Dennis R. Vaughan, Jr.
Vaughan & Withrow
Charleston, West Virginia
Attorney for the Appellee
Francis L. Warder, Jr.
Waters, Warner & Harris
Clarksburg, West Virginia
Attorney for Americare,
Boone County Health Care Corporation, and
Care Enterprises, Incorporated
Charles R. McElwee
Robinson & McElwee
Charleston, West Virginia
Attorney for the Appellants
William E. Hamb
Hamb & Poffenbarger
Charleston, West Virginia
Attorney for the Appellants
Michael J. Farrell
Jenkins, Fenstermaker, Krieger, Kayes, Farrrell & Agee
Huntington, West Virginia
Attorney for the Appellants
K. Paul Davis
John H. Tinney
Mark A. Sadd
Spilman, Thomas & Battle
Charleston, West Virginia
Attorney for Amicus Curiae Alston & Bird
JUSTICE WORKMAN delivered the Opinion of the Court.
JUSTICE BROTHERTON did not participate.
JUDGE FOX sitting by temporary assignment.
1. "Summary judgment is appropriate if, from the totality
of the evidence presented, the record could not lead a rational
trier of fact to find for the nonmoving party, such as where the
nonmoving party has failed to make a sufficient showing on an
essential element of the case that it has the burden to prove."
Syl. Pt. 2, Williams v. Precision Coil, Inc., No. 22493, W.
Va. , S.E.2d (W. Va. filed Mar. 24, 1995).
2. Mere nonuse alone, without further inquiry, is not dispositive of whether a grantee has sufficiently abandoned property so as to trigger a reverter clause contained in the grantee's deed.
This matter is before the Court upon the appeal of Lee O.
Hill, Trustee, Jerry W. Cook, Mid American National Bank & Trust
Company ("Mid American"), Trustee, and Haddad & Associates II
("Haddad"), from the August 17, 1994 order of the Circuit Court
of Boone County. The Appellants assert that the circuit court
erroneously granted the County Commission of Boone County's
("county commission's") motion for summary judgment and denied
the Appellants' cross motion for summary judgment. After careful
consideration of the briefs, oral argument, and all other matters
of record, we agree. Accordingly, we hereby reverse the circuit
In the late 1970's, the county commission determined that it
would be both desirable and in the public interest to construct a
long-term care nursing home facility in Boone County. In pursuit
of that aim, the county commission conveyed a 5.217 acre parcel
of land to the Boone County Building Commission ("building
commission") on October 22, 1979. The two commissions agreed
that the fair market value of the conveyed property amounted to
The deed for the conveyed property stated that the parcel of
land was to be used "for the purpose of constructing thereon or
causing to be constructed thereon a long-term extended care
health facility[.]" To assure the achievement of this purpose,
the deed also contained the following reverter and subordination
The sale of the aforesaid lands to
the . . . [building commission] is for the
express purpose of causing to be constructed
thereon an extended health care facility and
for that purpose only. . . . [S]hould the
said property ever cease to be used for that
purpose, the title to the aforesaid real
property shall revert back to the . . .
[county commission] without the necessity of
any legal proceeding whatsoever.
The . . . [county commission] agrees that the aforesaid right of reversion shall be and is hereby subordinated to any issuance and sale of revenue bonds as provided for in Chapter 8, Article 33, Section 4(j) of the West Virginia Code, as amended, by the . . . [building commission]. It is the purpose of this provision to permit the use of this property as as [sic] security for the payment of any of said bonds free and acquit of the right of reversion reserved to the . . . [county commission] herein.
In 1981, the building commission issued $2.9 million in
bonds which were used to construct and equip a 120 bed long-term
care nursing home on the conveyed property. The bonds were
apparently secured by a first lien upon the conveyed land, the
nursing home, and its contents. The county commission asserts
that these bonds were issued pursuant to West Virginia Code § 8-33-4(j) (1990).See footnote 1 The facility appears to have immediately
commenced operations upon its completion.
In 1986, the building commission learned that it could
obtain a sharp reduction in the debt service on the 1981 bonds by
issuing "refunding bonds" to pay off the 1981 issuance.
