Burdette v. Burdette Realty Improvement

• Decision Date: 14 October 2003
• Docket Number: No. 31152.,31152.
• Citation: 590 S.E.2d 641,214 W.Va. 448
• Court: West Virginia Supreme Court
• Parties: L.G. BURDETTE and Michael Burdette, Plaintiffs Below, Appellants, v. BURDETTE REALTY IMPROVEMENT, INC., et al., Defendants Below, Appellees.

590 S.E.2d 641

214 W.Va. 448

L.G. BURDETTE and Michael Burdette, Plaintiffs Below, Appellants, v. BURDETTE REALTY IMPROVEMENT, INC., et al., Defendants Below, Appellees.

No. 31152.

Supreme Court of Appeals of West Virginia.

Submitted September 9, 2003.

Decided October 14, 2003.

Harry F. Bell, Jr., Esq., Damon L. Ellis, Esq., Bell & Bands, PLLC, Margaret L. Workman, Esq., Charleston, for Appellant.

Steven L. Thomas, Esq., Kay, Casto & Chaney, Charleston, for Michael Burdette.

Richard L. Gottlieb, Esq., Lewis, Glasser, Casey & Rollins, Charleston, for Appellees.

PER CURIAM.

This action is before this Court upon the appeal of the appellant, L.G. Burdette, from the April 2, 2002, order of the Circuit Court of Kanawha County, West Virginia, granting the motion of the appellees, Burdette Reality Improvement, Inc., et al., to compel the enforcement of a settlement agreement in a dispute between the parties concerning their family-owned real estate business. Appellant L.G. Burdette contends that, even though he signed the agreement, it is invalid for a number of reasons and that he should, therefore, be permitted to proceed to trial against the appellees. Appellant L.G. Burdette also appeals from an October 1, 2002, order of the Circuit Court denying him relief upon his claim that the settlement agreement, even if valid, has been rendered unenforceable because the appellees have since conveyed a parcel of land to a third party which, under the agreement, was to be conveyed to the appellant.

This Court has before it the petition for appeal, all matters of record and the briefs and argument of counsel. For the reasons stated below, this Court reverses the April 2, 2002, order of the Circuit Court compelling enforcement of the settlement agreement. Specifically, this Court is of the opinion that the circumstances surrounding the execution of the agreement demonstrate that the parties failed to reach a meeting of the minds concerning a settlement of the dispute. Consequently, the October 1, 2002, ruling of the Circuit Court, with regard to the appellant's claim that the settlement agreement is unenforceable because of the appellees' conveyance to a third party, is moot. The propriety of the conveyance, however, in terms of its effect upon the value of the family business, may be raised as part of the litigation below.

Accordingly, the above orders of the Circuit Court of Kanawha County are reversed and set aside, and this action is remanded to the Circuit Court for proceedings consistent with this opinion.

I. THE ORDER OF APRIL 2, 2002

Burdette Realty Improvement, Inc., is a closely held corporation in the business of owning and managing various parcels of real estate. Appellant L.G. Burdette and his son Michael are the owners of one-third of the shares of the corporation. The appellant's brother, Foster Burdette, and the appellant's sister, Freda Burdette Larch, and their respective children, are the owners of the remaining two-thirds. The assets of Burdette Realty consist of holdings and developments worth several million dollars. Central to the dispute between the parties, however, is the wide disagreement concerning the precise value of the business. Whereas the appellees indicated that Burdette Realty is worth approximately 6 million dollars, appellant L.G. Burdette stated that Burdette Realty is worth 16 million dollars.

In November 1999, appellant L.G. Burdette and Michael Burdette, as minority shareholders, filed an action in the Circuit Court of Kanawha County against the appellees. The appellant and Michael Burdette were represented by attorney, William DePaulo. The complaint alleged self-dealing and breach of fiduciary obligations by the appellees and sought declaratory relief in the form of a determination of the nature and extent of the corporate duties owed by the appellees to L.G. Burdette and Michael Burdette. The appellees filed answers denying the allegations of the complaint and filed a counterclaim asserting that appellant Burdette and Michael converted real and personal property belonging to Burdette Realty to their own purposes without corporate authorization. Settlement negotiations between the parties were on-going following the institution of the action and reached a critical plateau at two points during the litigation. The first occurred on May 24, 2000, when a letter was signed by the parties' respective attorneys indicating that the action would be terminated upon an exchange of various holdings of the parties. Specifically, Burdette Realty was to convey certain parcels of land to a newly formed corporation to be owned by appellant L.G. Burdette and Michael Burdette. Appellant Burdette and Michael, in turn, were to surrender their shares in Burdette Realty to the appellees.

