                          STATE OF WEST VIRGINIA

                        SUPREME COURT OF APPEALS


                                                                            FILED
Keyser House Bonds, LLC,
                                                                      February 14, 2014
Plaintiff Below, Petitioner                                              released at 3:00 p.m.

                                                                       RORY L. PERRY II, CLERK

                                                                     SUPREME COURT OF APPEALS

vs) No. 12-1505 (Mineral County 12-C-62)                                  OF WEST VIRGINIA


Keyserhouse Associates, LTD Partnership, and
the City of Keyser,
Defendants Below, Respondents


                           MEMORANDUM DECISION

               Petitioner herein and plaintiff below, Keyser House Bonds, LLC, (“Plaintiff
Bondholder”), appeals an order entered by the Circuit Court of Mineral County on
November 13, 2012. All parties to this appeal agree that Plaintiff Bondholder is owed
approximately $650,000.00 for municipal bonds it holds that matured on April 24, 2012.
The parties set forth the terms of the agreement governing the municipal bonds in an
Indenture of Trust. Respondents, Keyserhouse Associates, LTD Partnership
(“Respondent Partnership”) and the City of Keyser (“Respondent City”), argue that
Plaintiff Bondholder did not follow the proper procedure contained in the Indenture of
Trust to collect payment once the bonds reached maturity. Respondents concede,
however, that Plaintiff Bondholder is entitled to full payment on the municipal bonds.
The circuit court’s order enjoined Plaintiff Bondholder from taking any action to collect
its debt on the bonds, including foreclosing on the encumbered property, because of its
finding that “Plaintiff has failed to offer any evidence or proof that it complied with the
pre-foreclosure notice and right to cure procedures contained in the Indenture.” By
counsel, Kenneth E. Webb, Jr., and Patrick C. Timony, Plaintiff Bondholder appeals the
circuit court’s order. Respondent Partnership, by counsel Nelson M. Michael and David
Collins, and Respondent City, by counsel Lee Murray Hall and Arnold J. Janicker, assert
that the circuit court’s order should be affirmed.

              Upon consideration of the standard of review, the parties’ briefs, the record
presented, and the oral arguments, this Court finds that the circuit court committed
reversible error. We hereby reverse the November 13, 2012, order of the circuit court
enjoining Plaintiff Bondholder from foreclosing on the Keyserhouse. This case presents
no new or significant questions of law. Furthermore, for the reasons set forth herein, this
case satisfies the “limited circumstance” requirement of Rule 21(d) of the Rules of


                                            1

Appellate Procedure and is appropriate for the Court to issue a memorandum decision
rather than an opinion.

               On June 1, 1981, Respondent City and Respondent Partnership entered into
two separate agreements related to the building of a low-income housing project, the
Keyserhouse. The first agreement consisted of Respondent Partnership conveying two
parcels of real property to Respondent City upon which the Keyserhouse was to be built.
The second agreement, an Indenture of Trust, secured the revenue bonds Respondent City
issued to finance the construction of the Keyserhouse. The Indenture of Trust required
Respondent Partnership to make monthly payments to the bondholder in an amount
sufficient to pay the bonds in full by July 10, 2011.1 Plaintiff Bondholder holds a one
hundred percent interest in these bonds.

              Respondent Partnership began experiencing financial difficulties in 2000
and was unable to make the monthly payments to the bondholders. Respondent
Partnership subsequently filed for bankruptcy and the bankruptcy court entered a
reorganization plan on January 23, 2002, requiring Respondent Partnership to make

      1
        Respondent City issued two thirty-year bonds to finance the construction of the
Keyserhouse. These two bonds were issued in the aggregate amount of $1,505,000.00.
In its brief to this Court, Respondent City described the bond agreement between the
parties as follows:
                      The Bonds are secured by an Indenture of Trust, which
               encumbers the Keyserhouse, and an assignment of rents in
               favor of a Trustee created by Indenture. The Bonds are a
               special obligation of the City of Keyser and payable only
               from revenues and receipts derived from the leasing or sale of
               the Keyserhouse. The Bonds are not a debt of the City of
               Keyser, and are not payable from, or are a charge against the
               general revenue of the City of Keyser. The Bonds provide
               that holders or their assigns are scheduled to receive monthly
               payments of principal and interest on the Bonds from the
               revenue generated by the Keyserhouse in an amount
               sufficient to pay the Principal and Interest in full on July 10,
               2011.
                      The City, in turn, leased back to KAP (Partnership) the
               real property that KAP (Partnership) had conveyed to it. KAP
               (Partnership) built the Keyserhouse upon the real property.
               The Lease between the City and KAP (Partnership) was for
               an original term of thirty years, the end of which coincided
               with the date final payment was scheduled to be made on the
               Bonds.

