# Appendix — Hughes-Bechtol, Inc. v. West Virginia Board of Regents > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_2247%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1984 - **Citation:** 469 U.S. 1018 ## Text 64-413 FILED oP it 84 nh Oe ER L. STEVAS, es CLERK In The Supreme Court of the United States October Term, 1984 HUGHES-BECHTOL, INCORPORATED, Petitioner, vs. ‘ WEST VIRGINIA BOARD OF REGENTS, A Statutory Corporation, Respondent. APPENDIX TO PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT JoHN O. HENRY, CouNSEL OF RECORD AND E. GLENN ROBINSON JONATHAN HOLLINGSWORTH RoBINSON AND McELWEE PorTEeR, WRIGHT, Morris & ARTHUR 600 KB&T Center 2100 First National Bank Building Charleston, West Virginia Dayton, Ohio 45402 Telephone: (304) 344-5800 Telephone: (513) 228-2411 Attorneys for Petitioner APPENDIX WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT TO PETITION FOR A INDEX CONSTITUTIONAL PROVISIONS, TREATIES, STATUTES, ORDINANCES, AND REGULATIONS ro Federal Provisions (i) (ii) United States Constitution (a) (b) (c) Amendment V. .. Amendment XI... Amendment XIV. . United States Code (a) (b) (c) Declaratory Judgment Statute 28 U.S.C. §2201. Federal Question Jurisdiction Statute 26 U.S.C. $1331. Diversity of Citizenship Statute, 28 U.S.C. $1332. NN ii (d) Civil Action For Deprivation of Rights Statute Sa Weems MEPOee « ct (e) United States Arbitration Act 9 U8. Gi. . 9 U.S.C. §2. . 9 U.8.0.. $4... 9 U.6.C. 99. -. 2. West Virginia Provisions (i) West Virginia Constitution MEGGLO Vaux Bae « « 6 6 ew (ii) West Virginia Code lee 2 ee (b) §18-12B-1 et seg (c) §18-11E-1 et seq B. OPINIONS, ORDERS, FINDINGS OF FACT AND CONCLUSIONS OF LAW District Court Decision and Entry (December 4, 1981) ...... District Court Decision and Entry (February 17, 19862)...... Sixth Circuit Decision Affirming District Court Judgment (June 18, 1984) ...... C. OTHER OPINIONS, ORDERS, FINDINGS OF FACT AND CONCLUSIONS OF LAW RENDERED BY COURTS OR ADMINIS- TRATIVE AGENCIES Arbitrator's Decision on Arbitrability of Case eR ee ee ee ee ee ee Arbitration Award (First) eats c6 & «¢ & @ se 6 © 6 a 162 168 18¢€ 189 Arbitration Award (Second) February 22, 1983 West Virginia Court of Claims Opinion (July 26, 1982). West Virginia Senate Finance Committee Report (January 31, 1983) JUDGMENT OR DECREE SOUGHT TO BE REVIEWED District Court Judgment Entry (December 4, Sixth Circuit Judgment Entry (June 18, OTHER APPENDED MATERIAL Construction Contract (March 14, Official Statement (August l, 194 197 205 215 217 219 258 A. CONSTITUTIONAL PROVISIONS, TREATIES, STATUTES, ORDINANCES -AND REGULATIONS 1 UNITED STATES CONSTITUTIONAL PROVISIONS, TREATIES, STATUTES, ORDINANCES AND REGULATIONS CONSTITUTION OF THE UNITED STATES AMENDMENT V. No person shall be held to answer for a Capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. 2 AMENDMENT XI. The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one on the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State. AMENDMENT XIV. SECTION lL. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; or shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. SECTION 2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, so amy 3 excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportio.: which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State. SECTION 3. No person shall be a Senator or Represertative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a 4 member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability. SECTION 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void. PE EE AEA Dit 5 SECTION 5. The Congress shall have power to enforce, by appropriate legislation, the provisions cf this article. UNITED STATES CODE DECLARATORY JUDGMENT STATUTE, 28 U.S.C. §2201 §2201. Creation of remedy In a case of actual controversy within its jurisdiction, except with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1954 or a proceeding under section 505 or 1146 of Title 1l, any court of the United States, | upon the filing of an appropriace pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration Shall have the force and effect of a final judgment or decree and shall be reviewable as such. 6 (As amended Oct. 4, 13976, Pub.L. 94-455, Title XIII, §1306(b) (8), 90 Stat. 1719; Nov. 6, 1978 Pub.L. 95-598, Title II, §249, 92 Stat. 2672.) UNITED STATES CODE FEDERAL QUESTION JURISDICTION STATUTE, 28 U.S.C. §1331 §1331. Federal question The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. (As amended Oct. 21, 1976, Pub.L. 94-574, §2, 90 Stat. 2721; Dec. 1, 1980, Pub.L. 96-486, § 2(a) 94 Stat. 2369). UNITED STATES CODE DIVERSITY OF CITIZENSHIP STATUTE, 28 U.S.C. §1332 §1332. Diversity of citizenship; amount in controversy, costs (a) The district courts shall have Original jurisdiction of all civil actions where the matter in controversy exceeds the ASE oN ene * 5 sum or value of $10,000, exclusive of interest and costs, and is between- (1) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state; (3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and (4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States. (b) Except when express provision therefor is otherwise made in a statute of the United States, where the plaintiff who files the case originally in the Federal courts is finally adjudged to be entitled to recover less than the sum or value of $10,000, computed without regard to any setoff or counterclaim to which the defendant may be adjudged to be entitled, and exclusive of interest and costs, the district court may 8 deny costs to the plaintiff and, in addition, may impose costs on the plaintiff. “(c) For the purposes of this section and section 1441 of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal piace of business: Provided further, That in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insurer is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business. (d) The word "States", as used in this section, includes the Territories, the District of Columbia, and the Commonwealth of Puerto Rico. 4 ae bec. Le lin laa alti ise att ee ee 9 CIVIL ACTION FOR DEPRIVATION OF _- RIGHTS STATUTE, 42 U.S.C. §1983 §1983. Civil action for deprivation of rights Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding ' for redress. For the purposes of this section, any Act of Congress applicable exclusively to the District of Columbia shall be considered to be a statute of the District of Columbia. R.S. §1979; Pub.L. 96-170, §1, Dec. 29, 1979, 93 Stat. 1284. 10 UNITED STATES ARBITRATION ACT, 9 U.S.C. §§l, 2, 4&9 §l. "Maritime transactions" and "commerce" defined; exceptions to operation of title “Maritime transactions", as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or any other matters in foreign commerce which, if the subject of controversy, would be embraced within admiralty jurisdiction; “commerce”, as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign " as ae eT Antenne na abi tal at MEA Ne tail AME A AE Mit ge ‘ re ONS ee ee 11 or interstate commerce. July 30, 1947, c. 392, 61 Stat. 670. §2. Validity, irrevocability, and enforcement of agreements to arbitrate A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. July 30, 1947, c. 392, 61 Stat. 670. §4. Failure to arbitrate under agreement; petition to United States court having jurisdiction for order to compel arbitration; 12 notice and service thereof; hearing and determination A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a Suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days' notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of 13 the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order Girecting such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specifically call a jury for that purpose. If the jury find that no agreement in writing for arbitration was made or that there is no 14 default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof. July 30, 1947, c. 392, 61 Stat. 671; Sept. 3, 1954, c. 1263, §19, 68 Stat. 1233. §9. Award of arbitrators; confirmation; jurisdiction; procedure If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, 15 modified, or corrected as prescribed in sections 10 and 1l of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court. July 30, 1947, c. 392, 61 Stat. 672. 16 WEST VIRGINIA CONSTITUTIONAL PROVISIONS, TREATIES, ORDINANCES AND REGULATIONS CONSTITUTION OF WEST VIRGINIA Art. VI, § 35 State Not to Be Made Defendant in Any Court § 35. The State of West Virginia shall never be made 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. WEST VIRGINIA CODE § 18-26-3 § 18-26-3. West Virginia board of regents created. There is hereby created a state agency to be known as the West Virginia board of regents, which shall be a corporation and as such may contract and be contracted with, plead and be impleaded, sue and be sued, and have and use a common seal. (1969, c. 130.) 17 WEST VIRGINIA CODE § i8-12B § 18-12B-1. Board of regents authorized to issue revenue bonds for certain Capital improvements; payment of relocation costs. The West Virginia board of regents shall have authority, as provided in this article, to issue revenue bonds of the State from time to time, either to finance the cost of major renovations, repairs and safety upgrading and providing new capital improvements consisting of facilities, buildings and structures, for those state institutions of higher education as determined by resolution of the board of regents, including any college, university or community college under its supervision, management and control, or to refund, at the discretion of the board of regents, bonds issued and outstanding under and pursuant to the provisions of this article or article eleven-B [§ 18-11B-1 et seq.] of this chapter, Or both. Such major renovations, repairs and safety upgrading and capital improvements may, 18 in each case, include land for current or future use in connection therewith and equipment and machinery and other similar items essential or convenient in connection with the foregoing but shall not include such items as books, fuel, supplies or other items which are cus_omarily deemed to result in a current operating charge. The princival of, interest and redemption premium, if anv, on such bonds shall be payable solely from the special fund herein provided for such payment. The costs of any such major renovations, repairs and safety upgrading and capital improvements shall include the cost of acquisition of land, the construction and acquisition of any such major renovations, repairs and safety upgrading and capital improvements and equipment and machinery therefor, and the provision of roads. utilities, and other services necessary, appurtenant or incidental to the foregoing; and shall also include all other charges or expenses necessary, appurtenant or incidental 19 to the construction, acquisition, and financing including, but not limited to, debt service reserve requirements and capitalized interest, and placing in operation of any such major renovations, repairs and safety upgrading and capital improvements: Provided, that from time to time but not later than the first day of March, one thousand nine hundred seventy-eight, the board shall issue and sell bonds pursuant to this article in an amount which, when combined with cash available under the provisions of section two [§ 18-12B-2] of this article, will be sufficient to finance the costs of the following purposes and projects: (1) Refunding of all bonds issued and outstanding under and pursuant to the provisions of article eleven-B [§ 18-11B-1 et seq.] of this chapter; (2) A building to house the music, arts and theatre programs at Shepherd College, at a cost not to exceed two million five hundred thousand dollars; 20 (3) A field house at West Liberty State College at a cost not to exceed two million seven hundred thousand dollars; (4) A shop and laboratory building at West Virginia State College at a cost not to exceed two million six hundred thousand dollars; (5) A multipurpose physical education facility at Marshall University, at a cost not to exceed eighteen million dollars; (6) A new football stadium at West Virginia University (at a different location than the existing stadium) at a cost not to exceed twenty million dollars; and (7) An all-purpose shell building for sports and physical education at West Virginia University, at a cost not to exceed four million five hundred thousand dollars. In the event that private real property is acquired in connection with the above enumerated projects, the board shall reimburse individuals, families and business concerns for relocation costs incurred as a consequence 21 of being displaced by such acquisition. With respect to payment of such relocation costs, the board shall follow the sare procedure and be subject to the same limitations as required for the commissioner of highways under section twenty [§ 17-2A-20] article two-A, chapter seventeen of this Code and _ regulations promulgated pursuant thereto, but in no event shall such payments exceed the sum of three hundred dollars for individuals and families and two thousand five hundred dollars for business concerns. (1977, c. 90.) § 18-12B-2. State system tuition fee special Capital improvements fund in state treasury; collections to be paid intc special fund; authority of board of regents to pledge such collections as security for revenue bonds; authority of board to finance projects on a cash basis. There is created in the state treasury a State system tuition fee special capital improvements fund to be expended by the board of regents for the benefit of the. state institutions of higher education, whch shall include any college, university or community 22 college under its supervision, management and control. On and after the first day of July, one thousand nine hundred seventy-seven, the board of regents may periodically transfer from the special nonrevolving West Virginia University Capital improvements fund created in the state treasury pursuant to the provisions of article eleven-B [§ 18-11B-1 et seq.] of this chapter, and from the special non revolving Marshall University capital improvements fund created in the state treasury pursuant to the provisions of article twelve-A [§18-12A-1 et seq.] of this Chapter, into the state system tuition fee special capital improvements fund moneys in excess of the amount pledged for the payment of the principal of, interest and redemption premium, if any, on any revenue bonds or revenue refunding bonds issued pursuant to such article eleven-B or twelve-A [§ 18-11B-1 et seq. or § 18-12A-1 et seq.] prior to the first day of July, one thousand nine hundred seventy-seven. Said Marshall hia SIRS le 23 University capital improvements fund is hereby continued notwithstanding the retirement of outstanding bonds issued pursuant to_ such article twelve-A [§ 18-12A-1 et seq.], but on and after the first day cof July, one thousand nine hundred seventy-seven, no bonds shall be issued pursuant to article twelve-A [§ 18-12A-1 et seq.], nor shall any moneys be expended (unless the board of regents shall by board action have made a commitment with respect thereto) pursuant to such article twelve-A [§ 18-12A-1 et seq.]