No settlement, however, was ever consummated upon the May 24, 2000, letter. Although appellant Burdette, in his 70s and in failing health, had often relied upon his son, Michael, with regard to business transactions, he objected to the terms of the May 24 letter. Moreover, appellant Burdette asserted that, although attorney DePaulo may have been authorized to sign the letter upon Michael's behalf, he had never been authorized to sign the letter upon the appellant's behalf. In the meantime, an escrow account established pursuant to the May 24 letter for the deposit of rental payments concerning the parcels to be conveyed in settlement, which account was to benefit the appellant and Michael, was unilaterally closed by appellee Foster Burdette because the appellant and Michael allegedly failed to vacate the premises of an unrelated parcel.

The second critical point in settlement negotiations, of primary concern in this appeal, occurred in January and February 2001. In January 2001, the appellees sent a proposed settlement agreement, executed by them, to the office of attorney DePaulo. The agreement was comparable to the proposal of May 24, 2000, in that it sought to terminate the action upon an exchange of various holdings of the parties. As the January 2001 agreement provided:

[A]s an inducement to the dismissal of the Action, the shareholders of BRI [Burdette Realty] have agreed to transfer the properties commonly referred to as the Wickham Road Business Center, located in Melbourne, Florida, the Lake Chaweva Goff Mountain Road Storage Units, located in Cross Lanes, West Virginia, and the Fairplain Property, located in Jackson County, West Virginia (collectively the "Split Off Parcels") into UPI, a wholly-owned subsidiary of BRI.

[I]mmediately following the aforementioned transfers, the Minority Shareholders would divest the entirety of their ownership interest in BRI in exchange for sole ownership of UPI.

In February 2001, appellant L.G. Burdette spoke with various individuals concerning the agreement, including attorney DePaulo and a Certified Public Accountant by the name of Mike Ellis. Ellis later testified that, although he discussed the terms of the agreement with appellant Burdette, he was uncertain whether the appellant understood the agreement or, if he did, whether he was willing to accept it.

On February 17, 2001, appellant L.G. Burdette and Michael Burdette met in attorney DePaulo's office to discuss the proposed settlement agreement. As later determined by the Circuit Court, Michael, who was experiencing personal financial difficulties at the time, vigorously attempted to persuade his father to join him in signing the agreement and ending the litigation. At that time, appellant L.G. Burdette signed the agreement, subsequently maintaining, however, that he did so as the result of unwarranted pressure from Michael and as the result of health problems and medication he was taking.

After returning home, appellant L.G. Burdette contacted attorney DePaulo and told him that he objected to the settlement agreement. According to the appellant, the agreement did not reflect the true value of his shares in Burdette Realty. Appellant Burdette instructed DePaulo not to deliver the agreement to the appellees. Attorney DePaulo assured the appellant that no delivery would take place. Nevertheless, on February 19, 2001, Michael Burdette entered DePaulo's office in the attorney's absence and took the signed agreement without either L.G. Burdette's or DePaulo's authorization. Michael then delivered the agreement to the attorneys for the appellees. As a result, DePaulo sent a facsimile transmission to the appellees' attorneys indicating that they should not proceed with the settlement: (1) unless they were to receive the signed settlement agreement directly from DePaulo or (2) unless they were to receive an authorization from both appellant L.G. Burdette and Michael Burdette. In reply, one of the attorneys for the appellees sent a facsimile transmission to DePaulo stating as follows:

I am in receipt of documents purporting to represent the fully executed settlement documents in the above referenced matter. Per our conversation this morning, the documents will remain in my custody pending receipt of written notice from you that both L.G. Burdette and Michael Burdette have authorized the release of the documents.

No such authorized release of the settlement agreement was ever sent to the appellees or their attorneys. Instead, on February 26, 2001, appellant L.G. Burdette appeared at the office of the appellees' attorneys and retrieved the signed settlement agreement.

In April 2001, the appellees filed a motion to compel enforcement of the settlement agreement, relying upon the fact that the signatures upon the agreement included those of appellant L.G. Burdette and Michael Burdette. The Circuit Court subsequently conducted a number of evidentiary hearings and, pursuant to the order entered on April 2, 2002, granted the appellees' motion. The Circuit Court found that L.G. Burdette knowingly and intelligently signed the settlement agreement on February 17, 2001, and that, therefore the agreement should be...