No. 18-0040

DO NOT REMOVE FROfVi FILE

FILE GOPY

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

At Charleston

JAMES A. DAILEY, III, NICOLE DAILEY, TRA VIS A. HILL, AND SCARLETT J. HILL,

Plaintiffs Below, Petitioners,

v.

A YEI~S LAND DEVELOPMENT, LLC, A AND A HOMES, INC., AYERS BUILDERS, INC., ROGER E. AYERS, .JERRY A. AYERS, RJM HOLDINGS, LLC, FRYE CONSTRUCTION, INC., AND MICHAEL E. FRYE,

Defendants Below, Respondents.

Susan R. Snowden W.Va. State Bar No. 3644 Jackson Kelly PLLC Post Office Box 1068

APPEAL BRIEF OF PETITIONERS

Martinsburg, West Virginia 25402 Telephone: (304) 260-4947 Facsimile: (304) 263-7110 E-Mail: susan.snowden@jacksonkelly.com Counsel for Petitioners

4831-1881-3538. vI

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I~U APR 192018 I~I , . EDYTHE NASH GAISER CLERK

.,' SUPREr!.E COURT OF APPEALS . OF WESlXIR~(,.=NI_1\ __ ~

T ABLE OF CONTENTS

TABLE OF AUTHORITIES ............................................................................................................... iii

I. ASSIGNMENTS OF ERROR .................................................................................................. 1

II. ST A TEMENT OF THE CASE. ................................................................................................ 2

A. STATEMENT OF RELEVANT FACTS ................................................................................. 2 B. PROCEEDINGS AND RULINGS BELOW .......................................................................... 10

III. SUMMARY OF ARGUMENT ............................................................................................... 12

IV. STATEMENT REGARDING ORAL ARGUMENT AND DECISION ................................ 12

V. ARGUl\1ENT .......................................................................................................................... 13

A. THE STANDARD OF REVIEW FOR A MOTION FOR SUMMARY JUDGMENT IS DE NOVO . ..................................................................................................................................... 13

B. THE CIRCUIT COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT AND FOUND THAT RESPONDENTS WERE NOT LIABLE BY REASON OF A JOINT VENTURE .............................................................................................................................. 14

C. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY DISMISSING THE PETITIONERS' CAUSE OF ACTION FOR ACTUAL AND/OR CONSTRUCTIVE FRAUD AS AGAINST THE RESPONDENTS ..................................................................... 17

D. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY DISMISSING THE PETITIONERS' CAUSE OF ACTION FOR CIVIL CONSPIRACY AS AGAINST THE RESPONDENTS WITHOUT ADDRESSING OR INCLUDING ANY FINDINGS OF FACT AND CONCLUSIONS OF LA W WITH RESPECT TO SAME ............................... 20

E. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR WHEN IT CONCLUDED THAT THE RESPONDENTS ROGER AYERS, JERRY AYERS AND MICHAEL E. FRYE CANNOT BE HELD LIABLE FOR ANY ACTIONS TAKEN BY THEM, OR PARTICIPA TION IN ANY TORT, WITH RESPECT TO BROOKSIDE BY VIRTUE OF BEING MEMBERS OF LIMITED LIABILITY COMPANIES OR SHAREHOLDERS OF CORPORA TIONS ........................................................................... 23

F. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY DISMISSING THE PETITIONERS' STAND-ALONE CAUSES OF ACTION FOR: (A) CREATING A CLOUD ON TITLE; (B) BREACH OF RESTRICTIONS, CONDITIONS AND COVENANTS; (C) SLANDER OF TITLE; (D) TRESPASS AND UNLAWFUL CONVERSION OF MONIES RECEIVED FOR FARMING ACTIVITIES; AND (E) AND PROMISSORY EQUITABLE ESTOPPEL WITHOUT ANY FINDINGS OF FACT AND CONCLUSIONS OF LA W ..................................................................................................... 30

G. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY ENTERING SUMMARY JUDGMENT IN FAVOR OF RESPONDENTS WHILE DISCOVERY WAS ONGOING AND PETITIONERS' MOTION TO COMPEL AND INSTITUTE IN CAMERA PROCEEDINGS WAS PENDING ........................................................................ 31

VI. CONCLUSION ....................................................................................................................... 32

CERTIFICATE OF SERVICE ........................................................................................................... 34