. On and after the first day of July, one thousand nine hundred seventy-seven there shall be paid directly into such state system tuition fee special capital improvements fund subject to the prior lien and pledge, if any, of outstanding bonds issued pursuant to the provisions of articles eleven-B and twelve-A [§§ 18-11B-1 et seq. and 18-12A-1 et seq.] of this chapter all tuition fees collected under the provisions of section one [§ 18-24-1], article twenty-four, chapter eighteen of this 24 tuition fee special capital improvements fund as may be needed to meet the requirements of any revenue bond issue or issues authorized by this article, including the payment of principal of, interest and redemption premium if any, on such revenue bonds, the establishing and maintaining of a reserve fund or funds for the payment of the principal of, interest and redemption premium, if any, on such revenue bond issue or issues when other moneys pledged may be insufficient therefor and including such additional protective pledge of revenues and fees as the board of regents in its discretion may provide by resolution authorizing the issue of such bonds and in any trust agreement made in connection therewith, and the board of regents may further provide in such resolution and in such trust agreement, for such priorities on the revenues and fees paid into such state system tuition fee special capital improvements fund as may be necessary for the protection of the prior rights of the holders of bonds issued at 25 different times under the provisions of this article. Any balance remaining in the state system tuition fee special capital improvements fund after the board of regents has issued bonds authorized by this article, and after the requirements of all funds including reserve funds established in connection with the bonds issued pursuant to this article have been satisfied, may be ont (i) for the redemption of any of the outstanding bonds’ issued hereunder which by their terms are _ then redeemable, or for the purchase of such bonds at the market price, but at not exceeding the price, if any, at which such bonds shall in the same year be redeemable, and all bonds redeemed or purchased shall forthwith be canceled and shall not again be issued or (ii) for any lawful purpose for which the board of regents may expend funds. The board of regents, in its discretion, may use the moneys in such state system tuition fee special capital improvements fund 26 to finance the cost of projects and purposes on a cash basis. Any pledge of moneys in such fund for revenue bonds shall be a prior and superior charge on such fund over the use of any of the moneys in such fund to pay for the cost of any project or purpose on a cash basis: Provided, that except for the projects and purposes expressly enumerated in section one [§ 18-12B-1] of this article, any expenditures from such fund, other than for the retirement of revenue bonds, may only be made by the board to meet the cost of a predetermined capital improvements program for one or more of the state institutions of higher education, in such order or priority as shall have been agreed upon by the board of regents and presented to the governor for inclusion in the annual budget bill, and only with the approval of the legislature as indicated by direct appropriation for the purpose. (1977, c. 90.) 27 § 18-12B-3. Board of regents to fix and collect fees. The board of regents shall fix, establish, maintain and collect the tuition fees provided for in section one [§ 18-24-1], article twenty-four, chapter eighteen of this Code, from students at all state institutions of higher education other than (unless the board of regents shall otherwise determine by resolution) tuition fees from students attending community colleges, in amounts at least sufficient, at all times, after depositing (subject to, or until termination of, the lien and pledge referred to in section two [§ 18-12B-2] of this article) in the special nonrevolving Marshall University Capital improvements fund, and the _ special nonrevolving West Virginia University capital improvements fund referred to in section two [§ 18-12B-2] of this article such tuition fees as are now required to be deposited therein pursuant to section one [§ 18-24-1], article twenty-four, chapter eighteen of this Code, to 28 provide revenues for deposit in the _ state system tuition fee special capital improvements fund which are adequate to pay the principal of, interest and redemption premium, if any, on the bonds authorized to be issued pursuant to this article as the same mature and become due and to make all reserve and other payments to be required by the proceedings which authorize such bonds, and to provide any additional protective pledge of revenues and fees and reserve or other payments as the board of regents may in its discretion require by the resolution authorizing any issue of bonds pursuant to this article and any trust agreement made in connection therewith, and to make all other payments required by this article or any such proceedings, resolutions or trust agreements. (1977, c. 90.) § 18-12B-4. Issuance of revenue bonds; use of proceeds; bonds exempt from taxation. The issuance of revenue bonds under the provisions of this article shall be authorized 29 from time to time by resolution or resolutions of the board of regents, which shall set forth the proposed major renovations, repairs and safety upgrading and capital improvements authorized by section one [§ 18-12B-1] of this article; and shall provide for the issuance of bonds in amounts sufficient, when sold as hereinafter provided, to provide moneys deemed by the board of regents sufficient to pay such costs, less the amounts of any other funds available for said costs from any other moneys of the board of regents available therefor or from any appropriation, grant or gift therefor. Such resolution shall prescribe the rights and duties of the bondholders and the board of regents, and for such purpose may prescribe the form of the trust agreement hereinafter referred to. The bonds may be issued from time to time, in such amounts, shall be of such series, bear such date or dates, mature at such time or times not exceeding forty years from their respective dates, bear interest at such rate or rates; be 30 in such denominations; be in such form, either coupon or registered, carrying such registration, exchangeability and interchangeability privileges be payable in such medium of payment and at such place or places within or without the State; be subject to such terms of redemption at such prices not exceeding one hundred five percent of the principal amount thereof; and be entitled to such priorities on the revenues and fees paid into the state system tuition fee special Capital improvements fund as may be provided in the resolution authorizing the issuance of the bonds or in any trust agreement made in connection therewith. The bonds’ shall be signed by the governor, and by the president or vice president of the board of regents, under the great seal of the State, attested by the secretary of State, and the coupons attached thereto shall bear the facsimile Signature of the president or vice president of the board of regents. In case any of the officers whose signatures appear on the bonds 31 or coupons cease to be such officers before the delivery of such bonds, such signatures shall nevertheless be valid and sufficient for all purposes the same as if such officers had remained in office until such delivery. Such revenue bonds shall be sold in such manner as the board of regents may determine to be for the best interests of the State. Any pledge of funds and fees for such revenue bonds made by the board of regents shall be valid and binding between the parties from the time the pledge is made; and the funds so pledged shall immediately be subject to the lien of such pledge without any further physical delivery thereof or further act. The lien of such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise, irrespective of whether such parties have notice of the lien of such pledge, and such pledge shall be a prior and superior charge over any other use of such funds so pledged. 32 The proceeds of- such bonds shall be used solely for the payment of the cost of those major renovations, repairs and safety upgrading and capital improvements as generally and specifically set forth in section one [§ 18=-]12B-1] of this article, and shall be deposited in the state treasury in a special fund to be disbursed as provided by law for the disbursement of any other state funds. If the proceeds of such bonds, by error in calculations or otherwise, shall be less than the cost of such major renovations, repairs and safety upgrading and capital improvements, additional bonds may in like manner be issued to provide the amount of the deficiency; and unless otherwise provided for in the resolution or trust agreement hereinafter mentioned, such additional bonds shall be deemed to be of the same issue, and shall be entitled to payment from the same fund, without preference or priority, as the bonds before issued for major renovations, repairs and safety upgrading and capital 33 improvements. If the proceeds of bonds issued for such major renovations, repairs and safety upgrading and capital improvements_ shall exceed the cost thereof, the surplus may be used for such other capital improvements as the board of regents may determine or in such other manner as the resolution authorizing such bonds may provide. Prior to the preparation of definitive bonds, the board may, under like restrictions, issue temporary bonds with or without coupons, exchangeable for definitive bonds upon the issuance of such definitive bonds. The term "cost," as used in this section, shall be deemed to include all of the items contemplated by the use of that term in section one [§ 18=-12B-1] of this article. After the issuance of any of such revenue bonds, the tuition fees at the_- state institutions of higher education pledged therefor shall not be reduced as long as any of such revenue bonds are outstanding and unpaid except under such terms, provisions and 34 conditions as shall be contained in the resolution, trust agreement or other proceedings under which such revenue bonds were issued. Such revenue bonds and the revenue refunding bonds, and bonds issued for combined purposes shall, together with the interest thereon, be exempt from all taxation by the State of West Virginia, or by any county, school district, municipality or political subdivision thereof. (1977, c. 90.) § 18-125-5. Issuance of revenue refunding bonds; use of moneys; power to enter into escrow agreements; call for redemption. The issuance of revenue refunding bonds under the provisions of this article shall be authorized by resolution of the board of regents and shall otherwise be subject to the limitations, conditions and provisions of section four [§ 18-12B-4]) of this article. Such revenue refunding bonds may be issued in an amount at the option of the board of regents sufficient to pay either in full or 33 together with interest earned on the investment of the proceeds thereof, whether or not at the time of the issuance of the revenue refunding bonds the hereafter mentioned bonds are payable or callable for optional redemption, (1) the principal of any outstanding bonds heretofore issued pursuant to the provisions of article eleven-B [§ 18-11B-1 et seq.] of this chapter or this article (hereinafter referred to as_ the "outstanding bonds"); (2) the redemption premium, if any, on such outstanding bonds or the prior redemption thereof; (3) the interest due and payable on such outstanding bonds to and including the first day upon which said outstanding bonds are callable prior to maturity, not exceeding, however, ten years from the date of issuance of such revenue refunding bonds, or the dates upon which the principal of said outstanding bonds mature before such first date on which the same are callable prior to