IN THE SUPREME COURT OF A PPEALS OF WEST VIRGINIA September 2014 Term

_____________

No. 13-0926

_____________ JERRY N. BLACK, M.D., Defendant Below, Petitioner

v. ST. JOSEPH’S HOSPITAL OF BUCKHANNON, INC., Plaintiff Below, Respondent

___________________ _____________________ ____________________ Appeal from the Circuit Court of Upshur County The Honorable John L. Henning, Jr., Judge Civil Action No. 12-C-52 AFFIRMED IN PART; REVERSED IN PART; and REMANDED

___________________ _____________________ ____________________ Submitted: September 3, 2014

Filed: September 30, 2014 J. Burton Hunter, III, Esq. J. Burton Hunter, III and Associates, PLLC Buckhannon, West Virginia Counsel for the Petitioner Marc E. Williams, Esq. Robert M. Sellards, Esq. Kelly Calder Mowen, Esq. Nelson Mullins Riley & Scarborough, LLP Huntington, West Virginia Counsel for the Respondent

JUSTICE KETCHUM delivered th e Opinion of the Court. 

### FILED September 30, 2014 released at 3:00 p.m. RORY L. PERRY II, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIASYLLABUS BY THE COURT

“An option given for the sale of land, supported by a valuable consideration, is not a sale of real estate, nor an agreement to sell, but is an executed contract, giving the optionee the exclusiv e privilege of purchasing within the time limited, and which cannot be withdrawn dur ing the time stipulated for; and upon acceptance within that time it b ecomes an executory contract for the sale of land, which may be specifically enforced in a proper case.” Syllabus Point 2, Pollock v. Brookover , 60 W.Va. 75, 53 S.E. 795 (1906).1 Justice Ketchum:

Petitioner/defendant below, Dr. Jerry N. Black (“Dr. Black”), appeals from an order of the Circuit Court of Upshur Co unty granting summary judgment in favor of respondent/plaintiff be low, St. Joseph’s Hospital of Buc khannon, Inc. (“hospital”). The hospital filed a complaint for de claratory judgment asking the circuit court to declare that an “Option to Repurchase” ag reement it entered into with Dr. Black was an option contract rather than a “right of first refu sal.” The hospital’s co mplaint did not seek a determination of whether the “Optio n to Repurchase” agreement was a valid option

contract or a determination of the time fr ame in which it could exercise the option. At the summary judgment hearing, both parties agreed that the “Option to Repurchase” agreement was, in fact, an option contract. During the hearing, counsel for

Dr. Black stated that the ac tual disagreement between the parties concerned the time frame in which the option could be exercised. The circuit cour t stated, “That’s not part of the case . . . . I’m not deciding that one way or the other. Please prepare an Order which says that the matter was determined by the Cour t to be an option contr act . . . that is the sole question decided by this Court.” Follow ing this hearing, co unsel for the hospital prepared an order stating that the “Option to Repurch ase” agreement is an option contract, but added that the “Option Contract is a valid Option Contract under West Virginia law.” (Emphasis added). The circ uit court entered the order prepared by the hospital, over Dr. Black’s objection, on August 8, 2013.2 On appeal, Dr. Black argues that the va lidity of the option contract was not

an issue before the circuit court. Dr. Bl ack states that the hospital’s complaint for declaratory judgment only sought a determina tion of whether the “Option to Repurchase” agreement was an option contract rather than a “right of first refusal.” Because the validity of the option contract was outside the scope of the hos pital’s complaint, according to Dr. Black, he asks that we reve rse the summary judgmen t order’s ruling that “[the] Option Contract is a valid Option Contract under West Virginia law.” After review, we find that the hospital’ s complaint for declaratory judgment

