Mellon-Stuart Co. v. Hall

• Citation: 178 W.Va. 291,359 S.E.2d 124
• Decision Date: 18 June 1987
• Docket Number: MELLON-STUART,No. 17498,17498
• Court: Supreme Court of West Virginia
• Parties: CO., and Kirby Electric Service, Inc. v. Cheryle HALL, Clerk of the West Virginia Court of Claims, et al. WEST VIRGINIA BOARD OF REGENTS, an agency of the State of West Virginia v.CO., a Pennsylvania corporation; Kirby Electric Service, Inc., a Pennsylvania corporation.

Page 124

359 S.E.2d 124

178 W.Va. 291

MELLON-STUART CO., and Kirby Electric Service, Inc. v. Cheryle HALL, Clerk of the West Virginia Court of Claims, et al.

WEST VIRGINIA BOARD OF REGENTS, an agency of the State of West Virginia v. MELLON-STUART CO., a Pennsylvania corporation; Kirby

Electric Service, Inc., a Pennsylvania corporation.

No. 17498.

Supreme Court of Appeals of West Virginia.

June 18, 1987.

Syllabus by the Court

1. "A knowledgeable party contracting with a state agency has, in effect, agreed to submit any disputes with the contracting state agency for resolution by the court of claims." Syllabus Point 2, G.M. McCrossin, Inc. v. West Virginia Bd. of Regents, W.Va. , 355 S.E.2d 32 (1987).

2. W.Va.Code, 14-2-23, imposes upon the clerk of the court of claims a nondiscretionary duty to recertify to the department of finance and administration claims which are approved by the court, and upon which the legislature has taken no action.

3. An assessment of three factors is ordinarily made in determining whether res judicata and collateral estoppel may be applied to a hearing body: (1) whether the body acts in a judicial capacity; (2) whether the parties were afforded a full and fair opportunity to litigate the matters in dispute; and (3) whether applying the doctrines is consistent with the express or implied policy in the legislation which created the body.

4. Res judicata or collateral estoppel effect may be given to matters litigated in the court of claims.

5. The grant of jurisdiction for the State to bring a counterclaim in the court of claims under W.Va.Code, 14-2-13, is permissive, rather than compulsory.

Peter J. Kalis, Pittsburgh, Pa., Ralph C. Dusic, Jr., Charleston, W.Va., for appellant.

Henry C. Bias, Jr. & Ann Ewart, Sp. Asst. Atty. Gen., Charleston, W.Va., for W.Va. Bd. of Regents.

Silas B. Taylor, Deputy Atty. Gen., J. Bradley Russell, Asst. Atty. Gen., for Cheryle Hall.

MILLER, Justice:

These cases have been consolidated for purposes of this opinion. Mellon-Stuart Company and Kirby Electric Service seek an original mandamus against the West Virginia Board of Regents (Board) and present a certified question from the Circuit Court of Kanawha County. The two proceedings arise out of a construction contract dispute with the Board.

Three questions are presented: (1) whether a contract suit against a State agency is barred by sovereign immunity; (2) whether the clerk of the court of claims is required under W.Va.Code, 14-2-23, to recertify claims which have been approved by that court, but which have been unfunded by the legislature; and (3) whether a decision by the court of claims, adverse to the State, may be given res judicata or collateral estoppel effect in a subsequent proceeding by the State against the prevailing party.

I.

After competitive bidding, Mellon-Stuart was chosen in March, 1979, as general contractor in the construction of a physical education facility at Marshall University in Huntington, West Virginia. ¹ Under its agreement with the Board, the project owner, Mellon-Stuart was to receive compensation in the amount of $11,092,000. Kirby was awarded a contract as prime electrical contractor. ² Mellon-Stuart was additionally charged with the responsibility of coordinating the various prime contractors, including Kirby, who were assigned to the project.

For a variety of reasons, the preparatory work on the project was considerably delayed. Maps provided by the Board allegedly did not properly locate underground storm sewers and pipelines, thereby delaying their relocation. Public streets adjoining the project site were not timely abandoned. A walkoff by one of the prime contractors early during construction also slowed progress. ³ Water drainage problems impaired the movement of both equipment and laborers for weeks during the excavation phases. A general building trades strike barely one month into the project caused work to remain idle for thirty consecutive days. Further delay was attributable to inclement weather. These problems cumulatively pushed the completion of the facility well beyond the agreed upon schedule and resulted in substantial cost overruns.

After work on the facility was ended, Mellon-Stuart and Kirby instituted a proceeding in the court of claims against the State of West Virginia and the Board in November, 1981. They sought adjustments in their respective contracts and an award of additional compensation totaling $1,000,000. This proceeding was tried intermittently in weekly intervals throughout 1984.