                                          2

monthly payments2 to the municipal bondholder over the course of ten years. The
reorganization plan called for the bondholder to be paid in full on or before April 24,
2012.

               The bonds reached maturity on April 24, 2012, at which time Respondent
Partnership failed to pay Plaintiff Bondholder the remaining debt owed on the bonds,
approximately $650,000.00. After failing to receive payment, Plaintiff Bondholder
sought relief from the Trustee, Huntington National Bank. Plaintiff Bondholder asserts
that the Trustee failed to act promptly after being notified of Respondent Partnership’s
failure to pay its remaining debt on the bonds.

              In addition to Respondent Partnership’s failure to pay its outstanding debt,
Plaintiff Bondholder alleges that Respondent Partnership had allowed the Keyserhouse to
lapse into a state of dilapidation. The United States Department of Housing and Urban
Development (HUD) issued numerous citations to Respondent Partnership between 2007
and 2012 for failing to provide its tenants with affordable, safe and sanitary housing.
Plaintiff Bondholder asserts that HUD twice threatened to suspend its subsidy payments
and to relocate the residents due to Respondent Partnership’s failure to maintain the
Keyserhouse.

                On May 30, 2012, Plaintiff Bondholder filed an action in the circuit court
requesting a declaratory judgment and a preliminary injunction based on Respondent
Partnership’s failure to pay its outstanding debt on the bonds and its alleged failure to
maintain the Keyserhouse in a habitable condition. Plaintiff Bondholder states that it
filed the action in circuit court because (1) a month had passed since the bonds matured
and it had not received payment; (2) the Trustee failed to take prompt action to resolve
the issue as it should have under the terms of the Indenture of Trust; and (3) their security
interest in the Keyserhouse was diminishing as a result of Respondent Partnership’s
failure to maintain the Keyserhouse in a habitable condition. In its complaint, Plaintiff
Bondholder requested that the circuit court determine the duties, rights and obligations of
the parties under the Indenture of Trust.

             In response to Plaintiff Bondholder’s lawsuit, Respondents acknowledged
that the bonds required full payment upon maturity and that the bonds were past due.
However, Respondents argued that Plaintiff Bondholder failed to provide sufficient

       2
       The reorganization plan described the amount of the monthly payments as
follows:
                   Class 2 claim, in the amount of $1,060,000.00 will be
            paid out over 10 years in monthly payments, at an interest
            rate of 5% per annum, with the debt balance due at the
            expiration of ten years.

                                             3

notice of the default and did not provide Respondent Partnership with an opportunity to
cure. Respondents argued that the right to cure provision in the Indenture of Trust
provided Respondent Partnership with ninety days to cure the default.

              The circuit court held a hearing on September 19, 2012. The parties
discussed the physical condition of the Keyserhouse and informed the circuit court that
HUD funding could be jeopardized if the Keyserhouse remained in a state of dilapidation.
Both Plaintiff Bondholder and Respondent Partnership informed the court that they had
management companies in place to take over the day-to-day operation of the
Keyserhouse in an effort to remedy the HUD related problems.

              Additionally, Plaintiff Bondholder argued during this hearing that the bonds
matured on April 24, 2012, and that Respondent Partnership had failed to pay the
remaining $650,000.00 owed on the bonds. Further, Plaintiff Bondholder asserted that
the Indenture of Trust gave it an unconditional right to enforce payment once the bonds
reached maturity, including the right to foreclose on the property if payment was not
received.3

             Respondents did not dispute (1) that the bonds had matured, (2) that
Respondent Partnership failed to pay, or that (3) the Indenture of Trust allowed Plaintiff
Bondholder to foreclose on the property. Rather, Respondents argued that Plaintiff
Bondholder could not foreclose until it provided Respondents with notice of the default
and ninety days to cure.4 In addition to the procedural arguments Respondents raised,

