Tri-State Pipeline, Inc. v. Jason Steorts and Steorts Homebuilders, LLC

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Tri-State Pipeline, Inc.,
Defendant/Third-Party Plaintiff Below, Petitioner FILED
May 17, 2019
vs) No. 18-0183 (Kanawha County 13-C-2324) released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
Jason Steorts, Individually; and OF WEST VIRGINIA
Steorts Homebulders, LLC,
Third-Party Defendant Below, Respondent
MEMORANDUM DECISION
Petitioner Tri-State Pipeline, Inc. (“Tri-State”), appeals the January 31, 2018 order of the
Circuit Court of Kanawha County, West Virginia, granting Respondents Jason Steorts’s,
individually, and Steorts Homebuilders, LLC’s (collectively “Respondents”) motions for
summary judgment. The circuit court found Tri-State’s claims were barred under principles of
issue preclusion in light of a prior arbitration.
This Court has considered the parties’ briefs, their oral arguments, and the record on
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appeal. Upon review, the Court discerns no substantial question of law and no prejudicial error.
Consequently, a memorandum decision affirming the order of the circuit court is the appropriate
disposition pursuant to Rule 21 of the West Virginia Rules of Appellate Procedure.
Tri-State performed excavation work at Rockcrest Pointe Subdivision in South
Charleston, West Virginia, pursuant to a contract with Skaff Family Limited Partnership
(“Skaff”). During this project, Respondents were on site building several homes at the
subdivision. When performing excavation work at the subdivision, Tri-State dumped fill dirt
onto nearby property owned by Ridgewood Pool (“Ridgewood”) that caused a landslide and
extensive property damage. Skaff compensated Ridgewood and eventually purchased this
property.
In December 2013, Skaff filed suit against Tri-State and asserted claims of negligence
and breach of contract. Skaff sought to recover $251,948 for remediation of slips, as well as
other damages, in connection with Tri-State dumping fill dirt on the Ridgewood property. Tri-
State filed a third-party complaint against Respondents and asserted that Mr. Steorts, acting as an
agent of Skaff, negligently directed it to dump fill dirt onto the Ridgewood property.
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Tri-State is represented by attorneys Benjamin T. Hughes and Evan Olds. Respondent
Jason Steorts is represented by attorneys Daniel C. Cooper, and Jamison H. Cooper. Respondent
Steorts Homebuilders, LLC, is represented by attorney Steven K. Nord.
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Pursuant to their contract, Skaff and Tri-State participated in a binding arbitration
proceeding in November of 2014. Respondents were not parties to the arbitration, but Mr. Steorts
testified at that proceeding that he directed Tri-State to dump fill dirt onto Ridgewood’s property
so the contractors could level the area to build a playground and common area. Tri-State’s
project supervisor, James Cooper, testified at length in the arbitration hearing about how Mr.
Steorts gave Tri-State specific instructions to deposit fill dirt on the Ridgewood property.2
The arbitrator found that Skaff (through its agent Mr. Steorts) and Tri-State were both
negligent in causing the landslide. He reasoned that even if Mr. Steorts told Tri-State to place the
fill dirt on the Ridgewood property, Tri-State was partially responsible because the property line
was clearly shown on the map provided to Tri-State, and Tri-State’s employee who was
principally involved in the operation, Mr. Cooper, did not consult the map prior to dumping the
fill dirt. The arbitrator reduced the amount of damages Tri-State owed Skaff for the remediation
of slips on the Ridgewood property by $125,974 (half of $251,948) based on Respondents’
actions.
After the arbitration order was rendered, the circuit court dismissed Skaff’s claims
against Tri-State in March of 2015.
In July 2016, Tri-State filed its Second Amended Third-Party Complaint against
Respondents and asserted claims of negligence. Tri-State sought to recover $198,272 in damages
it paid to Skaff following arbitration.3 Respondents filed motions for summary judgment, arguing
that Tri-State’s claims were precluded by the earlier arbitration.
