Polytechnic Inst. v. Interactive Return, Record No. 050710.

• Decision Date: 03 March 2006
• Docket Number: Record No. 050710.
• Citation: 626 S.E.2d 436
• Parties: VIRGINIA POLYTECHNIC INSTITUTE and State University, et al. v. INTERACTIVE RETURN SERVICE, INC.
• Court: Virginia Supreme Court

626 S.E.2d 436

VIRGINIA POLYTECHNIC INSTITUTE and State University, et al. v. INTERACTIVE RETURN SERVICE, INC.

Record No. 050710.

Supreme Court of Virginia.

March 3, 2006.

Eric A. Gregory, Associate State Solicitor General (Judith Williams Jagdmann, Attorney General; William E. Thro, State Solicitor General; D. Mathias Roussy, Jr., Associate State Solicitor General, on briefs), for appellants.

Christopher G. Hill (Meyer, Goergen & Marrs, on brief), Richmond, for appellee.

Present: LACY, KEENAN, KOONTZ, KINSER, LEMONS, AGEE, JJ., and COMPTON, S.J.

KOONTZ, Justice.

The sole issue in this appeal is whether the Setoff Debt Collection Act, Code §§ 58.1-520 through -535, (the "Act") permits an agency of the Commonwealth to offset the amount of a monetary judgment in favor of a judgment creditor against a larger debt owed by that judgment creditor to the agency.

BACKGROUND

The events ultimately leading to this appeal began in the mid-1990s when Interactive Return Service, Inc. ("Interactive Service") entered into certain research contracts with Virginia Polytechnic Institute and State University ("Virginia Tech") and Virginia Tech Intellectual Properties, Inc. ("VTIP").¹ We have previously related in some detail the subject matter of those contracts and the specific obligations and performances of the parties under those contracts in Virginia Polytechnic Inst. & State University v. Interactive Return Serv., Inc., 267 Va. 642, 595 S.E.2d 1 (2004). The significance of that case to the present appeal is that a jury returned a verdict on a breach of contract claim against Virginia Tech and VTIP, jointly and severally, in the amount of $110,000. Id. at 646, 595 S.E.2d at 2. The Circuit Court of the City of Richmond entered judgment in that amount in favor of Interactive Service, and we affirmed that judgment. Id. at 656, 595 S.E.2d at 9. Additionally, we noted that Interactive Service "admitted at trial that it owed Virginia Tech approximately $750,000." Id. at 647, 595 S.E.2d at 3.

Thereafter, on June 21, 2004, Virginia Tech notified Interactive Service, pursuant to a provision of the Act, that it would satisfy the above referenced monetary judgment by applying that amount against $749,611.06 Interactive Service owed to Virginia Tech. Interactive Service contested the setoff on several grounds and demanded a hearing before a debt setoff panel established by Virginia Tech under its operating statutes to "determine whether the claim is valid" and whether the "claimed sum asserted as due and owing is correct." Code § 58.1-526.

The panel held a hearing on September 1, 2004 in which it received and considered the testimony of the parties' witnesses and the argument of the parties' counsel. On September 28, 2004, the panel issued a written opinion listing its findings of fact and rendering its decision. The panel found that, in pertinent part, under a valid contract Virginia Tech had performed research services for Interactive Service with a value in excess of $122,833.56 (the amount of the prior judgment in favor of Interactive Service and post-judgment interest at the time of the hearing). The panel concluded that the "sum of $122,883.56 is a valid claim subject to the provisions of the . . . Act . . . and that the sum of $122,883.56 shall be released to" Virginia Tech. Interactive Service did not appeal the panel's decision.

Pursuant to Code § 8.01-455, Virginia Tech and VTIP subsequently filed a motion in the circuit court applying to have Interactive Service's breach of contract judgment against them marked satisfied. Following a hearing on the motion, the circuit court issued a final order dated December 27, 2004.

