Alpine Property Owners Ass'n, Inc. v. Mountaintop Development Co.

• Decision Date: 08 December 1987
• Docket Number: No. 17301,17301
• Citation: 179 W.Va. 12,365 S.E.2d 57
• Parties: ALPINE PROPERTY OWNERS ASSOCIATION, INC. v. MOUNTAINTOP DEVELOPMENT COMPANY, et al.
• Court: West Virginia Supreme Court

Page 57

365 S.E.2d 57

179 W.Va. 12

ALPINE PROPERTY OWNERS ASSOCIATION, INC. v. MOUNTAINTOP DEVELOPMENT COMPANY, et al.

No. 17301.

Supreme Court of Appeals of West Virginia.

Dec. 8, 1987.

Syllabus by the Court

1. "If there is no genuine issue as to any material fact summary judgment should be granted but such judgment must be denied if there is a genuine issue as to a material fact." Syl. Pt. 4, Aetna Casualty and Surety Co. v. Federal Insurance Co., 148 W.Va. 160, 133 S.E.2d 770 (1963).

2. After a statement of intent to dissolve is delivered to and filed by the secretary of state, the dissolving corporation is required by law to immediately give written notice to each "known creditor" of the corporation, W.Va.Code § 31-1-129(a) (1982 Replacement Vol.), and to proceed to collect its assets, to pay or adequately provide for payment of its obligations, and to distribute all remaining assets to its shareholders. W.Va.Code § 31-1-129(b) (1982 Replacement Vol.).

3. In order to have a regular, effective dissolution, the dissolving corporation must comply with all of the statutory conditions precedent.

4. As a matter of law, the term "creditor" includes the owner of any right of action against another, whether a claim or legal right for damages arising out of contract or tort.

5. Failure to strictly comply with the mandates of the dissolution statutes effectively continues the corporation with respect to creditors whose rights are prejudiced by noncompliance.

6. Because a trustee is personally liable for breach of a fiduciary duty, a creditor may elect to hold the trustee personally accountable for damages resulting from the breach or he may elect to pursue the trust property.

Herbert G. Underwood, William E. Galeota, Clarksburg, for Alpine Property.

Neil A. Reed, Kingwood, Arthur M. Recht, Wheeling, for Mountaintop Development.

McGRAW, Chief Justice:

This case is before this Court on an appeal from a summary judgment granted against the appellant, Alpine Property Owner's Association, Inc. (ALPOA), by the Circuit Court of Preston County on May 6, 1986. For the reasons detailed below, the circuit court's summary judgment order is affirmed in part, reversed in part, and this case is remanded for further proceedings consistent with this opinion.

I.

Mountaintop Development Company, Inc. (Mountaintop) was incorporated on November 12, 1969 ¹ and subsequently undertook the development and operation of what is now known as the Alpine Lake subdivision and resort near Terra Alta in Preston County. ² In 1971, Mountaintop executed a declaration of restrictions wherein Mountaintop declared its intention to sell lots in the subdivision and to impose certain restrictions with respect to the sale of such lots, including the requirement that every person be approved for membership in ALPOA before acquiring title. ALPOA was incorporated as a nonstock, nonprofit corporation, with the general purpose of furthering and promoting the community welfare of property owners at the Alpine Lake subdivision. ³

Sometime in 1980 Mountaintop and ALPOA agreed that operation of Alpine Lake would be transferred from Mountaintop to ALPOA. At a meeting of the ALPOA board of directors on July 28, 1980, Mountaintop delivered documents transferring the subdivision's recreational facilities, streets, roads and other miscellaneous real estate, as well as various machinery and equipment used in the operation thereof, to ALPOA. In order to allow an orderly transition, complete operation of Alpine Lake was not transferred to ALPOA until the fall of 1980.

On December 9, 1980, Mountaintop's board of directors adopted a plan of complete liquidation and dissolution which was ratified by the executors of Mr. Ruby's estate, Mountaintop's sole shareholder. On January 2, 1981, Mountaintop's statement of intent to dissolve was delivered to and filed by the Secretary of State of West Virginia. On April 24, 1981, the final settlement of the estate of John W. Ruby was filed and the executors of the estate were discharged. On June 30, 1981, Mountaintop delivered articles of dissolution to the secretary of state, who thereupon issued a certificate of dissolution to Mountaintop. On July 9, 1981, Mountaintop recorded the articles of dissolution and the certificate of dissolution in the office of the Clerk of the County Commission of Monongalia County. On September 1, 1981, Mountaintop recorded a liquidating trust agreement which had been executed on December 30, 1980, by and between the executors, as the collective shareholder of Mountaintop, and Mr. Farmer, as the trustee of the liquidating trust.

