West Virginia Lottery v. A-1 Amusement, Inc.

FILED
November 13, 2017
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
No. 16-1047 - West Virginia Lottery, West Virginia Lottery Commission, and Alan
Larrick, Director of the West Virginia Lottery v. A-1 Amusement, Inc.,
Action Gaming, Inc., Advanced Lottery Technologies, LLC, Blue
Diamond, LLC, CD 3 LLC, Clay Music Corp., Coach’s Club
Association, Dusty Enterprises, Inc., Elm Room, Inc., Fabulous 50's
Café, LLC, Gridcoach, LLC, Hot 5 Stop, LLC, Jerry’s Bar Association,
Leejay, Inc., LL&M, LLC, Mimi’s Inc., Moose Nitro Lodge 565,
Mountaineer Music, LLC, PDM Associates of Weirton, LLC, Palatokas
Associates, LLC, Patty’s, Inc., Progressive Video Lottery, LTD.,
Random World, LTD., TA Vending, LLC, The Lounge, LLC, Tiffany’s,
LLC, Trans-allegheny Enterprises, LLC, Wheeling Coin, LLC, Woldap,
LLC, WV “Café” Holding Company, LLC, and West Virginia
Amusement & Limited Video Lottery Association, Inc.
Davis, Justice, dissenting:
This was a simple case that the majority has transformed into a fiscal nightmare
for the State treasury and its taxpayers. In this proceeding, the circuit court ruled that the
plaintiffs did not have to limit their “takings” claim for relief to the insurance policy limits
provided by the Lottery Commission. The circuit court found that, because the plaintiffs’
theory of liability was grounded on the Takings Clause of the State Constitution, the
plaintiffs are entitled to receive whatever amount of compensation a jury decides to award
them. The majority opinion not only agreed with the circuit court, but it went where no
judicial opinion of this Court has ever gone in the history of this State! That is, the majority
of the Court has now ruled that all claims against the State for injury to personal property
unrelated to real estate must be litigated as an eminent domain proceeding under W. Va.
Code § 54-2-1 et seq. Such a decision is fiscally irresponsible because it extends the concept
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of condemnation to arenas where no one could have fathomed it would ever apply and will
undoubtedly be financially devastating to this State. For the reasons set out, I firmly dissent.1
Only the Legislature has Authority to Expand the Scope of
Eminent Domain Proceedings
The greatest tragedy in the majority opinion is the complete absence of any
constitutional or statutory analysis to determine whether a claim against the State for the
alleged taking of purely personal property, unrelated to real estate, is authorized in an
eminent domain proceeding. Because the majority opinion utterly fails to include this critical
legal analysis in its decision of this case, I will supply it in my dissent.
To begin, the state constitutional basis for compensation by the State for taking
property is found in article III, § 9 of the West Virginia Constitution:
Private property shall not be taken or damaged for public
use, without just compensation; nor shall the same be taken by
any company, incorporated for the purposes of internal
improvement, until just compensation shall have been paid, or
secured to be paid, to the owner; and when private property shall
be taken, or damaged for public use, or for the use of such
corporation, the compensation to the owner shall be ascertained
in such manner as may be prescribed by general law: Provided,
That when required by either of the parties, such compensation
shall be ascertained by an impartial jury of twelve freeholders.
(Emphasis added). This constitutional provision clearly states that both the State and
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The majority opinion resolved two other issues that pale in comparison to the
profoundly catastrophic eminent domain ruling.
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authorized corporations must provide just compensation for taking “private property.” More
importantly, the Takings Clause expressly requires the Legislature to enact legislation for
carrying out the intent of this constitutional provision. Relevant to this case, the Legislature
enacted W. Va. Code § 54-2-1 et seq. to govern the taking of private property by the State.
Consequently, we must look to this statutory scheme to discern whether the Legislature has
authorized an eminent domain proceeding by the State to compensate a party for purely
personal property, unrelated to land.
The jurisdiction in which the State may bring a condemnation proceeding is
set forth in W. Va. Code § 54-2-1 (1882) as follows:
In any case in which property may lawfully be taken for
a public use, application may be made by petition to the circuit
court or the judge thereof in vacation, of the county in which the
estate is situated, to appoint commissioners to ascertain a just
compensation to the owners of the estate proposed to be taken.
If a tract lies partly in one county and partly in another, the
application in relation thereto may be made in either county.
(Emphasis added). West Virginia Code § 54-2-2 (1957) outlines certain matters the State
must include in a complaint for eminent domain. This statute states, in pertinent part:
The pleadings shall be in writing and shall be verified.
