State ex rel. Massachusetts Mut. Life Ins. Co. v. Sanders

• Decision Date: 24 February 2012
• Docket Number: No. 11–1514.,11–1514.
• Parties: STATE of West Virginia ex rel. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Petitioner v. Honorable David H. SANDERS, Howard G. Demory and Charlotte P. Demory; 3rd Time Trucking, LLC, and Eric Custer, Respondents.
• Court: West Virginia Supreme Court

724 S.E.2d 353

STATE of West Virginia ex rel. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Petitioner

v.Honorable David H. SANDERS, Howard G. Demory and Charlotte P. Demory; 3rd Time Trucking, LLC, and Eric Custer, Respondents.

No. 11–1514.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 25, 2012.Decided Feb. 24, 2012.

Syllabus by the Court

1. “Prohibition lies only to restrain inferior courts from proceeding [ ] in causes over which they have no jurisdiction, or, in which, having jurisdiction, they are exceeding their legitimate powers, and may not be used as a substitute for [a petition for appeal] or certiorari. Syl. Pt. 1, Crawford v. Taylor, 138 W.Va. 207, 75 S.E.2d 370 (1953).” Syl. Pt. 3, State ex rel. Hoover v. Berger, 199 W.Va. 12, 483 S.E.2d 12 (1996).

2. “When determining whether to allow the deposition of a highly placed public official, the trial court should weigh the necessity to depose or examine an executive official against, among other factors, (1) the substantiality of the case in which the deposition is requested; (2) the degree to which the witness has first-hand knowledge or direct involvement; (3) the probable length of the deposition and the effect on government business if the official must attend the deposition; and (4) whether less onerous discovery procedures provide the information sought.” Syl. Pt. 4, State ex rel. Paige v. Canady, 197 W.Va. 154, 475 S.E.2d 154 (1996).

3. When a party seeks to depose a high-ranking corporate official and that official (or the corporation) files a motion for protective order to prohibit the deposition accompanied by the official's affidavit denying any knowledge of relevant facts, the circuit court should first determine whether the party seeking the deposition has demonstrated that the official has any unique or personal knowledge of discoverable information. If the party seeking the deposition cannot show that the official has any unique or personal knowledge of discoverable information, the circuit court should grant the motion for protective order and first require the party seeking the deposition to attempt to obtain the discovery through less intrusive methods. Depending upon the circumstances of the particular case, these methods could include the depositions of lower level corporate employees, as well as interrogatories and requests for production of documents directed to the corporation. After making a good faith effort to obtain the discovery through less intrusive methods, the party seeking the deposition may attempt to show (1) that there is a reasonable indication that the official's deposition is calculated to lead to the discovery of admissible evidence, and (2) that the less intrusive methods of discovery are unsatisfactory, insufficient or inadequate. If the party seeking the deposition makes this showing, the circuit court should modify or vacate the protective order as appropriate. As with any deponent, the circuit court retains discretion to restrict the duration, scope and location of the deposition. If the party seeking the deposition fails to make this showing, the trial court should leave the protective order in place.

4. “A party seeking to petition this Court for an extraordinary writ based upon a non-appealable interlocutory decision of a trial court, must request the trial court set out in an order findings of fact and conclusions of law that support and form the basis of its decision. In making the request to the trial court, counsel must inform the trial court specifically that the request is being made because counsel intends to seek an extraordinary writ to challenge the court's ruling. When such a request is made, trial courts are obligated to enter an order containing findings of fact and conclusions of law. Absent a request by the complaining party, a trial court is under no duty to set out findings of fact and conclusions of law in non-appealable interlocutory orders.” Syl. Pt. 6, State ex rel. Allstate Ins. Co. v. Gaughan, 203 W.Va. 358, 508 S.E.2d 75 (1998). Ancil G. Ramey, Esq., William E. Galeota, Esq., Lucien G. Lewin, Esq., Steptoe & Johnson PLLC, Huntington, WV, for Petitioner.

Robert J. Schiavoni, Esq., David M. Hammer, Esq., Hammer, Ferretti & Schiavoni, Martinsburg, WV, F. Samuel Byrer, Esq., Peter A. Pentony, Esq., Law Office of F. Samual Byrer, PLLC, Charles Town, WV, Brad D. Weiss, Esq., Kimberly S. MacCumbee, Esq., Rachelle E. Hill, Esq., Charapp & Weiss, LLP, McLean, VA, for Respondents.

