UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 05-1133



HELEN M. CUNNINGHAM,

                                              Plaintiff - Appellee,

           versus


DAVID W. JOHNSON; DELORES B. JOHNSON, a/k/a
Delores B. Barros,

                                           Defendants - Appellants.

---------------------------------------------

PARTA VALARTA, LLC,

                                                             Movant.



Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (CA-99-72-1)


Argued:   May 25, 2007                      Decided:   July 27, 2007


Before TRAXLER and KING, Circuit Judges, and T. S. ELLIS, III,
Senior United States District Judge for the Eastern District of
Virginia, sitting by designation.


Vacated and remanded by unpublished per curiam opinion.


ARGUED: William Daniel Sullivan, TIGHE, PATTON, ARMSTRONG &
TEASDALE, P.L.L.C., Washington, D.C., for Appellants. Paul Stone
Richter, RICHTER, MILLER & FINN, Washington, D.C., for Appellee.
ON BRIEF: Thomas P. Miller, RICHTER, MILLER & FINN, Washington,
D.C., for Appellee.


Unpublished opinions are not binding precedent in this circuit.




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PER CURIAM:

       David W. Johnson appeals the denial of his motion to vacate a

default judgment entered against him in the Eastern District of

Virginia.    His wife, Delores B. Johnson, appeals the denial of her

motion to reconsider an award of summary judgment made against her

in the same case.     These judgments arose from a suit on a $385,000

promissory note that the Johnsons executed in favor of Helen M.

Cunningham in 1991 (the “Note”), and the sum of each judgment was

computed by applying a computation of compound interest to the

principal amount of the Note.       The Johnsons contend on appeal that

the Note actually provided for simple interest only, that the sums

of the judgments against them are thus erroneous, and that the

court therefore erred in denying their motions for relief from

those judgments.      As explained below, the Johnsons are correct on

the interest computation issue, and we thus vacate and remand.



                                     I.

                                     A.

       On July 25, 1991, David and Delores Johnson, in connection

with   a   purchase   of   real   property,   executed   the   Note,   which

obligated them to pay Helen Cunningham the sum of $385,000 “with

interest until paid at the rate of 8.5 per centum per annum.”          J.A.




                                      3
15.1   The Note provided that “[s]aid principal and interest [were]

payable in monthly installments” of $4781.34, and specified that

“[i]f not sooner paid, said principal and interest shall be due and

payable in full Ten (10) years from date herein.”                  

  Note   provided   that   any   late   payment   entitled

Cunningham to demand immediate payment of all outstanding principal

and interest, and that “[a]ny payment more than 15 days late shall

require an additional Four Percent (4%) late fee.”          

on the Note almost immediately, and

made no payments until March 7, 1996, when they paid Cunningham

$2000.     Shortly thereafter, on April 9, 1996, the Johnsons made

another $2000 payment.       As far as the record indicates, they have

paid Cunningham nothing since.

       On January 11, 1999, Cunningham notified the Johnsons that she

was exercising her right to payment in full as a result of their

default.     Shortly thereafter, on January 22, 1999, Cunningham

initiated this civil action against the Johnsons in Virginia’s

eastern district.         On February 10, 1999, however, before the

Johnsons were served with the Complaint in Cunningham’s action,

Mrs. Johnson filed for bankruptcy, triggering an automatic stay of

Cunningham’s civil action against her.             See 11 U.S.C. § 362

(automatic stay in bankruptcy).       Thus, when Mr. Johnson was served



       1
      Citations herein to “J.A. ___” refer to the contents of the
Joint Appendix filed by the parties in this appeal.

                                     4
with process in this case on March 20, 1999, no such service was

made on Mrs. Johnson.

     Mr.     Johnson        failed     timely   to    respond     to   Cunningham’s

Complaint,       and   on   April     14,   1999,    Cunningham    sought    default

judgment against him.             Cunningham’s declaration in support of

default judgment asserted that Mr. Johnson owed her the sum of

$753,516.06 on the Note.             Cunningham’s declaration did not explain

how that sum had been computed, but she now concedes that it was

calculated by assessing compound interest on the amount owed on the

Note.     On May 11, 1999, the district court entered a Default and

Judgment against Mr. Johnson, ordering that Cunningham recover the

sum of $757,173.12 — the request made in her April 14, 1999

declaration plus additional prejudgment interest — from him.

