State ex rel. Lloyd's Inc. v. Facemire

• Decision Date: 18 November 2009
• Docket Number: No. 34948.,34948.
• Citation: 687 S.E.2d 341
• Parties: STATE of West Virginia ex rel. LLOYD'S INC., Petitioner v. The Honorable Richard A. FACEMIRE, Judge of the Circuit Court of Braxton County, West Virginia, and Charles R. Lloyd, Respondents.
• Court: West Virginia Supreme Court

687 S.E.2d 341

STATE of West Virginia ex rel. LLOYD'S INC., Petitioner v. The Honorable Richard A. FACEMIRE, Judge of the Circuit Court of Braxton County, West Virginia, and Charles R. Lloyd, Respondents.

No. 34948.

Supreme Court of Appeals of West Virginia.

Submitted September 23, 2009.

Decided November 18, 2009.

Syllabus by the Court

1. "In determining whether to entertain and issue the writ of prohibition for cases not involving an absence of jurisdiction but only where it is claimed that the lower tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the party seeking the writ has no other adequate means, such as direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent disregard for either procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression. These factors are general guidelines that serve as a useful starting point for determining whether a discretionary writ of prohibition should issue. Although all five factors need not be satisfied, it is clear that the third factor, the existence of clear error as a matter of law, should be given substantial weight." Syl. Pt. 4, State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996).

2. "An order of injunction is of no legal effect under * * * [Code, 53-5-9], unless the court requires a bond, or recites in the order that no bond is required for good cause, or unless the movant is a personal representative." Syl. Pt. 4, Syl., Meyers v. Washington Heights Land Co., 107 W.Va. 632, 149 S.E. 819 (1929).

Kenneth E. Webb Jr., Esq., Bowles Rice McDavid Graff & Love LLP, Charleston, WV, for Petitioner Lloyd's Inc.

Stephen B. Farmer, Esq., Erin K. King, Esq., Farmer, Cline & Campbell, PLLC, Charleston, WV, for Respondent Charles R. Lloyd.

PER CURIAM.

Petitioner Lloyd's Inc. seeks a Writ of Prohibition preventing the enforcement of the March 27, 2009, order of the Circuit Court of Braxton County, wherein the petitioner was enjoined from transferring, dissipating and/or wasting assets. Based upon the briefs and arguments of the parties, and after a careful review of the record in this matter, we issue the writ of prohibition as moulded.

I. Factual and procedural background

This matter arose from litigation in the Circuit Court of Braxton County in a dispute among family members over ownership of real estate and operation of several lumber companies. The original plaintiff in this civil action was William G. Lloyd, who sued Braxton Lumber Co., Inc., a West Virginia corporation, Charles R. Lloyd and Charles R. Lloyd II. Braxton Lumber Co., Inc. and Charles R. Lloyd II, in turn were granted third-party plaintiff status and filed a third-party complaint against Lloyd's Inc. Trial on all issues commenced on March 27, 2007, and on April 4, 2007, the jury returned a verdict granting Charles R. Lloyd judgment in the amount of $132,000.00, as well as pre-and post-judgment interest, from and against Lloyd's Inc. This judgment was entered by the lower court on March 5, 2007. Charles R. Lloyd and William G. Lloyd filed petitions for appeal from this judgment and this Court refused those petitions on December 20, 2008.

No collection action was taken while the petitions for appeal were pending in this Court. On February 17, 2009, Charles R. Lloyd filed a motion below seeking to enjoin Lloyd's Inc. from transferring, dissipating and/or wasting assets. In his motion to the circuit court, Charles R. Lloyd stated that Lloyd's Inc.'s failure to comply with the terms of the judgment order was consistent with its pattern and practice of conducting business and that he had a good faith basis to believe that Lloyd's Inc. would transfer assets in such a manner as to constitute fraudulent transfers within the definition of the West Virginia Fraudulent Transfers Act¹ (hereinafter referred to as the Act) and thereby attempt to prevent recovery on this judgment.

By order entered February 20, 2009, the circuit court below required Lloyd's Inc. to respond to the motion. The order also stated, inter alia, that "if any party desires oral argument on this motion, that party shall request the same within ten (10) days of entry of this Order." By letter dated March 2, 2009, counsel for Lloyd's Inc. requested a hearing on Charles R. Lloyd's motion. On March 6, 2009, counsel for Lloyd's Inc. filed a written response to the motion of Charles R. Lloyd. In this response, Lloyd's Inc. argued that there had been no showing on the part of Charles R. Lloyd of any transaction that would fall within the Act. As such, Lloyd's Inc. argued that the filing of the request for injunctive relief was premature.