did not seek a determination of the validity of the option cont ract or a determination of the time frame in which the optio n could be exercised. It onl y sought a determination of whether the “Option to Repurc hase” agreement was an optio n contract rather than a “right of first refusal.” Further, the circ uit court’s announced de cision at the summary judgment hearing made no ruling on the validity or time frame in which the option contract could be exercised. Instead, the ci rcuit court stated that the “sole issue” it decided was that the “Option to Repurchas e” agreement was an opt ion contract. We therefore reverse the ruling contained in the circuit court’s summary judgment order that the “Option Contract is a valid Option Contract under West Vi rginia law.” We affirm the order’s ruling that the “Option to Repurc hase” agreement is an option contract.3 I. FACTUAL AND PROCED URAL BACKGROUND On June 3, 1982, Dr. Black and the hospital entered into a “Memorandum Agreement” in which the hospita l agreed to deed certain real property to Dr. Black upon

which he would construct a build ing, at his own expense, to serve as the lo cation for his medical practice. 1 The “Memorandum Agreement” contains the following provision: “Hospital . . . is hereby granted the first opt ion to purchase the land for the sum of $1.00 and the Physicians Office Bu ilding pursuant to the terms and conditions shown on the option agreement a ttached hereto[.]” 2 The attached agreemen t is entitled “Option to Repurchase.” It states that Dr. Black does “hereby grant to Hospital the first option to purchase the premises known as Physicians Office Building . . . This option shall expire

1 This property is located in Upshur Coun ty, West Virginia, an d contains 13,069 square feet. The “Memorandum Ag reement” includes the following: Physician [Dr. Black] agrees that the Un it within the building will be used and occu pied only by members of the medical, surgical and oral surgical staff at St. Joseph’s Hospital hereinafter referred to Physician. In addition, only those activities reasonably related to the practice of Physician shall be permitted in the Unit provided and fu rther, only if such activities are performed in conjunction with or are supportive of the practice of the Doctors.

2 The terms and conditions state “[t]he purchase price shall be the sum of One Dollar ($1.00) and the fair market value for the building . . . as determined by three arbitrators.”4 at noon on June 3, 2081 unless otherwise extended by the oper ation of this agreement or consent of the parties hereto[.]” The “Option to Repurchase ” agreement contains one paragraph addressing the notice the hospital must pr ovide to Dr. Black prior to exercising the option and one paragraph addressing the time pe riod during which the hospital can exercise the option. Paragraph three of the “Optio n to Repurchase” agreement, entitled “Notice of Exercise,” provides, in relevant part, “T his option shall be exercised by written notice signed by St. Joseph’s and sent by registered mail at least one year prior to the expiration date [June 3, 2081].” (Emphasis added). Paragraph five of the agreement, entitled “Time During Which Option May Be Exercised,” states, in relevant part, “This first option will be exercised by giving written notice as set fort h in paragraph 3 herein which notice can only be given at any time within one year prio r to the date of the expiration of this Option[.]” (Emphasis added). The hospital filed a complaint for decl aratory judgment against Dr. Black on April 20, 2012. 3 The complaint alleges that “D r. Black refuses to recognize St. Joseph’s Hospital’s Option to Re purchase but instead considers the same to be a right of

first refusal. Due to Dr. Bl ack’s incorrect legal position, a justiciable controversy now exists between the parties herein.” Th e complaint goes on to allege that

3 The hospital’s complaint fo r declaratory judgment was filed pursuant to the West Virginia Uniform Declaratory Judgment Act , W.Va. Code § 55-13-1 [1941], et seq

.5 Dr. Black has taken the position that St. Joseph’s Hospital cannot exercise its executed op tion contract until an offer is made to a bona fide purchaser. This is an incorrect statement of law as St. Joseph’s Hospital clearly possesses an executed option contract that can be exer cised at any point within the agreed-upon time frame regardless of the existence of a bona fide purchaser. Based on this allegation, the hospital’s complaint seeks th e following relief:

A declaration that Plain tiff [hospital] possesses an executed option contract that can be exercised by the optionee, Plaintiff [hospital], at any point with in the agreedupon time frame and without the need for any condition precedents to be met. The hospital’s compla int for declaratory judgme nt does not ask for a determination of when the “agreed-upon ti me frame” occurs unde r the terms of the “Option to Repurchase” agreemen t. Instead, the complaint for declaratory judgment only

asks the circuit court to declare that the “O ption to Repurchase” is an option contract. On April 25, 2013, the hospital filed a motion for summary judgment asserting that the “Option to Repurchase” ag reement is an option contract. The circuit

court 4 held a hearing on th is motion on June 21 , 2013. At this hearing, counsel for the hospital stated that it was only seeking a determination of whether the “Option to Repurchase” agreement was an option contract or a “right of first refusal,” nothing more. Counsel for the hospital stated:

4 Judge Thomas H. Keadle entered an orde r denying a motion to dismiss filed by Dr. Black. Judge Keadle retired on January 31, 2013. J udge John L. Henning, Jr., presided over the summary judgment hearing.6 [W]e brought before the Court a complaint for declaratory judgment and we simply ask th e Court, “Is the document an option contract or a right of first refusal?” Nothing more. We didn’t ask when it could be e xercised, we didn’t ask for the interpretation of it , we just asked the C ourt to tell us whether it was or wasn’t [an option contract]. (Emphasis added).

Counsel for Dr. Black told the court that he did not dispute that the “Option to Repurchase” agreement wa s an option contract. Howe ver, counsel for Dr. Black stated, “[W]hat I want to tell the Court is that the real issue in this case is whether St. Joseph’s can exercise that op tion now or during the last year of a 99-year term[.]” 5 Following this statement, th e circuit court engaged in the following dialogue with Dr.

Black’s counsel: Circuit Court: So you are saying that you agree with them that it’s an option contract? Counsel: Always have.

Circuit Court: Period. Done deal. Case dismissed. Right? Counsel: Well, if that’s what they’re saying. But it’s our understanding –

5 Dr. Black states that under the plain lang uage of paragraph five of the “Option to Repurchase” agreement, the option can only be exercised “at any time within one year prior to the date of the expira tion of this Option.” By contra st, Dr. Black states that the hospital contends that it may exercise the “Op tion to Repurchase” at any time prior to one year before the date of the expiration of the “Option to Repurchase.” Stated another way, Dr. Black argues that the hospital can only exer cise its option betwee n June 3, 2080, and June 3, 2081; whereas the hosp ital believes it can exercise its option at any time prior to June 3, 2080, one year be fore the option expires.7 Circuit Court: That’s what they are saying and they are saying you agree with them. Counsel: As far as it goes.

Circuit Court: And that’s all they want to know. Counsel: And if they are not seeking a ruling on whether they can exercise that option now, go on record saying that if they try, we’ll resist it. Circuit Court: That’s not part of th e case. That’s not part of the case. . . . I’m not deciding th at one way or the other. Please prepare an Order which says that the matter was determined by the Court to be an option contract. The circuit court ordered counsel for the hospital to prepare the order granting summary judgment in the hospital’s favor. The circuit court stated, “Please prepare an order which says that the matter was determined by the Co urt to be an option

contract.” The circuit court also stated th at its ruling that the “Option to Repurchase” agreement was an option contract “is the so le question decided by this Court.” Following the summary judgment hear ing, counsel for the hospital prepared an order that contained two paragraphs under the heading “Findings of Fact and

Conclusions of Law.” Those tw o paragraphs are as follows: 1. Defendant [Dr. Black] entered into an Option Contract with Plaintiff [hospita l] dated June 3, 1982. This option contract has been recorded at Book 306 Page 140-143. 2. The June 3, 1982 Op tion Contract is a valid Option Contract under West Virginia law.8 On July 2, 2013, Dr. Black filed an objection to the hospital’s proposed order, arguing that the word “valid” precedi ng “option contract” in paragraph two was improperly inserted into th e order. Dr. Black maintain ed that the circuit court specifically did not rule on the validity or time period during which the hospital could exercise its option. Further, Dr. Black stat ed that the “wording of the proposed order should simply say the documen t entitled ‘option contract’ of the parties is an option

contract. This Court did NOT rule on its valid ity, the meaning of its notice terms, or its enforceability.” The circuit court entered the order prepared by counsel for the hospital, over Dr. Black’s objection, finding the ag reement was a “valid” option contract. 6 Dr. Black subsequently filed the present appeal.