Accordingly, on August 25, 1986, the building commission adopted
a resolution approving the issuance of approximately $2.8 million
in refunding bonds to defease the 1981 issuance and release the
trust indenture that held the property and its improvements as
security for the 1981 bonds. Like its 1981 counterpart, the 1986 building commission resolution stated that the bonds were being
issued pursuant to West Virginia Code § 8-33. Further, a new
trust indenture dated August 1, 1986, secured the refunding
bonds, like their predecessors, by a first lien upon the property
and its improvements. The bonds were then purchased by Dean
Witter Reynolds, Incorporated, and appear to have been traded in
the financial markets.
On October 26, 1989, the nursing home appears to have ceased
operations due to a work stoppage by its employees. As a result
of the labor unrest, all of the facility's residents were
immediately removed from the home, many even leaving behind some
of their personal effects. The facility remained unoccupied for
approximately two years thereafter. The Appellee has pointed us
to three letters that it asserts make "crystal clear" that the
facility had ceased being operated, and thus was abandoned, as a
nursing home at this time.See footnote 2 The first letter is from counsel for
the operator of the nursing home to, inter alia, the county
commission. The Appellee points to language in the letter which
states that the operator "will close and cease operating its
Nursing Home in Danville, West Virginia effective December 31,
1989." The letter also states, however, that "[t]he facility is temporarily closed down due to extensive violence occurring at"
the facility as a result of the work stoppage.
The second letter, dated March 9, 1990, is from the nursing
home operator to the building commission chairman. That letter
indicates that the operator no longer intends to provide security
or insurance for the facility and that the building commission or
the county commission should undertake that responsibility and
assume physical custody of the premises.See footnote 3 The letter also points
out, however, that the building commission chairman was "quoted
in numerous newspaper articles as saying that there are numerous
companies interested in purchasing or operating the facility . .
The third letter is from a Ms. Rita Susanne Bryant to the
Health Care Cost Review Authority ("HCCRA") dated April 19, 1991.
Ms. Bryant is a former Boone county commissioner and employee of
Haddad. She apparently wrote the letter in order to seek the
HCCRA's consideration of "reinstating, or granting an extention
[sic] of (whichever is appropriate), the previous "Certificate of
Need" as is necessary for the operation of the facility as a nursing home . . . ."See footnote 4 The Appellee points to language in the
letter which indicates that the facility was abandoned. The
letter also notes, however, that the county maintained the
utilities, insurance and security at the facility for some time
"in anticipation of re-opening the facility."
In response to these materials, the Appellants point to
information that they filed with their post-judgment motions.
For instance, Ms. Bryant filed an affidavit on behalf of the
Appellants which stated that "[f]rom 1982 until the present the
Nursing Home Facility has been used only for the operation of an
extended health care facility and for no other purposes." Mr.
Haddad similarly opined in his supplemental affidavit, averring
that subsequent to the acquisition of the property, "it has
continuously been operated as an extended health care facility."
On June, 18, 1991, the county commission learned that Mid
American, as trustee, had issued a notice of acceleration due to
the default in payment of the refunding bonds. Just prior to
this notice of foreclosure, Haddad had acquired all of the
refunding bonds for value on the market.
Upon learning of the acceleration and the possibility of
foreclosure, the county commission and the building commission
rightly became concerned. It appears that the two entities, both
prior to the notice of foreclosure and thereafter, began to
actively pursue Mr. Haddad to purchase the property and reopen
the nursing home. For instance, a local newspaper quoted the
building commission chairman, Nobert Miller, as saying "'I called
his office and asked him to consider the purchase[.]'" Janet
Yeager, Haddad New Owner of Nursing Home Bonds, Hometown News,
June 5, 1991, at 1. In relation to the county commission's
efforts to lure Mr. Haddad to act, reference is made to the
above-mentioned letter that body sent to the HCCRA.
On August 14, 1991, Appellant Lee O. Hill, as co-trustee,
held a foreclosure sale and conveyed the property to Haddad under
the trust indenture for $500,000. Prior to placing an operator
in possession of the property, however, Haddad expended an
additional $208,000 in making necessary repairs and maintenance
to the property. Further, Boone County appears to have levied and collected thousands of dollars in taxes on the property from
Even though it appears to have stood silent about the 1986
issuance and the interpretation of the reverter clause throughout
the events discussed above, the county commission took the
curious step of filing the instant declaratory judgment action
just prior to the foreclosure sale. The county commission
essentially sought two elements of relief: (1) a determination
that the bonds were void; and (2) a declaration that since the
nursing home was no longer in operation, title was vested in the
county commission under the reverter clause. Thereafter, the
parties filed cross motions for summary judgment. On August 17,
1994, the circuit court granted the Appellee's motion and denied
the Appellants' motion.
