Edwin Miller Investments, L.L.C. v. CGP Development Co.

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2013 Term FILED
______________ November 14, 2013
released at 3:00 p.m.
RORY L. PERRY II, CLERK
No. 12-1137 SUPREME COURT OF APPEALS
______________ OF WEST VIRGINIA
EDWIN MILLER INVESTMENTS, L.L.C.,
Respondent Below, Petitioner
v.
CGP DEVELOPMENT CO., INC., AND JACK C. BARR,
Respondents Below, Respondents
____________________________________________________________
Appeal from the Circuit Court of Berkeley County
The Honorable John C. Yoder, Judge
Civil Action No. 10-C-689
AFFIRMED, IN PART; REVERSED, IN PART; AND REMANDED
____________________________________________________________
Submitted: October 15, 2013
Filed: November 14, 2013
Michael J. Novotny, Esq. Jack C. Barr, Esq.
Harpers Ferry, West Virginia Law Office of Jack C. Barr
Counsel for the Petitioner Keyser, West Virginia
Wm. Richard McCune, Jr., Esq.
Alex A. Tsiatsos, Esq.
Wm. Richard McCune, Jr., PLLC
Martinsburg, West Virginia
Counsel for the Respondents
The Opinion of the Court was delivered PER CURIAM.
SYLLABUS BY THE COURT
1. “A circuit court’s entry of summary judgment is reviewed de novo.” Syl. pt.
1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
2. “In eminent domain proceedings, the date of take for the purpose of
determining the fair market value of property for the fixing of compensation to be made
to the condemnee is the date on which the property is lawfully taken by the
commencement of appropriate legal proceedings pursuant to W.Va. Code, 54-2-14a, as
amended.” Syl. pt. 1, West Virginia Dep’t. of Highways v. Roda, 177 W. Va. 383, 352
S.E.2d 134 (1986).
3. “The primary consideration in the construction of a contract is the intention
of the parties. This intention must be gathered from an examination of the whole
instrument, which should be so construed, if possible, as to give meaning to every word,
phrase and clause and also render all its provisions consistent and harmonious.” Syl.,
Henderson Dev. Co. v. United Fuel, 121 W. Va. 284, 3 S.E.2d 217 (1939).
Per Curiam:
In this case, Petitioner Edwin Miller Investments, LLC (hereinafter “EMI”)
appeals the August 20, 2012, order of the Circuit Court of Berkeley County that ruled
that Respondent CGP Development Co., Inc. (“CGP”) is entitled to all of the
condemnation proceeds of land formerly owned by EMI and dismissed EMI from the
condemnation proceeding below. After careful consideration of the parties’ arguments,
the relevant portions of the appendix, and the applicable law, we affirm the circuit court’s
finding that CGP is entitled to all sums awarded for damage to the four-acre residue
purchased by CGP. However, we reverse the circuit court’s finding that CGP is entitled
to any additional sums resulting from the condemnation of the eight-acre tract.1
I.
FACTS
This case involves an approximately 12-acre tract of real estate located in
Martinsburg which formerly was owned by EMI. EMI, when it was the owner of the real
estate, used it to secure a $335,000.00 loan from BCBank, Inc. (“BCBank”).
In August 2010, the State of West Virginia filed an action seeking to
condemn 8 of the 12 acres. The condemnation action was filed pursuant to W. Va. Code
§ 54-2-14a (1981), which provides an alternative method for condemnation of real estate.
1
Also listed as a respondent in this case is Jack C. Barr who was the successor
trustee of the deed of trust that secured EMI’s loan.
1
On September 16, 2010, BCBank assigned the note, deed of trust and other loan
documents regarding EMI’s loan to the respondent herein, CGP. Pursuant to the
provisions of W. Va. Code § 54-2-14a, the State became the legal owner of EMI’s eight
acres on September 27, 2010, when it paid $241,000.00 into court. This sum was
estimated by the State to be the fair market value of the eight acres and for any damages
to the approximately four-acre residue of the real estate.2
At about this time, EMI defaulted on its loan obligations to CGP. As a
result, a foreclosure sale of the remaining 4-acre residue was conducted. CGP purchased
the 4 acres at a foreclosure sale for $96,713.48, which sum was applied to the balance of
EMI’s loan. The foreclosure deed received by CGP expressly reserved from the
foreclosure sale rights to the condemnation proceeds paid into court by the State under
the theory of equitable conversion.
