Where a construction company was entitled to recover prejudgment interest on invoices unpaid by its customer but delayed in submitting its first invoice and delayed again in pursuing collection, the interest ran from the date of the last invoice, not the first.
Before the court is the complaint filed by trustee Bruce E. Robinson against Daniel McMurtrie, seeking to recover amounts allegedly due to the debtor, Peak 3 Construction LLC for construction work performed by the debtor and for the benefit of McMurtrie. Trial was held on Sept. 24, 2019, after which the parties submitted proposed findings of fact and conclusions of law.
The parties have stipulated that the remaining unpaid amount is $47,215. The parties stated at trial that the only issues before the court are the entitlement of the trustee to prejudgment interest and attorneys’ fees.
The trustee argues that he is entitled to an award of prejudgment interest at the contract rate of 1.5% per month beginning Feb. 15, 2016, the date of the first invoice. McMurtrie argues that the trustee is not entitled to prejudgment interest because the debtor’s claim against him was not liquidated when the trustee filed the complaint. He argues that Virginia law prohibits an award of prejudgment interest on a claim that is unliquidated, citing Advanced Marine Enters. v. PRC, Inc., 501 S.E.2d 148 (Va. 1988), for the proposition. However, Advance Marine is not an absolute bar to an award of prejudgment interest when there is some question as to the amount at issue.
The court is not persuaded that prejudgment interest is improper in this instance. Had McMurtrie paid the invoices submitted to him by the debtor, there would have been no uncertainty as to the amount owed. He would not have needed to pay outside vendors directly and he would not have needed to renegotiate the construction fee.
On the other hand, the debtor waited over four months to submit the first invoice, which may have contributed to the inability of McMurtrie to make payment within 14 days of the invoice, as required by the contract. Additionally, the debtor took no action to collect the balance due from McMurtrie between September 2016 and May
The court finds that prejudgment interest should run, at the 1.5% rate specified in the contract, from the date that is 15 days after the date of the final invoice. From an equitable standpoint, the assessment of interest will help to offset the costs that the debtor incurred as a result of McMurtrie’s failure to pay as required under the contract, while not penalizing McMurtrie for the debtor’s somewhat lackadaisical approach to collection.
Under the terms of article five of the parties’ contract, the debtor is entitled to attorneys’ fees if the project was stopped because McMurtrie “persistently failed to fulfill [his] obligations under the Contract . . . with respect to the performance of the progress of the [project].” The debtor must have given seven days’ written notice of that failure, and the failure must have caused a work stoppage of 30 consecutive days.
The trustee argues that all the conditions have been satisfied. The court agrees. The debtor, in the email accompanying the final invoice, gave the required notice to McMurtrie. By the date of the final invoice, it was clear that the work stoppage had far exceeded 30 consecutive days, and this was caused by the lack of payment; no other plausible reason for the stoppage has been put forth by either party.
McMurtrie argues that an award of attorneys’ fees would be inappropriate because the stoppage was at least partially caused by the debtor’s actions. The court has considered these factors but does not find them to be so material as to justify the denial of attorneys’ fees under the contract. Those damages will be determined at a future date, according to the schedule set forth in the order issued simultaneously with this opinion.
Robinson v. McMurtrie, No. 18-03046, March 31, 2020. EDVA Bankr. at Richmond (Phillips). VLW No. 020-4-005. 15 pp.