the most appropriate and accurate
measure of lost goodwill and profits. Thus, AME’s complaint
essentially is reduced to the fact that the chancellor accepted
the testimony of PRC’s expert witness, rather than the testimony
offered by AME’s expert. Since the chancellor’s findings
regarding PRC’s lost profits and damages for lost goodwill are
supported by credible evidence, we will not disturb those
findings on appeal. See City of Manassas v. Board of
Supervisors
, 250 Va. 126, 137, 458 S.E.2d 568, 574 (1995); Jamerson
v. Womack
, 244 Va. 506, 510, 423 S.E.2d 180, 182 (1992); Russell,
11 Va. App. at 417, 399 S.E.2d at 169.

For the same reasons, we find no merit in AME’s contention
that the damage award was excessive as a matter of law. Although
the record shows that the price for the sale of PRC to Litton did
not change after the departure of the PRC Managers and employees,
Bleiweis emphasized that the departing group had goodwill value
for purposes of maintaining the customer relationships necessary
for contract retention. As stated above, the chancellor based the
award of damages on his acceptance of Bleiweis’ testimony, which
constituted credible evidence in support of that award.

IV. PUNITIVE AND TREBLE DAMAGES

AME argues that a chancellor in equity may not award punitive
damages because any award of damages in equity is limited to
compensating an injured party to make it "whole." AME
contends that punitive damages are in the nature of a penalty and
extend beyond mere compensation. AME also asserts that treble
damages are punitive in nature and, thus, are likewise
unavailable in a court of equity. We disagree with AME’s
arguments.

When a court of equity acquires jurisdiction of a cause for
any purpose, the court may retain the entire cause to accomplish
complete justice between the parties. Thus, the chancellor may
hear legal claims and enforce legal rights by applying remedies
available only at law. Waskey v. Lewis, 224 Va. 206, 213,
294 S.E.2d 879, 882 (1982). This rule applies "even to the
extent of establishing legal rights and granting legal remedies
which would otherwise be beyond the scope of [the chancellor's] authority." Erlich v. Hendrick Constr. Co., Inc., 217
Va. 108, 115, 225 S.E.2d 665, 670 (1976) (citing Johnston v.
Bunn
, 108 Va. 490, 493, 62 S.E. 341, 342 (1908)); see Iron
City Sav. Bank v. Isaacsen
, 158 Va. 609, 625, 164 S.E. 520,
525 (1932).

The rule is based on the principle that once a court of equity
obtains jurisdiction in a case, the court has discretion to
transfer the parties to a court of law for adjudication of their
law claims or to conclude the litigation by giving complete
relief in the chancery cause. Iron City, 158 Va. at 625,
164 S.E. at 525. The purpose of this rule is to prevent a
"circuity of action and expense." See Smith
v. Smith
, 92 Va. 696, 698, 24 S.E. 280, 280 (1896). If a
chancellor decides to retain jurisdiction over legal claims, the
chancellor acts "as a substitute for the court of law."
Id.; Iron City, 158 Va. at 637, 164 S.E. at 529.

AME’s bill of complaint sought both equitable and legal
remedies. AME could have moved to transfer its legal claims to
the law side of the court under Code Sec.8.01-270, where it
would have been entitled to a jury trial, but chose not to
proceed in this manner. Thus, AME cannot now complain that the
chancellor improperly awarded legal relief to PRC. See Brown
v. May
, 202 Va. 300, 309-10, 117 S.E.2d 101, 108 (1960). We
also observe that the chancellor awarded compensatory, punitive,
and treble damages under the various legal claims, not under any
equitable claims. Therefore, we conclude that the chancellor
acted within his discretion in awarding legal relief on the law
claims before him.

We disagree with AME that our decision in Colonna Dry Dock
Co. v. Colonna
, 108 Va. 230, 61 S.E. 770 (1908), requires a
different conclusion. There, in an appeal from a decree denying
specific performance of a contract, we addressed the issue
whether the chancellor properly ruled that the forfeiture of a
deposit would constitute a penalty and, therefore, could not be
enforced in equity. Id. at 240, 61 S.E. at 774. Thus,
unlike the present case, Colonna did not involve legal
claims, but only a request for equitable relief. Since the
chancellor here restricted his award of damages that are
available solely at law to the law claims before him, Colonna
is inapposite.

We also disagree with AME’s contention that the chancellor
erred in awarding treble damages. Code Sec.18.2-500(a)
provides in relevant part:

Any person who shall be injured in his reputation,
trade, business or profession by reason of a violation of
Sec.18.2-499, may sue therefor and recover three-fold
the damages by him sustained, and the costs of suit,
including a reasonable fee to plaintiff’s counsel; and
without limiting the generality of the term,
"damages" shall include loss of profits.

