Opinion ID: 1288552
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Heading Rank: 5

Heading: Uniform Commercial Code: Applicability of 1993 Revisions

Text: Unless varied by an agreement between them, the legal relationship between the parties is governed by the Uniform Commercial Code, as adopted in Chapter 46 of the West Virginia Code. The Legislature substantially amended Articles 3 and 4 of the West Virginia Uniform Commercial Code in 1993 in order to conform to the changes to the U.C.C. promulgated in 1990 by the Permanent Editorial Board of the Uniform Commercial Code. When a pending case implicates a state statute enacted after the events that form the basis of the suit, the court's first task is to determine whether [the West Virginia Legislature] has expressly prescribed the statute's proper reach. Landgraf v. USI Film Products, 511 U.S. 244, 280, 114 S.Ct. 1483, 1505, 128 L.Ed.2d 229, 261-62 (1994). Thus, we begin our analysis with an examination of the law regarding retroactivity of legislative acts. The plaintiff contends the circuit court erred in applying the new amendments retroactively. While noting the underlying transactions in this case occurred in 1989, the defendant argues that the rights and responsibilities of the parties in this case should be governed by the 1993 amendments to the Code. Indeed, it appears the circuit court did apply the revised Code to the facts in this case. Although the circuit court did not specifically state that it was using the post-1993 version of the Code, its conclusion that the checks were payable in the alternative because the order language was ambiguous appears to be drawn directly from W. Va. Code § 46-3-110(d) (1993), [6] which does not have an equivalent in the older version of Article 3. Nevertheless, the circuit court's interpretation of a statute, including whether the statute is to be applied retroactively, is a question of law reviewed by us de novo. The defendant argues the changes were not substantive and, therefore, retroactive application poses no substantial harm to the parties. We disagree. Under West Virginia law, a statute that diminishes substantive rights or augments substantive liabilities should not be applied retroactively to events completed before the effective date of the statute (or the date of enactment if no separate effective date is stated) unless the statute provides explicitly for retroactive application. See Mildred L.M. v. John O.F., 192 W.Va. 345, 351-352 n. 10, 452 S.E.2d 436, 442-443 n. 10 (1994), citing Landgraf v. USI Film Products, 511 U.S. at 244, 114 S.Ct. at 1483, 128 L.Ed.2d at 229; see also Norman J. Singer, Statutes and Statutory Construction § 41.04 at 349-50 (5th ed.1993). To be specific, this means that, unless expressly stated otherwise by the statute, such a statute will not apply to pending cases or cases filed subsequently based upon facts completed before the statute's effective date. See generally State ex rel. Blankenship v. Richardson, 196 W.Va. 726, 738-739, 474 S.E.2d 906, 918-919 (1996). In contrast, remedial and procedural provisions are applied normally to pending cases despite the absence of a clear statement of legislative intent to do so. [7] In these situations, the reliance interest that is the foundation of the interpretive principle limiting retroactive application is not engaged. But even here the procedural/substantive distinction is not talismanic. The test of the interpretive principle laid down by the United States Supreme Court in Landgraf is unitary. It is whether the the new provision attaches new legal consequences to events completed before its enactment. 511 U.S. at 270, 114 S.Ct. at 1499, 128 L.Ed.2d at 255. If a new procedural or remedial provision would, if applied in a pending case, attach a new legal consequence to a completed event, then it will not be applied in that case unless the Legislature has made clear its intention that it shall apply. The changes made by the 1993 amendments cannot be considered as procedural or inconsequential. As the plaintiff argues, [t]he 1993 Amendments dramatically changed the law with respect to the problem of the ambiguous payees. Under the 1993 amendments, an ambiguity as to whether joint payees were payees in the alternative, or not, allows either payee to indorse and negotiate a check without the other payee's endorsement. To the contrary, the law prior to 1993, as codified in W. Va.Code, § 46-3-116, provided that unless the instrument is made payable to two or more payees, in the alternative, it is payable to all of them and may be negotiated, discharged or enforced only by all of them. (Emphasis added). Thus, we find that the new provision attaches new legal consequences to events completed before its enactment. Because application of the new amendments to this case would be retroactive, the next step is to discern whether the Legislature intended the new amendments to apply retroactively. This inquiry examines a principle deeply rooted in our jurisprudence that absent some clear signal from the Legislature, a statute will not apply retroactively. In unbroken precedent, this Court has stated [a] statute is presumed to operate prospectively unless the intent that it shall operate retroactively is clearly expressed by its terms or is necessarily implied from the language of the statute. Syl. Pt. 3, Shanholtz v. Monongahela Power Co., 165 W.Va. 305, 270 S.E.2d 178 (1980). See also Syl. Pt. 3, State ex rel. Manchin v. Lively, 170 W.Va. 672, 295 S.E.2d 912 (1982); State ex rel. Glauser v. Board of Educ., 173 W.Va. 481, 318 S.E.2d 424 (1984); W. Va.Code § 2-2-10(bb) (1989). Against this background, we look to the new amendments to see if the Legislature indicated an intent for them to apply to cases such as the one sub judice. No such ignoble intention appears in the statute and, as the plaintiff points out, its absence is determinative under West Virginia law. Because the amendments, if given retroactive effect, would attach a new legal consequence to the transaction that occurred before the amendments came into existence, this legislative silence, coupled with the presumption against retroactivity, leads us to hold that the new amendments do not apply to this case. Therefore, the U.C.C., as it existed prior to the 1993 amendments, is applicable to determine the parties' respective rights concerning the 1989 transactions which form the basis for this action. The circuit court's conclusion that [t]he checks made payable to the order of `Public Citizen, Inc. Attn: Jim Kampanos' are, at least, ambiguous. Therefore, they are payable in the alternative and could be negotiated by Public Citizen, Inc., or Jim Kampanos represents a misapplication of the law and is accordingly set aside. Our reasoning is more fully set forth below.