Title: New Kent County v. Worley Aviation Inc.

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
NEW KENT COUNTY 
 
v. Record No. 970236 
OPINION BY JUSTICE CYNTHIA D. KINSER 
                                          JANUARY 9, 1998 
WORLEY AVIATION, INC. 
 
 
FROM THE CIRCUIT COURT OF NEW KENT COUNTY 
 
Samuel T. Powell, III, Judge 
 
 
In this appeal, we first consider the jurisdictional 
requirements under Code §§ 15.1-550 and 15.1-552 for an appeal 
from an action of a county board of supervisors to the circuit 
court.  Next, we address whether a lessee of land owned by a 
county is entitled, under the terms of the lease, to recover the 
fair market value of a capital improvement on the leased 
premises.  Because we find that the lessee satisfied the 
jurisdictional requirements and constructed a capital improvement 
pursuant to a capital improvements plan approved by the board of 
supervisors, we will affirm the circuit court’s judgment in favor 
of the lessee. 
 
I. 
 
In accordance with a Lease Agreement dated January 24, 1985, 
New Kent County (the County) leased the New Kent County Airport 
to Worley Aviation, Inc., (Worley) for an initial term of ten 
years, with a right to renew the lease for an additional ten-year 
term under certain conditions.  The lease provisions at issue in 
this appeal provided a mechanism by which Worley could construct 
a capital improvement on the airport premises and later recover 
the fair market value of the improvement if the County did not 
renew the lease for an additional term.  Specifically, we are 
concerned with portions of Sections VI and VII of the lease.  In 
addition to establishing the initial ten-year term of the lease, 
commencing on January 1, 1985, and ending on December 31, 1994, 
the relevant portion of Section VII includes the following 
provisions: 
 
A.  If by December 31, 1989, 1) Lessee submits to 
Lessor a capital improvements plan for the construction 
of aviation related facilities on the airport property 
which plan shall specify the size, type and estimated 
costs of improvements shown thereon together with a 
committment [sic] by Lessee to begin construction of 
such improvements if the plan is approved, and 2) such 
plan or a variation of the same acceptable to both 
parties is approved by the Board of Supervisors of New 
Kent County, and 3) Lessee actually completes 
construction on the improvements shown in the plan, 
then Lessee shall have the right to extend the term of 
this lease until December 31, 2004, provided a written 
request for such renewal is submitted to Lessor not 
less than six (6) months nor more than nine (9) months 
before the end of the initial ten (10) year term.  
Notwithstanding a written request for extension from 
Lessee, Lessor reserves the right to terminate this 
agreement at the end of the initial ten (10) year term 
provided the provisions of Section VI paragraph D are 
complied with.  Lessor shall provide written notice of 
any such termination to Lessee at least six (6) months 
prior to the end of the term. 
Section VI(D), referenced in Section VII, and Section VI(E) 
contain the following terms: 
 
D. 
If Lessor is found in breach of this agreement or 
exercises its right to terminate this lease at the end 
of the first ten (10) year term and if Lessee has 
constructed capital improvements on the premises 
pursuant to an approved capital improvements plan as 
set out in Section VII paragraph A, then Lessor shall 
pay to Lessee the fair market value of such 
improvements at the time of such breach or termination. 
 
 
E. 
If lessee fails to exercise a right to renew this 
lease for an additional ten (10) year term or in the 
event this lease is terminated because of Lessee's 
failure to perform or for any other reason other than 
breach of this agreement by Lessor, then Lessee shall 
receive no compensation for any improvements 
constructed by Lessee and Lessee shall have no right to 
remove such improvements. 
 
 
 
In the event Lessee fails to construct 
improvements in accordance with the provisions of 
Section VII paragraph A and Lessor exercises its right 
to terminate under Section VII paragraph B, then Lessee 
shall receive no compensation for any improvements 
constructed by Lessee and Lessee shall have no right to 
remove such improvements except as set out in Section 
VII, paragraph C. 
 