The circuit court granted Respondents summary judgment. It held that Tri-State’s claims
against Respondents were barred by collateral estoppel and/or res judicata. It reasoned that Tri-
State was attempting to recoup from Respondents the amount the arbitrator already found to be
attributable to its own negligence. The circuit court stated:
Tri-State alleges that Jason Steorts breached certain alleged duties, including a
duty to refrain from instructing Tri-State to dump fill dirt on the pool property
and/or the duty to inform Tri-State that it was dumping dirt outside of the project
boundaries. Importantly, these are the same acts and/or omissions that Tri-State
accused Skaff of during the arbitration proceedings with the argument that Jason
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At the arbitration hearing, the parties introduced fifty-six exhibits. The arbitrator heard
the testimony of eight witnesses.
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Tri-State alleged:
In regard to the trespass and pool property land slip claims, the arbitrator
awarded the following sums against Tri-State and in Skaff’s favor $31,275.45,
including pre-judgment interest, on the trespass claim; $136,997.08, including
pre-judgment interest, on the slip repair claim [$125,974.33 which is half the cost
of the remediation together with pre-judgment interest at $11,022.75]; and
$30,000 in attorney’s fees, for a total of $198,272.53 in damages[.]
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Steorts served as Skaff’s agent and are the same arguments that formed the basis
of the Arbitrator’s finding that Skaff was comparatively at fault for its claimed
losses and damages.
Tri-State now appeals the circuit court’s order granting Respondents summary judgment.
“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). Pursuant to Rule 56(c) of the West Virginia Rules of
Civil Procedure, summary judgment is proper when “there is no genuine issue as to any material
fact and . . . the moving party is entitled to a judgment as a matter of law.” Furthermore,
“[s]ummary judgment is appropriate where the record taken as a whole could not lead a rational
trier of fact to find for the nonmoving party[.]” Syl. Pt. 4, in part, Painter, 192 W. Va. at 190,
451 S.E.2d at 756.
Tri-State raises six assignments of error on appeal. We begin with assignment of error
number five because it is dispositive. Tri-State contends that the circuit court erred in applying
collateral estoppel because it did not have a full and fair opportunity to litigate the issues
presented in its third-party claims since the issues of Respondents’ negligence and/or agency
relationship to Skaff were not fully litigated in arbitration. We disagree.
The doctrine of collateral estoppel—also called “issue preclusion”—is designed “to
foreclose relitigation of issues in a second suit which have actually been litigated in the earlier
suit even though there may be a difference in the cause of action between the parties of the first
and second suit.” Syl. Pt. 2, in part, Conley v. Spillers, 171 W. Va. 584, 301 S.E.2d 216 (1983)
(emphasis added). Ordinarily, collateral estoppel is relied upon by a defendant to preclude a
plaintiff from relitigating an issue that has previously been decided adversely to the plaintiff.
“When the defendant asserts collateral estoppel against the plaintiff, it is termed ‘defensive’
because the defendant seeks to defend and bar the plaintiff’s cause of action by a prior adverse
judgment rendered against the plaintiff.” Id. at 591, 301 S.E.2d at 222. This “defensive”
collateral estoppel is the manner in which the doctrine is applied in the present case.4
In syllabus point one of Miller, this Court held as follows:
Collateral estoppel will bar a claim [i.e., issue] if four conditions are met:
(1) The issue previously decided is identical to the one presented in the action in
question; (2) there is a final adjudication on the merits of the prior action; (3) the
party against whom the doctrine is invoked was a party or in privity with a party
to a prior action; and (4) the party against whom the doctrine is raised had a full
and fair opportunity to litigate the issue in the prior action.
194 W. Va. at 6, 459 S.E.2d at 117.
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“[T]he doctrines of res judicata, or claim preclusion, and collateral estoppel, or issue
preclusion, are closely related.” State v. Miller, 194 W. Va. 3, 9, 459 S.E.2d 114, 120 (1995).
Because we resolve this appeal on the basis of collateral estoppel, it is unnecessary to address the
issue of res judicata. Thus, Tri-State’s argument in assignment of error four is moot.
