A successful civil lawsuit generally results in a judgment for some amount of money. Interest accumulates on that judgment, either at the rate lawfully specified in the contract or at Virginia’s standard “judgment rate” of six percent. (See Va. Code § 6.2-302). Money judgments can consist of many different types of damages awarded to the plaintiff, such as compensatory damages, punitive damages, costs and expenses, liquidated damages, trebled damages, and other damages authorized by statute. For years, many successful plaintiffs have garnished wages, seized assets, and taken other action to collect their judgments on the assumption that they were entitled to add 6% interest to the total amount of the judgment, regardless of how that judgment amount was reached. On March 24, 2022, the Supreme Court of Virginia held that post-judgment interest should only run on the portion of the judgment representing compensatory damages. Things like punitive damages and trebled damages do not fit within this category.
Yacoub Sidya v. World Telecom Exchange Communications, LLC, was a business dispute between a telecommunications company, its former CEO, and the owner of Y-Telecom, a vendor to World Telecom. World Telecom sued Sidya on various counts and was successful on its claims for misappropriation of trade secrets, tortious interference with business expectancy, and business conspiracy. The jury awarded $1.332 million, trebled to $3.996 million, punitive damages of $350,000, attorneys fees, and post-judgment interest of 6% applied to the judgment as a whole. Sidya had a problem with the trial court awarding 6% interest on the entire judgment of roughly $6.5M rather than applying interest only to the $1.332M attributable to compensatory damages. On appeal, the Virginia Supreme Court didn’t agree with all of Sidya’s arguments, but it agreed that post-judgment interest should be restricted to awards that are compensatory, rather than punitive, in nature.