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State ex rel. Regional Jail v. Investment Mgmt.
IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA January 1998 Term __________ No. 25134 __________ STATE OF WEST VIRGINIA EX REL. WEST VIRGINIA REGIONAL JAIL AND CORRECTIONAL FACILITY AUTHORITY, Petitioner v. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD, Respondent __________________________________________________________________ Petition for Writ of Mandamus WRIT GRANTED __________________________________________________________________ Submitted: June 3, 1998 Filed: July 17, 1998 Benjamin L. Bailey, Esq. Special Assistant Attorney General Kenneth E. Webb, Jr., Esq. Bowles Rice McDavid Graff & Love Charleston, West Virginia Attorneys for the Petitioner

James K. Brown, Esq. Jackson & Kelly Charleston, West Virginia and Darrell V. McGraw, Jr., Esq. Attorney General Silas B. Taylor Managing Deputy Attorney General Charleston, West Virginia Attorneys for the Respondent JUSTICE MAYNARD delivered the Opinion of the Court. CHIEF JUSTICE DAVIS dissents and reserves the right to file a dissenting Opinion.

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JUSTICE MCCUSKEY dissents and reserves the right to file a dissenting Opinion. SYLLABUS BY THE COURT 1. "A writ of mandamus will not issue unless three elements coexist -- (1) a clear legal right in the petitioner to the relief sought; (2) a legal duty on the part of respondent to do the thing which the petitioner seeks to compel; and (3) the absence of another adequate remedy." Syllabus Point 2, State ex rel. Kucera v. City of Wheeling, 153 W.Va. 538, 170 S.E.2d 367 (1969). 2. "In determining whether a Contract Clause violation has occurred, a three-step test is utilized. The initial inquiry is whether the statute has substantially impaired the contractual rights of the parties. If a substantial impairment is shown, the second step of the test is to determine whether there is a significant and legitimate public purpose behind the legislation. Finally, if a legitimate public purpose is demonstrated, the court must determine whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation's adoption." Syllabus Point 4, Shell v. Metropolitan Life Ins. Co., 181 W.Va. 16, 380 S.E.2d 183 (1989). 3. "Retired and active PERS plan participants have contractually vested property rights created by the pension statute, and such property rights are enforceable and cannot be impaired or diminished by the State." Syllabus Point 16, Dadisman v. Moore, 181 W.Va. 779, 384 S.E.2d 816 (1988). 4. "The realization and protection of public employees' pension property rights is a constitutional obligation of the State. The State cannot divest the plan participants of their rights except by due process, although prospective modifications which do not run afoul of the federal or State impairment clauses are possible." Syllabus Point 18, Dadisman v. Moore, 181 W.Va. 779, 384 S.E.2d 816 (1988). 5. House Bill 4072 (1998), which authorizes the investment of PERS monies in the Regional Jail and Correctional Facility Authority, does not substantially impair the contract rights of PERS beneficiaries. 6. Syllabus Point 2 of State ex rel. Marockie v. Wagoner, 190 W.Va. 467, 438 S.E.2d 810 (1993), which holds the Legislature may not designate funds that will be used to liquidate a revenue bond issue out of a current tax source which flows into the general revenue fund, is overruled to the extent that it prevents the Legislature from exercising its power to prudently invest State or public funds, pursuant to Article X, Section 6 of the West Virginia Constitution, the Modern Investment Management Amendment. 7. House Bill 4072 (1998), which authorizes the investment of PERS monies in the Regional Jail and Correctional Facility Authority, does not violate the limitation on the contracting of State debt in Article X, Section 4 of the West Virginia Constitution. 8. House Bill 4072 (1998), which authorizes the investment of PERS monies in the Regional Jail and Correctional Facility Authority, does not implicate the constitutional due process guarantees of PERS beneficiaries as long as the State continues to pay PERS beneficiaries. 9. House Bill 4072 (1998), which authorizes the investment of PERS monies in the Regional Jail and Correctional Facility Authority, does not, on its face, mandate the violation of the West Virginia Investment Management Board's fiduciary duty to PERS beneficiaries. 10. "In considering the constitutionality of a legislative enactment, courts must exercise due restraint, in recognition of the principle of the separation of powers in government among the judicial, legislative and executive branches. Every reasonable construction must be resorted to by the courts in order to sustain constitutionality, and any reasonable doubt must be resolved in favor of the constitutionality of the legislative enactment in question. Courts are not concerned with questions relating to legislative policy. The general powers of the legislature, within constitutional limits, are almost plenary. In considering the constitutionality of an act of the legislature, the negation of legislative power must appear beyond reasonable doubt." Syllabus Point 1, State ex rel. Appalachian Power Co. v. Gainer, 149 W.Va. 740, 143 S.E.2d 351 (1965). Maynard, Justice: In this original mandamus proceeding, the relator, the West Virginia Regional Jail and Correctional Facility Authority, requests that this Court evaluate the constitutionality of House Bill 4702 (1998),See footnote 1 1 a recent enactment of the West Virginia Legislature.See footnote 2 2 This bill directs the respondent, the West Virginia

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Investment Management Board, the group charged with investing the funds of the Public Employees Pension System, to invest $150,000,000 of the pension system funds in the West Virginia Jail and Correctional Facility Authority to enable it to complete the construction or renovation of certain jails and correctional facilities in West Virginia. The issues before us are, inter alia, whether House Bill 4702 constitutes an unconstitutional impairment of the contract existing between the State of West Virginia and the participants and beneficiaries of the Public Retirement System and whether House Bill 4702 violates Article X, Section 4 of the West Virginia Constitution which places limitations on the contracting of State debt. I. FACTS The relator, the West Virginia Regional Jail and Correctional Facility Authority ("Jail Authority"), is a body corporate and governmental instrumentality created by the West Virginia Legislature. It is charged with the financing and construction of jails and correctional facilities in the State and is governed by the provisions of W.Va. Code

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