II. STANDARD OF REVIEW Dr. Black appeals the circuit court’s order granting summary judgment in favor of the hospital. Our standard of re view of a circuit cour t’s entry of summary

6 It appears that the circuit court did no t conduct a hearing on Dr. Black’s motion objecting to the hospital’s proposed order. Similarly, the appendix-record does not contain a circuit court order denying Dr. Black’s motion objecting to the hospital’s proposed order. The hospital’s brief states “the Circuit Court, after consideration of Dr. Black’s objections to the proposed order gran ting summary judgment . . . adopted [the hospital’s] pr oposed order[.]”9 judgment is de novo . Syllabus Point 1, Painter v. Peavy , 192 W.Va. 189, 451 S.E.2d 755 (1994). We have held that “[a] motion for summary judgment shou ld be granted only

when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law.” Syllabus Point 3, Aetna Cas. & Sur. Co. v. Federal Ins. Co. of New York , 148 W.Va. 160, 133 S.E.2d 770 (1963). Further, [s]ummary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, such as wh ere the nonmoving party has failed to make a sufficient showin g on an essential element of the case that it has the burden to prove. Syllabus Point 4, Painter , 192 W.Va. 189, 451 S.E.2d 755. Additionally, in Syllabus Point 3 of Cox v. Amick , 195 W.Va. 608, 466 S.E.2d 459 (1995), this Court not ed, “A circuit court’s entry of a declaratory judgment is

reviewed de novo .” More specifically, this Court stated in Cox that “because the purpose of a declaratory judgment action is to resolv e legal questions, a circuit court’s ultimate resolution in a declaratory j udgment action is reviewed de novo ; however, any determinations of fact made by the circuit court in reaching its ultimate resolution are reviewed pursuant to a clearly erroneous standard.” Id . at 612, 466 S.E.2d at 463. With the foregoing in mind, we consider the parties’ arguments.10 III. ANALYSIS A declaratory judgment action is a proper procedural means for adjudicating the legal rights of parties to a disputed contract . West Virginia Code § 55- 13-1 [1941] provides:

Courts of record within thei r respective jurisdictions shall have power to declare rights, st atus and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or ne gative in form and effect; and such declarations shall have th e force and effect of a final judgment or decree. Additionally, “[a]ny person interested unde r a . . . written contract, or other writings constituting a contract . . . may have determined any questi on of construction or validity arising under the . . . contract . . . a nd obtain a declaration of rights, status or other legal relations thereunder.” W.Va. Code § 55-13-2 [1941]. As Justice Cleckley explained in his concurring opinion in Cox v. Amick , 195 W.Va. at 618, 466 S.E.2d at 469, the West Virginia Uniform Declaratory Judgment

Act , W.Va. Code § 55-13-1, et seq ., “is designed to enable litigan ts to clarify legal rights and obligations before acting upon them.” T hus, “the principal purpose of a declaratory judgment action is to resolve legal questions.” Joslin v. Mitchell , 213 W.Va. 771, 775, 584 S.E.2d 913, 917 (2003). Turning to the present controversy, th e hospital’s compla int for declaratory judgment asked the circuit court to declare th at the “Option to Repu rchase” agreement it11 entered into with Dr. Black was an option contract rather than a “right of first refusal.” 7 As this Court explained in Pollock v. Brookover , 60 W.Va. 75, 53 S.E. 795 (1906), an option contract is not a contract to sell, nor an agreement to sell, real estate, because there is no mutuality of obligation and remedy; but it is a contract by which the owner agrees with another person that he shall have the right to buy, within a certain time, at a stipulated price. It is a contin uing offer to sell, which may or may not, with the time specified, at the election of the optionee, be accepted. The owner pa rts with his right to sell to another for such time, and gives to the optionee this exclusive privilege. It is the right of election to purchase, which has been bought and paid for, and which forms the basis of the contract between the parties. Upon the payment of the consideration, and the signing of the option, it becomes an executed contract - not, however, an executed contract selling the land, but the sale of the option, which is irrevocable by the optionor, and which is capable of being converted into a valid executory contract for the sale of land[.] Based on this discussion, the Court in Pollock held: An option given for the sale of land, supported by a valuable consideration, is not a sale of real estate, nor an