In March 2011, the circuit court heard EMI’s and CGP’s arguments
concerning various lien issues and entitlement to the condemnation proceeds paid into
court by the State. The circuit court found that CGP was the priority lienholder with
respect to the condemned property and accordingly ordered release of the $241,000.00
paid into court to CGP in partial satisfaction of CGP’s lien. Both EMI and CGP agree
that the total money paid into court by the State is insufficient to constitute the fair
2
The circuit court found that the State’s taking of the eight acres may have left the
remaining four acres effectively landlocked, thus either greatly reducing the value of
those four acres or turning them into an uneconomic remnant.
2
market value of the eight acres and any damage to the four-acre residue. However, the
parties disagree as to which party is entitled to any additional proceeds paid as damages
to the four-acre residue as well as any additional sums resulting from the condemnation
of the eight acres.
In the order appealed from in this case, the circuit court made four findings,
two of which are challenged by EMI in this appeal. First, the circuit court found that CGP
has a right to be paid out of any additional condemnation proceeds an amount equal to the
outstanding principal balance and interest owed by EMI.3 Second, the circuit court found
that CGP is entitled to be paid out of any additional condemnation proceeds an amount
equal to EMI’s other debts to CGP which are secured under the deed of trust. Third, the
circuit court found that CGP, as the owner of the four-acre residue, is alone entitled to all
damages which may accrue as a result of damage to the residue. Finally, the circuit court
found that CGP is entitled to any additional proceeds obtained in the condemnation
proceeding pursuant to language in the deed of trust held by CGP. Based on these
findings, the circuit court concluded that EMI has no further interest in the real estate, the
condemnation proceeding, or any condemnation proceeds paid by the State, and the court
dismissed EMI from the case with prejudice.
3
The circuit court found that after the application to EMI’s debt to CGP of the
$241,000.00 paid by the State for the eight acres and any damage to the residue, and the
$96,713.48 paid by CGP at the foreclosure sale, the total still owed by EMI at the time
the order was entered was $24,901.59 and an additional $4.31 per day from June 27,
2012 until paid.
3
In this appeal, EMI does not dispute that CGP as priority lienholder is
entitled to the payment of the principal and interest due on the note owed by EMI. EMI
also agrees that CGP is entitled to the payment of any other debts validly secured by the
deed of trust from the condemnation proceeds. However, EMI challenges the circuit
court’s determination that CGP is entitled to any further proceeds paid for damages to the
four-acre residue purchased by CGP and any additional sums awarded for the 8 acres
condemned.
II.
STANDARD OF REVIEW
This is an appeal of the circuit court’s order which granted CGP’s motion
for entitlement to condemnation proceeds. EMI contends that this Court should review
the circuit court’s order either as an order granting a motion filed pursuant to Rule 12(c)
of the West Virginia Rules of Civil Procedure or an order granting summary judgment.4
According to Rule of Civil Procedure 12(c), in part, “[i]f, on a motion for judgment on
the pleadings, matters outside the pleadings are presented to and not excluded by the
court, the motion shall be treated as one for summary judgment.” See also Gunn v. Hope
Gas, Inc., 184 W. Va. 600, 603, 402 S.E.2d 505, 508 (1991) (indicating that “the court’s
consideration of documents which supported the pleadings converted the defendant’s
Rule 12(c) motion into a Rule 56 motion for summary judgment”). In the instant case, the
4
Neither the motion filed by CGP nor the circuit court’s order granting the motion
identifies under which rule of civil procedure the motion was made or granted.
4
circuit court considered documents outside of the pleadings in granting CGP’s motion.
