Taylor v. Robert W. Ackerman, P.C.

CourtSupreme Court of West Virginia
Decision Date22 June 2015
Docket NumberNo. 14-0961,14-0961
PartiesLoyd C. Taylor, individually, and d/b/a L.C. Taylor Enterprises, Plaintiff Below, Petitioner v. Robert W. Ackerman, P.C., a Virginia professional corporation, Robert W. Ackerman, individually, and Pendleton Community Bank, Inc., a West Virginia corporation, Defendants Below, Respondents

Loyd C. Taylor, individually, and d/b/a L.C. Taylor Enterprises, Plaintiff Below, Petitioner
v.
Robert W. Ackerman, P.C., a Virginia professional corporation, Robert W. Ackerman, individually,
and Pendleton Community Bank, Inc., a West Virginia corporation, Defendants Below, Respondents

No. 14-0961

STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS

June 22, 2015


(Monroe County 10-C-91)

MEMORANDUM DECISION

Petitioner and plaintiff below, Loyd C. Taylor, individually, and d/b/a L. C. Taylor Enterprises, by counsel John H. Bryan, appeals two orders entered on August 27, 2014, that granted the respective motions for summary judgment filed by respondents and defendants below, Pendleton Community Bank, Inc., a West Virginia corporation ("the Bank"), and Robert W. Ackerman, P.C., a Virginia professional corporation, and Robert W. Ackerman, individually (collectively "Ackerman"). The Bank, by counsel William J. Powell and Vivian H. Basdekis, and Ackerman, by counsel Kermit J. Moore and W. Blake Belcher, filed responses, to which petitioner filed a reply.

This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

In 2005, petitioner and Warren Smith were equal partners in the purchase of the Sweet Springs Resort property, and owned equal interests in Sweet Springs Valley Holdings, LLC, the record owner of the resort property. In May of 2007, Sweet Springs Valley Holdings, LLC; Sweetsommer Water Bottling Co., LLC; and Smith's Beverage Corporation (the "Companies") borrowed $500,000 from the Bank, for which petitioner was a personal guarantor. On appeal, petitioner avers that he "spent hundreds of thousands of dollars over a period of time to allow [Mr.] Smith to continue developing Sweet Springs[;]" that the 2007 loan documents "mentions an unsecured loan from [petitioner] to [Mr.] Smith in the amount of $675,000.00, which the parties agreed to subordinate to the $500,000.00 loan[;]" and that "petitioner was owed substantial amounts of money by [Mr.] Smith as a result of his investments into the Sweet Springs Resort."

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On August 6, 2007, petitioner and Mr. Smith entered into a private "buy-out" agreement, pursuant to which petitioner conveyed all of his interest (50%) in the Companies to Mr. Smith who, in return, promised to pay petitioner either $3,000,000 or $5,000,000, depending on whether the Companies were successful in entering into a prospective lease. The agreement provided further that if any of the Companies obtained a loan secured by a deed of trust on the Sweet Springs Resort property, petitioner would subordinate his deed of trust to that creditor's lien for payment in the amount of $1,200,000. However, petitioner never recorded a deed of trust and, thus, remained an unsecured creditor of Mr. Smith.

On November 3, 2009, the Bank loaned $2,000,000 to the Companies. As collateral for the loan, the Bank recorded a deed of trust on the Sweet Springs Resort property. Given that petitioner never recorded a deed of trust following the execution of the buy-out agreement in 2007, when the Bank filed its deed of trust in 2009, it took the first priority position on the Sweet Springs Resort property because the original first deed of trust was extinguished when the $500,000 loan that created it was rolled into the 2009 loan. It is undisputed that petitioner's personal guaranty of the 2007 loan was released upon the closing of the 2009 loan.1

It is further undisputed that, at the time the loan was made in 2009, petitioner was neither an owner of the Companies nor authorized to act on their behalf. Mr. Smith, the sole member of the Companies in 2009, signed for the loan on their behalf as the authorized principal. Prior to issuing the loan, the Bank received and relied upon the Companies' official resolutions, which established Mr. Smith's exclusive authority to borrow on behalf of the Companies. The Bank also relied on an opinion letter from Ackerman—who had drafted the buy-out agreement and, therefore, knew that petitioner was no longer a co-owner of the Companies—that opined that the borrowers had full authority to execute the terms of the loan.2

Mr. Smith died on November 26, 2010. Prior to his death, Mr. Smith had not paid the monies owed to petitioner. Likewise, the loan to the Bank was in default.