     On June 17, 2004, after Mrs. Johnson’s bankruptcy stay had

been lifted, Cunningham filed an Amended Complaint against her in

this case, again seeking to recover on the Note.                (Mrs. Johnson had

been denied a discharge in bankruptcy and thus remained obligated

to Cunningham.)         Then, on September 28, 2004, Cunningham sought

summary judgment and an award of $321,013.23 in her action against

Mrs. Johnson. The amount of this request was computed by beginning

with the $757,132.12 Cunningham had asserted as due on the Note as

of May 11, 1999 — the date the default judgment was entered

against    Mr.    Johnson     —      subtracting     certain   payments     that   the



                                            5
Johnsons had made since that date, and adding further compound

interest.

      On November 12, 2004, the district court conducted a hearing

on Cunningham’s summary judgment motion.                At this hearing, Mrs.

Johnson acknowledged that summary judgment was warranted, but

contested   Cunningham’s     calculation        of     interest   on   the     Note.

Specifically, Mrs. Johnson maintained that the Note provided for

simple interest only, and that the Amended Complaint and summary

judgment motion, which sought a sum computed on the basis of

compound    interest,   overstated          Mrs.     Johnson’s     liability      to

Cunningham.    On November 30, 2004, the court entered an Order

awarding summary judgment to Cunningham and against Mrs. Johnson in

the sum of $321,263.23, the full amount Cunningham had sought.

This Order explained that “[t]he Court has reviewed Plaintiff’s

calculations and determined that they are correct and accurate.”

J.A. 117.

      On December 9, 2004, Mr. and Mrs. Johnson together submitted

a   post-judgment   motion   to   the       district    court,    in   which    they

maintained that the Note provided for simple interest only (the

“Post-Judgment Motion”).      The Post-Judgment Motion requested that

the court reduce the judgment against Mrs. Johnson to a sum

calculated using simple, rather than compound, interest, and sought




                                        6
to have the Declaratory Judgment against Mr. Johnson vacated.2    In

a two-sentence Order of January 18, 2005, the court denied both

aspects of the Post-Judgment Motion (the “Post-Judgment Order”).

In the Post-Judgment Order, the court explained that it was “of the

opinion that the 11/30/04 [summary judgment] and 5/11/99 [default

judgment] rulings were correct,” and that the defendants’ Post-

Judgment Motion should therefore be denied.   J.A. 147.

     Mr. and Mrs. Johnson have appealed the denial of their Post-

Judgment Motion, and we possess jurisdiction pursuant to 28 U.S.C.

§ 1291.

                                B.

     We review for abuse of discretion a district court’s ruling on

a motion to alter or amend a judgment pursuant to Rule 59(e).    See

Bogart v. Chapell, 

, 555 (4th Cir. 2005).     Likewise, a

district court’s ruling on a Rule 60(b) motion for relief from

judgment is subject to abuse of discretion review.   See Browder v.

Dir., Dep’t of Corr., 

, 263 n.7 (1978).       A district

court necessarily abuses its discretion if it makes a ruling based

on an erroneous view of the law or a clearly erroneous factual




     2
      The Post-Judgment Motion failed to invoke any specific
authority for the relief it requested. Mrs. Johnson’s motion for
a reduction in the judgment against her, however, is best
characterized as a motion to alter or amend the judgment pursuant
to Rule 59(e) of the Federal Rules of Civil Procedure.        Mr.
Johnson’s motion to vacate the default judgment is best viewed as
a motion for relief from judgment under Rule 60(b).

                                7
premise.    See Cooter & Gell v. Hartmax Corp., 

, 405

(1990).



                                II.