11

TABLE OF AUTHORITIES

CASES

Aloma Coat Corp Inc. v. Behr, 408 So.2d 496, 498 (Ala. 1981) ............................................................. 25

Alpine Property Owners Ass'n, Inc. v. Mountaintop Development Co., 179 W.Va. 12, 365 S.E.2d 57 (1987) ............................................................................................................................. 21

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,249 (1986) .............................................................. 23,30

Balm v. RMBR Wheels, Inc., 6 Neb. App. 354, 574 N.W.2d 524 (1998) ................................................ 16

Board of Ed. of Ohio Count)' v. Buren and Firestone Architects, Inc., 165 W.Va. 140, 144, 267 S.E.2d 440, 443 (1980) ............................................................................................................. 31, 32

Bowers v. Wurzburg, 207 W.Va. 28, 528 S.E.2d 475 (1999) ....................................................... 15,16,17

Bowie v. Sorrell, 113 F.Supp. 373 (W.D.Va.1953) ................................................................................. 18

Bowling v. Ansted Chrysler-Plymouth-Dodge, Inc., 188 W. Va. 468, 469, 425 S.E.2d 144, 145 (1992) ................................................................................................... 19, 20, 26, 28

Caj7isch Lumber CO. I'. Lake Lynn Lumber & Supply Co., 119 W.Va. 668, 195 S.E. 854 (1938) ............................................................................................................................... 25

Celotex Corp. v. Catrett, 477 U.S. 317, 322, (1986) ............................................................................... 31

Consolidation Coal Co. v. Boston Old Colony Ins. Co., 203 W.Va. 385, 390, 508 S.E.2d 102, 107 (1998) ................................................................................................................... 13

Dunn v. Rockwell, 225 W.Va. 43, 689 S.E.2d 255 (2009) ...................................................................... 21

Estate of Helmick by Fox v. Martin, 192 W.Va. 501, 504, 453 S.E.2d 335,338 (1994) ........................... 14

Estate of Robinson ex reI. Robinson v. Randolph County Com 'n, 209 W.Va. 50S, 549 S.E.2d 699, 705 (200 1) ................................................................................................................... 22

Fayette Count)' National Bank v. Lilly, 199 W. Va. 349,484 S.E.2d 232 (1997) ...................................... 22

Fitzgerald v. Seamans, 384 F. Supp. 688, 693 (D.D.C. 1974) ................................................................. 21

Gulf Atlantic Life Ins. Co. v. Hurlbut, 696 S.W.2d 83, 102 (Tex. App. 1985) ......................................... 21

Hanlon v. Chambers, 195 W.Va. 99,105,464 S.E.2d 741, 747 (1995) ................................................... 14

Herrod v. First Republic Mortg. Corp., Inc., 218 W.Va. 611, 625 S.E.2d 373 (2005) ............................. 16

Hively v. Merrifield, 212 W.Va. 804,575 S.E.2d 414 (2002) ................................................................. 21

iii

Horton v. Profl Bureau oJ Collections oJMm),land, Inc., 238 W.Va. 310, 794 S.E.2d 395, 399 (2016) ............................................................................................................. 17, 20

Hurlbut v. Gulf Atlantic Life Ins. Co., 749 S.W.2d 762 (Tex. 1987) ........................................................ 21

Hulings v. Hulings Lumber Co., 38 W.Va. 351, 18 S.E. 620 (1893) ....................................................... 18

In re: Arbuckle's Estate, 98 Cal.App.2d 562, 220 P.2d 950 (1950) ......................................................... 18

Jane Doe-J v. Corporation oj President oJ The Church oj Jesus Christ of Latter-dav Saints, 239 W.Va. 428,801 S.E.2d 443, 472 (2017) ................................................................... 17,20,21,31,33

Johnco, Inc. v. Jameson Interests, 741 So.2d 867 (La. App. 1999) ......................................................... 16

Kessel v. Leavitt, 204 W.Va. 95, 129,511 S.E.2d 720, 754 (1998) ......................................................... 21

Kllbican v. The Tavern, LLC 232 W.Va. 268, 752 S.E.2d 299 (2013) ......................... 23, 25,26,27,28,30

Lasl)' v. Lederman, 147 Cal. App.2d 480,305 P.2d 663 (1957) .............................................................. 16

Laya v. Erin Homes, Inc., 177 W.Va. 343, 352 S.E.2d 93 (1986) .................................... 23, 24, 25, 28, 29

