No. 13-0120 -         United Hospital Center, Inc. v. Cheryl Romano, Assessor of Harrison
                      County, and Craig Griffith, Tax Commissioner

                                                                            FILED
                                                                           May 29, 2014

                                                                       RORY L. PERRY II, CLERK

                                                                     SUPREME COURT OF APPEALS

                                                                         OF WEST VIRGINIA


Davis, Chief Justice, dissenting:

              This case presented a simple, straightforward question of statutory construction

for the Court’s resolution–a textbook example of reconciling two statutes when a specific

statutory provision1 and a general legislative enactment2 address the same issue. We

previously have held that “[t]he general rule of statutory construction requires that a specific

statute be given precedence over a general statute relating to the same subject matter where

the two cannot be reconciled.” Syl. pt. 1, UMWA by Trumka v. Kingdon, 174 W. Va. 330,

325 S.E.2d 120 (1984). Despite our established procedure for resolving such a conflict

between two applicable statutes, though, the majority of this Court resolutely has refused to

follow our longstanding precedent while simultaneously ignoring the clear expression of

legislative intent present in the subject enactments. As such, the majority’s decision of this

case is contrary to our established case law and the Legislature’s intent in promulgating such

legislation. Accordingly, I dissent.

              1
              See W. Va. Code § 11-3-9(a)(17) (2008) (Repl. Vol. 2013) (recognizing as
exempt from taxation “[p]roperty belonging to . . . any hospital not held or leased out for
profit” (emphasis added)).
              2
              Cf. W. Va. Code § 11-3-9(a)(12) (2008) (Repl. Vol. 2013) (affording tax
exempt status to “[p]roperty used for charitable purposes and not held or leased out for
profit”).

                                               1

           A. W. Va. Code § 11-3-9(a)(17) Governs the Decision of this Case

              In deciding the case sub judice, the majority relied upon the broader statutory

provision that governs charitably-used property generally, W. Va. Code § 11-3-9(a)(12)

(2008) (Repl. Vol. 2013), while making only passing reference to W. Va. Code § 11-3­

9(a)(17) (2008) (Repl. Vol. 2013), the narrower statute that pertains specifically to hospital-

owned property, such as United Hospital Center’s (hereinafter “UHC”) new facility that is

at the heart of the instant controversy. This Court previously has held that deciding a matter

involving a legislative enactment requires us to refer to our established rules of statutory

construction to guide our analysis: “When called upon to discern the meaning of a legislative

enactment, this Court resorts to well-accepted rules of statutory construction.” In re Stephen

Tyler R., 213 W. Va. 725, 740, 584 S.E.2d 581, 596 (2003). See also Gerlach v. Ballard, ___

W. Va. ___, ___, 756 S.E.2d 195, 200 (2013) (“[O]ur rules of statutory construction require

us to give meaning to all provisions in a statutory scheme.” (internal quotations and citation

omitted)); State v. King, 205 W. Va. 422, 427, 518 S.E.2d 663, 668 (1999) (“In interpreting

any statute, our principles of statutory construction require us to give effect to the spirit,

purpose, and intent of the Legislature.” (citation omitted)). Among these instructive

principles is the rule that when two statutes address the same topic and cannot be reconciled,

the specific statute prevails over the more general provision: “The general rule of statutory

construction requires that a specific statute be given precedence over a general statute

relating to the same subject matter where the two cannot be reconciled.” Syl. pt. 1, UMWA


                                              2

by Trumka v. Kingdon, 174 W. Va. 330, 325 S.E.2d 120. Thus, “[a]s a rule, when both a

specific and a general statute apply to a given case, the specific statute governs.” In re

Chevie V., 226 W. Va. 363, 371, 700 S.E.2d 815, 823 (2010) (emphasis in original).

Therefore, insofar as UHC is a hospital corporation and the new facility for which it seeks

tax-exempt status is intended to be used as a hospital facility, the majority should have

decided this case by applying the language of W. Va. Code § 11-3-9(a)(17), which

specifically addresses “[p]roperty belonging to . . . any hospital not held or leased out for

profit,”3 to the facts of this case rather than basing its decision on the more general language

of W. Va. Code § 11-3-9(a)(12), which pertains to the broader category of “[p]roperty used

for charitable purposes.” Instead, however, the majority mentioned W. Va. Code § 11-3­

9(a)(17) only one time in passing while en route to deciding the case under W. Va. Code

§ 11-3-9(a)(12).



              While both of these statutory provisions appear to achieve the same ultimate

purpose, i.e., to exempt from taxation property used for charitable purposes, the legislative

rules interpreting and clarifying the classification and treatment of tax-exempt property

indicate that the Legislature further has established a very precise procedure for determining

the taxability of hospital-owned property, the nuances of which the majority of the Court

clearly has not grasped in its decision of this case.


