Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Nance v. Huntington West Virginia Housing Authority

Supreme Court of West Virginia

May 19, 2017

Karen Nance, individually and as the managing general partner of the Historic Barnett Apartments, L.P., Historic Barnett Apartments, L.P., and the Old House Doctor, a West Virginia Sole Proprietorship, Plaintiffs Below, Petitioners
v.
Huntington West Virginia Housing Authority, Defendant Below, Respondent

         Cabell County 12-C-380

          MEMORANDUM DECISION

         Petitioners Karen Nance, individually and as the managing general partner of the Historic Barnett Apartments, L.P., Historic Barnett Apartments, L.P., and the Old House Doctor, a West Virginia Sole Proprietorship, by counsel J. Patrick Stephens, appeal the Circuit Court of Cabell County's order granting Respondent Huntington West Virginia Housing Authority's motion for summary judgment, entered on August 12, 2016. Respondent Huntington West Virginia Housing Authority, by counsel Perry W. Oxley and L.R. Sammons III, filed a response.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

         Factual and Procedural Background

         On March 14, 2008, Petitioners Karen Nance, individually and as the managing general partner of the Historic Barnett Apartments, L.P., Historic Barnett Apartments, L.P., and the Old House Doctor, a West Virginia Sole Proprietorship (collectively, "petitioners") purchased the Historic Barnett Hospital and Nursing School to redevelop the property into low income housing to serve the Huntington, West Virginia community. The project called for development of nine 1-bedroom apartments, and was to be privately owned and for-profit. Petitioners sought to benefit from grant funding under the federal Neighborhood Stabilization Program ("NSP") authorized under the American Recovery and Reinvestment Act of 2009. The NSP provided grant funding to state governments, local governments, and nonprofit organizations on a competitive basis in an attempt to revive the housing market after the economic recession in 2008. Petitioners' claims matter stem from its denial of such funding.

         In July of 2009, petitioners entered into a "Consortium Agreement" with Respondent Huntington West Virginia Housing Authority ("respondent") and the Housing Development Corporation. As part of the agreement, respondent served as the lead applicant for the NSP grant funding, and as such, was responsible for implementing and ensuring compliance with all grant requirements. Respondent executed an NSP contract with the West Virginia Development Office ("WVDO"), in which respondent requested that a portion of the funds awarded to the State of West Virginia be awarded to the Consortium. Termination of the Consortium Agreement required sixty days notice to all parties.

         One of the key requirements of the NSP was that twenty-five percent (25%) of the funds awarded to the State be devoted to persons with household incomes not exceeding fifty percent (50%) of the area median income. This requirement was referred to as the "25% set aside" requirement. Petitioners' project did not meet this requirement.

         In December of 2009, then-Governor Joe Manchin informed respondent that the NSP contract application had been approved in the amount of $2, 177, 974, including $928, 952 for petitioners' project. The parties initially believed that each project within the Consortium was eligible for NSP funding. However, the WVDO and Cloudburst Consulting, Inc. ("Cloudburst") subsequently advised respondent that certain projects within the Consortium, including petitioners' project, were ineligible. WVDO employees Michael Browning and Jeanna Bailes, both of whom were closely involved in the grant application, signed affidavits stating that they did not become aware of the eligibility problems until a May 13, 2010, meeting. In this meeting, Petitioner Karen Nance indicated that she purchased the subject property in 2008, prior to the enactment of the NSP legislation, which, according to the WVDO, rendered her project ineligible for NSP funding.