Littlejohn v. Shell Oil Co., 483 F.2d 1140, 1146 (5th Cir., 1973) ............................................................ 31

Masinter v. WEBCO Co., et. al., 164 W.Va. 241,262 S.E.2d 433 (1980) ......................................... 31,32

Miller v. Huntington & Ohio Bridge Co., 123 W.Va. 320,15 S.E.2d 687 (1941) .................................... 18

Painter v. Peavy, 192 W.Va. 189,451 S.E.2d 755 (1994) ................................................................ 13,21

Peters v. KC Transport, IIlC., No.2: I 5-cv-l 5609, 2016 WL 4522188 at *9 (SDWV A Aug. 29, 20 16) ................................................................................................................ 26, 28

Powderidge Unit Owners Ass 'n v. Highland Properties, Ltd., 196 W. Va. 692, 474 S.E.2d 872 (1996) ........................................................................................................................... 31

Price v. Halstead, 177 W.Va. 592, 355 S.E.2d 380 (1987) ..................................................................... 14

Rhodes v. Sunshine Mill. Co., 113 Idaho 162, 742 P.2d 417 (1987) ...................................................... 16

Sanders v. Roselawn Memorial Gardens, Inc., 152 W.Va. 91, 159 S.E.2d 784 (1968) ...................... 25, 30

Sipple v. Starr, 205 W.Va. 717, 520 S.E.2d 884 (1999) ............................................................... 14,16,17

Southem Elec. Supply Co. v. Raleigh Count)' Nat. Bank, 173 W.Va. 780, ---, 320 S.E.2d 515, 521-22 (1984) ................................................................................................... 24,25,29

Southem States Co-op, Inc. v. Dailey, 167 W. Va. 920 ---, 280 S.E.2d 821, 827 (1981) .......................... 24

Steele v. Steele, 295 F.Supp. 1266 (S.D.W.Va.1969) .............................................................................. 18

iv

Truman v. Farmers & Merchants Bank, 180 W.Va. 133, 375 S.E.2d 765 (1988) .............................. 31, 32

Tynes v. Shore, 117 W.Va. 355, 185 S.E. 845 (1936) ............................................................................. 25

Watson v. Inca Alloys Intern, Inc., 209 W.Va. 234, 238, 545 S.E.2d 294, 298 (2001) ............................. 14

Wheeling Kitchen Equipment Co. v. R & R Sewing Center, Inc., 154 W.Va. 715, 719-20, 179 S.E.2d 587, 589-90 (1971) .............................................................................................................. 25

Williams v. Precision Coil, Inc., 194 W. Va. 52, 59, 459 S.E.2d 329, 336 (1995) .................................... 23

STATUTES

W.Va. Code § 31B-3-303 ........................................................................................................... 10, 26, 28

RULES

West Virginia Rules of Civil Procedure 54 ................................................................................. 11, 12, 14

West Virginia Rules of Civil Procedure 56 ...................................................................................... 13, 31

West Virginia Rules of Appellate Procedure 18(a) ................................................................................. 12

West Virginia Rules of Appellate Procedure 19 ..................................................................................... 13

West Virginia Rules of Appellate Procedure 20 ..................................................................................... 13

OTHER

Cyclopedia of the Law of Private Corporations § 4 i .25 ......................................................................... 25

v

Vl

I. ASSIGNMENTS OF ERROR

I. The Circuit Court committed reversible error by finding that the Petitioners had failed to

establish the required elements of a joint venture theory of recovery against the Respondents with respect

to the development and marketing of Brookside Subdivision ("Brookside") and, as such, the Petitioners'

recovery fails as a matter of law.

2. The Circuit Court committed reversible elTor by dismissing the Petitioners' cause of

action for actual and/or constructive fraud as against the Respondents without fully addressing or

including any findings of fact and conclusions of law with respect to same. Moreover, the Circuit Court's

finding that a joint venture did not exist among the Respondents was not dispositive of Petitioners' stand­

alone cause of action for fraud based upon the record presented.

3. The Circuit Court committed reversible error by dismissing the Petitioners' cause of

action for civil conspiracy as against the Respondents without addressing or including any findings of fact

and conclusions of law with respect to same. The Circuit Court's findings that a joint venture did not

exist among the Respondents are not dispositive of the Petitioners' stand-alone civil conspiracy claim

based upon the record presented.