      3
        An issue that arose at the September hearing was whether Plaintiff Bondholder’s
proposed foreclosure would result in the residents of the Keyserhouse having to relocate.
Counsel for Plaintiff Bondholder told the circuit court that “the bondholders are doing
everything they can to insure that the citizens do not have to move from their homes.
They’ve been in contact with HUD . . . HUD’s approved TM Associates (Plaintiff
Bondholder’s proposed management company) to manage the property immediately and
that will stop the abatement process.”
       Counsel for Plaintiff Bondholder repeated this statement at the October 22, 2012,
status conference: “Since I’ve been asking for an injunction some five, six months ago,
we’ve had an approved management company in place. We’ve had an agreement with
HUD. It would take place immediately and the tenants will not be moved.” (Emphasis
added.)
      4
       In support of this argument, Respondents cited Article VI, section 4 of the
Indenture of Trust, which states:
              Whenever an event of default shall occur, the Lessee shall
              have the right to remedy such default within ninety days after
              notification of the occurrence thereof, provided that the
              Lessee shall pay all expenses incurred in the exercise of right
                                            4
they informed the circuit court that they were attempting to sell the Keyserhouse and had
a potential buyer in place. Respondents stated that a sale of the Keyserhouse would result
in sufficient monies to satisfy the outstanding debt owed to Plaintiff Bondholder.

              Following this hearing, the circuit court ruled that (1) Respondent
Partnership could enter into an agreement with their proposed management company,
RLJ Management Company, to take over the day-to-day operation of the Keyserhouse;
(2) Respondent Partnership and Respondent City could immediately enter into
negotiations to sell the Keyserhouse to the interested buyer (Buckeye Community Hope
Foundation); (3) it would not consider Plaintiff Bondholder’s motion for an injunction to
take over control and management of the Keyserhouse; and (4) RLJ Management
Company or Respondent Partnership were to pay Plaintiff Bondholder $5,000.00 per
month to be applied to the $650,000.00 outstanding debt owed to Plaintiff Bondholder.

              In making this ruling, the circuit court did not take evidence or hear
testimony from either Respondent Partnership’s proposed management company (RLJ
Management Company) or from Plaintiff Bondholder’s proposed management company
(TM Associates). It is unclear, based on the record before us, why the circuit court
ordered Respondent Partnership’s management company to take over control of the
Keyserhouse without allowing both sides to present evidence and testimony on this issue.
Further, in arriving at the $5,000.00 per month amount payable to Plaintiff Bondholder,
the circuit court did not provide the parties with an opportunity to brief this issue or
present evidence to the circuit court. Instead, the circuit court stated that “I’m just going
to pull a number out of the air that seems reasonable.”5

              Following this ruling, the Trustee6 reviewed the Indenture of Trust and
determined that it permitted Plaintiff Bondholder to initiate foreclosure proceedings on
the Keyserhouse. On October 22, 2012, Plaintiff Bondholder and the Trustee notified
Respondents of their intention to declare the bonds mature and unpaid, declare the
outstanding debt immediately due and, if not paid, invoke the power under the Indenture
of Trust to foreclose on the Keyserhouse. Plaintiff Bondholder, in conjunction with the

              or remedies hereunder and all expenses of remedying such
              default. The Trustee covenants and agrees promptly to notify
              in writing the Issuer and the Lessee of any other default in the
              Indenture brought to its attention.
       5
        Plaintiff Bondholder states that $5,000.00 per month is insufficient to pay the
interest on the outstanding bonds.
       6
       Huntington National Bank resigned its role as Trustee in August 2012. However,
Huntington National Bank withdrew its resignation on October 23, 2012, and attempted
to resume its role as Trustee.
                                             5

Trustee, subsequently published a notice of a foreclosure sale. After this notice was
published, Respondents removed the Trustee and noticed a status conference in the
circuit court for October 29, 2012.