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All four elements required for collateral estoppel to apply are present in the instant
action. First, the issue of Tri-State’s liability to Skaff for dumping fill dirt on Ridgewood
property was the identical issue litigated at arbitration. Tri-State successfully argued at
arbitration that it relied upon Respondents’ direction to dump fill dirt onto the Ridgewood
property, and the arbitrator reduced the damages Tri-State owed Skaff based on Respondents’
actions. Tri-State’s argument—that it does not seek to relitigate its liability to Skaff but only
seeks to litigate its third-party claims against Respondents—is disingenous. Tri-State is clearly
attempting to shift its liability to Skaff wholly onto Respondents, which is a blatant collateral
attack to the arbitrator’s decision. While the arbitrator did not address Respondents’ liability
separate and distinct from that of Skaff (because Respondents were not parties to the arbitration),
the arbitrator did determine Tri-State’s liability, and it is bound by that decision. See Syl. Pt. 6,
Conley, 171 W. Va. at 586, 301 S.E.2d at 218 (recognizing stranger to first action can assert
collateral estoppel in second action).
The remaining elements of collateral estoppel are also satisfied. As to the second
element, there was a final adjudication on the merits in the arbitration proceeding. The third and
fourth elements are met because the party against whom the doctrine is invoked—Tri-State—was
a party to the arbitration; and the party against whom the doctrine is raised—Tri-State—had a
full and fair opportunity to litigate the issue of Respondents’ role with regard to Tri-State’s
negligence. Therefore, we have no hesitancy in holding that the circuit court properly concluded
that Tri-State was collaterally estopped from further litigating these same issues.
There is no merit to Tri-State’s argument that collateral estoppel should not apply here
because the rules and procedures governing arbitration differ from those applied in court
proceedings. “A body of West Virginia case law has evolved over the years that mandates
arbitration awards be recognized as binding and final as to the matters presented.” Rashid v.
Schenck Const. Co., 190 W. Va. 363, 367, 438 S.E.2d 543, 547 (1993). We recognize “there is
good reason to treat the determination of the issues in an arbitration proceeding as conclusive in
a subsequent proceeding, just as determinations of a court would be so treated.” Restatement
(Second) of Judgments § 84 (Am. Law. Inst. 1982) cmt c. The comment explains as follows:
When arbitration affords opportunity for presentation of evidence and argument
substantially similar in form and scope to judicial proceedings, the award should
have the same effect on issues necessarily determined as a judgment has.
Economies of time and effort are thereby achieved for the prevailing party and for
the tribunal in which the issue subsequently arises.
Id.
Tri-State’s remaining assignments of error merit little discussion. Tri-State argues that the
circuit court misconstrued the arbitration order when it found that Tri-State sought double
recovery. Tri-State states it is seeking the amount it paid to Skaff, which did not include the
amount Skaff’s award was reduced due to Respondents’ actions. Tri-State also asserts that the
circuit court erred in concluding that Respondents could not be held liable independent of any
agency relationship to Skaff. However, as discussed above, the arbitrator’s decision assessing
Tri-State’s liability to Skaff is binding and final; Tri-State’s attempt to shift its liability in the
instant action is an impermissible collateral attack to the arbitrator’s decision.
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Finally, Tri-State contends that the circuit court’s finding that Mr. Steorts was an agent of
Skaff is clearly erroneous and contrary to the evidence. Again, Tri-State fully litigated that issue
at arbitration. Moreover, because Tri-State advanced that argument at arbitration, the doctrine of
judicial estoppel precludes it from now taking an inconsistent position. See State ex rel.
Universal Underwriters Ins. Co. v. Wilson, __ W. Va. __, 825 S.E.2d 95, 107 (2019) (“The
judicial estoppel doctrine generally prevents a party from asserting a claim in a legal proceeding
that is inconsistent with a claim taken by that party in a previous proceeding or the same
proceeding. The purpose of the doctrine is to protect the integrity of the judicial process, by
prohibiting a party from deliberately changing positions according to the exigencies of the
moment.”) (quoting Louis J. Palmer, Jr. and The Hon. Robin Jean Davis, Litigation Handbook
on West Virginia Rules of Civil Procedure § 8(c), at 235 (5th ed. 2017)).
For the reasons set forth above, we affirm the order of the Circuit Court of Kanawha
County that granted Respondents’ motions for summary judgment.
Affirmed.
ISSUED: May 17, 2019
CONCURRED IN BY:
Chief Justice Elizabeth D. Walker
Justice Margaret L. Workman
Justice Tim Armstead
Justice Evan H. Jenkins
Justice John A. Hutchison
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