Mills v. USA Mobile Communications, Inc.

• Decision Date: 29 October 1993
• Docket Number: No. 21761,21761
• Citation: 438 S.E.2d 1,190 W.Va. 209
• Court: West Virginia Supreme Court
• Parties: John MILLS, Plaintiff Below, Appellant v. USA MOBILE COMMUNICATIONS, INC., a Domestic Corporation, and Jack W. Fuellhart, Individually, Defendants Below, Appellees.

Page 1

438 S.E.2d 1

190 W.Va. 209

John MILLS, Plaintiff Below, Appellant v. USA MOBILE COMMUNICATIONS, INC., a Domestic Corporation, and Jack W. Fuellhart, Individually, Defendants Below Appellees.

No. 21761.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 15, 1993.

Decided Oct. 29, 1993.

Syllabus by the Court

1. "A motion for summary judgment should be granted if the pleadings, affidavits or other evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Syllabus, Hanks v. Beckley Newspapers Corp., 153 W.Va. 834, 172 S.E.2d 816 (1970).

2. W.Va.Code, 31-1-89 (1974), provides, in pertinent part: "A holder of or subscriber to shares of a corporation shall be under no obligation to the corporation or its creditors with respect to such shares other than the obligation to pay to the corporation the full consideration for which such shares were issued or to be issued."

3. The corporate entity may be disregarded in those situations where the corporate form is being used to perpetrate injustice, defeat public convenience, or justify wrongful or inequitable conduct.

Larry E. Thompson, Della Cline, Thornsbury & Thompson, Williamson, for plaintiff.

Robert P. Martin, Mark A. Robinson, Myer, Darragh, Buckler, Bebenek & Eck, Charleston, for defendants.

MILLER, Justice:

John Mills, the plaintiff below, appeals the final order of the Circuit Court of Mingo County, dated November 6, 1992. He contends that the trial court erred in granting summary judgment for all of the defendants except USA Mobile Communications, Inc., and Jack Fuellhart, and in striking from the verdict the damages the jury awarded for malicious prosecution. We have reviewed the record and find no error; accordingly, we affirm the final judgment of the Circuit Court of Mingo County.

I.

John Mills owned a one-third interest in Selectavision, a cable television company that operated in Mingo County. The plaintiff also owned Tug Valley Radiotelephone and Paging (Tug Valley). During the winter of 1986, Jack Fuellhart, as a representative for Cable Systems USA, Associates (Cable Systems), a Pennsylvania limited partnership, sought to purchase Selectavision from Mr. Mills. While negotiating the sale, Mr. Fuellhart became interested in purchasing Tug Valley as well because he needed a way for the trucks in his cable business to communicate with each other.

On June 26, 1986, the plaintiff sold his interest in Selectavision to Cable Systems for $25,000. ¹ During the closing on Selectavision, Jack Fuellhart gave the plaintiff a letter of intent to purchase all the assets of Tug Valley for $172,000. Soon thereafter, Jack Fuellhart, Janice Fuellhart, Peter Graf, Steve Richman, and Gerhard Waldshutz ² formed West Virginia Mobile Communications, a West Virginia corporation, to purchase Tug Valley. West Virginia Mobile Communications' name was later changed to USA Mobile Communications. ³ Janice Fuellhart was designated the president of this newly formed corporation.

Because none of the principals in USA Mobile Communications had experience in the mobile paging business, they asked the plaintiff to work for the company. The plaintiff agreed, and, in August of 1986, he quit his job with the Chesapeake and Potomac Telephone Company and began working full time for USA Mobile Communications. ⁴ His office was in the same building as Cable Systems, and he received his paycheck from an accounting firm retained by the cable company.

Approximately one month later, on September 3, 1986, USA Mobile Communications signed an Asset Purchase Agreement with the plaintiff to acquire Tug Valley for $172,000. Clause 9(1) of the Agreement provided as follows:

"Conditions Precedent to Buyer's Obligations. All of the Buyer's obligations at the Closing hereunder are subject, at the option of Buyer, to the fulfillment of each of the following conditions at or prior to Closing and the seller agrees to use its respective best efforts to fulfill each such condition:

* * *

* * *

"(1) Buyer and John N. Mills shall have entered into any [sic] employment agreement in form and substance reasonably satisfactory to Mills and Buyer pursuant to which among other things, Mills shall manage the System for a period of five years after the Closing." (Emphasis Added). ⁵

In January, 1987, USA Mobile Communications opened a corporate account and began paying Mr. Mills' salary directly from that account. Despite her initial confidence in Mr. Mills, Janice Fuellhart soon became dissatisfied with his job performance. In November, 1987, after numerous attempts to resolve their differences, Janice Fuellhart stopped paying Mr. Mills' salary.