7 This Court addressed the distinction betw een an option contract and a “right of first refusal” in Smith v. VanVoorhis , 170 W.Va. 729, 731, 296 S.E.2d 851, 853 (1982), stating: In a typical option the optionee has the absolute rightto purchase something for a definite consideration. A preemptive right [right of first refu sal] involves the creation of the privilege to purchase only on the formulation of a desire on the part of the owner to sell; and . . . the holder of the right must purchase for the price at which the owner is willing to sell to a third person.12 agreement to sell, but is an executed contract, giving the optionee the exclusive privilege of purchasing within the time limited, and which cannot be withdrawn during the time stipulated for; and upon acce ptance within that time it becomes an executory contract for the sale of land, which may be specifically enforc ed in a proper case. Syllabus Point 2, Id. Accord Syllabus Point 3, Am. Canadian Expeditions, Ltd. v. Gauley River Corp ., 221 W.Va. 442, 655 S.E.2d 188 (2007). Both the hospital and D r. Black agree that the “Option to Repurchase” agreement is an option contract. While conceding that the “Option to Repurchase” agreement is an option contract, Dr. Black ar gues that the option contract’s validity was

not an issue in this case and should not have been included in the circuit court’s summary judgment order. In support of this argument, Dr. Black cites the circuit court’s statement at the summary judgment hearing that “the sole question decide d by this Court” is that the “Option to Repurchase” agre ement is an option contract. When counsel for Dr. Black stated that actual dispute between the part ies was the time frame in which the option could be exercised, the circuit co urt stated: “That’s not part of the case. That’s not part of the case . . . I’m not deciding that one way or the other.” Further, Dr. Black notes that

the circuit court instructed co unsel for the hospital to prepar e an order stating, “[T]he matter was determined by the C ourt to be an option contract.” The circuit court did not instruct counsel for the hospita l to prepare an order stating that the matter was determined

to be a valid option contract. Because the circuit c ourt’s ruling was restricted to the sole question of whether the agreement was an option contract, Dr. Black argues that the13 circuit court erred by entering an order containing the legal c onclusion that the “Option to Repurchase” agreement is a valid option contract under West Virginia law. By contrast, the hospital argues that the circuit court correctly determined that the “Option to Repurchase” agreement is an option contract. The hospital argues that the narrow question of law before the circu it court was only whet her the “Option to Repurchase” agreement was an option contract or a “right of first refusal.” The hospital states that “Dr. Black argued about the term s, enforceability and timing of the option contract – all issues that were not properly before the circuit court, and are not properly before this Court on appeal.” While concedi ng that these issues regarding the substance of the option contract were not properly befo re the circuit court, the hospital fails to address why the order it prepared following the summary judgment hearing included a substantive legal conclusion—that the “Optio n to Repurchase” agre ement is a “valid” option contract under West Virginia law. After review, we find that the valid ity and time frame in which the option

could be exercised were issues not properly before the circ uit court because the hospital’s complaint for declaratory judgment only sou ght a determination of whether the “Option to Repurchase” agreement was an option contract rather than a “right of first refusal.” The hospital’s complaint did no t seek a declaration on the va lidity of the option contract or the time frame in which the option could be exercised. Before a court can determine the validity of a contract, it must consider the contract terms and, in the present case, the14 time frame in which the op tion could be exercised. 8 Because these issu es were not before

the circuit court or considered by the circuit court, it was error for the circuit court’s summary judgment order to include a legal conclusion regarding the option contract’s validity. The narrow scope of the hospital’s declaratory judgment complaint was evident during the summa ry judgment hearing. At this hearing, counsel for the hospital told the circuit court, “We di dn’t ask when it [the option] co uld be exercised, we didn’t ask for the interpretation of it[.]” This st atement is in direct opposition to the legal conclusion the hospital placed in the order follow ing the hearing. In the first instance, the hospital told the court that it was not seeking an interpretati on of the option contract. In

the order it submitted to the ci rcuit court, however, the hosp ital included its interpretation that the option contract was valid. The parties’ conflicting interpreta tions of the “Option to Repurchase” agreement demonstrate that there is subs tantial disagreement regarding the option contract’s validity. According to a report pr epared by Dr. Black’s e xpert, Dean John W. Fisher, II, the option contract’s validity is dependent on the time frame in which the option can be exercised. Dean Fisher agreed with Dr. Blac k’s suggested interpretation of