In a nutshell, the circuit court reasoned that (1) the
refunding bonds were void because they were not issued pursuant
to, or in accordance with, either constitutional or statutory
authority; (2) the trust indenture was not a valid encumbrance on
the property because the building commission was not authorized
by statute to secure the bonds in that fashion; (3) the property
reverted to the county commission in October 1989 when it ceased
operations as a nursing home; and (4) the subordination clause was not triggered because the refunding bonds were not issued
pursuant to West Virginia Code § 8-33-4(j).See footnote 5
The Appellants filed post-judgment motions under both West
Virginia Rules of Civil Procedure 59(e) and 60(b)(1), (2) and
(6). These motions were ultimately denied. The Appellants filed
a petition for appeal on December 22, 1994, which we granted on
February 2, 1995. During the pendency of this appeal, we
received an amicus curiae brief on behalf of the law firm of
Alston & Bird. That firm, which acted as bond counsel for the
refunding bonds, states that the bonds were issued pursuant to
West Virginia Code § 8-33-4(i).
While the parties have discussed numerous ancillary issues,
we think this case can be distilled to essentially two questions.
First, we must determine whether the building commission
possessed statutory authority to issue the refunding bonds and
encumber the property as security for such. Second, we must
ascertain whether the reverter clause was implicated either by
(1) the failure to satisfy the subordination provision; or (2)
the cessation of operations at the nursing home. For the reasons
that follow, we conclude that the circuit court erred in its
disposition of this matter. Accordingly, we now reverse.
A. The Building Commission's Authority to Issue the Refunding Bonds and Encumber the Property
While we are aware of the parties' differing conceptions and
confusion about which statute authorized the issuance of the
refunding bonds, we place great weight on bond counsel's
representation that the issuance was undertaken pursuant to § 8-
33-4(i). Accordingly, we must determine whether the building
commission was authorized to issue the refunding bonds and
encumber the property under that subsection or a related one.
West Virginia Code § 8-33 speaks directly to the
organization and powers of building commissions. The powers with
which a building commission is ordained are set forth in West
Virginia Code § 8-33-4. That section provides, in pertinent
part, as follows:
Each commission shall have plenary power and authority to:
. . . .
(h) Sell, encumber or dispose of
any property, real or personal;
(i) Issue negotiable bonds, notes,
debentures or other evidences of
indebtedness and provide for the
rights of the holders thereof,
incur any proper indebtedness and
issue any obligations and give any
security therefor which it may deem
necessary or advisable in connection with exercising powers
as provided herein;
. . . .
(m) Do all things reasonable and
necessary to carry out the
To the extent that one might harbor any doubts, West Virginia Code § 8-33-12 (1990) provides that all of article 33 is remedial in nature, and thus entitled to a liberal construction. Further, we have previously construed the phrase "plenary power and authority" to mean "'[a]uthority and power as broad as is required in a given case.'" Ellison v. City of Parkersburg, 168 W. Va. 468, 472, 284 S.E.2d 903, 906 (1981)(quoting Black's Law Dictionary 1039 (5th ed. 1979)).
The Appellant argues that since refunding bonds are not
expressly authorized by § 8-33-4(i), such bonds may not be issued
by building commissions. We disagree for at least three reasons.
First, the text of § 8-33-4(i) clearly allows for the incurrence
of "other evidences of indebtedness" beyond the stated "bonds,
notes, [and] debentures." Id. Second, the legislative grant of
power is so immense that one could not reasonably argue that the
authority to issue refunding bonds is not implied in § 8-33-4(i).
