Lloyd's Inc v. Lloyd, 34866.

• Decision Date: 04 March 2010
• Docket Number: No. 34866.,34866.
• Citation: 693 S.E.2d 451,225 W.Va. 377
• Court: West Virginia Supreme Court
• Parties: LLOYD'S, INC., a West Virginia Business Corporation, Plaintiff Below, Appellant,v.Charles R. LLOYD, Defendant Below, Appellee.

225 W.Va. 377

693 S.E.2d 451

West Virginia.

LLOYD'S, INC., a West Virginia Business Corporation, Plaintiff Below, Appellant,v.Charles R. LLOYD, Defendant Below, Appellee.

No. 34866.

Supreme Court of Appeals of

Submitted Feb. 9, 2010.

Decided March 4, 2010.

Syllabus by the Court

1. “Appellate review of a circuit court's order granting a motion to dismiss a complaint is de novo.” Syllabus point 2 State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).

2. “A trial court is vested with a sound discretion in granting or refusing leave to amend pleadings in civil actions. Leave to amend should be freely given when justice so requires, but the action of a trial court in refusing to grant leave to amend a pleading will not be regarded as reversible error in the absence of a showing of an abuse of the trial court's discretion in ruling upon a motion for leave to amend.” Syllabus point 6 Perdue v. S.J. Groves & Sons Co., 152 W.Va. 222, 161 S.E.2d 250 (1968).

3. “Before the prosecution of a lawsuit may be barred on the basis of res judicata, three elements must be satisfied. First, there must have been a final adjudication on the merits in the prior action by a court having jurisdiction of the proceedings. Second, the two actions must involve either the same parties or persons in privity with those same parties. Third, the cause of action identified for resolution in the subsequent proceeding either must be identical to the cause of action determined in the prior action or must be such that it could have been resolved, had it been presented, in the prior action.” Syllabus point 4 Blake v. Charleston Area Medical Center, Inc., 201 W.Va. 469, 498 S.E.2d 41 (1997).

4. “ ‘ “An adjudication by a court having jurisdiction of the subject-matter and the parties is final and conclusive, not only as to the matters actually determined, but as to every other matter which the parties might have litigated as incident thereto and coming within the legitimate purview of the subject-matter of the action. It is not essential that the matter should have been formally put in issue in a former suit, but it is sufficient that the status of the suit was such that the parties might have had the matter disposed of on its merits. An erroneous ruling of the court will not prevent the matter from being res judicata.” Point 1, Syllabus, Sayre's Adm'r v. Harpold, 33 W.Va. 553[, 11 S.E. 16 (1890) ].’ Syllabus Point 1 In re Estate of McIntosh, 144 W.Va. 583, 109 S.E.2d 153 (1959).” Syllabus point 1, Conley v. Spillers, 171 W.Va. 584, 301 S.E.2d 216 (1983).

5. “ ‘The purpose of the words “and leave [to amend] shall be freely given when justice so requires” in Rule 15(a) W. Va. R. Civ. P., is to secure an adjudication on the merits of the controversy as would be secured under identical factual situations in the absence of procedural impediments; therefore, motions to amend should always be granted under Rule 15 when: (1) the amendment permits the presentation of the merits of the action; (2) the adverse party is not prejudiced by the sudden assertion of the subject of the amendment; and (3) the adverse party can be given ample opportunity to meet the issue.’ Syllabus Point 3, Rosier v. Garron, Inc., 156 W.Va. 861, 199 S.E.2d 50 (1973).” Syllabus point 2, State ex rel. Vedder v. Zakaib, 217 W.Va. 528, 618 S.E.2d 537 (2005).

6. “The liberality allowed in the amendment of pleadings pursuant to Rule 15(a) of the West Virginia Rules of Civil Procedure does not entitle a party to be dilatory in asserting claims or to neglect his or her case for a long period of time. Lack of diligence is justification for a denial of leave to amend where the delay is unreasonable, and places the burden on the moving party to demonstrate some valid reason for his or her neglect and delay.” Syllabus point 3, State ex rel. Vedder v. Zakaib, 217 W.Va. 528, 618 S.E.2d 537 (2005).

Kenneth E. Webb, Jr., J. Mark Adkins, Bowles Rice McDavid Graff & Love LLP, Charleston, WV, for Appellant.

Stephen B. Farmer, Erin K. King, Farmer, Cline & Campbell, PLLC, Charleston, WV, for Appellee.

PER CURIAM:

The appellant herein and plaintiff below, Lloyd's, Inc. (hereinafter “Lloyd's”), appeals from an order entered February 11, 2009, by the Circuit Court of Braxton County. By that order, the circuit court granted the motion to dismiss filed by the appellee herein and defendant below, Charles R. Lloyd (hereinafter “Charles Lloyd”), and dismissed Lloyd's complaint finding that the claims asserted therein were barred by res judicata. The circuit court additionally denied Lloyd's motion to amend its complaint to add an additional party defendant concluding that, even if leave were granted to add this party, the claims asserted were the same as those in Lloyd's original complaint and, thus, would be precluded by res judicata. On appeal to this Court, Lloyd's assigns error to the circuit court's rulings dismissing its complaint and denying its motion to amend its complaint. Upon a review of the parties' arguments, the record presented for appellate consideration, and the pertinent authorities, we affirm the decision of the Braxton County Circuit Court.