              At the October status conference, Respondents argued that Plaintiff
Bondholder and the Trustee violated the court’s September order by initiating foreclosure
proceedings. Further, Respondents informed the court that a contract to sell the
Keyserhouse had been agreed to with Buckeye Community Hope Foundation. By
contrast, Plaintiff Bondholder argued that it initiated foreclosure proceedings with the
Trustee pursuant to the terms of the Indenture of Trust and that the court’s September
order did not preclude this action. After this hearing, the circuit court entered an order on
November 13, 2012, ruling that (1) Plaintiff Bondholder is enjoined from foreclosing on
the Keyserhouse and may not proceed with a foreclosure sale “without further order of
this Court”; (2) Plaintiff Bondholder may not interfere with a purchase agreement
between Respondents and a potential purchaser; and (3) “Huntington bank is removed as
trustee herein[.]”

               The circuit court’s ruling was based, in large part, on Respondent
Partnership’s statement at the October hearing that “we have a purchase agreement
between Keyserhouse Associates (Respondent Partnership) and the city (Respondent
City) with Buckeye (Community Hope Foundation) for the sale of the property.” The
circuit court’s order states:

              The public interest, as well as the interest of the citizens of
              Keyser living in the Keyserhouse, will be promoted by
              proceeding by [sic] the sale of the Keyserhouse to Buckeye as
              anticipated. . . . The Court also notes that the interests of the
              parties and interest of justice will be served by said sale and
              payment of the bonds with sale proceeds.

Similarly, at the September hearing, the circuit court told counsel for Plaintiff
Bondholder, “I mean, if this sale goes through, you’re going to get everything that’s
owed to you[.]” In an update provided to this Court, Respondent City reports that the
sale to Buckeye Community Hope Foundation did not take place. The Keyserhouse
remains unsold and the $650,000.00 bond payment that was due to Plaintiff Bondholder
on April 24, 2012, remains unpaid.

             After entry of the circuit court’s November 13, 2012, order, Plaintiff
Bondholder filed the present appeal.

               Our standard of review is set forth in Syllabus Point 1 of McCormick v.
Allstate Ins. Co., 197 W.Va. 415, 475 S.E.2d 507 (1996):


                                             6

                      When this Court reviews challenges to the findings
              and conclusions of the circuit court, a two-prong deferential
              standard of review is applied. We review the final order and
              the ultimate disposition under an abuse of discretion standard,
              and we review the circuit court’s underlying factual findings
              under a clearly erroneous standard.

              We begin our analysis by noting three undisputed facts: (1) the bonds
reached maturity on April 24, 2012; (2) the bonds were not paid in full on April 24, 2012,
and (3) all parties to this appeal agree that Plaintiff Bondholder is owed approximately
$650,000.00.

              Plaintiff Bondholder contends that the circuit court erred by enjoining it
from foreclosing on the Keyserhouse. Plaintiff Bondholder states that the Indenture of
Trust gives it an unconditional right to enforce the agreement once the bonds have
matured and full payment has not been made. The circuit court enjoined Plaintiff
Bondholder from foreclosing based on its determination that Plaintiff Bondholder “failed
to offer any evidence or proof that it complied with the pre-foreclosure notice and right to
cure procedures contained in the Indenture.” The issue before us is whether Plaintiff
Bondholder was required to provide notice and a right to cure to Respondents after the
bonds reached maturity and were not paid.

              Plaintiff Bondholder argues that under the plain language of the Indenture
of Trust, it was not required to provide notice and a right to cure prior to initiating
foreclosure proceedings after the bonds had reached maturity and full payment was not
made. We agree. Article VI, section thirteen of the Indenture of Trust gives Plaintiff
Bondholder a clear, unequivocal right to enforce the payment of the bonds once they
have reached maturity:

                      It is expressly covenanted and agreed, and the Bonds
              issued hereunder are subject to the condition that the holders
              of the Bonds shall not be entitled to institute any suit, action
              or proceeding at law or in equity to enforce any rights or
              remedies granted by this Indenture unless and until the
              Trustee shall have refused or, for ten days following delivery
              to it of a written demand therefor, signed by the holders of not
              less than 60% of the Bonds, shall have failed to take
              appropriate remedial action authorized by the Indenture upon
              the happening of one or more events of default specified in
              Section 1 of this Article. Such demand shall specify and
              describe the default.



                                             7

                     Nothing in the Indenture contained shall, however,
              affect or impair the right of the holders of the Bonds to
              enforce the payment of the principal of and interest on the
              Bonds at and after maturity thereof, or the obligation of the
              Issuer to pay the principal of an interest of the Bonds to the
              holders thereof at the time, place, from the source and in the
              manner in the Bonds expressed.