8 “A well-established principle of contract law is that it is esse ntial to the validity of any contract, including an option agreement, that a defin ite time for performance either be stated in the contract or be ascertainab le from the contract’s expressed or implied provisions.” Validity of Option to Purc hase Realty as Affected by Indefiniteness of Term Provided for Exercise , 31 A.L.R.3d 522 (1970).15 the “Option to Repurchase” agr eement—that the hospital coul d only exercise its option during the final year of the agreement. Ad ditionally, Dean Fisher asserted that the hospital’s interpretation of the option contr act—that it could be exercised at any time prior to June 3, 2080—“violates the common law rule against perpetuities.” 9 The circuit

9 Dean Fisher stated: For purpose of discussion, if one were to assume Plaintiff’s [hospital] interpre tation is correct, it leaves the Plaintiff with what I believe is an insurmountable Rule Against Perpetuities problem. If one accepts the Plaintiff’s reading of the documents, I be lieve the agre ement becomes patently inequitable. . . . In conclusion, I note that I am in agreement with the interpretation of the documents involved in this case as articulated in your [Dr. Black’s] motion to dismiss and the substance of your response to the Plaintiff’s motion for summary judgment. . . . My opinion is reflective of my teaching of Property Law fo r over forty years and my research and writing on the subject area. In addition to this expert witness repor t, Dr. Black argued that the hospital’s suggested interpretation of the option contract defies “comm on sense.” Dr. Black stated: Who, in his right mind, would sign an agreement which, if the interpretation of [t he hospital] in this case were accepted, where he constructed a building, at his own expense, only to be vulnerable , during the rest of his career and during the entire period of the option, to the hospital’s repurchasing the property for “$ 1.00 plus fair market value”? To do so would place the phys ician at the greatest peril in being forced to sell in the event of a dramatic event in market forces resulting in an unprecedented reduction in fair market value. It would perm it the hospital, at any time it (continued . . .)16 court did not rely on or discuss Dean Fishe r’s opinion at the summary judgment hearing, however, because the sole issue before it was whether the “O ption to Repurchase” agreement was an option co ntract rather than a “right of fi rst refusal.” Had the validity of the option contract been an i ssue in this case, Dean Fish er’s opinion would have been

relevant to that determination. Because the hospital’s complaint and moti on for summary judgment did not seek a determination of whether the option contract was valid, and because the circuit

court refused to consider the validity of the option contract during the summary judgment hearing, it was error for the circuit cour t to rule that the “Option to Repurchase” agreement is a valid option contract. 10

should choose, and any time adva ntageous to it, to obtain a huge windfall[.]

10 The circuit court’s summary judgment or der did not offer sufficient factual or legal support for its ruling that the “Option to Repurchase” agreement is a “valid” option contract. Had the option contract’s validity been an issue in th is case, the summary judgment order’s failure to offer sufficient factual or le gal support explaining why the “Option to Repurchase” agreem ent is a “valid” option contra ct would have required this Court to remand this case pursu ant to Syllabus Point 3 of Fayette County National Bank v. Lilly , 199 W.Va. 349, 484 S.E.2d 232 (1997): Although our standard of review for summary judgment remains de novo , a circuit court’s order granting summary judgment must set out factual findings sufficient to permit meaningful appellate review. Findings of fact, by necessity, include those facts which the circuit court finds relevant, determinative of the issues and undisputed.17 IV. CONCLUSION We reverse the following ruling containe d in the circuit court’s August 8, 2013, summary judgment order: “The June 3, 1982 Option Contract is a valid Option Contract under West Virginia law.” We remand this matter to the circuit court for entry of an order granting summary judgment to th e hospital on the sole issue raised in its complaint for declaratory judg ment—that the “Option to Re purchase” agreement is an option contract rather than a “right of first refusal.”

Affirmed in part; Reversed in part; and Remanded.