See W. Va. Code § 8-1-7 (1990) ("The enumeration of powers and
authority granted in this chapter shall not operate to exclude
the exercise of other powers and authority fairly incidental
thereto or reasonably implied and within the purposes of this chapter.") Third, we have noted on several occasions that there
is little, if any, practical difference between bonds of original
issuance and refunding bonds. See, e.g., Winkler v. West
Virginia School Bldg. Auth., 189 W. Va. 748, 434 S.E.2d 420
(1993)See footnote 6; Board of Educ. v. Slack, 174 W. Va. 437, 327 S.E.2d 416
(1985). Given these principles, as well as the liberal
interpretation that we must accord § 8-33-4(i), we have little
difficulty in concluding that the refunding bonds were issued
pursuant to and in compliance with statutory authority.See footnote 7
Our general conclusion that § 8-33-4(i) grants broad
authority in the realm of bond issuances is not particularly
novel. We recognized the same proposition just two terms ago.
In State ex rel. Clarksburg Mun. Bldg. Comm'n v. Spelsberg, 191
W. Va. 553, 447 S.E.2d 16 (1994), a case which none of the
parties have cited, we stated as follows:
The [building] Commission is also authorized to dispose of or lease its property for public purposes, and to issue negotiable bonds, notes, debentures, or other evidences of indebtedness and provide for the rights of the holders thereof, incur any proper indebtedness and issue any obligations and give any security therefor which it may deem necessary or advisable in connection with exercising its powers. W.Va. Code 8-33- 4(l), (i) .
191 W. Va. at 555, 447 S.E.2d at 18 (emphasis added).See footnote 8
We further conclude that § 8-33-4(h) authorized the building commission to encumber the property via the trust indenture. The statutory language admits of no other interpretation. See also W. Va. Code § 8-33-4(i)(stating that a building commission may "incur any proper indebtedness and issue any obligations and give any security therefor which it may deem necessary or advisable")(emphasis added). Accordingly, we conclude that the refunding bonds are valid and that the facility was properly encumbered by the trust indenture.
B. The Subordination and Reverter Clauses
1. The Subordination Clause
Given our conclusion that the refunding bonds were properly issued pursuant to § 8-33-4(i), one might immediately conclude that the subordination provision is not satisfied. Indeed, the clause states in pertinent part that "the . . . right of reversion shall be and is hereby subordinated to any issuance and sale of revenue bonds as provided for in Chapter 8, Article 33, Section 4(j) of the West Virginia Code." (Emphasis added). This language, however, cannot be read in isolation.
One must also take note of the subordination provision's
second sentence: "It is the purpose of this provision to permit
the use of this property as as [sic] security for the payment of
any of said bonds free and acquit of the right of reversion
reserved to the . . . [county commission] herein." This language
indicates (1) that whether the refunding bonds were issued
pursuant to subsection 4(j) or 4(i) is largely a matter of
semantics, and (2) that the citation of subsection 4(j) is merely
surplusage. The subordination clause is in the deed for one
reason: the county commission wanted to assure that the property
could be used as security for a bond issuance that would aid in
financing the much-needed facility. The refunding bonds
satisfied this desire and went no further. That this purpose was
accomplished under one subsection rather than another in the same
statute is of no moment. Accordingly, we hold that the § 8-33-
4(i) issuance satisfied the subordination provision.
2. The Reverter Clause
The only remaining question is whether the reverter clause
was triggered by the building commission's lapse in using the
property as a nursing home for approximately two years. It is
worth restating the language of the clause:
The sale of the aforesaid lands to the . . . [building commission] is for the express purpose of causing to be constructed thereon an extended health care facility and for that purpose only. . . . [S]hould the said property ever cease to be used for that purpose, the title to the aforesaid real property shall revert back to the . . . County Commission . . . without the necessity of any legal proceeding whatsoever.
We recently stated in syllabus point two of Williams v. Precision Coil, Inc., No. 22493, W. Va. , S.E.2d (W. Va. filed Mar. 24, 1995), as follows:
Summary judgment is appropriate if, from the
totality of the evidence presented, the
record could not lead a rational trier of
fact to find for the nonmoving party, such as
where the nonmoving party has failed to make
a sufficient showing on an essential element
of the case that it has the burden to prove.