maturity, including any interest theretofore accrued and unpaid; and 36 (4) all expenses of the issuance and sale of said revenue refunding bonds, including all necessary financial and legal expenses, and also including the creation of initial debt service reserve funds. Any moneys in funds pledged with respect to the outstanding bonds may be used for any or all of the purposes stated in (1), (2), (3) and (4) above or may be deposited in a sinking fund or reserve fund or other funds for the issuance of bonds which have been issued wholly or in part for the purpose of such refunding. Such amount of the proceeds of the revenue refunding bonds as shall be sufficient for the payment of the principal of, interest and redemption premium, if any, on’ such outstanding bonds which will not be immediately due and payable shall be deposited in trust, for the sole purpose of making such payments, with the treasurer of the State of West Virginia or the _ state Sinking fund commission. Any of the moneys so deposited in trust may, prior to the date on which such moneys will be needed for the 37 payment of principal of, interest and redemption premium, if any; on such outstanding bonds, be invested and reinvested as determined by the board of regents, in whole or in part: (a) in direct obligations issued by the United States of America or one of its agencies or in direct obligations of the State of West Virginia, (b) in obligations unconditionally guaranteed by the United States of America as to principal and interest, or (c) in certificates of deposit of a banking corporation or association which is a member of the federal deposit insurance corporation, or successor; but any such certificates of deposit must be fully secured as to both principal and interest by pledged collateral consisting of direct obligations of or obligations guaranteed by the United States of America, or direct obligations of the State of West Virginia, having a market value, excluding accrued interest, at all times at least equal to the amount of the principal of and accrued interest on such certificates of 38 deposit. Any such investments must mature, or be payable in advance of maturity at the option of the holder, and must bear interest in such manner as to provide funds which, together with uninvested money, will be sufficient to pay when due or called for redemption the bonds refunded, together with interest accrued and to accrue thereon and redemption premiums, if any, and such refunding bonds proceeds or obligations so purchased therewith shall be deposited in escrow and held in trust for the payment and redemption of the bonds refunded: Provided, that if interest earned by any investment in such escrow is shown to be in excess of the amounts required from time to time for the payment of interest on and principal of the refunded bonds, including applicable redemption premium, then such excess may be withdrawn from escrow and disbursed in such Manner as the board of regents’ shall by resolution determine, subject to the provisions of section two [§ 18-12B-2] of this 39 article. Any moneys in the sinking or reserve funds or other funds maintained for. the outstanding bonds to be refunded may be applied in the same manner and for the same purpose as are the net proceeds of refunding bonds or may be deposited in the special fund or any reserve funds established for account of the refunding bonds. The authority to issue revenue refunding bonds shall be in addition to any other authority to refund bonds conferred hy law. The board of regents shall have power to enter into such escrow agreements and to insert therein such protective and other covenants and provisions as it may consider necessary to permit the carrying out of the provisions of this article and to insure the prompt payment of principal of anc interest and redemption premiums on the revenue bonds refunded. Where any revenue bonds to be refunded are not to be surrendered for exchange or payment and are not to be paid at maturity 40 with escrowed obligations, but are to be paid from such source prior to maturity pursuant to call for redemption exercised under a right of redemption reserved in such revenue bonds, the board of regents shall, prior to the issuance of the refunding bonds, determine which redemption date or dates shall be used, call such revenue bonds for redemption and provide for the giving of the notice of redemption required by the proceedings authorizing such revenue bonds. Where such notice is to be given at a time subsequent to the issuance of the refunding bonds, the necessary notices may be deposited with the state sinking fund commission or the bank acting as escrow agent of the refunding bond proceeds and the escrow agent appropriately instructed and authorized to give the required notices at the prescribed time or times. If any officer of the public body signing any such notice shall no longer be in office at the time of the utilization of the notice, the notice shall nevertheless be 41 valid and effective for its intended purpose. (1977, C. 90.) § 18-12B-6. Bonds may be issued for combined purposes. The board of regents may authorize by one or more resolutions a single issue or bonds for the combined purposes of refunding the outstanding bonds as herein authorized and financing one or more of the major renovations, repairs and safety upgrading and capital improvements herein authorized. (1977, c. 90.) § 18-12B-7. Bonds shall be negotiable instruments. The revenue bonds, revenue’ refunding bonds and bonds issued for combined purposes under the provisions of this article shall, independently of the requirements of any other provision of law and solely by virtue of the provisions of this section, be and have all the qualities and incident of negotiable instruments. 2977, Cs. 96.) 42 § 18-12B-8. Trust agreements for holders of bonds. The board of regents may enter into an agreement or agreements with any trust company, or with any bank having the powers of a trust company, either within or outside the State, to act as trustee for the holders of bonds issued hereunder, setting forth therein such duties and containing such legally binding covenants of the board of regents with the holders of the bonds in respect to the payment of the bonds, the fixing, establishing and collecting of the fees hereinbefore referred to; the acquisition, construction, improvement, maintenance, operation, repair and insurance of authorized major renovations, repairs and safety upgrading and capital improvements; the custody, safeguarding and disposition of the proceeds of the bonds, and the moneys in such special funds, sinking funds, reserve funds, or any other moneys or funds, notwithstanding provisions of this article to the contrary; the security for 43 moneys on hand or on deposit, and the rights and remedies of the trustee and the holders of the bonds, as may be agreed upon with the purchasers of such bonds; provisions restricting the individual right of action of bondholders as is customary in trust agreements respecting bonds and debentures of municipal corporations, protecting and enforcing the rights and remedies of the trustee and the bondholders; and the provisions as to any other matters which are deemed necessary and advisable by the board of regents in the best interests of the State and to enhance the marketability of the bonds. Any such agreement entered into by the board of regents shall be binding in all respects on such board and its successors from time to time in accordance with the terms thereof; and all the provisions thereof shall be enforceable by appropriate proceedings at law or in equity, or otherwise. (1977, c. 90.) 4s § 18.12B-9. Sinking fund for payment of bonds. From the state system tuition fee special capital improvements fund the board of regents shall make periodic payments to the _ state sinking fund commission in an amount sufficient to meet the requirements of any issue of bonds sold under the provisions of this article, as may be specified in the resolution of the board authorizing the issue thereof and in any trust agreement entered into in connection therewith. The payments so made shall be placed by the commission in a special sinking fund which is hereby pledged to and charged with the payment of the principal of the bonds of such issue and the interest thereon, and to the redemption or repurchase of such bonds, such sinking fund tc be a fund for all bonds of such issue without distinction or priority of one over another, except as may be provided in the resolution authorizing such issue of bonds. The moneys in the special sinking fund, less such reserve 45 for payment of principal and interest and redemption premiums, if any, aS may be required by the resolution of the board of regents, authorizing the issue and any trust agreement made in connection therewith, may be used for the redemption of any of the outstanding bonds payable from such fund which by their terms are then redeemable, or for the purchase of bonds at the market price, but at not exceeding the price if any, at which such bonds shall in the same year be redeemable; and all bonds redeemed or purchased shall forthwith be canceled and shall not again be issued. (1977, c. 90.) § 18-12B-10. Credit of State not pledged. No provisions of this article shall be construed to authorize the board of regents at any time or in any manner to pledge the credit or taxing power of the State, nor shall any of the obligations or debts created by the board under the authority herein granted be deemed to be obligations of the State. (1977, c. 90.) 46 § 18-12B-11. Attorney general or his duly appointed legal representative to serve as bond counsel. The attorney general, or his- duly appointed legal representative, shall serve as bond counsel and shall be responsible for the issuance of a final approving opinion regarding the legality of the sale of bonds under this article. (1977, c. 90.) § 18-12B-12. Powers of board are supplemental; conflicting laws superseded. The powers conferred by this article shall be in addition and supplemental to the existing powers of the board of regents. The provisions of any other law or laws conflicting with the provisions of this article shall be and the same are hereby superseded to the extent of any such conflict. (1977, c. 90.) 47 WEST VIRGINIA CODE § 18-11E-1 ET SEQ. § 18-l1lE-1. Definition of board; cost of construction, reconstructing, remodeling, repairing, improving, extending, equipping or furnishing the football stadium or other athletic facilities of Marshall University to be financed by revenue bonds or notes. (a) Notwithstanding the provisions of section one [§ 18-l=-1], article one of this chapter, the word “board,” when used in this article means the West Virginia board of regents. (b) For the purpose of financing the cost of any or all of the = following: Constructing, reconstructing, remodeling, repairing, improving, extending, equipping or furnishing the football stadium or other athletic facilities of Marshall University, the board periodically may issue negotiable bonds or notes of the State in a principal amount, not in excess of fifteen million doliars, which, in the opinion of the board, shall be necessary to finance said cost. Such cost shall include, but not limited to, the 48 following: The cost of such construction, reconstruction, remodeling, repair, improvement, extension, equipment or furnishings; studies and surveys; plans, specifications, architecturas and engineering services; legal, organizational, marketing or other special services; interest and carrying charges prior to, during and for six months after completion of such construction, reconstruction, remodeling, repair, improvements, extension, equipment or furnishing; the costs of issuing the bonds or notes; and a reasonable reserve for payment of the principal of and interest on the bonds or notes. (c) The board periodically may issue renewal notes of the State, may issue revenue bonds of the State to pay notes and, if it considers refunding expedient may refund or refund in advance bonds issued by the board by the issuance of new bonds of the State, pursuant to the requirements of section six [§ 18-11E-6] of this article. 49 (d) Except as may otherwise be expressly provided by the board, every issue of bonds or notes by it shall be special obligations of the State, payable solely from the revenues or other moneys pledged therefor. (e) The bonds and the notes shall be authorized by resolution of the board, shall bear such date and shall mature at such time or times, in the case of any such note or any renewals thereof not exceeding five years from the date of issue of such original note, and in the case of any such bond not exceeding forty years from the date of issue, as such resolution may provide. The bonds and notes shall bear interest at such rate or rates, be in such denominations, be in such form, either coupon or registered, carry such registration privileges, be payable in such medium of payment and at such place or places and be subject to such terms of redemption as the board may authorize. The bonds and notes may be sold by the board in the manner and at or not less than the price the board determines. 