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State ex rel. West Virginia Department of Transportation v. Kaufman

Supreme Court of West Virginia

April 2, 2019

STATE EX REL. WEST VIRGINIA DEPARTMENT OF TRANSPORTATION, DIVISION OF HIGHWAYS, Petitioner,
v.
THE HONORABLE TOD J. KAUFMAN, JUDGE OF THE CIRCUIT COURT OF KANAWHA COUNTY; AND MIKE ENYART & SONS, INC., Respondents.

          Kanawha County No. 18-C-868.

          MEMORANDUM DECISION

         The petitioner (defendant below), Department of Transportation, Division of Highways ("Highways"), seeks a writ to prohibit the Circuit Court of Kanawha County from allowing the counterclaim filed below by the respondent (defendant and counter-claimant below), Mike Enyart & Sons, Inc. ("MESI"), to proceed.[1] Highways argues that MESI's counterclaim violates Highways's sovereign immunity, [2] as well as the doctrine of claim splitting.[3]

         This Court has considered the parties' briefs, the arguments of counsel, the appendix record, and the supplemental appendix record. Upon consideration of the standard for the issuance of a writ of prohibition, the Court finds that Highways is not entitled to the extraordinary relief it seeks. For these reasons, this matter is properly disposed of through this memorandum decision in accordance with Rule 21 of the West Virginia Rules of Appellate Procedure.

         I. Factual and Procedural Background

         On June 3, 2014, MESI entered into a multimillion-dollar contract with Highways for the construction of the East Beckley Bypass in Raleigh County. MESI claims it was damaged by Highways's delay in acquiring certain necessary rights-of-ways related to the project. Conversely, Highways contends that problems arose concerning the quality and timing of MESI's work, as well as MESI's refusal to acquire an insurance rider unless Highways entered into Change Order 9. This change order required an additional payment of $1, 250, 000, which Highways alleges was paid under duress and served to exacerbate the difficulties between the parties.[4]

         On September 13, 2017, Highways exercised its contractual right by issuing a partial termination of contract for the convenience of the State.[5] Thereafter, MESI submitted a liquidated damages termination claim to Highways, which Highways denied. Highways terminated the remainder of the contract for the State's convenience on October 8, 2017.

         On March 28, 2018, MESI filed a notice of claim against Highways with the West Virginia Legislative Claims Commission ("Claims Commission") for breach of contract and seeking $5, 651, 661 in damages. Highways filed an answer to MESI's claim, but did not file a counterclaim. The Claims Commission scheduled a status conference for July 10, 2018.

         On July 9, 2018, Highways filed the instant civil action in the circuit court against MESI, seeking to recover significant monetary damages. Highways alleged, inter alia, that MESI failed to properly construct, install, and place curbs and signals. Highways further alleged that MESI breached duties owed to Highways by performing "substandard work in a dilatory manner[;]" failing to properly complete work under the contract; and damaging both public and private property during the course of its work. In addition to these breach of contract claims, Highways alleged duress, unjust enrichment, and negligence. On this same day, Highways filed a motion to stay the proceedings in the Claims Commission on the basis that there were numerous common issues between the Claims Commission case and the circuit court action and that certain issues in the circuit court proceeding would affect MESI's claim before the Claims Commission.

         The status conference went forward before the Claims Commission on July 10, 2018. Due to a scheduling oversight, MESI's counsel failed to appear. Highways's counsel did appear and urged a stay or dismissal of MESI's claim. The Claims Commission dismissed MESI's claim, which was later reinstated on MESI's motion. The Claims Commission also granted Highways's motion to stay.

         On August 22, 2018, MESI filed a motion to dismiss Highways's action in the circuit court or, in the alternative, to stay the circuit court action until the Claims Commission case concluded. MESI asserted in its motion that it had "brought its case in the proper venue created by an Act of the Legislature in 2017. . . . [and that] [t]he Claims Commission has exclusive jurisdiction" of claims under its contract with Highways. By letter dated August 28, 2018, the circuit court directed Highways to file a response to MESI's motion to dismiss by September 12, 2018, and directed both parties to submit proposed orders on the motion by that same date.

         In accordance with the circuit court's directive, on September 12, 2018, Highways filed a response to MESI's motion to dismiss/alternative motion to stay and submitted its proposed order denying MESI's motions, both of which Highways states it either hand-delivered or faxed that day to MESI and the circuit court. On that same day, MESI filed a pleading in the circuit court titled "Answer, Amended Motion to Dismiss Plaintiff's Complaint, Counterclaim and Amended Alternative Motion to Stay." It also submitted its proposed order, providing for its motions to be taken under advisement for sixty days during which time the parties were to engage in "all necessary discovery as efficiently as possible with the objective of preparing this case for trial." MESI's proposed order further provided that MESI had properly brought its action before the Claims Commission; that Highways could have filed a counterclaim against MESI in the Claims Commission, but did not; that the circuit court and the Claims Commission have concurrent jurisdiction over all claims; and that Highways "waived its constitutional [sovereign] immunity from having to defend the Counterclaim by filing its Complaint in this case. See, Syl. Pt. 2, State, by Davis v. Ruthbell Coal Co., 133 W.Va. 319, 56 S.E.2d 549 (1949)." MESI's proposed order also provided for a status conference on a date to be determined by the circuit court.

         MESI mailed a copy of its "Answer, Amended Motion to Dismiss Plaintiff's Complaint, Counterclaim and Amended Alternative Motion to Stay" and its proposed order to Highways's counsel, but hand-delivered the same to the circuit court. Highways's counsel telephoned MESI's counsel that same day, asking counsel to email her the documents MESI had filed that day. MESI's counsel did so, the following day, which is also the day the circuit court entered MESI's proposed order, as drafted, and scheduled the status conference for November 16, 2018.

         On September 25, 2018, Highways filed a motion to dismiss MESI's counterclaim. Highways asserted, inter alia, that it had no opportunity to address MESI's counterclaim before it was filed because the pleading was mailed to Highways, but hand-delivered to the circuit court; that MESI seeks a direct judgment in excess of $5.5 million from the State's treasury; and that the Ruthbell Coal Co. case relied upon by MESI does not provide any support for the filing of MESI's counterclaim, which is expressly barred by the doctrine of sovereign immunity. Highways also sought reconsideration of the circuit court's order expediting discovery and trial.

         Little more than two weeks later, on October 11, 2018, Highways filed a petition for a writ of prohibition and a motion for an emergency stay in this Court. Highways argued that the circuit court's September 13, 2018, order "erodes the protection sovereign immunity affords" Highways and forces Highways to expend thousands of dollars defending against MESI's counterclaim. Highways further asserts that the circuit court had "done nothing" to rule on Highways's motion to dismiss the ...


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