              3
                  (Emphasis added).

                                               3

              Although the majority discussed the legislative rule directly applicable to the

issue before the Court, W. Va. C.S.R. § 110-3-24.17.3, the majority failed to appreciate the

intended application of this rule by considering it in isolation rather than in the context in

which it was adopted–that is, as part of a detailed procedure for determining the taxability

of hospital-owned property. In this regard, the West Virginia State Tax Commissioner

proposed, and the Legislature approved and adopted, W. Va. C.S.R. §§ 110-3-24.17.1 to -5

(1989). This legislative rule provides, in full, as follows:

              110-3-24. Charitable Hospitals.

                     ....

                     24.17. Vacant land and construction.

                      24.17.1. When a hospital purchases land which it intends
              to use for capital improvements, which will be used for
              charitable purposes, the land shall not be exempt so long as the
              land is vacant. So long as the land is vacant, it can be sold and
              used for noncharitable purposes.

                     24.17.2. Vacant tracts owned by a hospital will remain
              subject to taxation, even if plans are made which show that the
              land will be used for tax exempt purposes.

                       24.17.3. If construction is begun on a tract for the
              purpose of making improvements to be used for hospital
              purposes, such property shall not be exempt under this section
              until it has been put to such actual use as to make the primary
              and immediate use of the property charitable in accordance with
              Section 19 of these regulations.

                      24.17.4. If construction is begun on a tract exempt under
              this section from ad valorem taxation at the time construction is
              initiated, such construction shall not void the pre-existing

                                              4

              exemption if the proposed use of the improvements so
              constructed is to be a charitable use consistent with the
              provisions of this section.

                    24.17.5. Construction of improvements, the proposed use
              of which is not charitable, shall not void a pre-existing
              exemption under this section until such time as the primary and
              immediate use of the property is not longer charitable in
              accordance with this section and Section 19 of these regulations.

W. Va. C.S.R. §§ 110-3-24.17.1 to -5 (emphasis added).



              In rendering its ruling, the majority suggested that application of W. Va. C.S.R.

§ 110-3-24.17.3 to deny tax-exempt status to UHC’s new facility would create an unduly

harsh result because of the relocation of its IT and housekeeping departments prior to the July

1, 2010, assessment date.4 However, the majority’s misguided interpretation of this rule

ignores the fact that taxing an uncompleted hospital building, such as UHC’s new facility,

was precisely what the Legislature and the Tax Commissioner intended in adopting this

comprehensive legislative rule delineating between hospital-owned property that is subject

to taxation and hospital-owned property that is tax-exempt. Even the taxpayer, UHC,

appreciated the plain meaning of this legislative rule and anticipated that its incomplete

facility would be taxed as evidenced by UHC’s lament that it had intended to relocate all of

its operations to its new facility and would have done so prior to the July 1, 2010, assessment


              4
                See W. Va. Code § 11-3-1(a) (2010) (Repl. Vol. 2013) (directing that “[a]ll
property . . . shall be assessed annually as of July 1 at sixty percent of its true and actual
value”).

                                              5

date but for construction problems that delayed the facility’s completion and ability to

accommodate patients. Barring a finding that a legislative rule is invalid or otherwise

unenforceable, this Court simply is not at liberty to substitute its own convoluted

interpretation for the plain language of a legislative rule. See Syl. pt. 5, State v. General

Daniel Morgan Post No. 548, V.F.W., 144 W. Va. 137, 107 S.E.2d 353 (1959) (“When a

statute [or rule] is clear and unambiguous and the [drafter’s] intent is plain, the statute [or

rule] should not be interpreted by the courts, and in such case it is the duty of the courts not

to construe but to apply the statute [or rule].”). Rather, the Court was obligated to apply, not

construe, such plain language to effectuate the intent of the Legislature in approving the

legislative rule and to accord deference to the interpretation of such rule by the body charged

with its administration: “A valid legislative rule is entitled to substantial deference by the

reviewing court. As a properly promulgated legislative rule, the rule can be ignored only if

the agency has exceeded its constitutional or statutory authority or is arbitrary or capricious.”

Syl. pt. 4, in part, Appalachian Power Co. v. State Tax Dep’t of West Virginia, 195 W. Va.

