First Nat. Bank of Bluefield v. Clark

• Decision Date: 18 July 1994
• Docket Number: No. 22083,22083
• Citation: 191 W.Va. 623,447 S.E.2d 558
• Court: West Virginia Supreme Court
• Parties: The FIRST NATIONAL BANK OF BLUEFIELD, a National Banking Association, Plaintiff Below, Appellant, v. Andrew L. CLARK and William J. Sheppard, Defendant Below, Appellee.

Page 558

447 S.E.2d 558

191 W.Va. 623

The FIRST NATIONAL BANK OF BLUEFIELD, a National Banking

Association, Plaintiff Below, Appellant, v. Andrew L. CLARK and William J. Sheppard, Defendant Below, Appellee.

No. 22083.

Supreme Court of Appeals of

West Virginia.

Submitted May 11, 1994.

Decided July 18, 1994.

Syllabus by the Court

"In considering whether a motion for judgment notwithstanding the verdict under Rule 50(b) of the West Virginia Rules of Civil Procedure should be granted, the evidence should be considered in the light most favorable to the plaintiff, but, if it fails to establish a prima facie right to recover, the court should grant the motion." Syllabus point 6, Huffman v. Appalachian Power Company, 187 W.Va. 1, 415 S.E.2d 145 (1991).

Robert B. King, Stephen B. Farmer, King, Allen & Arnold, Charleston, for appellant.

Carl L. Fletcher, Jr., Neva G. Lusk, Spilman, Thomas & Battle, Charleston, for appellee.

PER CURIAM:

This is an appeal by The First National Bank of Bluefield, a national banking association, from an order of the Circuit Court of Mercer County, West Virginia, ignoring a jury verdict awarding the bank prejudgment interest in a contract action and granting the appellees a judgment notwithstanding the verdict on the prejudgment interest question. On appeal, the bank claims that the circuit court erred in granting the judgment notwithstanding the verdict. After reviewing the facts and the questions presented, this Court agrees. Accordingly, the judgment notwithstanding the verdict of the Circuit Court of Mercer County is reversed.

In 1981, the appellees in the proceeding, Andrew L. Clark and William J. Sheppard, requested that the Mercer County Commission provide them with assistance in financing a townhouse project which they desired to build in Princeton, Mercer County, West Virginia. The commission, on December 22, 1981, decided to grant the request and authorized the issuance of a $1,000,000.00 industrial development revenue bond to assist with the construction of the townhouse project.

After the Mercer County Commission authorized the issuance of the industrial revenue bond, Andrew L. Clark contacted the appellant, The First National Bank of Bluefield, to determine whether the bank was interested in purchasing the industrial development revenue bond. In subsequent discussions, the bank expressed an interest in purchasing the bond, contingent upon certain conditions and providing that the size of the project was increased from twenty to twenty-five townhouses. Among other conditions, the bank required Mr. Clark and Mr. Sheppard, or other outside parties, to inject $625,000.00 in capital into the project.

During the discussions, it appears that Andrew L. Clark and William J. Sheppard proposed to raise the $625,000.00 which the bank required be injected into the project by selling twenty-five limited partnership shares for $25,000.00 each. They also agreed to purchase any limited partnership shares which they could not sell. In a subsequent letter dated August 31, 1983, to assure the bank that the $625,000.00 would be injected into the project, Mr. Clark and Mr. Sheppard, acting as general partners of the partnership, formally entered into a commitment to purchase all limited partnership shares not sold.

The bank subsequently did purchase the $1,000,000.00 revenue bond, and the appellees, Andrew L. Clark and William J. Sheppard, undertook to construct the townhouse project as a limited partnership operation.

Following the bank's purchase of the revenue bond, Mr. Clark and Mr. Sheppard failed to sell nineteen of the twenty-five limited partnership shares, and, contrary to their assurances to the bank, they failed to purchase the unsold shares. Then, due to inadequate capitalization, they were unable to complete the project. As a result, the project became delinquent in the payment of the note securing the $1,000,000.00 revenue bond, and on April 7, 1986, the bank, as holder of the revenue bond, foreclosed on the project.

