Campbell Flannery, PC v. Leon H. Wilson

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Campbell Flannery, PC, et al.,
Petitioners Below, Petitioners FILED
April 6, 2018
vs) No. 17-0602 ( Berkeley County 16-C-96) EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Leon H. Wilson, et al.,
Defendants Below, Respondents
MEMORANDUM DECISION
Petitioners Campbell Flannery, PC, the Law Office of Danell J. Palladine, PLLC, and
Donna F. Miller, by counsel James P. Campbell, appeal the June 8, 2017, order of the Circuit
Court of Berkeley County that denied their motion for summary judgment and granted the
respondents’ motion for summary judgment. Respondents Leon Hunter Wilson and Stephen
Kershner, by counsel Richard G. Gay, filed a response to which petitioners replied.
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.
Petitioner Donna Miller (“Petitioner Miller”) and Respondent Leon Wilson (“Respondent
Wilson”) were married in 1990, and Petitioner Miller filed for divorce on June 1, 2005. The
parties stipulated to May 31, 2005, as the date of their separation. There were no children born
from the marriage. Petitioners Campbell Flannery, P.C., and the Law Office of Danell J.
Palladine, PLLC, (“Petitioner Lawyers”) represented Petitioner Miller in the divorce litigation,
and in a separate, unrelated matter in Delaware. The divorce was contested1, and on June 29,
2015, the Family Court of Berkeley County entered an order of equitable distribution (“equitable
distribution order”) granting judgment in favor of Respondent Wilson in the amount of
$627,994. On July 13, 2015, Petitioner Miller filed a motion for reconsideration of the equitable
distribution order. On July 20, 2015, Respondent Wilson recorded the abstract of the judgment in
Jefferson County.
1
There are two prior appeals in this matter, Wilson v. Wilson, 227 W. Va. 157, 706
S.E.2d 354 (2010); and Miller v. Wilson, No. 16-0587, 2017 WL 2608426, (W.Va. Jun. 16,
2017) (memorandum decision).
1
On August 18, 2015, Petitioners Campbell Flannery and the Law Office of Danell
Palladine each obtained judgments against Petitioner Miller, their client, in the amount of
$275,048 and $95,332, respectively in the Circuit Court of Jefferson County for unpaid legal
fees. The abstracts were recorded on September 21, 2015.
On September 10, 2015, the family court entered an order denying petitioner’s July 13,
2015, motion for reconsideration of the equitable distribution order. On September 18, 2015,
Petitioner Miller filed a motion for stay with the family court pending the appeal of the equitable
distribution order. Respondent Wilson objected to the motion arguing that Petitioner Miller had a
contract for the sale of her home, and that if Petitioner Miller obtained the proceeds, he would be
unable to collect his judgment.
On September 24, 2015, petitioners filed a second motion to alter or amend the June 29,
2015, order in family court. On November 4, 2015, the family court denied Petitioner Miller’s
second motion to alter or amend, but granted petitioner’s motion for stay “so long as any funds
from the sale of Miller’s real estate were held in escrow, pending appeal.” In that order the
circuit court also found, “[t]he Court does not find the Respondent [Wilson] violated the [West
Virginia] Rules of Civil Procedure by filing an abstract of judgment.” On October 9, 2015,
Petitioner Miller filed her notice of appeal of the equitable distribution order in circuit court.
According to the circuit court, Petitioner Miller did not request that the court supplement her
petition for appeal with an appeal of the family court’s order denying her second motion to alter
or amend. On May 17, 2016, the circuit court entered an order denying Petitioner Miller’s
appeal, and affirming the equitable distribution order. Petitioner Miller filed a notice of appeal of
that order with this Court on June 13, 2016. This court entered a memorandum decision
regarding that order in Donna Miller fka Donna Wilson v. Leon Hunter Wilson, No. 16-0587
(memorandum decision).
Petitioner Miller sold her residence on November 10, 2015, and in light of the court’s
November 4, 2016, order granting a stay in the proceedings, the parties entered into an escrow
agreement on that same date. Respondent Stephen Kershner, the escrow agent and settlement
agent for the purchasers of Petitioner Miller’s property, required that the judgments of
Respondent Wilson and Petitioner Lawyers2 be released in order to deliver good and marketable
title to the purchasers. An escrow agreement was entered on November 10, 2015, between
Petitioner Miller, and Respondents Wilson and Kershner, where the parties agreed that a first
deed of trust in favor of the Bank of Charles Town, and the second deed of trust in favor of
Petitioner Lawyers, and another law firm, McCarter & English, be satisfied from the proceeds,
and that the remaining proceeds be satisfied from an escrow account. Respondent Wilson also
executed a partial release of judgment releasing his judgment lien on the property to be sold, and
attached his judgment lien rights to the sums in escrow.
2
In 2014, while serving as counsel in Miller’s divorce proceeding, Petitioner Lawyers,
along with another law firm, McCarter & English, had obtained a second deed of trust for their
unpaid legal fees in the amount of $175,000.