 
In a July 8, 1986, letter, Worley submitted to the County “a 
capital improvement plan for the construction of aviation related 
facility in accordance with Section VII of our Lease Agreement.” 
 The proposed capital improvement consisted of a new maintenance 
aircraft hangar along with an office and terminal building.  
Worley requested approval of the capital improvement plan
1 by the 
Board of Supervisors of New Kent County (the Board) and also a 
renewal of its lease to December 31, 2004, in accordance with 
Section VII(A), provided the capital improvements were completed. 
 
The County’s attorney provided copies of Worley’s July 8, 
1986, letter and plan to the members of the Board.  Worley’s 
request for approval was placed on the Board’s agenda for its 
October 20, 1986, meeting: 
 
ITEM 5 – REPORT; REVIEW OF SITE AND CONSTRUCTION PLANS 
FOR NEW KENT AIRPORT TERMINAL BUILDING AND MAINTENANCE 
HANGER [sic] – The Board will review plans submitted by 
Mr. A. C. Worley, New Kent Airport Manager, for 
construction of a 64’ x 80’ aircraft maintenance hangar 
along with a 60’ x 24’ terminal building.  The airport 
lease agreement requires Board approval of all airport 
capital improvement projects undertaken by the airport 
operator - Worley Aviation, Inc.  
 
                     
    
1 Section VI(A) of the Lease Agreement addresses Worley's right 
to "construct and/or erect improvements on the premises" with the 
County's approval.  In contrast to Section VII(A), Section VI(A) 
does not use the term "capital improvement." 
After discussion of the plan and a presentation by Worley, the 
Board approved, as stated in its minutes, “the plans for the new 
terminal building.”
2
 
Subsequent to the meeting, the County’s attorney advised 
Worley, in a letter dated October 22, 1986, that the Board had 
approved “the site and construction plans for the new terminal 
and hangar building . . . .  These plans were approved by the 
Board in accordance with Section IV-A of the airport lease 
agreement.”
3  Accordingly, Worley obtained a building permit and 
proceeded with construction.  The building inspector issued a 
certificate of occupancy on January 4, 1988. 
 
However, part of the present dispute concerns whether the 
construction was in accordance with the approved drawings because 
Worley included an apartment area in the building.  Those 
drawings are no longer available, but the building inspector 
stated that part of his inspection was to ensure compliance with 
the approved plans. 
 
Several months before the end of the initial ten-year term 
of the lease, the Board advised Worley that it did not intend to 
renew the lease for an additional term.  The County relied on its 
right to terminate the lease at the end of the first ten years 
provided it complied with Section VI(D) of the Lease Agreement.  
Subsequently, the County’s attorney advised Worley that the Board 
                     
    
2 The Board did not vote on Worley’s request to renew the lease 
for an additional ten-year term. 
    
3 The parties agree that the reference to “Section IV-A” in 
this letter is not correct. 
   
would be contacting it to invoke the appraisal procedure set 
forth in Section VI(C).
4  Eventually, the County and Worley 
selected J. Parks Rountrey (Rountrey) as the appraiser for the 
purpose of establishing the value of the capital improvement on 
the airport premises.  Rountrey described the improvement as a 
maintenance hangar, office/public building, equipment (fixtures), 
and site improvements.  He opined that the fair market value of 
the improvement was $480,000 as of December 21, 1994. 
 
Despite the agreement to use Rountrey, a dispute arose 
between Worley and the County.  In a letter dated October 18, 
1994, the County’s new attorney advised Worley for the first time 
that the County questioned Worley’s claim for the fair market 
value of the capital improvement on the airport premises.  The 
basis for the dispute was the absence of a reference in the 
minutes of the October 20, 1986, meeting to the specific section 
of the Lease Agreement under which the Board approved the capital 
improvement.  Worley then presented its claim to the Board in 
three separate letters, the last of which included Rountrey’s 
appraisal.  But at its January 9, 1995, meeting, the Board denied 
Worley's capital improvement claim along with other claims 
unrelated to this appeal.
5  
                     
    
4 The pertinent portion of Section VI(C) contains the following 
terms: 
 
 
When the “fair market value” of a building or structure 
or improvement must be determined for purposes of this 
lease, it shall be established by a qualified appraiser 
agreed upon by Lessor and Lessee. 
    