4. The Circuit Court committed reversible error when it concluded that: (a) the Respondents

Roger Ayers, Jerry Ayers and Michael E. Frye cannot be held liable for any actions taken by them, or

participation in any tort, with respect to Brookside by virtue of being members of limited liability

companies or shareholders of corporations; (b) the Petitioners failed to produce sufficient evidence to

allow for the piercing of the corporate veil for RJM Holdings, LLC ("RJM") and the company/corporate

Respondents, and no inequitable harm would occur if the corporate veil was not pierced; and (c) RJM's

status as a limited liability company, despite its use by the Respondents as a shell company to hold legal

title and execute legal documents for Brookside fully insulated the Respondents.

5. The Circuit Court committed reversible elTor by dismissing the Petitioners' stand-alone

causes of action for: (a) creating a cloud on title; (b) breach of restrictions, conditions and covenants; (c)

slander of title; (d) trespass and unlawful conversion of monies received for farming activities; and (e)

pronlissory equitable estoppel without any findings of fact and conclusions of law. The Circuit Court's

findings that ajoint venture did not exist among the Respondents, are not dispositive with respect to the

Petitioners' other stand-alone causes of action.

6. The Circuit Court committed reversible error by entering summary judgment in favor of

A and A Homes, Inc .. Ayers Builders, Inc., Ayers Land Development, LLC, Jerry Ayers, Roger Ayers,

Frye Construction. Inc. and Michael E. Frye while discovery was ongoing and Petitioners' Motion to

Compel and Institute In Camera Proceedings was pending.

II. STATEMENT OF THE CASE

A. STATEMENT OF RELEVANT FACTS

I. Roger Ayers and Jerry Ayers are engaged in the business of real estate development and

construction of residential homes. To facilitate their various ventures, they have formed multiple limited

liability companies and corporations, including the following companies which are pertinent to the instant

matter: Ayers and Ayers Holdings, LLC ("Ayers Holdings"), Ayers Land Development, LLC ("Ayers

Land"), Ayers Builders, Inc. ("Ayers Builders") and A and A Homes, Inc. ("A and A"), collectively

referred to herein as the "Ayers Companies". JA 119-121 at UI6-23, 365-67 at 919116-23. The companies

are comprised as follows:

(a) The sole members of Ayers Holdings are Jerry Ayers and Roger Ayers; (b) The sole members of Ayers Land are Jerry Ayers and his wife Deborah Ayers; (c) Jerry Ayers is president and his wife, Deborah Ayers is vice-president of Ayers

Builders; and (d) Roger Ayers is president and Jerry Ayers is vice-president of A and A.

2. The purpose for the formation of the Ayers Companies was to divide their operations and

activities. Ayers Land and Ayers Holdings are holding companies for real estate and Ayers Builders and

A and A are home contractors. JA 119-121 at 919116-23, 365-355 at 919116-23, 1187 at 12-22, 1192 at 16-

21, 1193 at 7-10,1212 at 11-14.

3. Michael Frye is a real estate developer and home builder. He formed Frye Construction,

Inc. ("Frye Construction") as part of those operations. JA 120 at 9121, 121 at 9124,434 at 919121, 24.

2

4. Roger Ayers and Jerry Ayers had retained Michael Frye and his company Frye

Construction to construct the infrastructure for other subdivisions that they had formed. Based upon these

prior experiences, Roger Ayers and Jerry Ayers decided to form a business venture with Michael Frye

with respect to the development of land that they had located in Berkeley County, West Virginia. JA

1172, at 12-19.

5. On November 1, 2004, prior to the formation of RJM, Roger Ayers, Jerry Ayers and

Michael Frye agreed to purchase property that would become Brookside. JA 125 at. qf37, 332 at qf37, 804,

935.

6. Roger Ayers, Jerry Ayers and Michael Frye decided to form a legal limited liability

company named RJM, with members being Michael Frye and Ayers Holdings (the development entity

used by Roger and Jerry Ayers). RJM's Certificate of Limited Liability Company was issued on

November 24,2004. JA 118 at qf 14,330 at qf12, 923.

7. Michael Frye holds a fifty (SO) percent ownership interest in RJM and he made an initial

capital contribution of $300,000.00, cash, to RJM for the purpose of buying and developing the property

that would form Brookside. JA 2415-18.

8. Ayers Holdings holds a fifty (SO) percent ownership interest in RJM and has made

approximately $300,000.00 of capital contributions to RJM for the purpose of buying and developing the

property that would form Brookside. JA 2433-34.