573, 466 S.E.2d 424 (1995). See also Syl. pt. 2, West Virginia Health Care Cost Review

Auth. v. Boone Mem’l Hosp., 196 W. Va. 326, 472 S.E.2d 411 (1996) (“Once a disputed

regulation is legislatively approved, it has the force of a statute itself. Being an act of the

West Virginia Legislature, it is entitled to more than mere deference; it is entitled to

controlling weight. As authorized by legislation, a legislative rule should be ignored only if

the agency has exceeded its constitutional or statutory authority or is arbitrary or


                                               6

capricious.”). Instead, however, the majority substituted its own confusing and tortured

interpretation of W. Va. C.S.R. § 110-3-24.17.3 for the express, plain, and unmistakable

intent of the Legislature. Accordingly, I resolutely dissent from the majority’s ruling in this

regard.



    B. Until It Was Licensed, UHC’s New Facility Could Not Be Used to Effectuate

                    Its Charitable Purpose of Operating a Hospital


              In addition to missing the mark by misinterpreting and misapplying the plain

language of W. Va. C.S.R. § 110-3-24.17.3, the majority also has misconstrued the meaning

of “primary and immediate use” in the context of this case. As the majority astutely noted,

“[u]nder section 1, Article 10, Constitution, the exemption of property from taxation depends

on its use. To warrant such an exemption for a purpose there stated, the use must be primary

and immediate, not secondary or remote.” Syl., State ex rel. Farr v. Martin, 105 W. Va. 600,

143 S.E. 356 (1928). With specific respect to the case sub judice, “[p]roperty used for a

hospital can not be exempted from taxation under the Constitution of this state unless it is

used for charitable purposes.” Syl. pt. 3, Reynolds Mem’l Hosp. v. County Court of Marshall

County, 78 W. Va. 685, 90 S.E. 238 (1916).



              No one disputes that UHC is a corporation that has been formed to operate a

hospital and that the operation of a hospital is the ultimate intended use of UHC’s new

facility. In fact, in its “Agreement of Incorporation,” UHC identifies the operation of a

                                              7

hospital as its primary purpose:

                      The purpose[] for which this Corporation is formed [is]
              as follows:

                     1. To own, operate, conduct and maintain hospitals and
              related facilities in Harrison County and elsewhere in West
              Virginia.

(Emphasis added). Consistent with the legislative promulgations defining “primary use,”

UHC specifically has stated that its “chief, main or principal” use of its new facility is the

operation of a hospital. See W. Va. C.S.R. § 110-3-2.48 (1989) (defining “primary use”).5

Similarly, UHC has acknowledged that the “immediate use,” or direct use, of its new facility

is its operation of a hospital facility. See W. Va. C.S.R. § 110-3-2.31 (1989) (defining



              5
                  W. Va. C.S.R. § 110-3-2.48 (1989) provides as follows:

              2.48. The term “primary use” is use which is chief, main or
              principal.

                      2.48.1. Whenever property is required to be “used” for
              stated purposes in order to qualify for exemption under W. Va.
              Code § 11-3-9, the stated purpose must be the primary or
              immediate use of the property, and not a secondary or remote
              use. The property may be used for purposes which are ancillary
              to the stated purpose, but the ancillary use must further the
              stated, primary use.

                     2.48.2. Whenever property is required to be “used
              exclusively” for stated purposes in order to qualify for
              exemption under West Virginia Code § 11-3-9, the stated
              purposes must be the primary and immediate use, and not a
              secondary or remote use. The property may not be used for
              purposes which are ancillary to the stated purpose.

                                              8

“immediate use”).6 However, simply stating the laudable purpose of operating a hospital and

intending to use it as such do not a hospital make. Rather, the Legislature scrupulously has

defined the parameters for the establishment of a hospital facility and has imposed stringent

licensing requirements before an entity is allowed to operate as a hospital.



                Pursuant to W. Va. Code § 16-2D-2(p) (2010) (Repl. Vol. 2011), a “hospital”

is defined as

                a facility licensed as such pursuant to the provisions of article
                five-b [§§ 16-5B-1 et seq.] of this chapter, and any acute care
                facility operated by the state government, that primarily provides
                inpatient diagnostic, treatment or rehabilitative services to
                injured, disabled or sick persons under the supervision of
                physicians and includes psychiatric and tuberculosis hospitals.

See also W. Va. Code § 16-5B-1 (1977) (Repl. Vol. 2011) (establishing hospital licensing

requirement).7 This definition is reiterated in W. Va. C.S.R. § 110-3-2.29 (1989), which also

                6
               Pursuant to W. Va. C.S.R. § 110-3-2.31 (1989), “[t]he term ‘immediate use’
is use which is direct and not separated in time, relationship or connection.”
                7
                    W. Va. Code § 16-5B-1 (1977) (Repl. Vol. 2011) provides, in pertinent part:

                       No person, partnership, association, corporation, or any
                local governmental unit or any division, department, board or
                agency thereof shall establish, conduct, or maintain in the State
                of West Virginia any ambulatory health care facility, ambulatory
                surgical facility, freestanding or operated in connection with a
                hospital, hospital or extended care facility operated in
                connection with a hospital, without first obtaining a license
                therefor in the manner hereinafter provided: Provided, That only
                one license shall be required for any person, partnership,
                                                                                     (continued...)