50 The bonds and notes shall be executed by the governor and the president of the board, both of whom may use facsimile signatures. The great seal of the State or a facsimile thereof shall be affixed thereto or printed thereon and attested, manually oor by facsimile Signature, by the secretary of state, and any coupons attached thereto shall bear the manual or facsimile signature of the president of the board. ta case any officer whose signature, or a facsimile of whose signature, appears on any bonds, notes or coupons ceases to be such officer before delivery of such bonds or notes, such Signature oor facsimile is nevertheless sufficient for all purposes the same as if he had remained in office until such delivery; and, in case the seal of the State has been changed after a facsimile has been imprinted on such bonds or notes, such facsimile seal will continue to be sufficient for all purposes. (f) A resolution authorizing bonds or notes or an issue of bonds or notes under this 51 article may contain provisions, which shall be a part of the contract with the holders of the bonds or notes, as to any or all of the following: (1) With the written approval of the director of athletics at Marshall University, which approval shall be specific as to such moneys pledged, pledging and creating a lien on all or any portion of the moneys derived from admission fees to athletic contests at Marshall University to secure the payment of the bonds or notes or of any issue of bonds or notes, subject to those agreements with bondholders or noteholders which then exist; (2) Pledging and creating a lien on any loan, grant or contribution to be received from the federal, state or local government or other source; (3) Setting aside of reserves or sinking funds and the regulation and disposition thereof; (4) Limitations on the purpose to which the proceeds of sale of bonds or notes may be 52 applied and pledging the proceeds to secure the payment of the bonds or notes or of any issue of the bonds or notes; (5) Limitations on the issuance of additional bonds or notes and the terms upon which additional bonds or notes may be issued and secured; (6) The procedure by which the terms of a contract with the bondholders or noteholders may be amended or abrogated, the amount of bonds or notes the holders of which must consent thereto and the manner in which the consent may be given; and (7) Vesting in a trustee or trustees the property, rights, powers, remedies and duties which the board considers necessary or convenient. (g) Prior to the preparation of definitive bonds or notes, the board may under like restrictions, issue temporary bonds or notes, with or without coupons, exchangeable for definitive bonds or notes, as the case may 53 be, upon the issuance of the latter. (1984, c. 66.) § 18-ilE-2. Trustee for bondholders or noteholders; contents of trust agreement. In the discretion of the board, any bonds, refunding bonds or notes issued by the board may be secured by a trust agreement between the board and a corporate trustee, which trustee may be any trust company or banking institution having the powers of a trust company within or without the State. Any such trust agreement may contain provisions as set forth in section. one [§ 18-11E-1] of this article with respect to the resolution. All expenses incurred in Carrying out such agreement may be treated as a part oof the cost oof constructing, reconstructing, remodeling, repairing, improving, extending, equipping or furnishing the football stadium or other athletic facility at Marshall University affected by such agreement. (1984, c. 66.) 54 § 18-11E-3. Payment of principal of and premium, if any, and interest on bonds and notes from all or any portion of the moneys derived from admission fees to athletic contests at Marshall University; approval of director of athletics. Whenever bonds or notes are issued for financing the cost of any or all of the following: Constructing, reconstructing, remodeling, repairing, improving, extending, equipping or furnishing the football stadium or other athletic facilities of Marshall University, the board may, with the written approval of the director of the athletics at Marshall University, pledge to the payment of the principal of and premium, if any, and interest on said bonds or notes all or any portion of the moneys derived from adinission fees to athletic contests and deposited into the athletic accounts at Marshall University: Provided, that said approval of the director of athletics must specify all or any said portions of the moneys to be pledged: Provided, however, that no fees paid by 55 students other than the regular student activity fee may be so pledged. (1984, c. 66.) § 18-11E-4. Enforcement of payment and validity of bonds and notes. (a) The provisions of this article and any resolution or trust agreement’ shall continue in effect until the principal of and interest on the bonds or notes of the State issued by the board have been fully paid, and the duties of the board under this article and any resolution or trust agreement shall be enforceable by any bondholder or noteholder by mandamus or other appropriate action in any court of competent jurisdiction. (b) The resolution authorizing the bonds or notes shall provide that such bonds or notes shall contain a recital that they are issued pursuant to this article, which recitai shall be conclusive evidence of their validity and or the regularity of their issuance. (1984, c. 66.) 56 § 18-11E-5. Pledges; time; liens; recordation. Any pledge made by the board shall be valid and binding from the time the pledge is made: Provided, that the pledge by the board of all or any portion of the moneys derived from admission fees to athletic contests and deposited into the athletic accounts at Marshall University shall be subject to the written approval of the director of athletics at Marshall University. The moneys so pledged and thereafter received by the board shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the board irrespective of whether such parties have notice thereof. (1984, c. 66.) § 18-11E-6. Refunding bonds. Any bonds issued under the provisions of this article and at any time outstanding may 57 at any time and from time to time be refunded by the board by the issuance of refunding bonds of the State in such amount as it may deem necessary to refund the principal of the bonds so to be refunded, together with any unpaid interest thereon; to provide additional funds for the purposes authorized by this article; and tO pay any = premiums and commissions necessary to be paid in connection therewith. Any such refunding may be effected whether the bonds to be refunded shall have then matured or shall thereafter mature, either by sale of the refunding bonds and the application of the proceeds thereof for the redemption of the bonds to be refunded thereby, or, together with the interest on such proceeds, for the payment of the bonds to be refunded thereby and the interest thereon as the same come due, or by exchange of the refunding bonds for the bonds to be refunded thereby: Provided, that the holders of any bonds to be refunded shall not be compelled without their consent to surrender their bonds 58 for payment or exchange prior to the date on which they are payable or, if they are called for redemption, prior to the date on which they are by their terms subject to redemption. Any refunding bonds issued under the authority of this section shall - payable from the revenues out of which the bonds to be refunded thereby were payable, from other moneys or from the principal of and interest on or other investment yield from investments or proceeds of bonds or other applicable funds and moneys, including investments of proceeds of any refunding bonds, and shall be subject to the provisions contained in and shall be secured in accordance with this article. (1984, c. 66.) § 18-11E-7. Purchase and cancellation of bonds or notes. The board, subject to such agreements with bondholders or noteholders as may then exist, shall have the power, out of any funds available therefor, to purchase bonds, including refunding bonds or notes of the 59 State issued by the board. If the bonds or notes are then redeemable, the price of such purchase shall not exceed the redemption price then applicable plus accrued interest to the next interest payment date thereon. If the bonds or notes are not then redeemable, the price of such purchase shall not exceed the redemption price applicable on the first date after such purchase upon which the bonds or notes become subject to redemption plus accrued © interest to such date.. Upon such purchase, such bonds or notes’ shall _ be canceled. (1984, c. 66.) § 18-11E-8. Federal and private assistance. The board is authorized and empowered to accept loans or grants or temporary advances for the purposes of paying part or all of the cost of constructing, reconstructing, remodeling, repairing, improving, extending, equipping or furnishing the football stadium or other athletic facilities of Marshall University and the other purposes herein authorized from the United States of America 60 or such federal or public agency or department of the United States or any private agency, corporation or individual, which loans or temporary advances may be repaid out of the proceeds of the bonds authorized to be issued under the provisions of this article, and to enter into the necessary contracts and agreements to carry out the purposes hereof with the United States of America or such federal or public agency or department of the United States or with any private agency, corporation or individual. (1984, c. 66.) § 18-11E-9. Vested rights; impairment. The State pledges and agrees with the holders of any bonds or notes issued under this article that the State will not limit or alter the rights vested in the board to fulfill the terms of any agreements made with the holders thereof, or in any way impair the rights and remedies of the holders, until the bonds or notes, together with the interest thereon, and all costs and expenses. in connection with any action or proceeding by or 61 on behalf of such holders, are fully met and discharged. The board is authorized to include its pledge and agreement of the State in any agreement with the holders of such bonds or notes. (1984, c. 66.) § 18-11E-10. Bonds and notes not debt of State, county, municipality or any political subdivision; expenses incurred pursuant to article. Bonds, refunding bonds and notes issued under the authority of this article and any coupons in connection therewith shall not constitute a debt or a pledge of the faith and credit or taxing power of the State or of any county, municipality or any other political subdivision of the State, and the holders and owners thereof shall have no right to have taxes levied by the legislature or the taxing authority of any county, municipality or any other political subdivision of the State for the payment of the principal thereof or interest thereon, but such bonds and notes shall be payable solely from the revenues and funds pledged for their payment as authorized 62 by this article: Provided, that notes issued in anticipation of the issuance of bonds or bonds being refunded may be paid from the proceeds of bonds which are payable solely from revenues and funds pledged for their payment as authorized by this article. All such bonds and notes shall contain on the fact thereof a statement to the effect that the bonds or notes, as to both principal and interest, are not debts of the State or any county, municipality or political subdivision thereof, but are payable solely from revenues and funds pledged for their payment. All expenses incurred in carrying out the provisions of this article shall be payable solely from funds provided under the authority of this article. This articles does not authorize the board to incur indebtedness or liability on behalf of or payable by the State or any county, municipality or any other political subdivision. (1984, c. 66.) 