Initially, the circuit court ruled that Interactive Service was barred from challenging the amounts owed because it failed to appeal the panel's findings regarding those amounts within the 30 days allowed by Code § 58.1-527. Next, addressing Interactive Service's assertion that the Act applies only to tax refunds, the circuit court concluded that "the Act is intended to allow agencies of the Commonwealth such as [Virginia Tech] to set off debts owed such agencies against tax refunds owed by the Commonwealth to the debtor." Since funds due to Interactive Service on a breach of contract judgment, not a tax refund, were implicated in the case, the circuit court denied Virginia Tech and VTIP's motion to have the breach of contract judgment marked satisfied. We awarded Virginia Tech this appeal.²

DISCUSSION

Our resolution of the question whether the circuit court erred in denying the motion to have the monetary judgment in favor of Interactive Service marked satisfied requires our interpretation of the Act. In doing so, we are guided by well-established principles. Interpretation of a statute is a pure question of law subject to de novo review by this Court. Ainslie v. Inman, 265 Va. 347, 352, 577 S.E.2d 246, 248 (2003). In interpreting a statute, we are required to "ascertain and give effect to the intention of the legislature," which is usually self-evident from the statutory language. Chase v. DaimlerChrysler Corp., 266 Va. 544, 547, 587 S.E.2d 521, 522 (2003). When the language in a statute is clear and unambiguous, we apply the statute according to its plain language. HCA Health Servs. v. Levin, 260 Va. 215, 220, 530 S.E.2d 417, 419-20 (2000).

We begin our analysis by emphasizing that the issue in this case is not whether the Act applies to tax refunds but, rather, whether the Act applies only to such refunds. Beyond question, the statutory scheme of the Act applies to Virginia state and local income tax refunds due any individual having a delinquent debt or account with a state agency or institution which obligation has not been satisfied or set aside by court order, or discharged in bankruptcy. See Code § 58.1-520 (defining claimant agency, debtor, delinquent debt, and refund). In general, this statutory scheme provides the procedures to be followed by the claimant agency to establish the validity of its claim, to establish the correctness of the amount of that claim against the debtor, and to secure the assistance of the Department of Taxation to accomplish a setoff of the debtor's tax refund against the debt. See Code § 58.1-526 (hearing by agency established by its operating statutes); Code § 58.1-527 (appeal to a designated circuit court); Code § 58.1-523 (Department of Taxation shall render assistance in collection of delinquent account or debt owing to claimant agency by debtor); and Code § 58.1-529 (Department of Taxation to setoff refund against debt).

To resolve the question whether this statutory scheme is limited in its application to tax refunds, our focus turns to Code § 58.1-535. In doing so, we note that there is no ambiguity in the language of that statute.

Code § 58.1-535(A) states that:

• In addition to the collection remedy provided in this article, if a claimant agency has on deposit any funds which are due to the debtor, the claimant agency may apply such funds to the payment of any delinquent debt which the debtor owes to the claimant agency, provided that the claimant agency first provides written notification to the debtor of its intent to apply the funds against the debt.

Code § 58.1-535(D) defines "funds on deposit" as "any funds of a debtor that a claimant agency may have in its possession including . . . any funds due to a debtor arising from a contractual agreement with a claimant agency." In contrast to Code § 58.1-520, this subsection defines "debtor" as "any individual, business or group having a delinquent debt or account with any claimant agency which obligation has not been satisfied by court order, set aside by court order, or discharged in bankruptcy."

The plain language of Code § 58.1-535 evinces a clear legislative intent to extend the scope of the collection remedy provided a claimant agency by the other provisions of the Act beyond instances in which the debtor is due a tax refund. Initially, that intent is signaled by the language "[i]n addition to the collection remedy provided in this article" in the introductory language of subsection (A). The language in subsection (D) defining "funds on deposit" to include "any funds due a debtor arising from a contractual agreement with a claimant agency" clearly broadens the scope of the remedy provided by the statute beyond instances...