2
According to Respondent Wilson, unbeknownst to him, Petitioner Lawyers entered into a
separate escrow agreement to which he was not privy until he received the underlying complaint
in this case. This agreement contained a provision which stated,
[s]hould a court of competent jurisdiction in the pending equitable distribution
action invalidate Leon Hunter Wilson’s judgment lien, or should Leon Hunter
Wilson’s judgment lien be invalidated by virtue of a Final Order of any other
court, this Escrow Agreement shall control the disposition of the sums held in
escrow by the Escrow Agent.
On February 24, 2016, petitioners filed a complaint requesting that the circuit court
declare the rights of the parties to the $259,566.91 in escrow, and issue an injunction prohibiting
the enforcement of Respondent Wilson’s judgment against the escrow unless their judgments are
paid first and in full. In their complaint, petitioners alleged that Respondent Wilson violated the
automatic stay of the family court’s final order, when he recorded his judgment in Jefferson
County on July 20, 2015. Petitioners moved for summary judgment on their claims, and
Respondent Wilson filed a cross-motion for summary judgment arguing that the issue of whether
Respondent Wilson violated the stay was previously adjudicated in the circuit court’s November
4, 2015, order. The circuit court agreed and found that respondents claims were barred by res
judicata because (1) there was a final adjudication on the issue by the family court’s November
4, 2015 order denying petitioner’s second motion for reconsideration and granting petitioner’s
request for a stay; (2) privy exists between the parties, and (3) petitioner’s claims could have
been resolved in the prior action before this Court, but were not raised in petitioners’ prior
appeal, as the only order this Court considered was the May 17, 2016, order.
The circuit court further held that pursuant to West Virginia Code § 38-3-6, Respondent
Wilson’s judgment was rendered and became a lien against Petitioner Miller’s estate on June 29,
2015. The circuit court found further that priorities of liens are established by the common law
rule of priorities and that because Respondent Wilson’s judgment was rendered on June 29,
2015, and respondents did not obtain and record their judgments until September 21, 2015, that
Respondent Wilson’s judgment was statutorily entitled priority over petitioners’ judgments. The
circuit court found further that petitioners colluded in an attempt to deprive respondent Wilson of
his judgment by obtaining a second deed of trust securing payment of attorney’s fees on August
26, 2014. The circuit court found that Petitioner Lawyers “were fully aware at the time of the
possibility, if not the probability, of a judgment resulting therein in Wilson’s favor, and that such
judgment would be a lien on [Petitioner] Miller’s real property.” As a result the circuit court
denied petitioners’ motions for summary judgment and granted summary judgment in favor
Respondent Wilson finding that there was no genuine issue of material fact.
On appeal to this Court, petitioners contend that the circuit court erred in finding that
petitioners’ action was barred by res judicata,3 and that the circuit court erred in finding that
3
Petitioner also asserts, as error, that the circuit court erred in finding that the recording
of the judgment lien during the automatic stay was not a violation of Rule 62(a) of the West
(continued . . .)
3
Respondent Wilson’s judgment automatically took priority over the judgment of Petitioner
Lawyers.
This Court reviews a circuit court’s entry of summary judgment de novo. See Syl. Pt. 1,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). “‘ 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)” Syl. Pt. 1, Carr v. Michael Motors, Inc., 210 W. Va. 240, 557 S.E.2d 294
(2001).
We first consider petitioners’ claim that the circuit court erred in finding that this appeal
is barred by res judicata. Petitioners argue that the family court and circuit court did not have
jurisdiction over Petitioner Lawyers on the issue of priority of competing judgment liens; that the
Law Office of Dannell Palladine was not counsel for respondent in the underlying divorce
matter; and that the divorce proceedings did not decide the priority of the judgment liens. We
disagree.
In order for res judicata to apply, three factors must be met: (1) there must have been a
final adjudication on the merits of the prior action; (2) the actions must involve either the same
parties or persons in privity with those same parties; (3) the cause of action identified for
resolution in the subsequent proceeding must be identical to the cause of action determined in the
prior action or must be such that it could have been resolved, had it been presented in the prior
action. See Syl. Pt. 4, Blake v. Charleston Area Med. Ctr. Inc., 201 W. Va. 469, 498 S.E.2d 41
(1997).
It is clear from our review of the record that in her September 24, 2015, second motion to
alter or amend, Petitioner Miller requested that the circuit court find that Respondent Wilson
violated the West Virginia Rules of Civil Procedure in filing the abstract of judgment on July 20,
2015, in violation of an automatic stay pursuant to Rule 62(a). Further, in its November 4, 2015,
order denying petitioner’s second motion for reconsideration and granting petitioner’s request for
a stay, the family court found that it “does not find that [Respondent] Wilson violated the WV
Rules of Civil Procedure in filing an abstract of judgment.” Petitioner did not appeal that finding
or the November 4, 2015, order to this Court. Consequently we find that there was a final
adjudication of this issue on November 4, 2015.
