Dodd v. Potomac Riverside Farm, Inc.

Decision Date13 June 2008
Docket NumberNo. 33501.,33501.
Citation664 S.E.2d 184,222 W.Va. 299
PartiesDavid R. DODD, David E. Dodd, and Diann D. Martin, and other similarly situated minority shareholders of Potomac Riverside Farm, Inc., Plaintiffs Below, Appellants, v. POTOMAC RIVERSIDE FARM, INC., Logan D. Wannamaker, Marjorie Lee Wannamaker, National City Bank, Trustee of Voting Trust Agreement of Potomac Riverside Farm, Inc., and Trustee of Edwin D. Dodd Trust, Sarah D. Kauffman, as President of Potomac Riverside Farm, Inc., Defendants Below, Appellees.
CourtWest Virginia Supreme Court

Syllabus by the Court

1. "`In reviewing challenges to the findings and conclusions [found by a special commissioner that were adopted by the circuit court], 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 novo review.' Syllabus Point 1, Public Citizen, Inc. v. First National Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996)." Syllabus Point 1, Napier v. Compton, 210 W.Va. 594, 558 S.E.2d 593 (2001).

2. "In reviewing a circuit court's award of prejudgment interest, we usually apply an abuse of discretion standard. When, however, a circuit court's award of prejudgment interest hinges, in part, on an interpretation of our decisional or statutory law, we review de novo that portion of the analysis." Syllabus Point 2, Hensley v. West Virginia Department of Health & Human Resources, 203 W.Va. 456, 508 S.E.2d 616 (1998).

3. "'[T]he trial [court] ... is vested with a wide discretion in determining the amount of ... court costs and counsel fees, and the trial [court's] ... determination of such matters will not be disturbed upon appeal to this Court unless it clearly appears that [it] has abused [its] discretion.' Syllabus point 3, [in part,] Bond v. Bond, 144 W.Va. 478, 109 S.E.2d 16 (1959). Syl. Pt. 2, [in part,] Cummings v. Cummings, 170 W.Va. 712, 296 S.E.2d 542 (1982) [(per curiam)]. Syllabus point 4, in part, Ball v. Wills, 190 W.Va. 517, 438 S.E.2d 860 (1993). Syl. pt. 3, Daily Gazette Co., Inc. v. West Virginia Dev. Office, 206 W.Va. 51, 521 S.E.2d 543 (1999). Syllabus point 1, Hollen v. Hathaway Electric, Inc., 213 W.Va. 667, 584 S.E.2d 523 (2003) (per curiam)." Syllabus Point 3, Shafer v. Kings Tire Service, Inc., 215 W.Va. 169, 597 S.E.2d 302 (2004).

4. "Where there exists no statute or express written agreement establishing the type of prejudgment interest as being compound, and in the absence of a recognized exception which would permit recovery of compound prejudgment interest, prejudgment interest is simple in simple in kind." Syllabus Point 4, Hensley v. West Virginia Department of Health & Human Resources, 203 W.Va. 456, 508 S.E.2d 616 (1998).

Webster J. Arceneaux, III, Lewis, Glasser, Casey & Rollins, Charleston, WV, for Appellants.

William J. Powell, Richard F. Shearer, Jackson Kelly, P.L.L.C., Martinsburg, WV, for Appellee, Sarah D. Kaufmann.

Tammy Mitchell McWilliams, Trump & Trump, L.C., for Appellees, Potomac Riverside Farm, Inc., Logan D. Wannamaker, Majorie Lee Wannamaker and National City Bank.

PER CURIAM:

In the instant matter, appellants David R. Dodd, David E. Dodd and Diann D. Martin [hereinafter, collectively "appellants"], seek reversal of two orders entered by the Circuit Court of Berkeley County in this minority shareholder dissent action instituted pursuant to the provisions of our prior dissenting shareholder rights statute, W. Va.Code § 31-1-123 (1974).1 The first, entered April 6, 2006, established the fair value of the appellants' shares of stock in appellee Potomac Riverside Farm, Inc., a closely held corporation. The second, entered October 6, 2006, set forth the interest to which appellants were entitled on the value of their shares of corporate stock and assessed certain costs against the appellees, while denying appellees' motion for attorney fees.

On appeal, appellants argue that the circuit court erred in its valuation of their shares of stock and made an unfair and inequitable interest award. Appellee Sarah Kaufman responds that appellants' challenge to the circuit court's valuation of the appellants' shares of stock is untimely and, even if timely, did not constitute an abuse of discretion. Further, she argues that the circuit court's interest determination and award were fair and reasonable under the circumstances. In addition to arguing points similar and consistent with those argued by Sarah Kaufman, the remaining appellees assert a cross-assignment of error challenging the circuit court's assessment of costs incurred for the special commissioner appointed herein against the appellee corporation and denying appellees' request for attorney's fees pursuant to Rule 68(c) of the West Virginia Rules of Civil Procedure. Having thoroughly considered the arguments of the parties, the record below and applicable precedent, we affirm, in part, and reverse, in part, the Circuit Court of Berkeley County for the reasons set forth herein.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellee Potomac Riverside Farm, Inc. [hereinafter "PRF"] is a closely-held corporation formed in 1965 having three siblings, David R. Dodd, Edwin Dodd and Sarah Kaufman as its primary shareholders. At its inception, PRF issued 1,070 shares of stock with the siblings each owning approximately one-third of the same.2 PRF's primary assets consist of two farms totaling 360 acres of farm land located in Berkeley County, West Virginia and which front approximately 1.4 miles of the Potomac River. This land had been in the Dodd family's possession for seven generations.