On January 25, 1984, the Board brought a civil action against Mellon-Stuart and Kirby in the Circuit Court of Kanawha County. The Board alleged in its complaint that due to poor workmanship, the concrete floor in the interior of the facility was cracked over its entire length, requiring its removal and replacement. Delays in the project were attributed to fault on the part of Mellon-Stuart, resulting in increased costs to the Board and exposing the Board to future liability. In addition, electrical wiring and piping work performed by Kirby was allegedly not in conformity with the specifications in its contract. The Board sought damages in the amount of $5,500,000 against Mellon-Stuart and $3,500,000 against Kirby.

The contractors jointly moved to stay the proceedings in the circuit court and to refer the matter to arbitration, in accordance with contract provisions requiring arbitration of disputes. Some two years later, the court acted on this motion, and an order of referral was signed on February 3, 1986.

The court of claims issued its decision on January 24, 1986, and determined that most of the project delays were due to the neglect of the Board. The court awarded Mellon-Stuart the sum of $697,934.33 and Kirby the sum of $107,835.04. Their approved claims were promptly certified by the clerk of the court of claims to the department of finance and administration and included in the proposed budget for fiscal year 1986-87, as provided under W.Va.Code, 14-2-23. ⁴ The 1986 regular session of the legislature declined to follow the recommendation of the court of claims, and appropriated no money to fund the Mellon-Stuart and Kirby claims.

After the court of claims decision was announced, Mellon-Stuart and Kirby moved to enjoin the arbitration proceedings and to dismiss the civil action brought by the Board on the ground of res judicata. The circuit court denied the motion, holding simply that the court of claims is a "legislative creature" and "not a judicial entity." By order of September 10, 1986, it certified to this Court the question of whether the doctrines of res judicata and collateral estoppel are applicable to decisions of the court of claims. ⁵

Some three months after the denial of their motion in the circuit court, the contractors jointly petitioned this Court for a writ of mandamus seeking, inter alia (1) to require the Board to pay the claims out of its budgeted funds for the current fiscal year, or (2) to require the clerk of the court of claims to recertify their approved claims for inclusion in the proposed budget for the next fiscal year. ⁶ We have consolidated the certified question and the petition for mandamus for our consideration. ⁷

II.

Mellon-Stuart and Kirby urge initially that since their claims have been approved by the court of claims, they are entitled to mandamus relief against the Board compelling it to forthwith pay the claims. Two arguments are advanced to overcome the defense of sovereign immunity. First, the contractors invite us generally to reexamine the breadth of the State's immunity in the light of Pittsburgh Elevator Co. v. West Virginia Bd. of Regents, 177 W.Va. 539, 310 S.E.2d 675 (1983). Second, they contend more narrowly that sovereign immunity must yield where a State agency purposely engages in a commercial venture. We are not persuaded by either argument.

The State's immunity from suit is derived from the provisions of Article VI, Section 35 of the West Virginia Constitution:

"The State of West Virginia shall never be made a defendant in any court of law or equity, except the State of West Virginia, including any subdivision thereof, or any municipality therein, or any officer, agent, or employee thereof, may be made defendant in any garnishment or attachment proceeding, as garnishee or suggestee."

This constitutional grant of immunity is absolute and, as we have consistently held, cannot be waived by the legislature or any other instrumentality of the State. E.g., Ohio Valley Contractors v. Board of Educ., 170 W.Va. 240, 293 S.E.2d 437 (1982); City of Morgantown v. Ducker, 153 W.Va. 121, 168 S.E.2d 298 (1969); State ex rel. Scott v. Taylor, 152 W.Va. 151, 160 S.E.2d 146 (1968); Petros v. Kellas, 146 W.Va. 619, 122 S.E.2d 177 (1961).

Broadly stated, the policy which underlies sovereign immunity is to prevent the diversion of State monies from legislatively appropriated purposes. Kerns v. Bucklew, 178 W.Va. 68, 357 S.E.2d 750 (1987). Thus, where monetary relief is sought against the State treasury for which a proper legislative appropriation has not been made, sovereign immunity raises a bar to suit. ⁸ E.g., Ables v. Mooney, 164 W.Va. 19, 264 S.E.2d 424 (1979); Hamill v. Koontz, 134 W.Va. 439, 59 S.E.2d 879 (1950). This immunity from suit is extended to the Board as an agency funded by the State. City of Morgantown v. Ducker, supra.

Mellon-Stuart and Kirby rely upon Pittsburgh Elevator as authority for abolishing sovereign immunity or, at a minimum, tempering such immunity where the State is a party to a commercial agreement. This reading cannot be supported by Pittsburgh Elevator, which involved a tort action against a State agency that had purchased liability insurance. Our central holding in Pittsburgh Elevator was that an action putatively against a State agency, which seeks recovery only from the agency's liability insurance, is not barred by sovereign immunity. We...