Beverly v. Thompson

• Decision Date: 07 November 2012
• Docket Number: No. 11–1188.,11–1188.
• Citation: 735 S.E.2d 559,229 W.Va. 684
• Court: West Virginia Supreme Court
• Parties: Benjamin BEVERLY, Defendant Below, Petitioner v. Gary Kent THOMPSON and Miki Thompson, Husband and Wife, Plaintiffs Below, Respondents.

229 W.Va. 684

735 S.E.2d 559

Benjamin BEVERLY, Defendant Below, Petitioner

v.Gary Kent THOMPSON and Miki Thompson, Husband and Wife, Plaintiffs Below, Respondents.

No. 11–1188.

Supreme Court of Appeals of

West Virginia.

Submitted Sept. 26, 2012.

Decided Oct. 19, 2012.

Dissenting Opinion of Justice Benjamin

Nov. 7, 2012.

Syllabus by the Court

1. “In reviewing challenges to the findings and conclusions of the circuit court made after a bench trial, a two-pronged deferential standard of review is applied. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, and the circuit court's underlying factual findings are reviewed under a clearly erroneous standard. Questions of law are subject to a de novo review.” Syl. pt. 1, Public Citizen, Inc. v. First National Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996).

2. “We review the rulings of the circuit court concerning a new trial and its conclusion as to the existence of reversible error under an abuse of discretion standard, and we review the circuit court's underlying factual findings under a clearly erroneous standard. Questions of law are subject to a de novo review.” Tennant v. Marion Health Care Foundation, Inc., 194 W.Va. 97, 459 S.E.2d 374 (1995).

3. “The doctrine of contribution has its roots in equitable principles. The right to contribution arises when persons having a common obligation, either in contract or tort, are sued on that obligation and one party is forced to pay more than his pro tanto share of the obligation.” Syl. pt. 4, in part, Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440, 288 S.E.2d 511 (1982).

Scott H. Kaminski, Esq., Balgo & Kaminski, Charleston, WV, for Petitioner.

Lauren Thompson, Esq., Thompson Law Office, Williamson, WV, for Respondents.

PER CURIAM:

This action is before this Court upon the appeal of the petitioner and defendant below, Benjamin Beverly (“Beverly”), from the July 20, 2011, order of the Circuit Court of Mingo County denying his motion for a new trial. That order followed a bench trial which resulted in the entry of judgment in favor of the respondents and plaintiffs below, Gary Kent Thompson and Miki Thompson, (“respondents”) in the amount of $24,080.94. Beverly and the respondents were co-guarantors of a promissory note signed to obtain a bank loan to pay the debts of the parties' failed corporation, B & T Services d/b/a Precision Automotive. The respondents paid the note from their personal funds. The $24,080.94 represents the extent of Beverly's liability for contribution to the respondents.

Upon careful review of the briefs and argument of the parties, the record-appendix and the law relevant to this matter, this Court is of the opinion that the order denying the motion for a new trial should not be disturbed. Accordingly, for the reasons stated below, the July 20, 2011, order of the Circuit Court of Mingo County is affirmed.

I.Factual Background

On January 19, 1995, the West Virginia Secretary of State issued a Certificate of Incorporation for B & T Services, Inc. d/b/a Precision Automotive. The incorporators and their respective shares of stock were as follows: the respondents, Gary Kent Thompson and Miki Thompson, husband and wife, 25 shares each, and Beverly's wife Sue (“Sue”), 50 shares. Although involved in the planning of the business, Beverly himself did not receive any stock in the corporation. Both couples, however, placed trust deeds on their homes, securing a total of $100,000 in start-up money. The principal place of business of the corporation was in Williamson, West Virginia. The parties intended to share equally in the profits and losses.

It is undisputed that Sue played no role in the management or operation of the corporation. On the other hand, Beverly, her husband, worked in the business on a daily basis, made management decisions, handled the corporation's routine financial matters and was paid for his services. Moreover, during the bench trial, Sue testified that she and Beverly intended to share her half of the profits.

However, in June 1997, a final decree was entered in the Circuit Court of Mingo County divorcing Benjamin Beverly and Sue on the ground of irreconcilable differences. The decree, inter alia, awarded Sue the former marital residence and directed her to transfer all stock she owned in B & T Services, Inc., back to the corporation. Sue's 50 shares of stock, however, were never transferred back to the corporation. The respondents assert that Beverly received Sue's interest in the corporation in exchange for the former marital residence.