The petition shall describe with reasonable certainty the
property proposed to be taken, and may embrace one or more
parcels of land where the ownership is the same. If an estate
less than a fee is proposed to be taken, the petition shall describe
with reasonable certainty the particular estate less than the fee
which it is proposed to take, the name of the owner or owners
thereof, the manner and extent of their respective interests. If
there are any liens upon or conflicting claims to such real estate,
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the petition shall state the nature and amount of such liens and
claims and the names and places of residence of the persons who
hold the same, so far as known to the petitioner.
(Emphasis added). When a condemnation proceeding is initiated, it is first heard by a
condemnation commission. West Virginia Code § 54-2-9 (1963) describes the duties of the
commission as follows:
The commissioners, after viewing the property, if a view
is demanded, and hearing any proper evidence which is offered
shall ascertain what will be a just compensation to the person
entitled thereto for so much thereof as is proposed to be taken,
or for the interest therein, if less than a fee, and for damage to
the residue of the tract beyond all benefits to be derived, in
respect to such residue, from the work to be constructed, or the
purpose to which the land to be taken is to be appropriated,
including, when less than the fee is taken, the actual damage, if
any, done, or that may be done, to the fee by such
construction[.]
(Emphasis added).
It is quite clear to me that, pursuant to the above-quoted statutes, the
Legislature has provided for a condemnation proceeding involving the State when the matter
concerns taking real property, i.e., land. Nothing in these statutes provides for a
condemnation action involving the State that is brought to compensate a party for the so-
called taking of purely personal property that is completely unrelated to land. It is equally
clear to me why the majority opinion conveniently failed to examine these statutes: none of
these statutes support the cause of action created by the majority for the alleged additional
expenditure of money to compensate the plaintiffs for buying new computer programs!
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The only authority relied upon by the majority opinion in reaching its absurd
decision was dicta from the opinion in G.M. McCrossin, Inc. v. West Virginia Board of
Regents, 177 W. Va. 539, 355 S.E.2d 32 (1987), wherein Chief Justice McGraw suggested
that a claim against the State for injury to personal property might be brought under W. Va.
Code § 54-2-1 et seq. If the majority opinion had performed a scintilla of research, however,
it would have discovered that the case Justice McGraw cited for support of his dicta, Teter
v. West Virginia Central & Pittsburgh Railway Co., 35 W. Va. 433, 14 S.E. 146 (1891), did
not involve a State eminent domain proceeding.
The decision in Teter involved a railroad company that had removed “valuable
stone” from the plaintiffs’ land for the purpose of building a bridge. The plaintiffs filed an
action to enjoin the railroad company from removing the stone. The trial court ultimately
granted a partial injunction that prohibited the railroad company from quarrying and splitting
out stone, but allowed it to remove stone that was “already split by the defendant in sizes
suitable for building and abutment purposes[.]” Teter, 35 W. Va. at 434, 14 S.E. at 147. The
plaintiffs appealed the partial injunction order. On appeal, this Court examined the railroad
company’s conduct under the Takings Clause and specific statutes related to takings by
railroad companies and by corporations generally. In doing so, the Court in Teter found that
the Legislature provided for eminent domain proceedings against railroad companies for
taking not only real estate, but personalty such as “wood, earth, gravel, shale, or stone,
necessary to be used in constructing its railroad[.]” Teter, 35 W. Va. at 436, 14 S.E. at 147.
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The opinion reasoned as follows:
That this provision [the Takings Clause] was intended to
protect stone and other “material” annexed to the freehold, or
detached therefrom, is sufficiently proved by the fact that the
legislature has provided all of the procedure for taking the same,
by the exercise of eminent domain, which it has instituted for
the taking of real estate. This is abundantly proved by section
14, c. 52, Code, in regard to corporations generally, and by the
provisions of chapter 54, § 49, which are exclusively applicable
to railway companies. . . .
....
[T]he mode of taking material from lands adjoining a railway is
fully provided for, and such material is placed by our Code
under the full protection of the shield of the constitution. It is
hardly necessary to add that such material cannot be taken,
without the owner’s consent, until due compensation is paid or
secured by the company; nor does it make a particle of
difference whether the same is still attached to the land, or has
been detached therefrom by the agents of the company; neither
the constitution nor the statute recognizes any such distinction.
The action of the Circuit Court, therefore, in treating the
company as an ordinary trespasser, was erroneous. It should
have been treated as an internal improvement company, or
railroad company, which had the right to take material for the
construction of its road, without the owner’s consent, and which,
in the exercise of that right, had failed to comply with the
conditions imposed by the constitution and the legislature of the
State.