(Emphasis added.)

              In construing a written instrument, this Court has previously held “[w]here
the terms of a contract are clear and unambiguous, they must be applied and not
construed.” Syllabus Point 3, in part, Waddy v. Riggleman, 216 W.Va. 250, 606 S.E.2d
222 (2004). Further, “[i]t is the safest and best mode of construction to give words, free
from ambiguity, their plain and ordinary meaning.” Syllabus Point 3, in part, Bennett v.
Dove, 166 W.Va. 772, 277 S.E.2d 617 (1981). We also note that “[a] valid written
instrument which expresses the intent of the parties in plain and unambiguous language is
not subject to judicial construction or interpretation but will be applied and enforced
according to such intent.” Syllabus Point 1, Cotiga Development. Co. v. United Fuel Gas
Co., 147 W.Va. 484, 128 S.E.2d 626 (1962).

               The circuit court enjoined Plaintiff Bondholder from taking any action to
collect its debt on the bonds because of its finding that Plaintiff bondholder failed to
follow the notice and right to cure provisions contained in the Indenture of Trust. The
circuit court’s order failed to address the above “nothing shall affect” clause. The circuit
court did not cite the specific notice and right to cure language it relied upon, nor did the
circuit court set forth a finding that the above “nothing shall affect” clause was subject to
any notice or right to cure language contained in the Indenture of Trust.

              We find that the plain language of the Indenture of Trust gives Plaintiff
Bondholder an absolute right to enforce payment of the bonds once they have matured.
Allowing the notice and right to cure provisions cited by Respondents to eviscerate
Plaintiff Bondholder’s right to enforce payment after the bonds have reached maturity
would be contrary to the “nothing shall affect” clause. By its clear, unambiguous terms,
the “nothing shall affect” clause gives Plaintiff Bondholder an absolute right to enforce
payment after the bonds have reached maturity. As this Court stated in Syllabus Point 3,
in part, of Dunbar Fraternal Order of Police, Lodge No. 119 v. City of Dunbar, 218
W.Va. 239, 624 S.E.2d 586 (2005), “[s]pecific words or clauses of an agreement are not
to be treated as meaningless, or to be discarded, if any reasonable meaning can be given
them consistent with the whole contract.” In the present case, the “nothing shall affect”
clause cannot be treated as meaningless or discarded. Instead, we find that the clause


                                             8

gives Plaintiff Bondholder an absolute right to enforce payment once the bonds have
reached maturity.

              Moreover, the record establishes that Respondents had actual notice that the
bonds had matured and were in default. Respondents do not dispute that the present
lawsuit was filed on May 30, 2012, and that they received notice of and are parties to this
action. Assuming arguendo that Respondents were entitled to ninety days to cure the
default after receiving notice, Respondents had the opportunity to cure after receiving
notice of this lawsuit. This lawsuit was filed over twenty months ago and Respondents
have yet to cure the default. Further, Respondent Partnership entered into a bankruptcy
reorganization plan in 2002 that required it to make full payment to Plaintiff Bondholder
within ten years (April 24, 2012). Since Respondent Partnership entered into this
agreement setting forth a fixed date upon which the bonds were to be paid, Respondent
Partnership cannot reasonably claim that it failed to make the remaining $650,000.00
payment to Plaintiff Bondholder due to lack of notice.

              Based on all of the foregoing, we find that the circuit court abused its
discretion by enjoining Plaintiff Bondholder from enforcing its right to full payment on
the bonds once they reached maturity. The circuit court’s order was based, in significant
part, on Respondents’ statement at the October 2012 hearing that a sale of the
Keyserhouse was eminent and that the sale would produce sufficient funds to pay the
debt owed to Plaintiff Bondholder. That sale did not occur and Plaintiff Bondholder still
holds bonds that matured on April 24, 2012, for which it has not been paid. Plaintiff
Bondholder is entitled to seek payment on the bonds through means, including
foreclosure, set forth in the Indenture of Trust. We therefore reverse the circuit court’s
November 13, 2012, order enjoining Plaintiff Bondholder from foreclosing on the
Keyserhouse.


                                                                                Reversed.


ISSUED: February 14, 2014

CONCURRED IN BY:
Chief Justice Robin Jean Davis
Justice Brent D. Benjamin
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Allen H. Loughry II




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