This subsection explicitly allows an award of treble damages
on proof of the cause of action provided under Code
Sec.18.2-499. Nevertheless, AME asserts that treble damages
may not be awarded in equity because Code Sec.18.2-500(b),
which sets forth the equitable relief available for business
conspiracy claims brought under the statute, does not
specifically state that treble damages may be awarded in a
chancery case. Code Sec.18.2-500(b) provides in relevant
part:

Whenever a person shall duly file a bill in chancery
in the circuit court of any county or city against any
person alleging violations of the provisions of
Sec.18.2-499 and praying that such party defendant be
restrained and enjoined from continuing the acts
complained of, such court shall have jurisdiction to hear
and determine the issues involved, to issue injunctions
pendente lite and permanent injunctions and to decree
damages and costs of suit, including reasonable counsel
fees to complainants’ and defendants’ counsel.

We conclude that this provision does not preclude an award of
treble damages in a law claim heard in chancery. Instead of
limiting the relief available in chancery, this subsection grants
a complainant the additional right to seek and obtain injunctive
relief, as well as "damages and costs of suit." The
term "damages" in subsection (b) refers to the
"three-fold" recovery of damages described in
subsection (a).

Notably, much of the language from subsection (a) is not
repeated in subsection (b). For example, subsection (b) does not
expressly refer to a "person who shall be injured in his
reputation, trade, business or profession by reason of a
violation of Sec.18.2-499," yet this requirement is
clearly a predicate for recovery under the statute in equity, as
well as in law. Lost profits also are not mentioned in subsection
(b), but this subsection necessarily contemplates the right to
seek recovery of lost profits in equity as compensatory damages.
Thus, on consideration of the language of the entire statute, we
conclude that a chancery court is permitted to award treble
damages on a law claim under the provisions of Code
Sec.18.2-500.

We also find no merit in AME’s contention that our decision in
Porter v. Wilson, 244 Va. 366, 421 S.E.2d 440 (1992),
dictates a different result. Porter involved a trespass
action in which a plaintiff contended, among other things, that
the trial court erred in refusing to award him treble damages
under Code Sec.55-334 for the unauthorized removal of timber
from his property. Id. at 367, 421 S.E.2d at 441.
Observing that treble damages are in the nature of a penalty and
are not favored, we held that since the timber was removed by one
acting under a bona fide claim of right, the trial court did not
abuse its discretion in refusing to award treble damages. Id.
at 371-72, 421 S.E.2d at 443. Thus, contrary to AME’s assertion, Porter
did not involve the issue whether treble damages may be awarded
in a chancery case.

AME next contends that the chancellor’s award of both punitive
and treble damages was duplicative. Although AME concedes that
the chancellor awarded punitive and treble damages under separate
counts of the bill of complaint, AME argues that the conduct
underlying the claims is the same and, therefore, that the
chancellor erred in awarding both types of damages. We disagree
with AME’s argument.

The awards of punitive and treble damages were based on
separate claims involving different legal duties and injuries.
The chancellor awarded punitive damages under Counts I, II, and
III, for breach of fiduciary duty, intentional interference with
contractual relations, and intentional interference with
prospective business and contractual relations. The award of
treble damages was limited to the business conspiracy claim of
Count VII.

To prevail in its business conspiracy claim, PRC was required
to prove that the defendants combined, associated, agreed, or
acted in concert together for the purpose of willfully and
maliciously injuring PRC in its business "by any means
whatever." Code Sec.18.2-499. In contrast, the claims
asserted in Counts I through III do not require such proof and
relate solely to the employment relationship between PRC and the
PRC Managers and employees. Thus, the chancellor did not err in
awarding PRC both punitive and treble damages.

We also find no merit in AME’s contention that an award of
treble damages is subject to the ceiling on punitive damages set
forth in Code Sec.8.01-38.1. When the words of a statute are
unambiguous, we accord the statutory language its plain meaning. Haislip
v. Southern Heritage Ins. Co.
, 254 Va. 265, 268, 492 S.E.2d
135, 137 (1997); Archambault v. Roller, 254 Va. 210, 213,
491 S.E.2d 729, 731 (1997).

Under the plain language of Code Sec.8.01-38.1, the
limitation of $350,000 applies only to an award of
"punitive" damages. If the General Assembly had
intended for an award of treble damages to be subject to this
limitation, it would have included an express reference to such
damages in the statutory language. See Jones v. Jones,
249 Va. 565, 570, 457 S.E.2d 365, 368 (1995); Allstate Ins.
Co. v. Eaton
, 248 Va. 426, 430, 448 S.E.2d 652, 655 (1994).
In the absence of such a reference, we will not construe the
plain statutory language in a manner that amounts to holding that
the legislature meant other than what it actually stated. See
Davis v. Tazewell Place Assocs., 254 Va. 257, 260-61, 492
S.E.2d 162, 164 (1997); Haislip, 254 Va. at 268, 492
S.E.2d at 137; Jones, 249 Va. at 570, 457 S.E.2d at 368.

V. COSTS

 

AME challenges the chancellor’s award of several items of
"costs." AME asserts that in the absence of an explicit
statutory provision, expert witness fees cannot be shifted to the
losing party. AME also contends that the chancellor abused his
discretion in including numerous charges, such as fees for legal
research and temporary employees, as costs in this case.

In response, PRC contends that under the provisions of Code
Sec.18.2-500, PRC was entitled to all reasonable litigation
expenses as the prevailing party at trial. We disagree with PRC.