I.FACTUAL AND PROCEDURAL HISTORY

To understand the instant controversy, it is necessary to briefly revisit the relationships among and the litigation history between the parties. Charles Lloyd is the father of William Greg Lloyd (hereinafter “Greg Lloyd”) and Charles R. Lloyd, II (hereinafter “Chuck Lloyd”). Charles Lloyd, the appellee herein, owns several business interests and property holdings in Braxton County, West Virginia; he also is the owner of Lloyd Stave Company, Inc. (hereinafter “Lloyd Stave”), through which he operates a motel and a convenience store. Charles's son, Greg Lloyd, owns the appellant herein, Lloyd's, Inc., and, through this corporation, Greg Lloyd operates a hardware store. For several years, Charles Lloyd served as the bookkeeper for Lloyd's. Additionally, Greg Lloyd and his brother, Chuck Lloyd, jointly own Braxton Lumber Company (hereinafter “Braxton Lumber”).

On April 20, 2004, Greg Lloyd filed a civil action (hereinafter “Case Number 04-C-39”) in the Circuit Court of Braxton County against his father, Charles Lloyd; his brother, Chuck Lloyd; and Braxton Lumber Company. The essence of this lawsuit alleged that Charles Lloyd and Chuck Lloyd were conspiring to keep Greg Lloyd from participating in the business decisions of Braxton Lumber and that, in furtherance of this scheme, Charles Lloyd had forged minutes of a Braxton Lumber board meeting. This lawsuit also sought judicial dissolution of Braxton Lumber Company and partition of real estate. In response to this complaint, Charles Lloyd filed a counterclaim against Greg Lloyd and a third-party complaint against Lloyd's through which he sought repayment of a $132,000.00 note that had secured loans he had made to Lloyd's, and which had been guaranteed by Greg Lloyd, in 1996 and 1997 for the hardware store's startup expenses. Charles Lloyd additionally sought repayment from Greg Lloyd and Lloyd's of unpaid rent for the parcel of property upon which the hardware store is located.¹

Thereafter, Charles Lloyd filed a motion for summary judgment as to his counterclaims and third-party complaint. In response to this motion, Greg Lloyd and Lloyd's averred that Charles Lloyd, while keeping Lloyd's books, had misapplied payments they had made to Charles Lloyd in partial satisfaction of the $132,000.00 note. However, Greg Lloyd did not move to amend his complaint to add a cause of action against Charles Lloyd for misappropriation or conversion of these monies. Nor did Greg Lloyd or Lloyd's file a separate lawsuit during the pendency of Case Number 04-C-39 asserting such claims against Charles Lloyd.

During the ensuing trial of this matter in March and April 2007, Greg Lloyd and Lloyd's again attempted to defend themselves against Charles Lloyd's counterclaims and third-party complaint by claiming that he had misapplied payments they had made on the note. The trial court, however, refused to permit the late assertion of this defense ruling that such “issues ... unfortunately ... aren't in this lawsuit.” In response to additional arguments made by Greg Lloyd and Lloyd's that the misapplied monies had been received either by Charles Lloyd or by Lloyd Stave Company, the trial court ruled that “Lloyd's [sic] Stave Company, a corporate entity, is a separate entity and considered an individual person. And if ... they were wrongfully paid then ... a proper action to ... get that from Lloyd's [sic] Stave Company would be proper[.] ... But, that's another day another dollar, so to speak, in the matter.” By order entered March 5, 2008,² the trial court granted “Charles R. Lloyd's motion for judgment as a matter of law in favor of his third-party claim for payment of a $132,000.00 Note against Lloyd's, Inc.” Greg Lloyd and Chuck Lloyd both appealed from the circuit court's rulings to this Court,³ and this Court refused both of their petitions for appeal by orders entered December 9, 2008.⁴

On August 17, 2007, following the rendering of judgment in Case Number 04-C-39, Lloyd's filed a separate lawsuit (hereinafter “Case Number 07-C-76”) against Charles Lloyd in the Circuit Court of Braxton County. This second litigation forms the basis of the case sub judice. In this proceeding, Lloyd's alleged that, while serving as its bookkeeper, Charles Lloyd had misappropriated, misapplied, and/or converted payments it had made in satisfaction of its debts; among the causes of action asserted against Charles Lloyd are claims for unjust enrichment and conversion. Through this action, Lloyd's attempts to show that it should not be required to pay the full amount of the $132,000.00 note, the repayment of which Charles Lloyd sought through his counterclaims and third-party complaint in Case Number 04-C-39, because Charles Lloyd wrongfully applied payments Lloyd's...