5 The minutes of the January 1995 Board meeting state that “the 
Lease Agreement . . . does not require the County to compensate 
Worley Aviation for the terminal building . . . and that the 
 
After the Board’s denial, Worley commenced an appeal to the 
circuit court.  According to Worley, it first served a written 
notice of appeal on the clerk of the Board on February 3, 1995, 
and posted an appeal bond.  Worley then filed its motion for 
judgment in the circuit court.  In its grounds of defense, the 
County denied that Worley served its written notice of appeal on 
the clerk of the Board and posted its bond,
6 but the County never 
brought this issue for hearing before the circuit court.
7
 
After ruling on the County’s demurrer and motion for partial 
summary judgment, the circuit court conducted a bench trial.  At 
the trial, the attorney who represented the County at the October 
20, 1986, Board meeting testified that he did not recall that the 
Board approved any capital improvements plan but "simply the 
plans for the one facility.”  However, the attorney admitted that 
the Board approved Worley’s plans as submitted.  Likewise, a 
member of the Board testified that the Board approved only the 
plans for the terminal building and not a capital improvements 
                                                                  
claimants have failed to establish or prove their claims and have 
failed to comply with Section 15.1-550 of the Code of Virginia in 
the presentation of their claims.” 
    
6 The County also mentioned this alleged failure in a footnote 
in its trial brief and as an exception to the circuit court's 
final order. 
    
7 Worley alleged service of the written notice on the clerk of 
the Board and posting of its bond in paragraphs 12 and 13 of its 
motion for judgment.  It provided additional details about these 
matters in its answer to the County’s interrogatories.  The County 
filed this interrogatory answer as an exhibit with its memorandum 
in support of its demurrer and motion for partial summary 
judgment.  Worley did not introduce the written notice or bond 
into evidence before the circuit court. 
plan.
8  Worley, however, testified that it would not have 
invested its money if the Board’s approval had not been pursuant 
to Section VII(A) of the Lease Agreement.  
 
On November 6, 1996, the circuit court entered a final order 
in which it found that “Worley constructed certain capital 
improvements on the demised premises; that the capital 
improvements were part of a capital improvements plan properly 
approved by the Board of Supervisors and constructed; and that 
the fair market value of such improvements was $480,000 at the 
date of termination of the lease.”  We awarded the County an 
appeal. 
 
II. 
 
In the County’s first assignment of error, it asserts that 
Worley did not satisfy the jurisdictional requirements of Code 
§§ 15.1-550 and 15.1-552.  These two sections, along with Code 
§§ 15.1-553 and 15.1-554, “demonstrat[e] a legislative intent to 
provide a comprehensive procedure for the presentation, auditing, 
challenge, defense, and judicial review of monetary claims 
asserted against a county.”  Nuckols v. Moore, 234 Va. 478, 481, 
362 S.E.2d 715, 717 (1987).  Furthermore, “Code §§ 15.1-550 et 
seq. provide the exclusive procedure for litigating claims 
                     
    
8 At the bench trial, several agenda books for the October 20, 
1986, meeting were introduced into evidence.  The books belonged 
to one of the supervisors, the County's administrator, the 
County's assistant administrator and director of planning, and the 
County's attorney.  Each of these books contained copies of the 
agenda, Worley's July 8, 1986, letter, and a staff report 
recommending that the Board approve "the site plan for the 
construction but not the request for extension of the lease 
. . . ."  
against a county.  Failure to allege compliance with these 
statutes is fatal to an action against a county.”  Burk v. 
Porter, 222 Va. 795, 797, 284 S.E.2d 602, 603 (1981) (citations 
omitted). 
 
Code § 15.1-550 states that “[n]o account shall be allowed 
by the board of supervisors unless the same shall be made out in 
separate items and the nature of each item specifically stated.” 
 The County contends that Worley never “specifically stated” its 
claim to the Board.  It argues that Worley failed to establish 
that the Board had approved a capital improvements plan and never 
provided the Board with the site plan, the working drawings, or 
the specifications for the terminal building.  We disagree with 
the County. 
 