On September 30, 1983, legal counsel for ALPOA directed a letter to the secretary of state advising him that ALPOA had outstanding claims against Mountaintop. On October 5, 1983, a deed was executed by and between the trustee of the Mountaintop liquidating trust and Ruby Enterprises, Inc., transferring all real estate owned by Mountaintop to Ruby Enterprises, Inc. ⁴ On October 6, 1983, more than two years after the certificate of dissolution was issued to and recorded by Mountaintop, ALPOA instituted suit against Mountaintop, the trustee of the Mountaintop liquidating trust, and the executors of the estate of John W. Ruby. On that same day, the trustee delivered a check in the amount of $219,712.59 to Ruby Enterprises, Inc. as a final distribution out of the Mountaintop liquidating trust. The circuit court later granted ALPOA's motion to amend and supplement its complaint and to join Ruby Enterprises, Inc. as an additional defendant.

II.

Briefly, ALPOA claimed in its amended complaint that Mountaintop failed to complete the development of the Alpine Lake subdivision as promised, ⁵ and that Mountaintop sought to avoid its obligations to ALPOA and place its assets beyond ALPOA's claims. ALPOA's amended complaint alleged breach of contract, promissory estoppel, violation of West Virginia's corporate dissolution statutes, fraudulent conveyance, fraud and deceit, breach of fiduciary duty, and civil conspiracy.

The defendants moved to dismiss ALPOA's complaint under Rule 12(b) of the West Virginia Rules of Civil Procedure. Because matters outside of the pleadings were presented to the circuit court, the motions to dismiss were treated as ones for summary judgment and disposed of under Rule 56 of the West Virginia Rules of Civil Procedure. West v. National Mines Corp., 168 W.Va. 578, 582, 285 S.E.2d 670, 674 (1981); Chapman v. Kane Transfer Company, Inc., 160 W.Va. 530, 236 S.E.2d 207 (1977); Barker v. Traders Bank, 152 W.Va. 774, 166 S.E.2d 331 (1969).

The circuit court rendered its opinion that ALPOA's complaint presented no genuine issue as to material fact and granted the defendants' motions for summary judgment. The court ruled that: (1) ALPOA's suit against Mountaintop was time barred, pursuant to West Virginia Code § 31-1-48 (1982 Replacement Vol.), because it was commenced more than two years after June 30, 1981, ⁶ the date the secretary of state issued a certificate of dissolution to Mountaintop; ⁷ (2) ALPOA's suit against Mr. Farmer, as trustee of the Mountaintop liquidating trust, was barred because his duties as trustee had terminated prior to institution of the suit; (3) ALPOA's suit against the executors of Mr. Ruby's estate was barred, pursuant to West Virginia Code § 44-2-26 (1982 Replacement Vol.), because suit was not instituted until after Ruby's estate was settled and the executors discharged; (4) ALPOA's suit against Ruby Enterprises, Inc. was invalid because it was dependent upon the existence of legally enforceable claims against Mountaintop and its liquidating trustee; and (5) ALPOA's civil conspiracy claim against the executors and the liquidating trustee was barred by the two-year limitation period applicable under West Virginia Code §§ 55-2-12 and 55-7-8a(a) (1981 Replacement Vol.).

Subsequent to the circuit court's summary judgment order, ALPOA was granted a stay of judgment pending appeal to this Court.

III.

The question to be decided in reviewing a summary judgment order is whether a genuine issue as to any material fact exists. ⁸ As this Court said in Syllabus Point 4 of Aetna Casualty and Surety Co. v. Federal Insurance Co., 148 W.Va. 160, 133 S.E.2d 770 (1963): "If there is no genuine issue as to any material fact summary judgment should be granted but such judgment must be denied if there is a genuine issue as to a material fact." In determining on review whether there is a genuine issue of material fact between the parties, this Court will construe the facts "in a light most favorable to the losing party," Masinter v. Webco Co., 164 W.Va. 241, 242, 262 S.E.2d 433, 435 (1980). Because summary judgment forecloses trial on the merits, this Court does not favor the use of summary judgment, especially in complex cases, where issues involving motive and intent are present, Masinter, 164 W.Va. at 243, 262 S.E.2d at 436, or where factual development is necessary to clarify application of the law. Lengyel v. Lint, 167 W.Va. 272, 281, 280 S.E.2d 66, 71 (1981).

As detailed below, this Court finds that certain factual issues were raised on the record in this case and that those issues should have been developed and resolved by a jury at trial.

A. Mountaintop

The circuit court ruled that Mountaintop's corporate existence ended two years after the secretary of state issued a certificate of dissolution to Mountaintop, and that the secretary of state therefore lacked authority to accept service of process on behalf of Mountaintop. ⁹ In connection with its ruling, the circuit court concluded that Mountaintop's plan of dissolution and liquidating trust complied with the statutory dissolution requirements set forth in chapter thirty-one et seq. of the Code.

ALPOA first attacks the circuit court's ruling by contending that the certificate of dissolution issued by the secretary of state was invalid because Mountaintop's articles of...