As a result, we will treat the circuit court’s order as a summary judgment order. This
Court previously has held that “[a] circuit court’s entry of summary judgment is reviewed
de novo.” Syl. pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).
III.
ANALYSIS
A. The Operation of W. Va. Code § 54-2-14a
In this case, the State condemned eight acres of the 12-acre tract originally
owned by EMI pursuant to W. Va. Code § 54-2-14a (1981). Prior to considering the
specific issues herein, we will first discuss the general operation of this statute.
Under W. Va. Code § 54-2-14a, once the State seeks to condemn real
estate, and the circuit court finds that the purpose of the condemnation is for a public use,
the State shall, prior to entry onto the land, pay into court such sum as the State estimates
to be the fair value of the property plus damages, if any, to the residue. The circuit court
shall then issue an order vesting a defeasible title in the State to the real estate sought to
be condemned and permitting the State’s immediate possession of and entry upon the real
estate. The owners of the real estate at the time the State pays the sum into court,
including lienholders and conflicting claimants, have the same title to the proceeds paid
into court as they had to the real estate, and all liens by deed of trust, judgment or
otherwise, upon the real estate are transferred to the proceeds paid to the court.
5
If the State and the owner of the real estate cannot agree on the fair market
value of the real estate and any damage to the residue, the value is determined by
condemnation commissioners or a jury. The commissioners’ report or the jury’s verdict is
then confirmed and ordered to be recorded. If the amount determined exceeds the amount
originally paid into court by the State, the State has three months to pay into court the
excess amount together with the statutorily prescribed interest from the date of the filing
of the condemnation petition to the date of payment into court of the excess amount. Only
after the commissioners’ report or jury’s verdict has been confirmed and ordered to be
recorded, and the State pays into court the excess amount, if any, is title to the
condemned real estate absolutely and indefeasibly vested in the State in fee simple.
In the instant case, at the time that CGP purchased the four-acre residue, the
State had paid into court the estimated fair market value of the eight acres including any
damages to the four-acre residue and had taken possession of the property. However, the
fair market value of the real estate had not yet been determined by condemnation
commissioners or a jury.
B. EMI’s First Assignment of Error
There are two assignments of error in this case. In the first assignment of
error, EMI asserts that the circuit court erred in determining that CGP, as the foreclosure
purchaser of the four-acre residue, is entitled to all condemnation proceeds to be awarded
for damages to the residue. First, EMI asserts that residue damages are determined as of
6
the date of the taking and belong to EMI as the owner of the property on that date. EMI
characterizes the date of the taking as the date that the State deposited into court the
estimated fair value of the condemned property including damages, if any, to the residue,
and took possession of the real estate.
In Syllabus Point 1 of West Virginia Department of Highways v. Roda, 177
W. Va. 383, 352 S.E.2d 134 (1986), this Court held:
In eminent domain proceedings, the date of take for
the purpose of determining the fair market value of property
for the fixing of compensation to be made to the condemnee
is the date on which the property is lawfully taken by the
commencement of appropriate legal proceedings pursuant to
W. Va. Code, 54-2-14a, as amended.
EMI was the owner of the 12 acres on the date that the State commenced the
condemnation proceedings. However, while the State’s commencement of appropriate
legal proceedings is the date of the taking for the purpose of determining the fair market
value of the real estate taken and damage to the residue for the fixing of compensation to
be made to a condemnee, it is not the date for determining who is entitled to the fair
market value of the condemned real estate. This fact was made clear by this Court in
Depart,emt of Transportation v. Robertson, 217 W. Va. 497, 503, 618 S.E.2d 506, 512
(2005), where we explained:
The decision in Roda was not concerned with, nor did it
address the issue of, the extent of a landowner’s interest in
property on the date of the take. Roda stands for the
proposition that whenever a determination of the value of
property is made, that determination must be based upon the
fair market value of the property when the condemnation
7
application was filed. Neither Roda nor the provisions in W.
Va. Code § 54-2-14a address the issue of the extent of a
landowner’s property on the date of the take.
Therefore, our holding in Roda does not answer the question of which party is entitled to
the condemnation proceeds in this case.