63 § 18-11E-11. Negotiability of bonds and notes. Other provisions of this Code to the contrary notwithstanding, the bonds or notes authorized to be issued by this article are negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of the bonds or notes for registration. (1984, c. 66.) § 18-11E-12. Bonds and notes legal investments. The provisions of sections nine and ten ([§$§ 12-6-9 and 12-6-10], article six, chapter twelve of this Code to the contrary notwithstanding, the bonds and notes of the State issued by the board are securities in which all public officers and bodies of the State, including the West Virginia state board of investments, all municipalities and other political subdivisions of the State, all insurance companies and associations and other persons carrying on an insurance business, including domestic for life and domestic not 64 for life insurance companies, all banks, trust companies, societies for savings, building and loan associations, savings and loan associations, deposit guarantee associations and investment companies, all administrators, guardians, executors, trustees and other fiduciaries and all other persons whatsoever who are authorized to invest in bonds or other obligations of the state may properly and legally invest funds, including capital, in their control or belonging to them. (1984, c. 66.) § 18-11E-13. Exemption from taxation. The exercise of the powers granted to the board by this article will be in all respects for the benefit of the students and the faculty and other employees at Marshall University and the other people of the State, for the improvement of their safety, convenience and welfare, and is a public purpose. As the operation and maintenance of the football stadium oor other athletic facilities at Marshall University constitutes 65 the performance of essential governmental functions, the board shall not be required to pay any taxes or assessments upon any property acquired or used by the board or upon the income therefrom. Any bonds and notes of the State issued by the board, and all interest and income thereon, shall be exempt from all taxation by the State and any county, municipality, political subdivision or agency thereof, except inheritance taxes. (1984, c. 66.) § 18-11E-14. Article regarded as supplementary. This article shall be deemed to provide an additional and alternative method for the doing of the things authorized hereby and shall be regarded as supplementary and additional to powers conferred by other laws. (1984, c. 66.) § 18-11E-15. Liberal construction. This article, being necessary for the safety, convenience and welfare of the 66 students and the faculty and other employees at Marshall University and the other people of the State, shall be liberally construed to effectuate the purposes hereof. (1984, c. 66.) B. OPINIONS, ORDERS, FINDINGS OF FACT AND CONCLUSIONS OF LAW 67 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION HUGHES-BECHTOL, INC. * CASE No. C-3-81-038 Plaintiff * (Filed December 4, 1981) vs. * WEST VIRGINIA BOARD * OF REGENTS Defendant * DECISION AND ENTRY OVERRULING PLAINTIFF'S REQUEST FOR A PRELIMINARY INJUNCTION; FINDINGS OF FACT AND CONCLUSIONS OF LAW; DECISION AND ENTRY SUSTAINING DEFENDANT'S MOTION TO DISMISS; JUDGMENT TO DEFENDANT; ENTRY OF JUDGMENT; PLAINTIFF'S MOTION TO COMPEL DISCOVERY AND SEEKING STATEMENT OF COURT'S DISINCLINATION TO SUSTAIN DEFENDANT'S MOTION TO DISMISS DEEMED MOOT; TERMINATION ENTRY I. Introduction On February 9, 1981, Hughes-Bechtol, Inc., filed the within action against the West Virginia Board of Regents (hereinafter Board), requesting that the Court both declare the arbitration clause in a contract between the Plaintiff and Defendant to be binding on the parties, and that it award damages in the 68 amount established by the arbitrator. The facts before this Court indicate that on April 5, 1979, Hughes-Bechtol and the Board entered into a standard American Institute of Architects (AIA) agreement, which provided that Hughes-Bechtol would perform mechanical work on the Multi-Purpose Physical Education Facility (gymnasium) to be constructed at Marshall University in Huntington, West Virginia. The contract between the parties also provided for arbitration in the event of contractual disputes. Problems arose during construction, and Hughes-Bechtol requested arbitration. The Board refused to partici- pate in arbitration proceedings, claiming that the arbitration clause was of no effect, since the Board had no authority to obligate the State of West Virginia for amounts beyond those which had been appropriated by the state legislature. Moreover, since the Board was immune from suit under principles of sovereign immunity, the Board contended that 69 Hughes-Bechtol's only, and proper remedy lay in the West Virginia Court of Claims, where suits against the state were allowed to be brought. Hughes-Bechtol proceeded through arbitration anyway, and just prior to the granting of the arbitration award, filed the present action. The Board then filed a Motion to Dismiss, requesting that the suit be dis- missed, inter alia, for the aforementioned reasons. However, before the Court issued a ruling on Defendant's Motion to Dismiss, Hughes-Bechtol filed a Motion for a Preliminary Injunction on August 4, 1981, requesting that the Court enjoin the Board from interfering with its (Hughes-Bechtol's) contractual rights, and from its performing the work left unfin- ished under the contract entered into by the parties. Appropriate Opposing and Reply Memoranda were filed by the parties, and on August 11, 1981, Plaintiff's Motion for a Preliminary Injunction came on for hearing before the Court, at which time the Court 70 received testimony on behalf of the Plaintiff, from Philip Thompson, the Regional Director of the Cincinnati Office of the American Arbitra- tion Association, and from D. R. Hughes, Jr., the President of Hughes-Bechtol, Inc. Plain- tiff also offered nine exhibits, which were admitted into evidence. Defendant offered testimony from Karl Egnatoff, the Vice-Presi- dent of Administration for Marshall University, and from Kenneth E. Grose, the Vice-Chancellor for Administrative Affairs for the West Virginia Board of Regents. Defendant addi- tionally has filed with the Court, in conjunc- tion with its Motion to Dismiss, the Affidavit of Dr. Robert Ramsey, Jr., the Chancellor and Chief Administrative Officer for the West Virginia Board of Regents, to which is attached the purchase order issued to Hughes-Bechtol by the Commissioner of Finance and Administration for the West Virginia Board of Regents. After consideration of the above materials, the Court indicated to the parties on August 71 13, 1981, that it would overrule the Plaintiff's Motion for a Preliminary Injunction, and would thereafter file a decision more fully out- lining its reasoning. The Court also stated that a decision would be forthcoming at the same time with regard to the Motion to Dismiss previously filed by the Defendant. After an analysis of the facts and legal authority pertinent to the matters under consideration, the Court has concluded that: (1) Under the balancing test followed by the Sixth Circuit in Roth v. Bank of the Commonwealth, 583 F.2d 527 (6th Cir. 1978), cert. dism'd., 442 U.S. 925 (1979) (Roth), for ruling upon a motion for preliminary injunction, the Plaintiff has not demonstrated either a likelihood of success on the merits, or that it will suffer irreparable harm; (2) Defendant's Motion to Dismiss should be granted, since the Court does not have jurisdiction over the subject matter involved in this action. Because Fed. R. Civ. P. 52(a) requires specific findings of fact and 72 conclusions of law by the Court upon refusal of interlocutory injunctions, the Court will first set forth its determinations with respect to the injunction request, and will then follow with an analysis of the other Matters brought forth in the Defendant's mo- tion to dismiss. II. Preliminary Injunction A. Findings of Fact Based on the testimony adduced at the hearing held on August 1ll, 1981, and the Exhibits, affidavit, and the pleadings pre- sented herein, the Court makes the following findings of fact: Re Hughes-Bechtol, Inc. (also “contractor") is a corporation organized under the laws of the State of Ohio, with a principal place of business in Ohio, and an annual volume of business of approximately thirty-million dollars ($30,000,000). ae Marshall University is a state university located in Huntington, West Virginia. Marshall 73 University has an enrollment of approximately twelve thousand students, and participates in Division I athletics. 3. In 1979, the West Virginia Board of Regents (also “owner") solicited bids in con- nection with the construction at Marshall University of Henderson Center, which was intended to be a multipurpose physical educa- tion facility including a basketball arena seating ten thousand persons, classrooms for the department of health and physical educa- tion, and offices for the athletic department. Also included in this project was the renova- tion of an existing building, Gullickson Hall. 4. Hughes-Bechtol was awarded a contract in the amount of three million, one hundred sixty two thousand, one hundred and seventy-three dollars ($3,162,173.00) for the mechanical work for the Multi-Purpose Physical Education Facility. According to the terms of the contract, the work to be performed was to be commenced upon the date specified in the 74 "Notice to Proceed" given by the Board to Hughes-Bechtol. From the time specified, Hughes-Bechtol would have eight hundred and fifty (850) consecutive calendar days to fully complete the project. S- On April 5, 1979, a purchase order was issued by the State of West Virginia, Depart- ment of Finance and Administration for the above contract price. 6. The original anticipated completion date for the Henderson Center Project was April 6, 1981, but at the time of the injunction hearing, the physical activities center was scheduled for occupancy on October 15, 1981, due to delays in the project. At the time of the hearing herein, the project was ninety percent (90%) finished. Ve During the first year of the contract, little progress was made on the construction project. Hughes-Bechtol requested an exten- sion of time and payments for the increased costs due to the delay, but the Board refused, 75 and instead directed that Hughes-Bechtol per- form the unfinished work in the time remaining under the contract. 8. Paragraph 7.9.1 of the contract between the Board and Hughes-Bechtol provided that all disputes arising between the owner and the contractor would "be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association,” that the agreement to arbitrate "shall be specifically enforceable under the prevailing arbitration law," and that "the award entered by the arbitrators shall be final; and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof." 9. On December 11, 1980, Hughes~Bechtol filed a demand for arbitration with the Cincinnati office of the American Arbitration Association. The arbitration inquiry was bifurcated, with consideration being first given to whether the issue was one subject to 76 arbitration. On February 20, 1981, the arbitrator ruled that the matter was arbitrable, and notified the parties of his decision. A hearing on the claims of Hughes-Bechtol was held, and on June 9, 1981, after the filing of the within lawsuit, the arbitrator issued his decision, finding that Hughes-Bechtol was entitled to an additional sum of five hundred twenty-one thousand three hundred twenty-six dollars and forty-eight cents ($521,326.48). 10. The Board did not participate directly in the arbitration hearings, but did have a legal representative present. On various occasions, the Board and the West Virginia Attorney General's Office advised Hughes- Bechtol and the American Arbitration Associa- tion that the Board of Regents was not authorized to engage in binding arbitration. ll. Paragraph 9.7 of the contract provided that if an amount awarded through arbitration was not paid by the owner, the contractor was permitted to stop work. After the Board 77 refused payment of the arbitration award, Hughes-Bechtol removed its work forces from the Henderson Center construction site on July 20, 1981. 12. The other contractors on the Henderson Center project have agreed to pursue remedies for contractual claims against the Board in the West Virginia Court of Claims. 13. Vandalism at the University is minimal. The only incidents testified to involved minor tampering with fire equipment in the dormitories on two occasions. In addition, Henderson Center was evacuated once due to a bomb scare. Bomr scares, however, occur with some frequency at the University, because of the erroneous belief by students that such a scare will result in the cancellation of clases. 14. The Board and Hughes-Bechtol continued to attempt to negotiate, but on August 3, or 4, 1981, Hughes-Bechtol was advised that it would not be possible for Marshall University to pay seven or eight hundred thousand dollars 78 in additional claims on the Henderson Center project. 15. On Tuesday, August 4, 1981, Hughes- Bechtol removed approximately two hundred thousand dollars ($200,000.00) worth of equip- ment from the Henderson Center job site, and from warehouses in Huntington, West Virginia. Between July 20, 1981, and the date of the equipment removal, Hughes-Bechtol had employed a project manager on the job site. Although the equipment had been at the job site or in warehouses for at least one year, Hughes- Bechtol was concerned about the safety of the equipment, based on the bomb scares at the job site and the possibility of vandalism at both the job site and the warehouses. Hiring a twenty-four guard for the property may have been less expensive than moving the equipment to Dayton. Hughes-Bechtol did not attempt to find other warehouses in the Huntington area to accommodate the property. 26. Hughes-Bechtol's sole claimed damage 79 justifying a preliminary injunction is that, on future bids, it will be required to dis- close on the bidding qualification statement that it had failed to finish work awarded to it. This would preclude Hughes-Bechtol from being considered for a bid by some employers. The bidding qualification statement also pro- vides for an explanation of why the work awarded was not finished. 17. If a preliminary injunction should be granted, the University would be unable to start its basketball season and intramural programs as scheduled. Approximately five thousand tickets have already been sold for the first game of the season. In addition, an injunction would have an effect on the academic program of the University. Since the new facility is constructed so as to "wrap around" an existing structure, classrooms already in existence will be unavailable because of poor ventilation. Finally, an injunction would cause the loss of the jobs of the approximately oe - a ee 80 one hundred and thirty other construction employees presently working at the Henderson Center site. 18. Payments for the Henderson Center project come from the State treasury of West Virginia. The project was financed by a public bond sale, with student revenues for future years obli- gated to pay for the project. All funds expended by the Board of Regents are state funds from the state treasury and may only be spent pursuant to an appropriation by the West Virginia legislature. All funds received by the Board from all other sources such as federal funds or gifts must be deposited in the state treasury and may be expended only for their specified purposes, and after appropria- tion by the West Virginia legislature. 