     The Johnsons contend that the district court abused its

discretion in denying their Post-Judgment Motion because its ruling

in that regard rested on an erroneous legal conclusion:   that the

sums of the judgments against them were correct.   According to the

Johnsons, the judgments against them were in fact incorrect,

because they were based on a compound interest computation, while

the Note allowed for simple interest only. Cunningham concedes, as

she must, that the judgments against the Johnsons were computed by

compounding interest on the Note.     Thus, if the Note actually

allowed only simple interest (as the Johnsons contend), then the

basis of the Post-Judgment Order — that the judgments against the

Johnsons were correct — was an erroneous premise, and the court

abused its discretion in denying the Post-Judgment Motion.

     It is a longstanding principle of Virginia law that compound

interest is allowed on a promissory note only if the note so

provides; if the note makes no provision as to whether the interest

due thereon is simple or compound, only simple interest may be

assessed.   See Blanchard v. Dominion Nat’l Bank, 

, 651




                                 8
(Va. 1921).3        Cunningham does not challenge this proposition, nor

does she dispute the fact that the Note failed to make any express

provision for compound interest.               Rather, she asserts — without

support   or    explanation        —   that    the   monthly   payment   schedule

established in the Note implicitly demonstrates that interest was

to be compounded, because the interest on promissory notes that

call for monthly payments is “always” of the compound variety.

Appellant’s Br. 24.

     In fact, however, the Note’s payment schedule called for the

Johnsons to pay only simple interest.                Each month, the scheduled

payment of $4781.34 would have paid the interest that accrued that

month plus a portion of the principal, leaving only the remaining

principal      as    the   basis   for   the    next   month’s   assessment   of

interest.4      Consequently, had the Johnsons adhered to the Note’s


     3
      In their briefs, the parties cursorily discuss the
possibility that District of Columbia law, rather than Virginia
law, may govern this dispute.      They agree, however, that the
question of which jurisdiction’s law applies is immaterial to this
appeal, because both allow only simple interest on a promissory
note that fails to otherwise provide. See Giant Food, Inc. v. Jack
I. Bender & Sons, 

, 1304 (D.C. 1979).
     4
      The interest accrued in the Note’s first month was
approximately $2727.08. (This sum is calculated by multiplying the
initial principal of $385,000 by (.085/12), with (.085/12)
representing one month’s interest at an annual interest rate of
8.5%.) And, had the Johnsons complied with the Note’s schedule of
payments, the interest accrued in each succeeding month would have
been less than that accrued the month before, as a consequence of
the diminishing principal. Thus, the monthly payment of $4781.34
would have been more than sufficient to pay the interest due in
each month of the Note’s scheduled ten-year term.

                                          9
schedule, they would have paid interest on principal only (that is,

simple    interest),   rather   than    interest   on   interest   (compound

interest). Cunningham’s cryptic assertion that the Note’s schedule

of payments somehow implies a compound interest term is thus

misconceived.

       Nor does a compound interest provision, either express or

implied, appear in the Note’s specification of the consequences of

a default by the Johnsons.       Rather, the Note included only these

two provisions relating to default:            First, a default by the

Johnsons would entitle Cunningham to demand immediate payment in

full of the balance owed her.          Second, if the Johnsons were more

than fifteen days late with an installment payment, they would be

obliged to pay a late fee of four percent of the sum that was past

due.     In light of these two expressly specified consequences of

default, the Note’s failure to provide for compound interest as an

additional incident of late payment is especially conspicuous, and

difficult to reconcile with Cunningham’s position.

       In sum, the Note made no provision, express or implied, for

interest to be compounded.      Thus, pursuant to the applicable legal

principles, the Johnsons were obligated to pay only simple interest

on the Note’s principal amount.             The premise of the district

court’s denial of the Post-Judgment Motion — that the judgments

against the Johnsons, the sums of which were based on compound

interest, were correct — was therefore legally erroneous, and the


                                       10
court’s ruling in that regard constituted an abuse of discretion.

Accordingly, we are obliged to vacate the Post-Judgment Order and

remand.   On remand, the court should exercise its discretion over

the Post-Judgment Motion in light of our determination that the

Note allowed for simple interest only, and that the sums of the

judgments against the Johnsons were therefore incorrect.



                               III.

     Pursuant to the foregoing, we vacate the district court’s

denial of the Post-Judgment Motion and remand for such other and

further proceedings as may be appropriate.

                                              VACATED AND REMANDED




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