Further, we find that privity exists between Petitioner Lawyers and Petitioner Miller. The
record reflects that Petitioner Lawyers were agents of Petitioner Miller in the divorce action, and
previously obtained judgments on Petitioner Miller’s property in order to recover legal fees. We
note that while Petitioner Miller appealed the May 17, 2016, order of the circuit court to this
Court, she failed to appeal the November, 4, 2015, order. It was in the November 4, 2015, order,
that the circuit court found that the filing of the abstract of judgment was not a violation of the
Virginia Rules of Civil Procedure. Because this claim is barred by the doctrine of res judicata,
we decline to consider this assignment of error.
4
automatic stay. Petitioners could have raised that issue before this Court at the time they
appealed the May 17, 2016, order, but did not. As a result, we agree with the circuit court and
find that petitioner’s claim is barred by the doctrine of res judicata.
Petitioners also assert, as an assignment of error, that the circuit court erred in finding
that West Virginia Code § 38-3-6 allowed Respondent Wilson’s judgment to take priority over
the judgment of Petitioner Lawyers. We disagree. According to West Virginia Code § 38-3-6,
[e]very judgment for money rendered in this State, other than by confession in
vacation, shall be a lien on all the real estate of or to which the defendant in such
judgment is or becomes possessed or entitled, at or after the date of such
judgment, or if it was rendered in court, at or after the commencement of the term
at which it was so rendered, if the cause was in such condition that a judgment
might have been rendered on the first day of the term; but if from the nature of the
case judgment could not have been rendered at the commencement of the term,
such judgment shall be a lien only on or after the date on which such judgment or
decree could have been rendered and not from the commencement of the term;
but this section shall not prevent the lien of a judgment or decree from relating
back to the first day of the term merely because the case shall be set for trial or
hearing on a later day of the term, if such case was matured and ready for hearing
at the commencement of the term, not merely because an office judgment in a
case matured and docketed at the commencement of the term does not become
final until a later day of the term. A judgment by confession in vacation shall also
be a lien upon such real estate, but only from the time of day at which such
judgment is confessed. Such lien shall continue so long as such judgment remains
valid and enforceable, and has not been released or otherwise discharged.
Further, this Court has long held that,
“[u]nder [West Virginia] Code [§] 38-3-6, a judgment rendered during a term of
court in a case which was in such condition that a judgment might have been
rendered on the first day of the term relates to and is a judgment as of its first day,
and, is a lien on all the real estate of or to which the person against whom it is
rendered is possessed or entitled as of and after the date of such judgment.”
Syl. Pt. 1, Cooper v. Cooper, 142 W. Va. 847, 98 S.E.2d 769 (1957). Here, Respondent Wilson
obtained a judgment against Petitioner Miller on June 29, 2015. Consequently, pursuant to
Cooper, and West Virginia Code § 38-3-6, Respondent Wilson’s judgment became a lien on
Petitioner Miller’s property on June 29, 2015.
Regarding the priority of liens,
the common law rule of priorities is generally one of ‘first in time [,] . . . first in
right.’ In other words, ‘liens take precedence in the order of their dates. . . . [T]he
principle is believed to be universal, that a prior lien gives a prior claim, which is
entitled to prior satisfaction out of the subject it binds.’
5
State ex rel. McGraw v. Combs Services, 206 W. Va. 512, 520, 526 S.E.2d 34, 42 (1999)
(internal citations omitted). Petitioner Lawyers did not obtain and record their judgments until
September 21, 2015. Because Respondent Wilson’s judgment was rendered on June 29, 2015,
pursuant to West Virginia Code § 38-3-6, and our holding in McGraw, Respondent Wilson’s
judgment is entitled to priority over the judgment of Petitioner Lawyers.4 Consequently, we find
no error.
For the foregoing reasons, we affirm.
Affirmed.
ISSUED: April 6, 2018
CONCURRED IN BY:
Chief Justice Margaret L. Workman
Justice Robin Jean Davis
Justice Menis E. Ketchum
Justice Allen H. Loughry II
Justice Elizabeth D. Walker
4
Petitioners also complain that the circuit court found that Petitioner Lawyers colluded
with Petitioner Wilson to deprive Respondent Wilson of his judgment. Petitioners complain that
this finding was irrelevant to West Virginia’s priority scheme and assert that the circuit court
mistakenly relied upon Cooper v. Cooper, 142 W. Va. 847, 98 S.E.2d 769 (1957), in its finding.
Regarding this assignment of error, we find that petitioners fail to establish a genuine issue of
material fact regarding collusion. We have held that summary judgment should be granted, “only
when it is clear that there is no genuine issue of fact to be tried and inquiry concerning facts is
not desirable to clarify the application of the law.” Syl. Pt. 3, in part, Aetna Cas. & Sur. Co. As a
result, we find no error.
6