Prior to his death on January 2, 2001, Edwin D. Dodd purchased the rights to vote Sarah Kaufman's 344 shares of PRF for $50,000 and created a voting trust for the purpose of voting both his 352 shares of PRF stock and his sister's 344 shares of PRF stock. Appellee National City Bank was named the trustee of the voting trust and also serves as the representative of the Estate of Edwin D. Dodd and trustee for the Edwin D. Dodd Trust. Thus, National City Bank controls the votes for the majority of shares of PRF stock and also controls Quail Creek Farm, property owned by Edwin D. Dodd prior to his death and which is located adjacent to PRF's property.

In early August 2001, the PRF Board of Directors3 recommended the sale of essentially all of PRF's assets, specifically the 360 acres of farm land and any improvements thereon, and noticed a special meeting of stockholders for August 31, 2001. By letter dated August 30, 2001, Appellants exercised their rights under W.Va.Code § 31-1-123(a) (1974)4 to dissent from the proposed corporate actions. The proposed sale of PRF's assets was approved at the August 31, 2001, special meeting. Thereafter, the appellants made written demands for payment the fair value of their shares in accordance with W. Va.Code § 31-1-123(a).

On March 21, 2002, an entity known as WV Hunter, LLC, offered to purchase Quail Creek Farm and the PRF properties for a total of $5,000,000. Of that amount, $1,399,900 was allocated for the purchase of the PRF properties.5 Appellants thereafter, on July 8, 2002, instituted this action seeking to prevent the sale and recorded a lis pendens against the PRF properties. The contract for sale to WV Hunter, LLC, was signed on July 31, 2003, having previously been ratified by the PRF Board of Directors. By order effective January 31, 2003,6 the circuit court ordered the removal and expungement of the lis pendens finding appellants, as shareholders, had no legal interest in property titled in the corporation's name. In this order, the circuit court also held appellants' sole remedy would be to seek money damages and directed that any sale proceeds be placed in a constructive trust pending further order of the court. The sale of PRF's properties to WV Hunter, LLC was finalized in June 2003, and PRF made a tender offer, pursuant to W. Va.Code § 31-1-123(c),7 to appellants of $835.51 per share8 for each of their combined 357 shares9 on June 27, 2003.

Appellants rejected the tender offer as not being a fair and reasonable value of their shares and the instant proceeding was continued to determine the fair value of the shares. PRF's tender offer was followed by two offers of judgment made pursuant to Rule 68 of the West Virginia Rules of Civil Procedure. The first, made on February 10, 2005, was for $376,500. The second, made on February 18, 2005, was for $414,500. Subsequent to the appellants rejecting both offers of judgment, the circuit court appointed Oscar M. Bean as special commissioner to determine the fair value of the dissenting stockholders' shares of PRF stock as of August 30, 2001, the date they filed their notice of dissent.

Commissioner Bean held two days of hearings in October 2005. The parties, having agreed that the net asset valuation method10 should be used to determine the property value as of August 30, 2001, presented evidence regarding the same. Appellants offered the testimony of Norman McCray who opined that PRF's property had a value of $2,082,000 as of July 1, 2002, or $2,024,745 on August 30, 2001. Appellees presented the testimony of Terrence W. McPherson who opined that the PRF property had a value of $1,250,000 on August 30, 2001 and increased to $1,399,900 by June 12, 2003, when it was sold. Upon hearing all evidence and finding both appraisals to be imperfect, Commissioner Bean found the McPherson appraisal to be more persuasive. In so doing, he noted that the McCray appraisal was unpersuasive because it did not satisfactorily account for the flood plain and a railroad easement. Additionally, the appraisal was performed using a listing that was not comparable.

Commissioner Bean ultimately submitted his recommendations to the...

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4 cases
  • U.S. Bank N. A. v. Cold Spring Granite Co., A10–0252.
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    • Supreme Court of Minnesota (US)
    • September 7, 2011
    ...... out’ minority stockholders); FGS Enters., Inc. v. Shimala, 625 N.E.2d 1226 (Ind.1993) (ruling ..., Inc., 884 A.2d 26, 35 (Del.2005); Dodd v. Potomac Riverside Farm, Inc., 222 W.Va. 299, ......
  • Gainer v. Walker
    • United States
    • Supreme Court of West Virginia
    • May 19, 2009
    ...... See e.g. Dodd v. Potomac Riverside Farm, Inc., 222 W.Va. 299, ......
  • Simmons v. Fussell, 18-0210
    • United States
    • Supreme Court of West Virginia
    • April 12, 2019
    ...and Syllabus Point 1, Napier v. Compton , 210 W.Va. 594, 558 S.E.2d 593 (2001)." Syllabus Point 1, Dodd v. Potomac Riverside Farm, Inc. , 222 W. Va. 299, 664 S.E.2d 184 (2008). We have also held that, " ‘[t]he admissibility of testimony by an expert witness is a matter within the sound disc......
  • Am. Ethanol Inc. v. Fund
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    • Supreme Court of Nevada
    • May 5, 2011
    ......82, 725 A.2d 927, 931 (1999); Dodd v. Potomac Riverside Farm, Inc., 222 W.Va. 299, 664 S.E.2d ......

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