19. If Hughes-Bechtol does not complete its contractual obligations, the Board intends to secure other contractors to perform the work. 81 20. The State of West Virginia has authorized suit to be brought against the State in the West Virginia Court of Claims. B. Conclusions of Law In Roth, 583 F.2d 527 (6th Cir. 1978), cert. dism'd., 442 U.S. 925 (1979), the Sixth Circuit indicated that the following approach should be utilized in determining whether injunction relief should be granted: In addition to assessing the like- lihood of success on the merits, the Court must consider the irreparability of any harm to the plaintiff, the balance of injury as between the parties, and the impact of the ruling on the public interest. Id. at 537-538, quoting with approval from, Metropolitan Detroit Plumbing & Mechanical Contractors Ass'n. vs. H.E.W., 418 F.Supp. 585, 586 (E.D. Mich. 1976) (Detroit Plumbing v. H.E.W.). While there has been an ostensible conflict in the Sixth Circuit's interpretation of precisely what degree of likelihood of success is required, compare: Ohio v. Callaway, 497 F.2d 1235, 1240 (6th Cir. 1974) 82 (requiring possibility of success on the merits), with Mason County Medical Ass'n v. Knebel, 563 F.2d 256, 261, n.4 (6th Cir. 1977) (requiring strong or substantial likeli- hood or probability of success on the merits), the Roth Court approved the following explana- tion, again quoting Detroit Plumbing v. H.E.W., 418 F. Supp. 585, 586 (E.D. Mich. 1976): This apparent disparity in the wording of the standard merely reflects the circumstance that no single factor is determinative as to the appropriateness of equitable relief ... In general, the iikelihood of success that need be shown will vary inversely with the degree of injury the plaintiff will suffer absent an injunction... [i.e., the greater the potential harm to the plaintiff, absent an injunction, the less likelihood of success on the merits which need be shown, and vice-versa). It thus appears that the precise wording of the standard for the likelihood of success on the merits is not as important as a realistic appraisal of all the traditional factors weighed by a Court of equity. A balancing is required, and not the mechanical application of a certain ‘form of words. Roth, 583 F.2d at 3537-538. (Bracketed material added ). EI ae a 83 Balancing the above factors then, as required, this Court finds that injunctive oo 2 ep aii, relief is not appropriate under the circumstances _ involved herein. First, there appears to be Slight likelihood that Plaintiff will be able to mrevail on the merits in this Court. In reaching such a determination, the Court has carefully avoided any prediction with regard | to the eventual outcome of the controversy between Hughes-Bechtol and the Board, but instead has premised its decision on the fact ee that this Court has no jurisdiction over the subject matter of the present dispute. Conse- quently, Plaintiff will never be able to succeed in obtaining a judgment on the merits in this jurisdiction. Second, assuming that Plaintiff could somehow "prevail" herein, it has not demonstrated that it will sustain irreparable harm without the issuance of an injunction. Although Plaintiff has indicated that it will be harmed in its ability to bid on future construction contracts if it does 84 not finish the Marshall University contract, an examination of the kidding qualification statement relied upon by Plaintiff indicates that an opportunity is provided thereon for an explanation of the circumstances surrounding any failure to complete a contract. Thus, should Plaintiff eventually receive an award from the West Virginia Court of Claims, which would vindicate its refusal to complete the contract, that fact alone should provide ample justification for future employers. Therefore, Plaintiff does have an adequate remedy at law. Moreover, even at the present incomplete stage of the proceedings, Hughes-Bechtol does have a favorable arbitral decision which may be used an an explanation for the work stoppage at Marshall University, or for a refusal to finish the contract. Third, the balance of injury in the event of issuance of an injunction, clearly rests with the Board rather than with Hughes- Bechtol. Since the Board is charged by law 85 with the supervision and management of the educational policies and affairs of the universities of West Virginia, W. Va. Code §18-26-1 (1969), an interference with the intramural, athletic, and educational programs at Marshall University would negatively affect the Board's ability to perform its legisla- tively-mandated functions. Finally, assuming arguendo that all the above considerations militated in favor of Hughes-Bechtol, the impact of a ruling permitting an injunction would adversely serve the public interest of the people of West Virginia, who would be deprived indefinitely of their ability to utilize the Henderson Center Facility, and would be subjected to a disruption in educa- tional opportunities. Therefore, based on the foregoing analysis, the Court makes the following conclusions of law: 1. Plaintiff has little or no likeli- hood of succeeding on the merits in the present action; 86 2. Plaintiff has not demonstrated that it does not have an adequate remedy at law, or that it would suffer irreparable harm absent an injunc- tion; 3. The balance of harm in the event of an injunction is in favor of the Board of Regents rather than Plaintiff; 4. Plaintiff has not established that the issuance of a preliminary order restraining construction at Hender- son Center, or enjoining Defendant from employing another mechanical contractor, will not injure the public interest. Accordingly, Plaintiff's request for a pre- liminary injunction must be, in all respects, denied. IIIT. Motion to Dismiss. As was previously indicated, Defendant filed a Motion to Dismiss on April 2, 1981, requesting that the within action be dismissed under Fed. R. of Civ. P. 12(b) (1), (2), (3), (5), (6), and (7). While Defendant has raised several grounds for dismissal such as insufficiency of process, failure to join an indispensable party, sovereign immunity, and 87 lack of subject matter jurisdiction, only two grounds for Defendant's Motion need be address- ed, as those matters provide more than ample justification for dismissing this action. Therefore, the Court will discuss only those issues contained in branches I and II of Defendant's Motion to Dismiss, that is, those matters pertinent to subject matter jurisdic- tion and sovereign immunity. For procedural Clarity, this Court will first consider the jurisdictional questions presented in Branch II of Defendant's Motion. With these points in mind, the Court now turns to an analysis of: (1) whether diversity jurisdiction exists between the Plaintiff and Defendant, and if not, whether an alternate source of federal jurisdiction is present; and (2) whether in any event, suit against the Board of Regents is prohibited under the doctrine of sovereign immunity. A. Jurisdiction l. Diversity of Citizenship Ne NEIDIO AI Pegler nals 88 The complaint filed in this action states that the Plaintiff, Hughes-Bechtol, Inc., is a corporation organized under the laws of Ohio, that the Defendant, the West Virginia Board of Regents, is a citizen of the State of West Virginia, that the amount in controversy exceeds ten thousand dollars, and that jurisdic- tion exists pursuant to 28 U.S.C. §1332 (1970). §1332 provides that: The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between -- (1) citizens of different states. Although the parties herein are technically "residents" of different states and would thus seem to satisfy diversity re- quirements, Defendant has maintained that the Board is merely the arm, or alter ego, of the State of West Virginia and cannot therefore be considered a citizen for diversity purposes. Plaintiff has replied to this contention by pointing out that under West Virginia law, the 89 Board is a corporation, and was subjected to diversity jurisdiction in Kondos v. West Virginia Board of Regents, 318 F. Supp. 394 (S.D. W.Va. 1970), aff'd, 441 F.2d 1172 (4th Cir. 1972) (Kondos). The principle is well settled that a weeks may not be considered a citizen in order to establish diversity jurisdiction. In Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482 (1894) (Postal Telegraph), the State of Alabama had initiated suit in an Alabama state court against a New York corporation in order to recover taxes owed to the State. Id. at 482, 483. The Defendant removed the case to federal court, but the Supreme Court ruled that removal was improper, since neither diversity nor federal jurisdiction was present. Id. at 487. With respect to diversity, the Court stated that: A state is not a citizen. And, under the Judiciary Acts of the United States, it is well settled that a suit between a State and a 90 citizen or a corporation of another State is not between citizens of different States; and that the Circuit Court of the United States has no jurisdiction of it unless it arises under the Construction, laws or treaties of the United States. Id. (citations omitted). In State Highway Comm'n of Wyoming v. Utah Constr. Co., 278 U.S. 194 (1929) (Wyoming Highway Comm'n), a Utah citizen filed a breach of contract action against the Wyoming State Highway Commission in a Wyoming district court, alleging jurisdiction on the basis of diversity of citizenship. id. at 198. Although the State of Wyoming had not been named as a party to the action, the Court held that since the Suit was in effect against the State, diversity of citizenship could not exist. Id. at 199-200. The Court appeared to premise its determination that the State was the real party in interest on the following factors: (1) the highway commission was merely an arm or alter ego of the state, "with no funds or ability to 91 respond in damages,” id. at 199; and (2) neither the Highway Commission nor its members had assumed any direct or personal responsi- bility by entering into the contract in question. Id. Significantly, the Court found it unnecessary to consider the effect of the State's grant to the Highway Commission of the power to sue or be sued, or its later with- drawal of that power. Id. The Court indicated that since the State was not considered to be a citizen for purposes of diversity, "[N]o con- sent by the State to submit itself to suit could affect the question of diverse citizen- ship.” Id. at 199-200. Thus, even should a state consent to suit in federal court, that act itself cannot create diversity jurisdic- tion. Like the Highway Commission in the previously cited case, the Board of Regents is a statutorily-created creature. W. Va. Code §18-26-1 (1969) specifically provides that: 92 The purpose of the legislature in the enactment of this article is to establish a state agency to be known as the West Wirctate Board of Regents which will have the general determination, control, supervision and management of the financial, business and educational policies and affairs of all State Colleges and Universities. (emphasis added). Moreover, an examination of West Virginia law reveals that the board has no funds or ability to respond in damages but is merely a conduit through which budget requests from the state universities, and corresponding appropriations from the West Virginia legis- lature, flow. For example, W. Va. Code §18-26-8 (1981) lists certain duties of the Board, which involve, inter alia,: (1) directing the prepara- tion of budget requests for state universities; (2) the submission of budget requests and analysis of requests to the legislature; (3) compilation of an annual report indicating the fiscal performance of the state system of higher education. Although some of these duties were more specifically delineated by the amendment of §18-26-8 in 1981, the essential 93 nature of the Board's function has not changed from former practice. See former W. Va Code §18-26-8 (1969). Plaintiff has indicated, in a memorandum filed after the injunction hearing (Doc. #20), that the source of a state agency's funds is often determinative of that agency's entitle- ment to immunity from suit. Plaintiff argues therefore that since the project in question was financed by a self-liquidating bond issue secured by student tuition fees, rather than by general state revenues, the Board may not claim immunity as an arm of the State. The case cited by Plaintiff, Hope Natural Gas Co. v. West Vir. Turnpike Comm'n, 143 W. Va. 913, 105 S.E. 2d 630 (1958) (Hope Natural Gas), considered whether the West Virginia Turnpike Commission was immune from suit as the alter egoof the State of West Virginia. Id. at 926, 105 S.E. 2d 638. The Court analyzed the statutory provisions creating the Commission, which was authorized to collect tolls without 94 supervision by other State agencies, id. at 919, 105 S.