WORKMAN, Justice:

This case is before the Court on a writ of prohibition brought by Massachusetts Mutual Life Insurance Company (“MassMutual”) seeking to prohibit the Circuit Court of Jefferson County, West Virginia, from enforcing two Orders entered on October 26, 2011,¹ requiring Roger Crandall, President, Chief Executive Officer (“CEO”), and Chairman of MassMutual, to submit to depositions. MassMutual argues that the Orders requiring its president to submit to depositions are properly the subject of a writ of prohibition. MassMutual further argues that the Orders of the circuit court compelling the depositions of this high-ranking corporate executive, despite his lack of any personal or unique knowledge about the cases, are clearly erroneous and constitutes an abuse of the circuit court's discretion. The Court issued a Rule to Show Cause on November 22, 2011. Based upon a review of the record, the parties' briefs and arguments, and all other matters submitted before the Court, the Court issues the requested writ.

I. Facts and Procedural Background

Howard G. Demory, et al. v. Massachusetts Mutual Life Insurance Company, Case No. 11–C–131, and the related case of 3^rd Time Trucking, LLC, et al. v. Massachusetts Mutual Life Insurance Company, Case No. 11–C–68, are two civil actions in a series of 412i retirement plan cases ² filed in Jefferson County, West Virginia, against multiple defendants including MassMutual. According to the record, the Demorys filed their complaint on or about April 26, 2010. At issue in the Demory action is a $100,000 annuity purchased by Howard G. Demory and Charlotte P. Demory from MassMutual. The plaintiffs claim the transaction involved fraud and tax fraud.³ The 412i plan must be established by an employer as the sponsor of the plan and the plan itself is then established as a separate and distinct entity with its own employer identification number for IRS tax reporting purposes. Mr. Demory, who was eighty-one years old in 2005, sold his thirty acre farm. He did not have enough money to qualify for a 412i plan and was not in a position to fund the plan for the minimum five years. According to the Respondents, MassMutual, through its agents, fabricated an employer named “Demory Farm” and an employer sponsored retirement plan named “Demory Farm Retirement Plan.” The Demory Farm Retirement Plan then purchased the annuity. The Respondents claim the annuity was illegally funded with $100,000 from the capital gains from the sale of the Demorys' farm. Then, in January 2007, MassMutual, through its agents, caused the improper and illegal conveyance of the Demory Farm Retirement Plan “annuity” to an individual retirement account which it had set up for Mr. Demory. The Respondents claim that in order to make this transfer, MassMutual had to represent that the annuity was coming from a qualified tax plan into another qualified tax plan.

As part of discovery, on July 14, 2011, a little more than two months after the litigation commenced, the Demorys noticed the deposition of Roger Crandall, the Chairman, President and CEO of MassMutual. On August 16, 2011, MassMutual removed the case to the United States District Court for the Northern District of West Virginia due to the bankruptcy filed by Defendant Alexandria West. On September 26, 2011, the district court remanded the case back to state circuit court. By letter dated September 29, 2011, the Respondents requested to depose Mr. Crandall.

On or about October 3, 2011, MassMutual filed motions for protective orders in both civil actions, arguing that Mr. Crandall lacked any personal knowledge of the plaintiffs' actions, and “did not have any contact with the Plaintiffs, any involvement in the subject matter of this lawsuit, or any involvement in the subject matter of any of the other lawsuits filed in Jefferson County[.]” On October 21, 2011,⁴ in response, the Respondents contended that: 1) the annuity contract was signed with Mr. Crandall's facsimile signature; 2) MassMutual publicly proclaims its commitment to investigating and reporting fraud; 3) Mr. Crandall is MassMutual's “face” of compliance regarding reporting and investigating any suspected fraud or wrongdoing because he has publicly proclaimed that MassMutual is an ethical company and because, as MassMutual's president, he signs Internal Control Certifications in accordance with the Sarbanes–Oxley Act; ⁵ 4) Mr. and Mrs. Demory wrote a letter to Mr. Crandall regarding their dispute; and, 5) there have been similar lawsuits filed regarding the “defective 412i Plans.” On October 24, 2011, MassMutual replied seeking the entry of an order with specific findings of fact and conclusions of law as contemplated by the Court in State ex rel. Allstate Ins. Co. v. Gaughan, 203 W.Va. 358, 508 S.E.2d 75 (1998) (“A party seeking to petition this Court for an extraordinary writ based upon a non-appealable interlocutory decision of a trial court, must request the trial court set out in an order findings of fact and conclusions of law that support and form the basis of its decision. In making the request to the trial court, counsel must inform the trial court specifically that the request is being made because counsel intends to seek an extraordinary writ to challenge the court's ruling. When such a request is made, trial courts are obligated to enter an order containing findings of fact and conclusions of law. Absent a request by the complaining party, a trial court is...