The taxing of costs in litigation was unknown at common law
and is purely a creature of statute. Ryan v. Davis, 201
Va. 79, 85, 109 S.E.2d 409, 414 (1959). Code Sec.18.2-500
provides that "costs of suit, including a reasonable fee to
plaintiff’s counsel" may be recovered on proof of a
violation of Code Sec.18.2-499. Thus, with the exception of
reasonable attorney’s fees, Code Sec.18.2-500 makes no
provision for an award of costs other than those ordinarily
awarded under the general statutes of Title 14.1 of the Code
addressing the taxing of costs. See Code
Sec.14.1-177 through -201.

Since trial courts are vested with discretion under the
relevant provisions of Title 14.1 to determine what costs should
be taxed against a losing party, we examine the costs challenged
by AME to determine whether the chancellor abused his discretion.
AME takes exception to the chancellor’s award of expert witness
fees, and expenses for express mail service, messengers, meals,
law clerk "temporaries," computer-based legal research,
"library research," photocopies, parking, taxicabs,
telephone calls, and transcripts. We conclude that the chancellor
abused his discretion in awarding PRC recovery for the
above-challenged expenses. Generally, unless otherwise specified
by statute, a trial court’s discretion to award costs under Code
Sec.18.2-500, or under the relevant provisions of Code
Sec.14.1-177 through –201, is limited only to those
costs essential for prosecution of the suit, such as filing fees
or charges for service of process.

Finally, we disagree with PRC’s assertion that, in Ryan v.
Davis
, we "did not question" the trial court’s
award of costs for expert witness fees in a condemnation case.
Since the State Highway Commissioner did not assign cross-error
to the award of such "costs," the issue was not before
us in that case.

VI. PREJUDGMENT INTEREST

AME asserts that the chancellor erred in awarding interest
from June 19, 1996, the date of the bench ruling, because some of
the damages still were unliquidated. PRC responds that the
chancellor did not err in awarding interest from that date,
because the chancellor did not reduce the original amount of the
award, with the exception of his reduction of the $1,000,000
punitive damage award to comply with Code Sec.8.01-38.1.

Generally, prejudgment interest is not allowed on unliquidated
damages in dispute between the parties. Skretvedt v. Kouri,
248 Va. 26, 36, 445 S.E.2d 481, 487 (1994); Beale v. King,
204 Va. 443, 447, 132 S.E.2d 476, 479 (1963). However, the issue
whether interest should be awarded, and from what date any
interest should run, is a matter submitted to the sound
discretion of the trial court. Code Sec.8.01-382; Skretvedt,
248 Va. at 36, 445 S.E.2d at 487-88; Marks v. Sanzo, 231
Va. 350, 356, 345 S.E.2d 263, 267 (1986).

When the chancellor ruled on June 19, 1996, that PRC was
entitled to $1,245,062 in compensatory damages, several matters
remained to be resolved. First, the chancellor ruled that the
parties would argue at a later date the issue whether treble
damages awarded under Code Sec.18.2-500 were subject to the
statutory "cap" of Code Sec.8.01-38.1. Second,
although the chancellor awarded $1,000,000 in punitive damages
against AME, he announced that he would determine at a later date
whether this amount should be reduced under the provisions of
Code Sec.8.01-38.1. Third, in his bench ruling, the
chancellor did not determine the amount of attorney’s fees or
costs to be awarded PRC. Thus, as of the date of the bench
ruling, the amount of AME’s liability remained unliquidated as to
all amounts except the original compensatory damage award of
$1,245,062.

The chancellor did not resolve these outstanding issues
affecting the amount of AME’s liability until June 18, 1997, the
date of entry of the final decree. AME did not cause the delay in
the chancellor’s entry of the decree. Rather, the chancellor
candidly acknowledged that he was the cause of the one-year
delay. Thus, we conclude that the chancellor abused his
discretion in awarding prejudgment interest on all amounts in
excess of $1,245,062.

For these reasons, we will affirm the chancellor’s decree,
with the exception of the portion of costs and prejudgment
interest specified in this opinion, and will remand the case for
entry of a decree regarding costs and interest that is consistent
with the principles set forth herein. [4]

Affirmed in part,

reversed in part,

and remanded.

FOOTNOTES:

[1] Due to a conflict of interest
caused by the sale to Litton, PRC was later required to sell one
of its primary marine engineering contracts, the 400D contract,
to a buyer other than Litton. In April 1996, PRC entered into a
contract with Tracor, Inc., the parent company of Vitro
Corporation (Vitro), for the sale of the "400D unit,"
which covered the 400D contract and approximately 80 PRC
employees.

[2] In April 1996, AME signed a
letter of intent with Nichols Research Corporation (Nichols) to
sell AME to Nichols.

[3] AME does not assign error to
the conditional nature of the chancellor’s injunction.

[4] Although AME argues that the
chancellor erred in adopting the findings of fact as drafted by
PRC, AME does not suggest that this constitutes ground for
reversal of this appeal. Thus, we do not address this argument on
appeal.

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