It has been said that “[i]n general, where property is conveyed after the
commencement of a condemnation proceeding but before the time when the taking is
complete, the purchaser is entitled to the compensation, unless the compensation is
expressly reserved to the grantor.” 29A C.J.S. Eminent Domain § 244 (2007) (footnotes
omitted). While this Court declines to adopt this rule as applicable in all circumstances,
we believe that it is the appropriate rule to apply to the instant facts.
This Court’s review of the record indicates that the State commenced the
condemnation proceeds in August 2010, and EMI defaulted on its loan very shortly
thereafter. Clearly, at the time CGP purchased the four-acre residue in November 2010,
the condemnation proceedings had just commenced and were not near completion.
Specifically, the fair market value of the eight acres and any damages to the four-acre
residue had not yet been determined, any additional amount that may be awarded had not
been paid by the State into court, and the State had not received absolute and indefeasible
title in fee simple to the real estate. As a result, at the time CGP purchased the four-acre
residue, the taking of the eight acres and any damages to the residue were not complete
for the purpose of determining entitlement to the condemnation proceeds.
8
EMI asserts, however, that the foreclosure deed conveying the four-acre
residue to CGP did not transfer any right in the damage of the residue to CPG. In support
of this argument, EMI points to language in the foreclosure deed which EMI says
excludes the transfer of any condemnation rights.5 The foreclosure deed conveys the 12
acres of the real estate which secured EMI’s loan from CGP
[s]ubject to and less the real estate and interest in real estate
described in the condemnation proceedings instituted in
Berkeley County West Virginia (Civil Action Nos. 10-C-689
VI, 10-C-690 VI, 10-C-691 VI). Successor Trustee reserves
from said sale the portions of real estate which are subject to
such condemnation proceedings and the liens upon the
deposit by the state and/or the proceeds from the real estate
which have now been equitably converted by said
proceedings.
According to EMI, this language clearly reserves from the conveyance of the four-acre
residue to CGP all proceeds for damages to the residue.
The circuit court below rejected EMI’s argument, reasoning as follows:
EMI also claims that the foreclosure sale reserved “the
portions of the real estate which are subject to such
condemnation proceedings.” That is correct, but the
reservation does not accomplish what EMI alleges. The
foreclosure deed refers to the specific case numbers involving
specific parcels condemned and the deposits into which the
parcels had been equitably converted. Specifically, those
parcels were equitably converted in the $241,000.00 paid into
Court by the State. That money was reserved from the sale
because it belonged to CGP, as this Court subsequently
agreed. The reservation was in place to prevent a buyer at the
foreclosure sale from buying a right to the proceeds which
belonged to CGP. Nothing in the deed mentions any
5
This exact language also appears in the “Notice of Successor Trustee’s Sale.”
9
reservation in EMI for rights to residual damages or
diminution to the residue. Therefore, CGP as fee owner of the
residue has exclusive rights to raise claims for damage to the
residue.
(Footnote omitted). We find that the circuit court’s construction of the reservation in the
trust deed is correct.
Reading the reservation provision as a whole, it is clear that its purpose is
to reserve from a purchaser of the foreclosed property the eight acres condemned by the
State and any liens on the money deposited into court by the State as an estimation of the
fair market value of the real estate. Significantly, the language nowhere refers to EMI’s
interest in the real estate or damages to the four-acre residue. Therefore, this Court finds
no merit to EMI’s argument. Accordingly, this Court finds that CGP, as the foreclosure
purchaser of the four-acre residue, is entitled to all of the proceeds to be awarded for any
damages to the four-acre residue, and we affirm the circuit court’s order to the extent that
it so ruled.