                                                 9

defines a “hospital” in similar language:

                     The term “hospital” means an institution which is
              primarily engaged in providing to in-patients, by or under the
              supervision of physicians, diagnostic and therapeutic services
              for medical diagnosis, treatment, and care of injured, disabled or
              sick persons, or rehabilitation services for the rehabilitation of
              injured, disabled or sick persons and which is either licensed by
              the West Virginia Department of Health as a hospital, or
              operated by the federal government or the state government as
              a hospital. This term also includes psychiatric and tuberculosis
              hospitals. See W. Va. Code § 16-2D-2(t).

A critical component of both of these definitions is the requirement that the institution

seeking to operate as a hospital be licensed by the State of West Virginia.8 However, because


              7
               (...continued)
              association, corporation or any local governmental unit or any
              division, department, board or agency thereof who operates any
              combination of an ambulatory health care facility, ambulatory
              surgical facility, hospital, extended care facility operated in
              connection with a hospital, or more than one thereof, at the same
              location. Ambulatory health care facilities, ambulatory surgical
              facilities, hospitals, or extended care facilities operated in
              connection with a hospital operated by the federal government
              or the state government shall be exempt from the provisions of
              this article.

                     A hospital or extended care facility operated in
              connection with a hospital, within the meaning of this article,
              shall mean any institution, place, building or agency in which an
              accommodation of five or more beds is maintained, furnished or
              offered for the hospitalization of the sick or injured[.]
              8
               The parties do not contend, and I do not suggest, that UHC might come within
the alternate requirement of being either a federal or a state government hospital. See
generally W. Va. Code § 16-5B-1 (indicating that government hospitals are exempt from
hospital licensure requirements).

                                             10

its new facility had not yet been completed so as to permit it to accommodate patients,

UHC’s new facility was not licensed to operate as a hospital on the crucial assessment date

of July 1, 2010. In fact, UHC did not receive its certificate of occupancy from the State Fire

Marshal until August 18, 2010, and did not obtain its license to “operate a General Hospital”

from the West Virginia Department of Health and Human Resources until nearly two months

later on October 8, 2010. Thus, under the express legislative definition of a “hospital,” the

operation of which is UHC’s stated charitable purpose, UHC was unable to achieve its

“primary and immediate use” of its new facility as a hospital on July 1, 2010, because if it

actually had attempted to use its new facility as a hospital on that date, without having

satisfied the requisite licensing requirements, UHC would have been subject to criminal

prosecution and subject to fine and/or imprisonment. See W. Va. Code § 16-5B-11 (1977)

(Repl. Vol. 2011) (imposing criminal penalties for operation of hospital without a license).9


              9
              The operation of a hospital without a license is a crime punishable by fine
and/or imprisonment:

                      Any person, partnership, association or corporation, and
              any local governmental unit or any division, department, board
              or agency thereof establishing, conducting, managing or
              operating an ambulatory health care facility, ambulatory surgical
              facility, a hospital, or extended care facility operated in
              connection with a hospital, without first obtaining a license
              therefor as herein provided, or violating any provision of this
              article or any rule or regulation lawfully promulgated
              thereunder, shall be guilty of a misdemeanor, and, upon
              conviction thereof, shall be punished for the first offense by a
              fine of not more than one hundred dollars, or by imprisonment
                                                                                  (continued...)

                                             11

The majority’s failure to recognize that UHC could not legally have operated its new facility

as a hospital on July 1, 2010, defies logic; lacks reason or justification; is inadvisable and

incredible; and, frankly, leaves me speechless. In essence, the majority’s decision in this case

effectively authorizes a corporation to operate a hospital without first having obtained the

appropriate licensure just to ensure that the corporation, as well as its property, enjoys tax-

exempt status. From the majority’s decision in this regard, I adamantly dissent.




              9
               (...continued)
              in the county jail for a period of not more than ninety days, or by
              both such fine and imprisonment, in the discretion of the court.
              For each subsequent offense the fine may be increased to not
              more than five hundred dollars, with imprisonment in the county
              jail for a period of not more than ninety days, or both such fine
              and imprisonment, in the discretion of the court. Each day of a
              continuing violation after conviction shall be considered a
              separate offense.

W. Va. Code § 16-5B-11 (1977) (Repl. Vol. 2011).

                                              12