In January, 1988, Mr. Mills went onto USA Mobile Communication's property and began taking personal items he claimed Jack Fuellhart had told him he could store there. After witnessing Mr. Mills' actions, Skip James, an employee of Cable Systems, called Janice Fuellhart and explained to her what was happening. She instructed Mr. James to secure a warrant for the plaintiff's arrest. Subsequently, the police arrested the plaintiff at his home on a charge of grand larceny; however, the charge was later dismissed.

Plaintiff initially filed suit in July of 1988, but amended the complaint twice, with his second amended complaint being filed on March 29, 1989. The plaintiff sued Cable Systems, USA Mobile Communications, Jack Fuellhart, Janice Fuellhart, Peter Graf, Steve Richman, Gerhard Waldshutz, and Skip James. The plaintiff alleged a breach of the employment contract, fraud, malicious prosecution, and harassment.

Following extensive discovery, all the defendants moved for summary judgment. The matter was heard by the circuit court on April 23, 1990. By an order dated May 2, 1990, the circuit court granted summary judgment for all the defendants except USA Mobile Communications and Jack Fuellhart on the malicious prosecution and harassment claims and for all the defendants except USA Mobile Communications on the breach of contract claim. ⁶

The case went to trial on November 4, 1991. Three days later, the jury returned the following verdict for the plaintiff against the corporation, USA Mobile Communications:

                (1)  Lost wages                $290,949.98
                (2)  Value of Corporate Stock   248,400.00
                (3)  Harassment                  10,000.00
                (4)  Malicious Prosecution      137,500.00
                                               -----------
                                  TOTAL AWARD  $686,849.98
                

The jury also found Jack Fuellhart liable on the harassment and malicious prosecution claims.

Thereafter, the defendants filed a motion for judgment notwithstanding the verdict, a motion for a new trial, and a motion for relief from the judgment. After conducting a hearing on the motions, the trial court found that the record was devoid of any evidence that Jack Fuellhart or USA Mobile Communications was liable for malicious prosecution. Accordingly, the trial court struck the $137,500 compensatory damage award for the malicious prosecution count from the final jury verdict. ⁷

On November 6, 1992, the trial court issued its final order finding that the plaintiff could recover from USA Mobile Communications the sum of $549,349.98 plus interest. The plaintiff appeals. ⁸

II.

As earlier noted, following extensive discovery, the trial court granted the defendants' motion for summary judgment pursuant to Rule 56 of the West Virginia Rules of Civil Procedure. ⁹ In the Syllabus of Hanks v. Beckley Newspapers Corp. 153 W.Va. 834, 172 S.E.2d 816 (1970), we recognized when the granting of summary judgment is proper:

"A motion for summary judgment should be granted if the pleadings, affidavits or other evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."

See also Aetna Casualty & Sur. Co. v. Federal Ins. Co., 148 W.Va. 160, 133 S.E.2d 770 (1963).

With this basic rule of law as our guide, we address the plaintiff's assertion that the trial court erred in granting summary judgment for all the defendants except USA Mobile Communications on the breach of contract count. The trial court granted summary judgment for the other defendants because the plaintiff's employment contract was exclusively with USA Mobile Communications. Nonetheless, the plaintiff argues that the individual stockholders of the corporation also should be liable. We disagree.

Although stockholders were not immune from liability for corporate obligations at common law, such insulation has been the cornerstone of corporate law since the nineteenth century, and virtually every state now has a statute limiting a stockholder's liability to the cost of the shares held. See generally 18A Am.Jur.2d Corporations § 850 (1985 & Supp.1993). Our statute, W.Va.Code, 31-1-89 (1974), ¹⁰ provides, in pertinent part:

"A holder of or subscriber to shares of a corporation shall be under no obligation to the corporation or its creditors with respect to such shares other than the obligation to pay to the corporation the full consideration for which such shares were issued or to be issued."

Thus, where the corporate shares have been fully paid for, the subscriber or stockholder is not liable for the debts of the corporation. As we recognized in Laya v. Erin Homes, Inc., 177 W.Va. 343, 346, 352 S.E.2d 93, 97 (1986): "[A] corporate shareholder's liability is usually limited to his or her capital investment in the corporation, and the shareholder is normally not liable individually to a creditor of the corporation." See generally 18A Am.Jur.2d Corporations § 850.

As have most courts, we have recognized instances in which the corporate entity may be disregarded. These include situations where the corporate form is being used to perpetrate injustice, defeat public convenience, or justify wrongful or inequitable conduct. See, e.g., Laya v. Erin Homes, Inc., supra; Southern States...