Court Opinion

ID: 1059960
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:41:02.193587+00
Date Added: 2024-06-11T13:08:13.068260
License: Public Domain

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.
                                                                 1
        Worley requested approval of the capital improvement plan 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
                                     5
        unrelated to this appeal.
    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.