Opinion ID: 1204380
Heading Depth: 1
Heading Rank: 3

Heading: Status of the Commission as an Arm of the State

Text: Article VI, § 35 of the West Virginia Constitution peremptorily requires that [t]he State of West Virginia shall never be made defendant in any court of law or equity.... We have consistently held that this grant of immunity is absolute and ... cannot be waived by the legislature or any other instrumentality of the State. Mellon-Stuart Co. v. Hall, 178 W.Va. 291, 296, 359 S.E.2d 124, 129 (1987); see also Clark v. Dunn, 195 W.Va. 272, 465 S.E.2d 374, 378 (1995). [T]he policy which underlies sovereign immunity is to prevent the diversion of State monies from legislatively appropriated purposes. Thus, where monetary relief is sought against the State treasury for which a proper legislative appropriation has not been made, sovereign immunity raises a bar to suit. Mellon-Stuart, 178 W.Va. at 296, 359 S.E.2d at 129 (citations and footnote omitted). In this case, Arnold argues that the Lottery Commission is not a state agency, and therefore may not seek refuge under the cloak of constitutional immunity. The primary justification for this position is that the Commission is financially self-sustaining, and is engage in a proprietary activity intended solely to generate revenue for the State. As a practical consequence of the expansion of government and the proliferation of bodies charged with conducting the State's business, we have recognized that proceedings against boards and commissions, created by the Legislature, as agencies of the State, are suits against the state within the meaning of Article VI, Section 35, of the Constitution of West Virginia, even though the State is not named as a party in such proceedings. Hamill v. Koontz, 134 W.Va. 439, 443, 59 S.E.2d 879, 882 (1950); see also Hesse v. State Soil Conservation Committee, 153 W.Va. 111, 115, 168 S.E.2d 293, 295 (1969) (constitutional immunity relates not only to the State of West Virginia but extends to an agency of the state to which it has delegated performance of certain of its duties). However, not every entity created by the Legislature is entitled to the protection of constitutional immunity. In Ohio Valley Contractors v. Board of Educ. of Wetzel County, 170 W.Va. 240, 241, 293 S.E.2d 437, 438 (1982), we synthesized our past cases and created a five-factor test to determine whether an organization is an agency of the State: Factors to consider are [1] whether the body functions statewide ...; [2] whether it does the State's work ...; [3] whether it was created by an act of the Legislature...; [4] whether it is subject to local control...; and [5] its financial dependence on State coffers.... 170 W.Va. at 241, 293 S.E.2d at 438 (citations omitted). The Court later went on to stress, in an analogous context, the importance of examining an organization's legislative framework, giving particular attention to whether its powers are substantially created by the legislature, and whether its governing board's composition is prescribed by the legislature. Other significant factors are whether the organization can operate on a statewide basis, whether it is financially dependent on public funds, and whether it is required to deposit its funds in the state treasury. Syl. pt. 1, in part, Blower v. West Virginia Educ. Broad. Auth., 182 W.Va. 528, 389 S.E.2d 739 (1990). In determining whether a commission or other body or entity created by 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. Hope Natural Gas Co. v. West Virginia Turnpike Comm'n, 143 W.Va. 913, 928, 105 S.E.2d 630, 639 (1958). Because this issue results from the circuit court's ruling on summary judgment, and because it raises issues of law concerning constitutional immunity, our review is de novo. Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994) (A circuit court's entry of summary judgment is reviewed de novo. ); Gribben v. Kirk, 195 W.Va. 488, 493, 466 S.E.2d 147, 152 (1995) (appellate courts review questions involving principles of sovereign immunity de novo ) (citation omitted). Our analysis need go no further than the clear language of Article VI, § 36 of the West Virginia Constitution. [6] We have previously indicated that while the Legislature may not expressly abrogate constitutional immunity, legislative statements regarding whether an entity is intended to be independent of the State may nevertheless be considered. See Ohio Valley Contractors, 170 W.Va. at 242, 293 S.E.2d at 439. Constitutional pronouncements regarding the intended status of a particular agency are obviously of great if not overriding significance. Article VI, § 36 expressly prohibits the creation of lotteries within our state, with the exception that the legislature may authorize lotteries which are regulated, controlled, owned and operated by the State of West Virginia in the manner provided by general law.... (Emphasis added.) The Lottery Commission was created by the Legislature under such authority. See State Lottery Act, 1985 W. Va. Acts ch. 115 (codified as amended at W. Va.Code §§ 29-22-1 to -28). As we stated in Syllabus point 1, in part, of State ex rel. Mountaineer Park v. Polan, 190 W.Va. 276, 438 S.E.2d 308 (1993), [o]nly those lottery operations which are regulated, controlled, owned and operated by the State of West Virginia in the manner provided by general laws enacted by the West Virginia Legislature may be properly conducted in accordance with the exception created under article VI, section 36 of our Constitution. The constitutional requirement of Article VI, § 36, which firmly requires that any lottery be under the aegis of the State, is determinative in the present case. As a consequence, we hold that the Lottery Commission is an agency of the State, and is entitled to assert constitutional immunity under W. Va. Const. art. VI, § 35. B.