West Virginia Lottery v. A-1 Amusement, Inc.
807 S.E.2d 760
| W. Va. | 2017Background
- Permit holders won 10-year LVL terminal permits; terminals used IGT's ICIS protocol. IGT announced it would stop supporting ICIS; Lottery required conversion to IGT's SAS protocol at permit-holders' expense and warned ICIS terminals would be illegal after 1/1/2018.
- Permit holders sued the West Virginia State Lottery (and IGT), alleging regulatory taking (Count I), deprivation of property without due process (Count II), and civil conspiracy (Count VII); they sought compensatory damages and injunctive relief.
- State Lottery moved to dismiss, arguing sovereign and qualified immunity and that claims pleaded under the State’s insurance exception must be limited to policy limits (citing Parkulo); plaintiffs amended some claims but did not limit the takings claim to insurance limits.
- The circuit court denied dismissal, finding the Lottery waived immunity by not raising it substantively in the first motion and holding takings/due-process measures need not be limited to insurance limits.
- Supreme Court (lead opinion) held: the Lottery did not waive sovereign or qualified immunity; takings claims for personal property may proceed via inverse condemnation/mandamus (Rule 71B complaint); takings damages measure is just compensation (not insurance limits), but due-process money claims pleaded under the insurance exception must be limited to policy limits and are subject to qualified immunity; remanded for factual findings on qualified immunity for Counts II and VII.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Lottery waive sovereign/qualified immunity by not raising it in first 12(b)(6)? | Waiver because Lottery failed to assert immunity substantively early. | No waiver; Lottery reserved rights and raised defenses in second motion; no unfair surprise. | No waiver; court erred to find waiver—Lottery may assert immunities in second motion. |
| Proper procedure & remedy for alleged regulatory taking of personal property | Plaintiffs may seek money damages in circuit court (not limited by insurance) for alleged taking of terminals/software. | State: takings claim must be pursued under inverse condemnation/mandamus or otherwise limited by insurance exception. | Takings claim for personal property may be pursued via inverse condemnation (complaint for writ of mandamus); remedy measure is just compensation, not capped by insurance. Plaintiffs may amend to seek mandamus. |
| Whether due-process money damages against state are barred by sovereign immunity or limited to insurance policy | Due-process claim seeks compensatory damages; plaintiffs argue Supremacy/Constitution allow full relief. | State says retroactive monetary relief implicates sovereign immunity; only insurance exception permits suit and then limits recovery to policy limits; qualified immunity still available. | Prospective/injunctive relief unaffected by sovereign immunity; retroactive monetary relief against state treasury is barred unless within insurance exception. If sued under insurance exception, recovery must be limited to policy limits and defendant may assert qualified immunity. |
| Availability of qualified immunity to state for claims brought under the insurance exception | Plaintiffs: insurance exception waives immunity generally. | State: insurance exception waives sovereign immunity but does not waive qualified immunity unless insurer/policy expressly does so. | Qualified immunity remains available to state officials/agencies for claims pursued under the insurance exception; remanded for factual findings whether qualified immunity applies to Counts II and VII. |
Key Cases Cited
- Parkulo v. West Virginia Bd. of Probation & Parole, 199 W. Va. 161 (1996) (state-insurance exception requires suits to allege recovery limited to applicable insurance coverage)
- Pittsburgh Elevator Co. v. W. Va. Bd. of Regents, 172 W. Va. 743 (1983) (recovery sought under and up to state liability insurance falls outside sovereign-immunity bar)
- G.M. McCrossin, Inc. v. W. Va. Bd. of Regents, 177 W. Va. 539 (1987) (statutory eminent-domain procedure can, in appropriate cases, be used to set compensation for personal property)
- Marple v. W. Va. Bd. of Educ., 236 W. Va. 654 (2015) (qualified-immunity defenses need not be raised at only one procedural point and are subject to timing/prejudice analysis)
- Will v. Michigan Dept. of State Police, 491 U.S. 58 (1989) (official-capacity suits seeking money from state treasury are barred by sovereign immunity)