&.2d 634; was permitted to con- struct projects and to issue revenue bonds payable solely from commission revenues, id. at 918, 105 S.E. 2d 633; and was required under §15 of its enabling statute to pay compensation from Commission funds for all damages caused to private property. Id. at 920-921, 930, 105 S.E. 2d 634, 639. The Court noted that pre- vious state and federal decisions had denied immunity to the Commission, id., and further found that in any event, §15 operated as a waiver of the Commission’s immunity. Id. at 930, 105 S.E. 2d 639-640. While the Court did place emphasis on the factor of an agency's independent financial existence, even where that agency performed a governmental function, id. at 924-925, 105 S.E. 2d 636-637, the Court also stated that: In determining whether a commission or other body or entity created by 95 the state is in truth and effect a part of the state, all of the features or characteristics must be considered and consequently each case must rest upon the provisions of the entity's own creation. Id. at 928-929, 105 S.E.2d 639. The case upon which Plaintiff has relied, however, is not controlling upon this action, due to the subsequent decision of the same court in City of Morgantown v. Ducker, 153 W.Va. 121, 168 S.E. 24 298 (1969) (Morgantown). In Morgan- town, West Virginia’s highest court considered whether to issue a writ of mandamus requiring the West Virginia Court of Claims to assume jurisdiction of an action for the collection of fire protection fees, brought against the Board of Governors of West Virginia University. Id. at 122, 168 S.E. 2d 299-300. The Court determined that the Board was a state agency, and an arm of the State, and ordered that the writ be issued. Id. at 131-132, 168 S.E. 2d 304. In so ruling, the Court distinguished Hope Natural Gas as follows: ell ts i i , 96 The rights and powers conferred and the duties imposed by the respective statutes upon the board of Governors of West Virginia University and the West Virginia Turnpike Commission differ materially and in many respects, particularly with reference to funds and moneys used and administere’ by the board and by the commission. The moneys accepted and received by the board of governors and on which it depends for its financial support are paid into the State treasury, whereas the moneys accepted and received by the commission are not required to be deposited in the State treasury but are administered under the supervision of the commission. Id. at 131, 168 S.E. 2d 304. After the Morgantown decision, the West Virginia legislature amended the West Virginia Code to create the West Virginia Board of Regents, which was vested with the powers previously held by the board of governors of West Virginia University, W.Va.—Code §18-26-11 (1969), and those formerly held by the West Virginia Board of Education, W.Va. Code §18-26- 12 (1969). In 1972, after these amendments were adopted, the West Virginia Supreme Court, citing Morgantown, ruled that the West Virginia 97 Board of Regents, as an arm of the state of West Virginia, had the authority to acquire land by condemnation without special legisla- tive authority. West Virginia Board of Regents v. Fairmont, Morgantown, and Pittsburgh R.R. Co., 155 W.Va. 863, 866-867, 189 S.E.2d 40, 43 (1972) (emphasis added). These decisions indi- cate that, in the opinion of West Virginia's highest state court, the Board of Regents is an arm, or alter ego, of the State of West Virginia. As a final matter, this Court notes that in Kondos, 318 F. Supp. 394 (S.D. W.Va. 1970), aff'd 441 F.2d 1172 (4th Cir. 1972), a West Virginia district court conducted a thorough survey of the applicable West Virginia Supreme Court decisions, many of which have been cited herein, and concluded that the West Virginia Board of Regents, as an arm of the State of West Virginia, was immune from suit under the doctrine of scvereign immunity. Id. at 396- 397. That decision was upheld on appeal by the 98 Fourth Circuit as “proper for the reasons stated by the District Judge." 441 F.2d at 1172. Plaintiff has, however, attempted to distinguish the Kondos decision on several grounds, none of which are legally correct. For example, Plaintif‘ has contended that diversity jurisdiction was permitted in Kondos, and should therefore be found to exist herein by this Court. (Doc. #10, p. 2). While Kondos was filed as a diversity action, 318 F. Supp. at 396, that does not mean that the requirements for diversity jurisdiction were found to be satisfied therein; the Kondos Court merely dis- missed the action against the Board on the alternative ground of sovereign immunity. In this context, it must be emphasized that a resolution of either issue requires a thres- hold determination of whether the agency in question is but an alter ego, or arm of the State. Id.; Postal Telegraph, 155 U.S. 482 (1894); Wyoming Highway Comm'n, 278 U.S. 194, 199-200 (1929). Thus, the Kondos case cannot 99 be viewed as supporting a finding that diversity jurisdiction is present herein, since the same considerations involved in the dis- missal therein due to sovereign immunity lead this Court to conclude that the Board of Regents, as an arm or alter ego of the State, cannot be considered a citizen for diversity purposes. The preceding discussion has illustrated that the highest courts of West Virginia, both federal and state, have spoken unequivocaly and affirmatively on the issue of whether the Board of Regents is an arm of the state. Accordingly, this Court need inquire no further, beyond commenting, in response to Plaintiff's "funding source" argument, that the material distinction noted in Morgantown, 153 W.Va. 121, 168 S.E. 2d 298 (1969), of payment of funds into the State treasury, id. at 131, 168 S.E. 2d 304, still exists herein, whether the Henderson Center project was financed by a bond issue secured by student tuition fees, or by general state revenues. In either event, a 100 tuition fees and other funds collected by the University are required to be deposited into the State treasury. In this context, see: W. Va. Code §18-24-1 (1981) (authorizing the Board to fix tuition and fees for state uni- versities); §§18-23-5, 18-23-7 (1969) (requiring that all money belonging to the state, and coming into the hands of the governing boards of state universities be transmitted into the State treasury, with expenditure therefrom permitted only upon submission of requisitions by the governing boards, and appropriation by the state legislature). Plaintiff has repeatedly asserted that the inguiry into the Board's status and con- duct is a "fact-specific" one (Doc. #8, p. 9; Doc. #20, p. 2), and that theretore, at the present stage of the proceedings, the matters under consideration by the Court are not ripe for determination.? Initially, the Court notes that summary judgment is not required herein because reference to the complaint and 101 the previously cited case law, of which the Court can take judicial notice, obviates the need for factual determinations, Moreover, even assuming the application herein of Hope Natural Gas, 143 W.Va. 913, 105 S.E.2d 630 (1958), the inquiry required by that case is not factual, but is one into the legislative provisions which have created the agency in question. Jd. at 928-929, 105 S.E.2d 639. Be- cause an analysis of the statutes creating the Board has been conducted herein (although not strictly necessary in view of the dispositive rulings of the West Virginia courts), and has revealed that the Board is an arm of the State of West Virginia, this Court can find no further barriers to concluding that the Board of Regents may not be considered a citizen for the purpose of invoking diversity jurisdiction. Having determined then, that jurisdiction trootnote located at end of opinion. 102 yp: herein may not be premised upon diversity of citizenship, the Court will next consider what alternate jurisdictional grounds, if any, may be present. 2. Other Jurisdictional Grounds Although diversity jurisdiction does not exist herein, Postal Telegraph, 155 U.S. 482 (1894), would still permit this Court to assume jurisdiction over the present action if an alternate basis of jurisdiction, such as federal question jurisdiction, exists. Id. at 487. Although the complaint herein alleges that a federal question has arisen under the Eleventh Amendment, the sole Eleventh Amendment issue which has been presented is whether the Plaintiff's claim against the Board is barred under the doctrine of sovereign immunity. This issue is merely an anticipation of a defense and does not constitute an element of Plaintiff's claim, which is for a declaratory judgment and for the .nforcement of an arbi- tration decision. As such, the Eleventh 103 Amendment issue does not invoke this Court's federal question jurisdiction in light of the Supreme Court's ruling in Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125 (1974), wherein the Court stated that: This Court has repeatedly held that, in order for a claim to arise "under the Constitution, laws, or treaties of the United States," "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the Plaintiff's cause of action." - . . The federal questions "must be disclosed upon the face of the complaint, unaided by the answer." Moreover, “the complaint itself will not avail as a basis of jurisdiction insofar as it goes beyond a statement of the plaintiff's cause of action and anticipates or replies to a probable defense." Id. at 127-128. (citations omitted). Conse- quently, as Plaintiff's assertion of an Eleventh Amendment issue does nothing more than anticipate the sovereign immunity defense which has in fact been raised by Defendant, no federal question jurisdiction has been invoked by the inclusion of that issue in Plaintiff's complaint. In addition, although Plaintiff's 104 complaint requests a Declaratory Judgment, under 28 U.S.C. §2201 (1958) and Fed. R. Civ. P. 57, of the legal relations between the parties, the Declaratory Judgment Act does not extend the jurisdiction of the federal courts, but is a procedural remedy which can only be afforded where another basis of jurisdiction already exists. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 666, 671 (1950). Finally while the potential application herein of the United States Arbitration Act, 9 U.S.C. §§1 et seq. (1970) has not been raised by Plaintiff's Complaint, the relevance of that Act has been discussed by both parties in various memoranda submitted to the Court. Therefore, the Court will assume that Plaintiff would, if offered an opportunity, amend its Complaint to allege the application of the United States Arbitration Act. In addition, the Court assumes, for purposes of ruling on this motion, that the contract herein involved interstate commerce, as the Act only extends 105 to such contracts. 9 U.S.C. §§l1, 2 (1970). As was previously noted herein, in order for federal question jurisdiction to be present, the right or immunity involved must be created by the Constitution or laws of the United States, and must be an essential element of the Plaintiff's claim. Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, it27-128 (1974). Assuming arguendo that Plaintiff would allege the application of the Arbitration Act, the Complaint herein would be brought pursuant to 9 U.S.C. §4 (1970), which provides that upon a party's failure to arbitrate under a written arbitration agreement, the aggrieved party may | petition a district court for an order directing that arbitration proceed. Although the Act would be an essential element of a plaintiff's Claim, and is clearly a federal law, the Courts, by looking to the wording of the Act itself, have consistently held that the United States Arbitration Act does not, in and of itself, 106 operate to invoke the jurisdiction of the federal courts. Litton FCS, Inc. v. Pennsyl- vania Turnpike Comm'n, 396 F. Supp. 579, 585 (E.D. Pa. 1974), aff'd mem. Litten Business Systems, Inc. v. Pennsylvania Turnpike Comm'n, 511 F.2d 1394 (3rd Cir. 1975) (Litton) (cita- tions omitted). One of the first major deci- sions in this area was Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F. 2d 402 (2nd Cir. 1959), cert. granted 362 U.S. 909 (1960), petition for cert. dism'd per stipulation, 364 U.S. 801 (1961) (Robert Lawrence). In that case, the Court noted that while new substantive federal rights were created by the Arbitration Act, suits involving the Act did not provide an independent basis of federal jurisdiction. Id. at 408 (citations omitted). In so holding, the Court speci- fically pointed to §§3, 4, and 8 of the Act, which appeared to require a jurisdictional basis other than the Arbitration Act for actions brought in federal courts. Id. 107 This view has been followed in other jur- isdictions. Commercial Metals Co. v. Balfour, Guthrie and Co., LTD., 577 F. 2d 264, 268-269 (5th Cir. 1978); Collins Radio Co. v. Ex-Cello Corp., 467 F. 2d 995, 996, n. 1 (8th Cir. 1972); Monte v. Southern Delaware County Authority, 321 F. 2d 870 (3rd Cir. 1963); Sear v. Cadillac Automobile Co., 501 F. Supp. 1350, 1358 (D. Mass. 1980); Litton, 376 F. Supp. 579, 585 (E.D. Pa. 1974), aff'd mem. 511 F.2d 1394 (3rd Cir. 1975)2 In American Airlines, Inc. v. Louisville and Jefferson County Air Board, 269 F.2d 81l (6th Cir. 1959) (American Airlines), the Sixth Circuit rendered a decision which appears to comport with the generally accepted view of the intended role of the Arbitration Act. In American Airlines, since jurisdiction was premised upon diversity, id. at 822, the Court had no need to directly address that issue. -Footnote located at end of opinion. dass ¥ sth basta einai AIAN) Nil eit Ae ots OL A es nish ad aml 108 The Court did consider, inter alia, whether Kentucky law or federal law would govern the validity and enforceability of an arbitration clause contained in leases entered into by several airlines and the Louisville and Jef- ferson County Air Board. Id. at 814-815. The Court discussed the Arbitration Act, and stated that: Consideration of the legislative history reveals that what the Congress intended was merely to overrule by legislation long- standing judicial precedent, which declared agreements to submit judiciable controversies to arbi- tration contrary to public policy, on the