C. EMI’s Second Assignment of Error
The circuit court also ruled in its August 20, 2012, order that CGP has a
right to any additional sums resulting from the condemnation proceedings presumably
referring to any additional proceeds paid by the State as the fair market value of the
condemned eight-acre tract. The circuit court based its ruling on the following provision
in the deed of trust that secured EMI’s loan from CGP:
10
CONDEMNATION. Grantor will give Lender prompt
notice of any action, real or threatened, by private or public
entities to purchase or take any or all of the Property,
including any easements, through condemnation, eminent
domain, or any other means. Grantor further agrees to notify
Lender of any proceedings instituted for the establishment of
any sewer, water, conservation, ditch, drainage, or other
district relating to or binding upon the Property or any part of
it. Grantor authorizes Lender to intervene in Grantor’s
name in any of the above described actions or claims and
to collect and receive all sums resulting from the action or
claim. Grantor assigns to Lender the proceeds of any
award or claim for damages connected with a
condemnation or other taking of all or any part of the
Property. Such proceeds shall be considered payments and
will be applied as provided in this Deed of Trust. This
assignment of proceeds is subject to the terms of any prior
mortgage, deed of trust, security agreement or other lien
document.
(Emphasis added). The circuit court found that the language emphasized above is
unambiguous and that with this language EMI agreed to give CGP “all sums” and to
assign to CGP “any award” resulting from condemnation, not just the sums which will
satisfy EMI’s indebtedness.
In its second assignment of error, EMI avers that the circuit court erred in
finding that this provision assigned all sums to CGP including those in excess of EMI’s
indebtedness to CGP. According to EMI, the circuit court failed to read this provision in
accord with the entire deed of trust. EMI asserts that the deed of trust is not an unlimited
assignment of property rights. Instead, it is a limited collateral assignment of real estate
and condemnation rights for the sole purpose of securing the payment of EMI’s debt.
11
We agree with EMI’s argument. This Court has held:
The primary consideration in the construction of a
contract is the intention of the parties. This intention must be
gathered from an examination of the whole instrument, which
should be so construed, if possible, as to give meaning to
every word, phrase and clause and also render all its
provisions consistent and harmonious.
Syl., Henderson Dev. Co. v. United Fuel, 121 W. Va. 284, 3 S.E.2d 217 (1939). The
provision at issue is included in a deed of trust which is defined as “[a] deed conveying
title to real property to a trustee as security until the grantor repays a loan.” Black’s Law
Dictionary 476 (9th ed. 2009). The purpose of the deed of trust in this case was to secure
EMI’s loan from CGP; it was not an unlimited assignment of property rights. The
provision at issue clearly indicates that the proceeds of any award or claim for damages
connected with the condemnation proceedings are to be considered payments and will be
applied as provided in the deed of trust. In addition, paragraph 18 of the deed of trust
indicates that “[o]nce the Secured Debt is fully and finally paid, Lender agrees to release
this Deed of Trust.” Thus, when we read the provision at issue in light of the purpose of
the deed of trust and in accord with its other terms, we conclude that this provision
assigns to CGP only those condemnation proceeds awarded for the eight acres taken
which are necessary to pay off the remaining debt owed by EMI to CGP. Accordingly,
we find that the circuit court erred in finding that CGP is entitled to any additional sums
resulting from the condemnation of the eight-acre tract.
12
Finally, because the circuit court erred in finding that CGP is entitled to all
additional condemnation proceeds of the eight acres taken, we also find error in the
circuit court’s dismissal with prejudice of EMI from the condemnation proceedings.
IV.
CONCLUSION
For the reasons set forth above, this Court affirms the ruling of the Circuit
Court of Berkeley County in its August 20, 2012, order that CGP, as the owner of the
four-acre residue, is entitled to all of the condemnation proceeds for damages to the four-
acre residue resulting from the State’s taking of the eight-acre tract. However, this Court
reverses the circuit court’s ruling in its August 20, 2012, order that CGP is entitled to any
additional condemnation proceeds from the State’s condemnation of the eight-acre tract,
and the circuit court’s dismissal with prejudice of EMI from the condemnation
proceedings below. Finally, we remand this case to the Circuit Court of Berkeley County
for proceedings consistent with this opinion. Accordingly, the August 20, 2012, order of
the Circuit Court of Berkeley County is affirmed, in part; reversed, in part; and
remanded.
Affirmed, in part; reversed, in part; and remanded.
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