In interpreting the reverter clause in light of the record
herein, we find our decision in Marthens v. B & O R.R. Co., 170
W. Va. 33, 289 S.E.2d 706 (1982) helpful by analogy. In
Marthens, we dealt with a provision in a deed which stated that
the land was to revert to the grantor "'at any time when said
railroad company shall cease to use it solely and strictly for
railroad purposes.'" Id. at 36, 289 S.E.2d at 709. The grantee
railroad subsequently leased portions of the property to entities
which did not utilize the property for the stated purpose. Id.
at 36, 289 S.E.2d at 709. We stated as follows in Marthens:
[T]here are three broad criteria to which a court must look to determine whether land is no longer being used for railroad purposes: (1) has the property actually been alienated by sale or lease or effectively abandoned by long nonuser; (2) if the property is leased or unused, would a reasonable person conclude that there is a substantial likelihood that the property will be used again for railroad purposes; and (3) if part of the property is no longer used for railroad purposes and has been abandoned under the two criteria above, and part is still used for railroad purposes, is the unused property sufficiently distinct and identifiable that it can be separated in some reasonable way from property that is still being used for railroad purposes.
Id. at 36-37, 289 S.E.2d at 710.
While the third factor has little or no relevance to the
instant case, the two criteria for abandonment do. We must
determine whether the property in question was ever abandoned,
i.e. "cease[d] to be used," as an extended health care facility.
Drawing on the two Marthens elements above, and with reference to
the facts of the instant case, we think this question is resolved
by determining whether the property was permanently abandoned for
the stated purpose or, to the contrary, whether a reasonable
person would conclude that there was a substantial likelihood
that the property would again be used for the stated purpose in
due course. In making this determination, we must look to the
grantee's intentions, "as evidenced by their long-range plans for
the particular property, the economic conditions giving rise to
the . . . non-use, and the length of the non-use." Id. at 39,
289 S.E.2d at 712.See footnote 9
There is no substantial indication in the record which tends
to demonstrate that the long range plans for the property
entailed anything other than reopening the facility as a nursing
home. Indeed, this was the only prudent course to take. As
stated by the county commission itself as late as April 29, 1991,
to the HCCRA: "[The facility] is a beautiful, modern, 120-bed
nursing home facility that has been hailed by all who have toured
its premises as a state-of-the-art facility, one of the best in
the State." (Emphasis added). The county commission further
stated that it felt that "the Nursing Home did and will provide a
much-needed service to Boone County and Southern West
Virginia[.]" (Emphasis added). We are not directed to anything
in the record which would tend to indicate that the building
commission was in anything less than full agreement with these
As for the second factor, the economic conditions giving
rise to the non-use are not vigorously disputed. The reason for
closure had nothing to do with the profitability or need for the
facility. In fact, the county commission stated in its letter to
the HCCRA that "[t]he closure was in no way due to a lack of
need." The county commission also touted the economically
beneficial effects of the facility and the fact that at the time of the closure, "[t]he Nursing Home enjoyed approximately 98%
occupancy[.]" The only reason for the lapse in use of the
facility was the labor dispute discussed above. Few would
contend that the building commission had any control over or
ability to prevent the lapse. Labor disputes and their
accompanying consequences are no longer an extraordinary
occurrence in the service industry. It does not stand to reason
that such an event, if resolved in due course, should work a
forfeiture of property from a grantee that has endeavored
mightily to abide by a deed's stated purpose.
Neither do we find the length of non-use to be particularly
troublesome. Once the labor dispute was resolved, the facility
reopened its doors. In making this determination, we are not
unmindful of the HCCRA's finding that even after the lapse in
operations, the nursing home still constituted "an existing
health care facility[.]"
While it is beyond cavil that the nursing home closed in
1989 due to the labor dispute, Marthens and a legion of authority
provide that "nonuser alone, without further inquiry, is not
dispositive of the abandonment issue." Id. at 37, 289 S.E.2d at
710. To the extent that we did not explicitly adopt this
position in Marthens, we now categorically hold that mere nonuse
alone, without further inquiry, is not dispositive of whether a grantee has sufficiently abandoned property so as to trigger a
reverter clause contained in the grantee's deed.
Based on the above factors, and our reading of the record as
a whole, the only reasonable conclusion to be drawn from the
evidence herein is that there was not only a substantial
likelihood, but rather a near certainty, that the nursing home
would be revived in due course. Indeed, that likelihood was
realized when Haddad foreclosed on the property and resolved the
labor dispute. In fact, to this day the facility is still
operating in accordance with the stated purpose in the deed. In
sum, we conclude that in light of the Marthens factors, the
subject property never ceased to be used for the stated purpose
as a matter of law. Accordingly, the reverter clause was not
For the reasons set forth above, we conclude (1) that the
refunding bonds were validly issued; (2) that the facility was
properly encumbered; (3) that the subordination provision was
satisfied; and (4) that the reverter clause was not triggered.