On March 19, 2009, Charles R. Lloyd replied to the response of Lloyd's Inc., reiterating his belief that Lloyd's Inc. "will continue to refuse to comply with the Judgment Order and seek to transfer, dissipate, or waste assets, thereby attempting to prevent Charles R. Lloyd from recovering upon the judgment obtained against Lloyd's Inc." Charles R. Lloyd further stated that his motion was not intended to be a complaint under the Act. In a separate motion, Charles R. Lloyd requested appointment of a Commissioner in Aid of Execution.²

On March 27, 2009, and without a hearing on the underlying motion, the circuit court entered its order enjoining Lloyd's Inc. from transferring, dissipating and/or wasting assets. The order also appointed a Commissioner in Aid of Execution. The circuit court's order included the following findings and directives:

4. Charles Lloyd is not filing a complaint pursuant to the Uniform Fraudulent Transfers Act, W.V. (sic) Code § 40-1A-1, et seq., which provides a remedy for a creditor after a transfer of assets has been made by a debtor. Charles Lloyd is not asserting that Lloyd's Inc. has made a fraudulent transfer of assets. Charles Lloyd is seeking to prevent a transfer of assets that would inhibit his capacity to collect on what is a valid judgment.

5. The Court believes that enjoining Lloyd's Inc. from transferring or wasting assets is appropriate in this case, and will prevent possible further litigation. Furthermore, the Court does not believe that Lloyd's Inc. will be unduly harmed by this injunction, as the Court is only requiring that Lloyd's Inc. remain as it is, and keep it's (sic) assets where they are now.

Therefore, it is hereby ORDERED, ADJUDGED and DECREED:

1. Charles Lloyd's Motion to Enjoin Lloyd's Inc. From Transferring, Dissipating and/Or Wasting Assets shall be GRANTED.

2. The Motion to Appoint Commissioner in Aid of Execution shall be GRANTED, and attorney Thomas J. Drake of Sutton, WV shall be appointed as Commissioner to aid in execution.

There was no bond required of Charles R. Lloyd in this order.

On April 13, 2009, Lloyd's Inc. presented to this Court a petition for writ of prohibition against the circuit court. Charles R. Lloyd responded to the petition on May 12, 2009. On June 3, 2009, this Court issued a rule to show cause returnable to September 23, 2009, directing the respondent to show cause why a writ of prohibition should not be granted against the circuit court.

II. Standard of review

In syllabus point four of State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996), we announced the standard by which we determine whether a trial court has exceeded its jurisdiction:

In determining whether to entertain and issue the writ of prohibition for cases not involving an absence of jurisdiction but only where it is claimed that the lower tribunal exceeded its legitimate powers, this Court will examine five factors: (1) whether the party seeking the writ has no other adequate means, such as direct appeal, to obtain the desired relief; (2) whether the petitioner will be damaged or prejudiced in a way that is not correctable on appeal; (3) whether the lower tribunal's order is clearly erroneous as a matter of law; (4) whether the lower tribunal's order is an oft repeated error or manifests persistent disregard for either procedural or substantive law; and (5) whether the lower tribunal's order raises new and important problems or issues of law of first impression. These factors are general guidelines that serve as a useful starting point for determining whether a discretionary writ of prohibition should issue. Although all five factors need not be satisfied, it is clear that the third factor, the existence of clear error as a matter of law, should be given substantial weight.

With these factors in mind, we proceed to determine whether Petitioner has established the necessary grounds for the issuance of a writ of prohibition.

III. Discussion

We must first address the propriety of granting injunctive relief without the requirement of posting a bond. West Virginia Code § 53-5-9 (2008) directs that a bond must be posted prior to an injunction taking effect provides:

An injunction (except in the case of any personal representative, or other person from whom, in the opinion of the court or judge awarding the same, it may be improper to require bond) shall not take effect until bond be given in such penalty as the court or judge awarding it may direct, with condition to pay the judgment or decree (proceedings on which are enjoined) and all such costs as may be awarded against the party obtaining the injunction, and also such damages as shall be incurred or sustained by the person enjoined, in case the injunction be dissolved, and with a further condition, if a forthcoming bond has been given under such judgment or decree, to indemnify and save harmless the sureties in such forthcoming bond and their representatives against all loss or damages in consequence of...