Worley submitted its claim regarding the capital improvement 
in three separate letters to the County’s attorney.  Included 
with the last letter dated January 5, 1995, was Rountrey’s 
appraisal, which valued the capital improvement at $480,000, the 
amount Worley claimed.  Furthermore, the Board’s minutes of its 
January 9, 1995, meeting listed Worley’s claim for compensation 
for the airport terminal building as a separate item.  Worley 
provided sufficient information for the Board to be apprised of 
the nature, basis, and amount of his claim.  Thus, we conclude 
that Worley satisfied the statutory requirements of Code § 15.1-
550. 
 
The County’s contention that Worley cannot present evidence 
to the circuit court that it did not present to the Board is also 
without merit.  “An ‘appeal’ pursuant to Code § 15.1-552 is a de 
novo action at law.”  Carlo v. County of Nottoway, 232 Va. 1, 3, 
348 S.E.2d 201, 202 (1986).  While Code § 15.1-552 speaks in 
terms of an appeal to the circuit court, “the action of the board 
of supervisors is in no proper sense of the term an adjudication 
of the claim on its merits . . . .”  Luck Constr. Co. v. County 
of Russell, 115 Va. 335, 338, 79 S.E. 393, 394 (1913).  Thus, 
Worley was not precluded from presenting evidence to the circuit 
court that it did not present to the Board. 
 
To support its argument that Worley did not comply with Code 
§ 15.1-552, the County relies on Worley’s failure to introduce 
into evidence at the bench trial proof that it served the written 
notice of appeal on the clerk of the Board and posted an 
appropriate bond.  This section provides that, when the board of 
supervisors denies a claim, as in this case, the claimant: 
 
may appeal from the decision of the board to the 
circuit court of the county within thirty days from the 
date of the decision . . . .  Such appeal may be taken 
by causing a written notice thereof to be served on the 
clerk of the board and executing a bond to such county, 
with sufficient surety to be approved by the clerk of 
the board . . . .  
 
Code § 15.1-552. 
 
 
As previously stated, Worley alleged compliance with this 
provision, but the County denied the allegations.  The County did 
not, however, bring this issue for a hearing before the circuit 
court, nor did it proffer any reason for the court to question 
its jurisdiction.  Thus, the circuit court never addressed the 
matter, but decided the claim on its merits.  The County does not 
now assert that Worley did not serve the notice or post bond, but 
rather that the record on its face does not show Worley's 
compliance with Code § 15.1-552. 
 
This Court’s decision in Shelton & Luck v. Sydnor, 126 Va. 
625, 102 S.E. 83 (1920), controls the resolution of this issue.  
In that factually analogous case, a board of supervisors allowed 
a claim for services rendered to the county, and the 
Commonwealth’s Attorney appealed the allowance to the circuit 
court.  The statute under which the appeal was taken required the 
Commonwealth’s Attorney to serve a written notice of appeal on 
the clerk of the board of supervisors and the party in whose 
favor the claim had been allowed, within 30 days after the 
decision.  As in this case, it was argued that the written notice 
of appeal was essential to the circuit court’s jurisdiction and 
that the record failed to disclose timely notice. 
 
In Shelton, we held that the circuit court had jurisdiction 
to hear the appeal from the board of supervisors: 
 
There is a legal presumption, in the absence of 
evidence to the contrary, in favor of the jurisdiction 
of courts of record of general jurisdiction.  The 
appeal from the decision of the board of supervisors to 
the circuit court could only be taken in the manner and 
at the time prescribed by the statute, and, in the 
absence of any evidence in the record before us to the 
contrary, we must hold that the statement in the record 
that the appeal was taken December 1, 1917, means that 
the appeal was duly taken in the manner and within the 
time prescribed by the statute . . . .  [I]t is not now 
claimed that notice was not duly served or appearance 
duly entered, but simply that the record does not on 
its face show such service or appearance.  Under such 
circumstances every presumption will be indulged in 
favor of the correctness of the judgment of the circuit 
court. 
 
Shelton, 126 Va. at 633, 102 S.E. at 86.  We further stated in 
Shelton that “the case appears to have been tried in the circuit 
court without . . . an objection or exception on that account.  
If the notice was not given or appearance entered within the time 
required by law that fact could have been readily determined if 
the question had been raised in the trial court.”  Id. at 634, 
102 S.E. at 87. 
 