Accordingly, we hereby reverse the judgment of the circuit court and direct that judgment be entered for the Appellants consistent
with this opinion.See footnote 10
Footnote: 1 Section 8-33-4(j) provides that building commissions have plenary power and authority to:
(j) Raise funds by the issuance and
sale of revenue bonds in the manner provided
by the applicable provisions of sections
seven, ten, twelve and sixteen [§§ 8-16-7, 8-
16-10, 8-16-12 and 8-16-16], article sixteen
of this chapter, without regard to the extent
provided in section five [§ 8-33-5] of this article, to the limitations specified in said section twelve [§ 8-16-12], article sixteen, it being hereby expressly provided that for the purpose of the issuance and sale of revenue bonds, each commission is a 'governing body' as that term is used in said article sixteen [§ 8-16-1 et seq.] only
. . . .
W. Va. Code § 8-33-4(j). On the date that this case was submitted for decision, the county commission filed a resolution with the Court that was passed by the building commission on March 26, 1981. The resolution apparently formed the basis for the 1981 issuance. While the county commission has represented that the 1981 issuance proceeded according to West Virginia Code § 8-33-4(j), the resolution states that the 1981 issuance was authorized under West Virginia Code § 8-33, without specifying the precise section and subsection which permitted the issuance.
Footnote: 2 We would note that the parties presented virtually no evidence with their cross motions for summary judgment concerning the status of the facility following its closure. The issue does not appear to have been substantially developed until post- judgment motions were filed by the Appellants.
Footnote: 3 This assumption of custody appears to have occurred sometime later. According to the record, the county commission (1) took over payments for the utilities at the home; (2) included the home in the county's insurance policy; and (3) provided for security at the facility.
Footnote: 4 Even though the facility closed and was in a state of disrepair at the time of Ms. Bryant's letter, the HCCRA determined on May 10, 1991, that the nursing home was nevertheless "an existing health care facility." The county commission obviously supported this decision. In an April 29, 1991 letter, the county commission told the HCCRA that it "fully and wholeheartedly support[ed]" Ms. Bryant's request. The county commission touted the facility as "a beautiful, modern, 120-bed nursing home . . . that has been hailed by all who have toured its premises as a state-of-the-art facility, one of the best in the State." The county commission also admitted that from 1989 to 1991, it had "made every effort to keep the building secure, insured, maintained, and operational in hopes that the problems could be ironed out and the facility could be reopened." Along the same lines, the letter states that "the Nursing Home did and
will provide a much-needed service to Boone County and Southern West Virginia." Most significantly, however, the county commission appears to have taken the position in this letter that the reverter clause had not yet come into play: "It is located on land owned by the County and leased with a reverter clause providing that it must be used as a Nursing Home."
Footnote: 5 Indeed, there appeared to be quite a bit of confusion below as to the particular statute that was utilized in issuing the refunding bonds. As will become apparent, that confusion has now been resolved.
Footnote: 6 We also recognized in Winkler the salutary purpose that often underlies an entity's decision to refund previously issued bonds. Id. at 765, 434 S.E.2d at 437 (stating that the refunding of a previous issuance is designed "to enable the bond issuing authority to obtain the advantage of lower interest rates through the use of refunding bonds. Refunding the bonds saves on the cost of liquidating the older bonds").
Footnote: 7 Having reached this conclusion, however, we think the better approach for prudent bond counsel would be to utilize § 8- 33-4(j), which provides a bit more guidance on procedures for notice and public comment. In fact, we would encourage the legislature to consider the consolidation of subsections (i) and (j).
Footnote: 8 Interestingly enough, no mention was made in Spelsberg of § 8-33-4(j).
Footnote: 9 We formulated these elements anticipating that they would
typically raise a jury question. Marthens, 170 W. Va. at 38, 289 S.E.2d at 712. Nevertheless, as will become apparent below, we conclude that the Appellants have satisfied West Virginia Rule of Civil Procedure 56 and are thus entitled to summary judgment.
Footnote: 10 While we have carefully considered the parties' remaining arguments, we conclude that they are not meritorious.