Following the foreclosure, the bank sued Mr. Clark and Mr. Sheppard for $625,000.00 or, in the alternative, for specific performance of their agreement to purchase the limited partnership shares and to apply the proceeds resulting for such purchase toward the payment of the project note and bond. The complaint specifically alleged that:

Plaintiff says that defendants have not complied with their agreement to purchase all limited partnership shares or units not sold in Townhouses at a price of $25,000.00 per unit; that although being requested to do so by plaintiff, defendants have refused to purchase such shares and that there are now twenty-five (25) shares of Townhouses which have not been sold and which defendants are obligated to purchase.

After the filing of a number of documents in the action, the bank moved for summary judgment, and, on January 7, 1987, the circuit court granted the motion. In its memorandum opinion, the circuit court concluded that, as a matter of law, Mr. Clark and Mr. Sheppard had personally obligated themselves to purchase $625,000.00 in limited partnership shares, if not otherwise sold, and to inject the proceeds into the project. The court also, in effect, found that six limited partnership units had been sold and that, contrary to their agreement, Mr. Clark and Mr. Sheppard had failed to purchase the remaining $475,000.00 in shares.

Mr. Clark and Mr. Sheppard appealed the circuit court's decision to this Court, and, on April 21, 1989, this Court, in First National Bank of Bluefield v. Clark & Sheppard, 181 W.Va. 494, 383 S.E.2d 298 (1989), reversed the circuit court's decision to grant summary judgment and ruled that the case should be remanded for trial before a jury so that the jury could determine whether Mr. Clark and Mr. Sheppard's undertaking to purchase the unsold limited partnership shares had been undertaken in their personal capacities.

The case was tried on remand before a jury in January, 1993, and on January 25, 1993, the jury concluded that Mr. Clark and Mr. Sheppard had personally obligated themselves to purchase the unsold limited partnership shares for the $475,000.00. The jury returned a verdict for the bank on the breach of contract claim for actual damages of $475,000.00. The jury also awarded the bank prejudgment interest on the $475,000.00 at the rate of 10% per annum. ¹

Subsequent to the return of the jury's verdict, the circuit court entered a judgment order in favor of the bank in the total sum of $798,390.42. This included $323,390.42 in prejudgment interest.

On February 10, 1993, Mr. Clark and Mr. Sheppard filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. Among many other points, this motion claimed that:

There was no basis for an award of prejudgment interest, since there was no time specified for performance. Further, since it is undisputed that the Bank retained the property after foreclosure, collected rents on it, and eventually sold it, prejudgment interest would unduly reward the plaintiff.

On June 14, 1993, the circuit court refused to set aside the jury's verdict on the question of Mr. Clark's and Mr. Sheppard's liability, but did set aside the prejudgment interest award. It appears that in setting aside the prejudgment interest award, the court reasoned that the bank's damages were not reasonably certain or susceptible to simple calculation. The court also apparently reasoned that the bank's damages were imaginary.

In the present proceeding, The First National Bank of Bluefield claims that the circuit court erred in setting aside the jury's verdict of prejudgment interest.

General authority for awarding prejudgment interest in a contract action in West Virginia is contained in W.Va.Code § 56-6-27. That statutory provision provides:

The jury, in any action founded on contract, may allow interest on the principal due, or any part thereof, and in all cases they shall find the aggregate of principal and interest due at the time of the trial, after allowing all proper credits, payments and set-offs; and judgment shall be entered for such aggregate with interest from the date of the verdict.

In interpreting this statutory provision, this Court stated in Corte Company, Inc. v. County Commission of McDowell County, 171 W.Va. 405, 407, 299 S.E.2d 16, 18 (1982), that " W.Va.Code, 56-6-27 [1931], allows a jury to grant prejudgment interest 'in any action founded on contract.' "

In this Court's view, documents filed in the present case rather clearly show that the bank's claim against Andrew L. Clark and William J. Sheppard is based upon the bank's allegation that Mr. Clark and Mr. Sheppard breached a contract with the bank, whereby they guaranteed the purchase of unsold limited partnership interests...