Like the Commonwealth’s Attorney in Shelton, the County did 
not raise any objection to the circuit court’s jurisdiction when 
it was hearing the case.  The County’s denial in its grounds of 
defense is not sufficient.  If the County had a basis for 
believing that Worley did not comply with Code § 15.1-552, it 
should have squarely presented that issue to the circuit court.  
Then it would have been incumbent upon Worley to prove that it 
had, in fact, timely served the notice of appeal and posted bond. 
 Thus, we will apply the presumption enunciated in Shelton and 
hold that Worley satisfied the notice and bond requirements of 
Code § 15.1-552.
9
 
In the County’s final assignment of error, it challenges the 
lower court’s factual findings.  The County first argues that the 
Board never approved a capital improvements plan.  The County 
premises this argument on the fact that the October 20, 1986, 
meeting agenda and minutes did not include the term “capital 
improvements plan.”  It also relies on witnesses’ testimony that 
the Board approved only the construction of the terminal 
building--not a capital improvements plan. 
 
“As the fact finder, the trial court determines the 
                     
    
9 The County also contends that Worley cannot rely on its 
interrogatory answer as proof that it complied with Code § 15.1-
552.  We do not reach this issue since we are not relying on the 
interrogatory answer in our decision. 
credibility of the witnesses and the weight of their testimony; 
its findings, therefore, will not be disturbed on appeal unless 
plainly wrong or without evidence to support them.”  Bankers 
Credit Serv. of Vermont, Inc. v. Dorsch, 231 Va. 273, 275, 343 
S.E.2d 339, 341 (1986); see also Code § 8.01-680.  Accordingly, 
we will use this standard to review the circuit court’s factual 
findings. 
 
We agree that the evidence amply supports the trial court’s 
finding that the Board approved a capital improvements plan under 
Section VII(A) of the Lease Agreement.  When Worley initiated the 
approval process with its July 8, 1986 letter, it called the new 
construction a capital improvement plan under Section VII.  Even 
though the staff report to the Board incorrectly referred to 
Section IV(A), it also advised the Board that Worley requested 
approval not only for the construction but also for an extension 
of the lease until December 31, 2004, in accordance with Section 
VII(A).  The staff report explained that under Section VII(A), 
Worley had the right to request the extension if it submitted a 
capital improvements plan for approval before December 31, 1989. 
 
In addition, while Item 5 on the meeting agenda did not use 
the phrase “capital improvements plan,” it addressed the plans 
that Worley submitted.  The agenda, along with copies of Worley’s 
letter and the staff report, was in the handbooks belonging to 
the Board members and to some of the County’s staff.  Further, 
the Board’s minutes for the October 20, 1986, meeting reflect 
that the Board approved Worley’s plans. 
 
Several years later, when the Board decided not to renew the 
lease for an additional term, it relied on its right to terminate 
the lease under Section VII, which in turn requires that the 
provisions of Section VI(D) be followed.  Section VI(D) obligates 
the County to pay Worley the fair market value of capital 
improvements on the premises that were built pursuant to an 
approved capital improvements plan.  Thus, we conclude that the 
circuit court did not err in finding that the Board had approved 
a capital improvements plan under Section VII(A) of the Lease 
Agreement. 
 
The final factual error alleged by the County involves the 
lease provision that requires Worley “actually [to] complet[e] 
construction on the improvements shown in the plan.”  The County 
does not dispute that Worley completed the construction.  
Instead, it claims that the building constructed by Worley was 
not the construction approved by the Board.  However, the plans 
or drawings that the Board approved are no longer available.  If 
Worley deviated from the approved plans, it actually built more, 
i.e., an apartment area, than was encompassed by the original 
plans. Moreover, the building inspector testified that he had 
reviewed the construction plans before issuing the building 
permit and had inspected the building before granting Worley a 
certificate of occupancy.  He further stated that part of his 
inspection had been to verify that the building was constructed 
according to the approved plans. 
 
For these reasons, we will affirm the circuit court’s 
judgment awarding Worley $480,000 as the fair market value of the 
capital improvement constructed on the airport premises. 
 
Affirmed.