Although stable initially, no profits from B & T Services, Inc., were ever distributed to the parties, and the corporation began to experience financial difficulties. In November 1999, B & T Services, Inc., obtained a commercial bank loan in the principal amount of $42,116.68. Although the record in unclear as to signatures, a written business loan agreement associated with that loan indicates that the respondents, and Beverly, were each listed as 100% guarantors. Sue, however, was not involved in the transaction. The loan was subsequently repaid.

The current matter concerns a separate commercial bank loan obtained by B & T Services, Inc., on March 24, 2001, from Community Trust Bank, in Williamson, in the principal amount of $45,066.00. The promissory note was executed by the respondents only, and the loan proceeds were used to pay the debts of the corporation. The respondents and Beverly signed Commercial Guaranties, each individual thereby becoming a guarantor of payment of 100% of the note. As before, Beverly's former wife, Sue, was not involved in the transaction. The Commercial Guaranty signed by Beverly, for example, provided: “The word ‘Guarantor’ means each and every person or entity signing this Guaranty, including without limitation Benjamin Beverly.”

Soon after the March 24, 2001, loan was obtained, B & T Services, Inc. d/b/a Precision Automotive closed, and its assets were sold. It is undisputed that the corporation could not pay its debts, which included thousands of dollars of unpaid State taxes. Part of the March 24, 2001, loan proceeds were used to pay a portion of the previous 1999 loan. With regard to equipment, respondent Gary Thompson testified:

We tried to sell off some equipment. We sold some tire machines, an alignment machine. Those profits were used to pay off debt. * * * We sold off several pieces when Mr. Beverly was still there, trying to make ends meet; and then the owner of the building locked the doors. We lost a lot of equipment in the building.

Nevertheless, the respondents, Gary and Miki Thompson, made monthly payments from their personal funds with regard to the March 24, 2001, loan until it was satisfied in April 2009. The total amount they paid was $48,161.88.

II.Procedural Background

On September 17, 2009, the respondents filed an action in the Circuit Court of Mingo County against Beverly and his former wife, Sue. Although the complaint has not been included in the documents before this Court, the record-appendix demonstrates that the respondents sought contribution for the amounts paid from their personal funds in satisfaction of the March 24, 2001, commercial loan and promissory note.

A bench trial was conducted on April 29, 2011, at the conclusion of which the circuit court ruled in favor of the respondents. The court determined that Beverly was liable to the respondents in the amount of $24,080.94, representing one half the $48,161.88 they paid from their personal funds. Accordingly, on June 22, 2011, the circuit court entered a judgment order against Beverly and in favor of the respondents in the amount of $24,080.94. The respondents' claim against Sue was dismissed on the ground that she had been completely “distant from the operations and business” of the corporation. As to Beverly himself, the order stated:

Beverly was not a shareholder in the corporation and therefore is not liable for any debts of the corporation including any taxes owed to the State of West Virginia. However, defendant Benjamin Beverly signed as a co-guarantor with plaintiffs (100% each) on a bank loan for the business on or about March 24, 2001 in the principal amount of $45,066.00. Due to the failure of the business, plaintiffs paid on this loan personally in the amount of $48,161.88 including interest. As a co-guarantor, the Court finds that defendant Benjamin Beverly is jointly responsible for the March 24, 2001 bank loan and therefore liable to the plaintiffs for one half of the amount paid by them.

Beverly filed a motion for a new trial or, in the alternative, to amend the judgment. The circuit court denied the motion pursuant to the order entered on July 20, 2011. This appeal followed.

III.Standard of Review

Syllabus point 1 of Public Citizen, Inc. v. First National Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996), holds:

In reviewing challenges to the findings and conclusions of the circuit court made after a bench trial, a two-pronged deferential standard of review is applied. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, and the circuit court's underlying factual findings are reviewed under a clearly erroneous standard. Questions of law are subject to a de novo review.

Syl. pt. 1, Heitz v. Clovis, 213 W.Va. 197, 578 S.E.2d 391 (2003). See also, syl. pt. 1, Waddy v. Riggleman, 216 W.Va. 250, 606 S.E.2d 222 (2004) (Appellate review of an order granting or denying a motion for judgment as a matter of law in a bench trial is de novo.)

The standard of review concerning a ruling on a motion for a new trial is very similar. In Tennant v. Marion Health Care Foundation, Inc., 194 W.Va. 97, 104, 459 S.E.2d 374, 381 (1995), this Court stated:

We review the rulings of the circuit court concerning a new trial and its conclusion as to the existence of reversible error under an abuse of discretion standard,...