The clause of the constitution which we are now
considering protects private property in personalty as fully as in
real estate; neither can be taken against the owner’s consent
until payment is first made or secured.
But, for the purposes of this suit, it is sufficient to know
that the legislature has construed the Constitution for us in the
matter of taking stone and the like material by railway
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companies from adjacent lands without the owner’s consent.
Teter, 35 W. Va. at 435-36, 14 S.E. at 147-48 (emphasis in original; citations omitted). The
opinion in Teter reversed the circuit court’s order and remanded the case for further
proceedings that included an eminent domain proceeding as provided for against railroad
companies.
What is important to understand about Teter is that its discussion of an eminent
domain proceeding involving personalty was limited to items removed from land by railroad
companies–as expressly authorized by the Legislature. The dicta by Chief Justice McGraw
in McCrossin, which was relied upon by the majority opinion, took the ruling in Teter out
of context. Teter did not hold that this Court may create an eminent domain cause of action
that requires the State to compensate a party for taking personal property, unrelated to land.2
This Court does not have the authority to create such a cause of action. The West Virginia
State Constitution expressly has delegated exclusive authority to the Legislature to create
eminent domain proceedings. This point was acknowledged by this Court in Syllabus point
2 of State ex rel. Firestone Tire & Rubber Co. v. Ritchie, 153 W. Va. 132, 168 S.E.2d 287
(1969), wherein we held:
Where the constitution provides that private property
shall not be taken or damaged for public use without just
2
In fairness to the parties in this litigation, they did not raise or brief this issue. The
majority opinion sua sponte decided to address this matter with literally no briefing on the
matter by the parties.
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compensation, damage to personal property is covered therein
and is subject to condemnation proceedings; provided, proper
procedure is enacted by the legislature to cover such property
where required in the constitution unless such provisions are
self-executing.
(Emphasis added). The decision in Firestone pointed out that
[t]he general law with regard to the procedure for
compensation in eminent domain proceedings is found in
Chapter 54 of the Code of West Virginia. When the state
institutes condemnation proceedings under the general law
dealing with eminent domain, the only procedure set out therein
for compensation is for land or real estate taken or for the
interest therein if less than a fee, and for damages to the residue
of the tract adjacent thereto. Code, 54-1-1 et seq., as amended,
and in particular Code, 54-2-9, as amended. There is no
procedure prescribed by general law for compensation for
personal property[.]
This Court has clearly indicated that there is no procedure to
obtain damage to personal property in eminent domain
proceedings instituted by the state under Chapter 54 of the
Code.
Firestone, 153 W. Va. at 138, 168 S.E.2d at 290-91 (citation omitted; emphasis added).
In the final analysis, when the Legislature intends for personal property to be
the sole basis of a condemnation proceeding, it knows exactly how to enact legislation to
achieve this result. See W. Va. Code § 54-2-2a (1973) (“[A] public utility, person or
corporation required . . . to obtain a certificate of public convenience and necessity for the
construction and location of a high voltage transmission line, shall file a certified or attested
copy of such certificate with its petition to condemn real or personal property for the
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construction of such high voltage transmission line. Failure to file such certified or attested
copy of such certificate shall result in dismissal of the petition.” (emphasis added)). The
Legislature has not authorized a condemnation proceeding to require the State to condemn
personal computer programs and compensate their owners. The majority opinion has
determined to adopt such a procedure of its own accord. And, simply put, the majority is
flatly wrong because it has chosen to ignore the very clear constitutionally-drawn line of
demarcation!!!
The implications of the majority’s rogue opinion are fiscally frightening. I urge
the Legislature to act quickly to undo the potentially catastrophic financial consequences to
the State that could result from the majority’s absurd and patently unfounded decision. For
example, the hundreds of personal property cases against the State that are yearly litigated
in the former Court of Claims3 can now, thanks to the majority’s opinion, be brought as
inverse condemnation actions to force the State to institute condemnation proceedings. The
Legislature must make clear that which has always been clear until the majority inexplicably
blurred the unmistakable line. Therefore, I implore the Legislature to swiftly enact
legislation that prohibit a party from bringing an inverse condemnation proceeding to require
the State to condemn purely personal property that is unrelated to the taking of land. The
sanctity of our State’s coffers depends on it.
3
The Court of Claims was renamed the West Virginia Legislative Claims Commission.
See W. Va. Code § 14-2-4 (2017).
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Based on the foregoing, I vigorously dissent.
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