Petitioner filed an amended complaint in the Circuit Court of Monroe County against John Doe, as personal representative of the Estate of Warren Smith; Sweet Springs Management, LLC; Sweet Springs Valley Holdings, LLC; Sweetsommer Water Bottling Company, LLC; Smith's Beverage Corporation, Inc.; Ackerman; and the Bank. As against Ackerman and the Bank, respondents herein, petitioner alleged negligence, fraud and aiding and abetting fraud, tortious interference, and civil conspiracy. He also alleged a claim of breach of fiduciary duty against Ackerman.

The Bank and Ackerman filed motions for summary judgment against petitioner. Separate hearings were conducted on their respective motions and, by orders entered August 27,

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2014, the circuit court granted summary judgment in their favor.3 This appeal followed.

This Court's standard of reviewing circuit court's orders granting summary judgment is de novo. Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). Furthermore,

"[a] motion for summary judgment should be granted if the pleadings, exhibits and discovery depositions upon which the motion is submitted for decision disclose that the case involves no genuine issue as to any material fact and that the party who made the motion is entitled to a judgment as a matter of law." Syl. pt. 5, Wilkinson v. Searls, 155 W.Va. 475, 184 S.E.2d 735 (1971).

Finch v. Inspectech, LLC, 229 W.Va. 147, 152-53, 727 S.E.2d 823, 828-29 (2012). See W.Va. R. Civ. P. 56(c).

In his first assignment of error, petitioner argues that the circuit court erred in concluding that, under the specific facts of this case, the Bank owed no duty of care to petitioner that required it to notify him of the $2,000,000 loan. Petitioner argues that, based upon the fact that he co-owned the Companies that borrowed $500,000 from the Bank in 2007 and that he was a guarantor on that loan, he had a "contractual business relationship" with the Bank that predated the $2,000,000 loan such that the Bank had a duty to notify him that his rights under the 2007 loan agreement would be adversely affected by the subsequent loan and execution of a deed of trust on the Sweet Springs Resort property. Alternatively, petitioner argues that, absent a contractual business relationship, he had a "special relationship" with the Bank that required it to notify petitioner of the 2009 loan prior to its closing. See White v. AAMG Const. Lending Ctr., 226 W.Va. 339, 700 S.E.2d 791 (2010).

In contrast, the Bank argues that it had no contractual business relationship with petitioner either before or at the time of the 2009 loan that would have required it to notify petitioner of that transaction prior to closing. Although petitioner was a personal guarantor on the 2007 loan, he was not a borrower and did not otherwise have a customer relationship with the Bank. Rather, the Bank argues, petitioner simply signed the guaranty in his capacity as a co-owner of the Companies that obtained the loan. Shortly thereafter, petitioner entered into the buy-out agreement, pursuant to which all of his legal interest in the Companies was conveyed to Mr. Smith. Also pursuant to the buy-out agreement, petitioner became one of Mr. Smith's creditors and, although petitioner had the right and opportunity under the agreement to record a deed of trust to secure his interests, he failed to do so. As a result, petitioner remained an unsecured creditor. The Bank contends that, given these facts, it did not owe petitioner a legally-recognized duty of care requiring it to notify petitioner of the loan prior to its closing. Finally, the Bank argues that there was no "special relationship" between it and petitioner.

Upon de novo review, we find that the circuit court did not err in concluding that petitioner failed to prove, as a matter of law, that the Bank owed him a legally-recognized duty of care under the circumstances. See Syl. Pt. 5, in part, Aikens v. Debow, 208 W.Va. 486, 541

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S.E.2d 576 (2000) (holding that "the determination of whether a plaintiff is owed a duty of care by a defendant must be rendered by the court as a...

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