         As a result of the eligibility problems with some of the projects within the Consortium, the WVDO reduced the amount of the Consortium's NSP funding from $2, 177, 974 to $1, 391, 323. Additionally, the WVDO required that approximately eighty-five percent (85%) of the funding to the Consortium be spent on projects that met the "25% set aside" requirement. The remaining 15% of the NSP funds were eligible for use on projects that did not meet the "25% set aside" requirement; however, this amount (approximately $200, 000) was insufficient to fully fund petitioners' project. On May 21, 2010, respondent sent a letter to the WVDO requesting that petitioners' project be removed from the Consortium. In petitioners' place, respondent selected one of its own projects, known as Artisan Heights, to receive NSP funding. Artisan Heights, like petitioners' project was purchased prior to the enactment of the NSP legislation; however, the non-25% set aside funding was sufficient to complete the project, and it was not a for-profit project. On June 18, 2010, the WVDO sent a letter to respondent in which it stated, in pertinent part, that "when it became apparent that the original parties would not meet the 25% set aside requirement of the NSP Grant which was the intent when [respondent's] application was selected for funding, our office required [respondent] to select new properties."

         On June 12, 2012, petitioners filed suit against respondent, the WVDO, and Cloudburst. The WVDO and Cloudburst were subsequently dismissed from the case, leaving respondent as the sole defendant. Against respondent, petitioners asserted claims of negligence, breach of contract, breach of duty of good faith, and promissory estoppel.[1] Respondent filed a motion for summary judgment in September of 2014, in which it contended that petitioners' damages were caused by (1) the fact that petitioners purchased the property before the enactment of the NSP legislation; (2) petitioners' property had not been abandoned or foreclosed upon when it was purchased; (3) the WVDO reduced the amount of the grant; (4) petitioners' project was not a 25% set aside project; and (5) and there were not enough non-set aside funds to fully support petitioners' project. On December 3, 2014, the circuit court conducted a hearing on respondent's summary judgment motion. The circuit court directed the parties to engage in additional discovery, specifically, the depositions of Jeanna Bailes and Cloudburst employee Julia Pierson. The parties complied with the circuit court's directive and took the depositions.

         Ms. Bailes testified that the WVDO relied heavily on respondent to assist the State in satisfying the 25% set aside requirement with respect to the total amount of grant funding awarded to the State. Significantly, Ms. Bailes testified that if one grantee failed to properly allocate grant funds, then the State was at risk of losing the entirety of its funding. Ms. Bailes opined, therefore, that respondent was under pressure from the WVDO to ensure money was properly awarded, or it would go to other grantees. Neither Ms. Bailes nor Ms. Pierson testified that if there was no Consortium Agreement between respondent and petitioners that petitioners' project would have received funding.

         Following these two depositions, respondent filed an amended motion for summary judgment, which the court took up for hearing on June 2, 2016. By order entered August 12, 2016, the court granted summary judgment in favor of respondent. With respect to petitioners' breach of contract claim, the court concluded that the Consortium Agreement did not entitle petitioners to NSP grant funding or evidence a promise by respondent to fund petitioners' project; rather, the Agreement was a contractual mechanism for the group to seek NSP funding. The court determined that respondent's failure to provide the required sixty days notice prior to termination was immaterial and did not cause petitioners' project to be removed from the Consortium. Accordingly, the court dismissed the breach of contract claim. The circuit court likewise dismissed the breach of good faith claim on the basis that such a claim does not exist separate and apart from a breach of contract claim.

         With respect to petitioners' claim of promissory estoppel, the circuit court concluded that petitioners presented no evidence that respondent promised NSP grant funding and then breached that promise. Accordingly, the circuit court dismissed the promissory estoppel claim.

         Finally, with respect to petitioners' negligence claim, the circuit court concluded that respondent, as lead applicant, was charged with deciding whether to remove petitioners' project from the Consortium or include the project and risk losing all of its NSP funding. The circuit court concluded that, as a result of this choice being presented to respondent, respondent owed no duty to petitioner to keep petitioners' project included. However, the circuit court further concluded that, assuming arguendo that a duty existed, respondent's decision to choose its own project to replace petitioners' project, given petitioners' eligibility problems, did not constitute a breach of a duty as a matter of law. Even assuming that there was a duty and a breach, the circuit court concluded that petitioners failed to establish that the breach was the proximate cause of their alleged damages. Stated another way, the circuit court concluded that petitioner ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.