ground that enforcement of such agreements would oust the courts of their jurisdiction. Thus, the congressional purpose was to make arbitration agreements within the scope of the Federal statute as effective [sic] enforce- able as any other contract, and so permit contracting parties thereby to avoid, if they chose so to do, the “delay and expense of litiga- t2cn.” Id. at 816. (citations omitted) (emphasis added). The Court also noted that the legislative history of the Act indicated that ""an arbitration agreement is placed upon the 109 same footing as other contracts.'" Id. (cita- tion omitted). Although the Court did not discuss the jurisdictional aspects of the Arbitration Act, the above-quoted language indicates the Court's awareness that the Act did nothing more than eliminate established judicial reluctance to enforce arbitration clauses in contracts. Since federal jurisdic- tion is unquestionably not present in an ordinary contract case, even one involving interstate commerce, unless the parties are of diverse citizenship, the Sixth Circuit appears to at least implicitly support those decisions which have held that the United States Arbi- tration Act contemplates a source of federal jurisdiction other than itself in actions involving the Act. As a final point pertinent to analysis, this Court notes that a thorough analysis of the case law pertinent herein has not disclosed any Sixth Circuit decisions wherein the Arbitration Act constitutes the sole basis of jurisdiction. Therefore, having 110 concluded that Local 19, as discussed in Foot- note 2, supra, does not dictate the decision herein, and that later Sixth Circuit authority indicates a contrary intent to that expressed in Local 19, this Court will now briefly explain its reasons for agreeing with the weight of authority that in actions involving the United States Arbitration Act, an inde- pendent ground of federal jurisdiction is required. The starting point for inquiry must be the Act itself, which the Supreme Court has indi- cated should be read as a whole. Bernhardt v. Polygraphic Co. of America, Inc., 350 U.S. 198, 201 (1956) (Bernhardt). 9 U.C.S. §1 (1970) de- fines commerce as used in the Arbitration Act; §2 provides that agreements to arbitrate in contracts involving commerce shall be valid and enforceable, and the remaining provisions of the Act in general provide for certain pro- cedures to be followed where parties have agreed to arbitrate, but fail to do so, or lll where an award has been made, and is required to be confirmed. As noted in Robert Lawrence, 271 F.2d 402 (2nd Cir. 1959), cert. granted, 362 U.S. 909 (1960), petition for cert. dism'd per stipulation, 364 U.S. 801 (1961), certain sections of the Act specifically contemplate a jurisdictional basis other than the Arbitration Act itself. Id. at 408. In particular, §4 provides that: A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a writ- ten agreement for arbitration may ' petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising Out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. (emphasis added). Likewise, §8 gives the Court jurisdiction to deal with maritime cases, "if the basis of jurisdiction be a cause of action otherwise justiciable in admiralty." (Emphasis added). These clear jurisdictional limitations comport with the 112 legislative history of the Act, which is devoid of any interference that contracts containing arbitration clauses were intended to invoke federal jurisdiction where a contract without such a clause could not. Representative Graham, who authored the report accompanying the arbitration bill submitted to the House of Representatives, H.R. Rep. No. 96, 68th Cong., lst Sess. 1 (1924), emphasized during debate on the bill in the House, that the bill "does not involve any new principle of law... creates no new legislation, grants no new rights, except a remedy to enforce an agree- ment in commercial contracts and in admiralty contracts." 65 Cong. Rec. 1931 (1924) (remarks of Rep. Graham). In addition, H.R. Rep. No. 96 stated that the Act was intended to alter the common law doctrine whereby courts refused to enforce such agreements, H.R. Rep. No. 96, 68th Cong., lst Sess. l, 2 (1924), and further stressed that "[a]rbitration agreements are purely matters of contract, 113 | and the effect of the bill is simply to make the contracting party live up to his agreement. -+. an arbitration agreement is placed upon the same footing as other contracts, where it ee belongs." Id. at 1 (emphasis added). The Committee hearings held on the pro- posed arbitration resolutions evidence a | Similar understanding with regard to the Act's limitations. Julius Cohen, who had assisted in drafting the Arbitration Act inserted a brief explaning the proposed Act's provisions into the Committee record. Arbitration of Interstate Commercial disputes: Joint Hearings te 00 Re es eagle rs 2 2 on S. 1005 and H.R. 646 Before the suscom- mittees of the Committees on the Judiciary, 68th Cong. lst Sess. 15, 33 (1924) (Statement of Julius H. Cohen) (hereinafter Joint Hearings). The brief stated that: eae eh! vem [A] provision for arbitration con- tained in any contract which involved maritime transactions ... and interstate commerce ... is made “valid, enforceable, and irrevocable," . except upon the grounds for which any & contract may be revoked. ’ ee 114 The Federal Courts are given juris- diction to enforce such agreements whenever under the Judicial Code they would normally have jurisdiction of a controversy between the parties. Id. at 34. (emphasis added) Based on the above expressions of intent, and the explicit jurisdictional limitations contained in the Act itself, Congress appears to have intended that an independent basis of jurisdiction other than the United States Arbitration Act would be required in actions involving the Act. One other matter remains for resolution, and that is the effect of 9 U.S.C. §9 (1970), which provides that: If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitra- tion, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order con- firming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and ll of this title. If no court 115 is specified in agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party and there- upon the court shall have jurisdic- tion of such party as though he had appeared generally in the proceeding. The «ontract herein does contain a provision stating that judgment may be entered upon an arbitration award in any cour: having juris- diction. §7.9.1. Further, as the arbitration award upon which Plaintiff relies was appar- ently rendered in this judicial district (Doc. #1, 414, 415; Doc. #20, p. 1), §9 would appear to permit this Court to enforce that award. However, given the express statutory directives in §§4 and 8, which limit the district court's jurisdiction to cases wherein the court would otherwise have subject matter jurisdiction, and the Supreme Court's in- struction that the Act be read as a whole, Bernhardt, 350 U.S. 198, 201 (1956), this 116 Court cannot read §9 in so illogical a manner. Such an interpretation would make jurisdiction of actions brought on the basis of identical contracts contingent upon whether the parties involved sought to compel arbitration, or merely wished confirmation of an award already granted through arbitration. It is difficult to perceive the basis for such a jurisdictional distinction, because in both situations, the ultimate result desired would be the same. For a similar decision, refusing to construe the Arbitration Act in a manner which would result in "an odd patchwork of individual statutes, bereft of any coherent plan," see: Bangor Aroostock R.R. Co. v. Maine Central R.R. Co., 359 F. Supp. 261, 263 (D.C. 1973). Cf£. Ballantine Books, Inc. v. Capital Distributing Co., 302 F.2d 17, 19 (2nd Cir. 1962) (concluding without discussion, that on the basis of the Robert Lawrence decision, an independent source of federal jurisdiction was required in a proceeding under §9).. 117 Again, the legislative history of the Arbitration Act sheds light upon the intended meaning of the Act. During the sub-committee hearings held on the proposed Senate and House Arbitration bills, the following exchange took place: Representative HICKEY. Without a written agreement, Mr. Cohen, where would an arbitration be held? MR. COHEN. It would be held in accordance with the direction of the court; by direction of the court to which you apply. Representative HICKEY. And the application would be made to _ the court where the party asking for the arbitration resides? MR. COHEN. You would have to get jurisdiction just as you do now in a Federal court; by personal service. Representative HICKEY. Where the defendant lives? MR. COHEN. Where the defendant lives. That would mean practically that you have to go to_ the jurisdiction where the defendant is, or wait until he comes into your jurisdiction so that process may be served upon him. The process is exactly the same as in civil procedure in the Federal courts. 118 Joint Hearings, 68th Cong., lst Sess. 18 (1924) (statement of Julius H. Cohen) (emphasis added). In response to the above colloquy, the Committee Chairman then said: Here is the provision relating to that. Representative HICKEY. The fourth section? The CHAIRMAN. This is on page 7, section 10, beginning with line 8 [reading]: If no court is specified in the agr:ement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party. Then this [continuing reading]: 119 If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. That makes it very clear. Id. at 18-19. This explanation contained in the relevant legislative history indicates that §9 was only intended as a guide to where arbitration should take place when no agreement had been made by the parties, and was not intended as an independent grant of jurisdiction in federal courts. Based on the foregoing reasoning, the Court concludes that in actions brought to confirm arbitorial awards under §9 of the Arbitration Act, the same prerequisite, of an independent ground of federal jurisdiction, applies as has been required in actions involving other sections of the Act. Having 120 found no diversity jurisdiction between the parties herein, and no basis for federal jurisdiction other than the United States Arbitration Act, the Court concludes that it does not have subject matter jurisdiction over the present controversy. Therefore, Defendant's Motion to Dismiss must be granted. Although this ruling is dispositive with regard to the continuance of the present action, the Court has determined to address as well the sovereign immunity. arguments raised by the Defendant. C. Sovereign Immunity The Defendant has maintained that the within action must be dismissed because the Board, as an arm of the State of West Virginia, is immune from suit under the doctrine of sovereign immunity. Defendant has not specified under which portion of Fed. R. Civ. P. 12(b), this ground of dismissal has been raised, but there have been indications by the Supreme Court that such a motion relates to the subject matter jurisdiction of 121 the Court. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (Rhodes). Therefore, the Court will, on the basis of that ruling, consider Defendant's motion as having been brought pursuant to Fed. R. Civ. P. 12(b) (1), for lack of subject matter jurisdiction. The Court also notes that the standards applicable to Rule 12(b) (1) and (b) (6) motions are the same. Id. at 236. Thus, the Court must construe the allegations of the complaint favorably to the pleader, and must in addition follow the accepted rule that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Before engaging in the analysis required for determining whether the present action against the Board may be maintained, a few comments are in order. First, although the Supreme Court in Rhodes disapproved the 122 Gistrict court's dismissal of the case as a premature decision "precluding any opportunity for the plaintiff by subsequent proof to establish a claim, 416 U.S. at 236, that ruling does not mandate a similar decision herein. Unlike the present case, Rhodes, involved claims against individual state officers for deprivation of federal rights. Those matters were found by the Supreme Court to be judicially cognizable and to not be barred by the application of the Eleventh Amendment. Id. at 237-238. With respect to the alternate ground for dismissal, which had been premised upon executive immunity, id. at 238, the Court indicated that since the immunity to be accorded the executive officers was qualified rather than absolute, id. at 242, 243, 247, and required a determination with regard to whether the state officials acted in good faith, id. at 250, a further development of the factual background of the action was required. Id. Implicit in the Court's statements, however, is that where the 123 immunity involved is absolute, or is not premised upon a factual question such as the existence of good faith, a decision at the pleading state is appropriate. Therefore, Since the issue before this Court involves an immunity which if present, will be absolute, and further, necessitates resolution of no factual matters, the Court concludes that under Rhodes, it may properly proceed to determine whether this action is barred under the doctrine of sovereign immunity. The Eleventh Amendment provides that: The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State. The Eleventh Amendment has long been construed as prohibiting sui [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_2247%3A2. Public record. Not legal advice.