Mangus Coal Co. v. Christopher Jennings ( 2016 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Mangus Coal Co., et. al., FILED
Plaintiffs Below, Petitioners
November 18, 2016
RORY L. PERRY II, CLERK
vs) No. 16-0199 (Preston County 12-C-63) SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Christopher Jennings, et. al.,
Defendants Below, Respondents
MEMORANDUM DECISION
Petitioners Mangus Coal Co., Jesse A. Jennings, and Franklin M. Jennings, by counsel
Jeremy B. Cooper, appeal the February 4, 2016, order of the Circuit Court of Preston County,
Business Court Division, that granted respondent’s motion for summary judgment. Respondents,
Christopher Jennings, Doris Jennings, and Darlene Murray, by counsel William C. Brewer and J.
Tyler Slavey, filed a response. Petitioners did not file 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.
Petitioners are minority shareholders of Mangus Coal Company, Inc., (“Mangus”). The
original complaint in this matter was filed March 15, 2012, and alleged derivative and individual
causes of action against respondents who are the majority shareholders and officers of Mangus.
Petitioners’ complaint stemmed from the following four transactions: (1) an October 3, 2007,
sale of real property in Preston County; (2) an April 12, 2008, lease from Respondent
Christopher Jennings to a third party; (3) a 2002 timber sale; and (4) an allegation that
Respondent Christopher Jennings breached a fiduciary duty by failing to make reasonable efforts
for Mangus to obtain release of certain DEP permits, which took place at some time before the
October 3, 2007, conveyance of property.
Respondents moved to dismiss the original complaint, and petitioners filed an amended
complaint, which asserted the following six causes of action: (1) breach of fiduciary duties; (2)
breach of implied covenant of good faith and fair dealing; (3) unjust enrichment; (4) conversion;
(5) breach of contract; and (6) civil conspiracy. Following an extensive discovery period,
respondents filed a Motion for Summary Judgment in which they sought the dismissal of all
claims. In a March 20, 2015, order following mediation, the circuit court granted the summary
judgment motion in part, and completely dismissed any and all claims asserted by petitioners in
their individual capacity. The circuit court also dismissed counts two, three, and five of the
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amended complaint, and all claims against Respondent Darlene Murray, save the civil conspiracy
claim. The circuit court held in abeyance its ruling on whether petitioners’ remaining derivative
claims1 for breach of fiduciary duty, conversion, and civil conspiracy were barred by the statute
of limitations, and ordered the parties into mediation.
After an unsuccessful mediation, respondents filed a renewed motion for summary
judgment. In their renewed motion, respondents argued that the remaining claims were barred by
the statute of limitations. Respondents asserted that the evidence showed that petitioners knew of
the transactions that were the subject of the suit, prior to 2010, but did not file suit until March of
2012. In response, petitioners asserted that the statute of limitations was tolled because
respondents fraudulently concealed information, prevented them from discovering any
wrongdoing prior to 2010, and that under the doctrine of adverse domination, the statute of
limitations was tolled as long as no one knew of or was willing to redress the misconduct
Following a hearing, the circuit court granted respondents’ motion. The circuit court held
that there was no genuine issue of material fact regarding the discovery of the alleged
wrongdoing, and that all of the transactions were subject to the two-year statute of limitation
period contained in West Virginia Code § 55-2-12. The circuit court dismissed the remaining
claims against respondents. Petitioners now appeal to this Court, arguing that the circuit court
erred in finding that the statute of limitations barred their remaining causes of action against
respondents.
Petitioners assert a sole assignment of error, claiming that the trial court erred in granting
the motion for summary judgment. We have held, “[a] circuit court’s entry of summary judgment
is reviewed de novo.” Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). In
addition,
“‘[a] motion for summary judgment should be granted only when it is
clear that there is no genuine issue of fact to be tried and inquiry concerning the
facts is not desirable to clarify the application of the law.’ Syllabus Point 3, Aetna
Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160,
133 S.E.2d 770 (1963).” Syllabus Point 1, Andrick v. Town of Buckhannon, 187
W.Va. 706, 421 S.E.2d 247 (1992).
Syl. Pt. 2, 192 W.Va. at 190, 451 S.E.2d 756.
Petitioners limit their argument to the October 3, 2007, conveyance of real property.
Petitioners present the same argument that they presented below, claiming that, under the
doctrine of adverse domination and fraudulent concealment, the statute of limitations were
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The remaining claims were the derivative claims of Mangus Coal Company for civil
conspiracy against all of the respondents, as contained in count six of the complaint; breach of
fiduciary duty as contained in count one; conversion against respondents Christopher Jennings
and Doris Jennings as contained in count four of the complaint; and unjust enrichment against
Christopher Jennings as contained in count three of the indictment.
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tolled2. Petitioners claim that while they were aware of the sale of the property, they were not
aware of any misconduct, until 2010. To support this assertion, petitioners claim that as early as
February 27, 2009, Petitioner Franklin Jennings requested a full accounting of all income, profits
and sales of the corporation, and that subsequent to that request, Petitioner Franklin Jennings
made two other requests to respondents through his counsel. Petitioner argues that, based upon
this evidence, a jury could reasonably determine that petitioners were unaware of the misconduct
until a period of time within two years of the filing of the complaint.
The circuit court held that there was no genuine issue of material fact regarding the
discovery of the alleged wrongdoing, and held that all of the transactions were subject to the
two-year statute of limitations period contained in West Virginia Code § 55-2-12. Regarding the
October 3, 2007, sale of real property, the circuit court found that petitioners had clear, actual
knowledge of the conveyance of the property shortly after the transaction took place, and noted
that petitioners had not provided any evidence that the sale was for less than market value. The
circuit court found that in a September 23, 2008, letter to Respondent Doris Jennings, Petitioner
Franklin Jennings wrote that he was aware of the 2007 land transfer. In addition, Franklin
Jennings acknowledged in his deposition that he became aware of the sale in 2008, or 2009.
Also, during the January 5, 2009, stockholders meeting, Petitioner Franklin Jennings threatened
to sue respondents regarding the matters at issue in the complaint. The circuit court found further
that, although petitioners claimed that the statute of limitations was tolled at the time petitioners
learned of the transactions, they were armed with sufficient information to pursue litigation, and
therefore the statute of limitations barred petitioners’ claims.
Upon careful review of the record, we agree with the circuit court that there is no genuine
issue of material fact regarding the discovery of the alleged wrongdoing, and that petitioners’
remaining claims are barred by the statute of limitations as contained in West Virginia Code §
55-2-12. The circuit court’s order reflects its thorough analysis of the grounds raised in
respondent’s motion for summary judgment. Having reviewed the order entered on February 4,
2016, we hereby adopt and incorporate the circuit court’s well-reasoned findings and conclusions
as to the assignment of error raised in this appeal. The Clerk is directed to attach a copy of the
circuit court’s order to this memorandum decision.
For the foregoing reasons, we affirm.
Affirmed.
2
See syllabus point one of Clark v. Milam, 192 W.Va. 398, 452 S.E.2d 714 (1994).
In West Virginia the doctrine of adverse domination tolls statutes of
limitation for tort claims against officers and directors who acted adversely to the
interests of the company and against lawyers and accountants, owing fiduciary
duties to the company, who took action contributing to the adverse domination of
the company.
Id.
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ISSUED: November 18, 2016
CONCURRED IN BY:
Chief Justice Menis E. Ketchum
Justice Robin Jean Davis
Justice Brent D. Benjamin
Justice Margaret L. Workman
Justice Allen H. Loughry II
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