9. Although established as separate entities, RJM, Ayers Holdings, Ayers Land, Ayers

Builders, and A and A are in actuality so interrelated that they are nearly indistinguishable from one

another to the public. For instance:

(a) The Ayers Companies and RJM all share the same office location which continues to be owned by Ayers Land without any formal agreement between the entities with respect to the use or leasing of the same. JA 2146-52.

(b) The Ayers Companies and RJM share the same office address and telephone number and all telephone calls for both entities were routed through employees of A and A without any formal agreements with respect to the same. JA 2146-52.

(c) A and A is the only company that has employees. All of those employees were shared with RJM and the remaining Ayers Companies. JA 2155 at 17-23.

3

(d) Bills for all of the Ayers Companies and RJM were paid by an employee of A and A from the offices owned by Ayers Land. JA 2146-47.

(e) The financial records for RJM and the Ayers Companies were all kept with the same software on the same computer. JA 2149.

(f) Despite the purported separation among the Ayers Companies as to holding and development of property, and the construction of homes, there were no formal agreements between the companies. Roger and Jerry Ayers have indicated that no such agreements were necessary because they were brothers and "trust each other." JA 1192-93,1400,1566,2100,2158.

10. On June 15, 2005, the property that would become Brookside was conveyed of record to

RJM. JA 1608.

II. On June 15, 2005, RJM executed a Deed of Trust recorded in the Berkeley County

Clerk's office at Deed of Trust Book 1678, page 481, et seq., in favor of Centra Bank, Inc., with respect

to the aforementioned 117 acres in order to secure a loan in the amount of $2,400,000.00. In order to

obtain financing, Roger Ayers, Jerry Ayers and Michael Frye were each required to personally guarantee

the loan on behalf of RJM. JA 127,333,522, 1451,2138-39,2537 at 12-15.

12. Respondents developed the property into Brookside with the intent of creating a premier,

upscale subdivision. JA 362 at q] 1, 1499 at 24, 1500 at 1-6.

13. To develop and preserve Brookside as a premier subdivision in Berkeley County, West

Virginia, and to further market same to prospective buyers, RJM (in concert with the Respondents)

drafted the Declaration of Covenants, Conditions and Restrictions for Brookside (hereinafter referred to

as the "2007 Declaration") and caused same to be recorded in the Berkeley County Clerk's office on June

25, 2007 in Deed Book 872, page 17, et seq. JA 185-245.

14. The 2007 Declaration established a series of covenants and restrictions for Brookside that

were purportedly intended to create and preserve a certain community standard for the subdivision,

including, but not limited to, the following: (a) All residences are to be used for residential purposes

only; (b) Limitations on business uses of property; (c) No mobile homes or mobile double wide homes;

(d) All one-story Dwellings shall contain a minimum of 2,800 square feet, excluding basements, garages.

decks, porches, eaves and other similar extensions and overhangs; (e) All multiple-story Dwellings shall

contain a minimum of 3,000 square feet, with at least 1,500 square feet on the first floor, excluding

4

basements, garages, decks, porches, eaves and other similar extensions and overhangs; (f) No vinyl or

aluminum siding shall be permitted on any exterior wall, and no concrete shall be exposed; (g) No

detached garages; and (h) All plans and construction are subject to architectural review. JA 192, 203-10.

15. Frye Construction, with the assistance of A and A, built the infrastructure for Brookside

in exchange for approximately $500,000. J A 1856 at 12-15, 2008 at 12-15, 2290 at 12-15. However, no

formal agreements were executed with RJM and Frye Construction with respect to same. The negotiation

for Frye Construction's proposal was by Michael Frye in his capacity as a member of RJM and a member

of Frye Construction. JA 1346,2288-90, 2293-94.

16. Ayers Holdings, A and A, Ayers Land, Ayers Builders were all involved in some

capacity with Brookside:

(a) RJM paid A and A for percolation testing. JA 371, 1438. (b) A and A markets all properties within Brookside and fields all sales related calls.

JA 1315aat6-12, (c) A and A expressly entered into contractual agreements with realtors to sell

properties within Brookside and it also had options on lots in the subdivision. JA 1392 at 29.

(d) RJM has confirmed that prospective purchasers at Brookside did not contact it, but would instead contact A and A or a realtor retained by A and A. JA 1242, at 7, 1349-53.

(e) Ayers Holdings and Ayers Land were parties to the Exclusive Right to Sell Listing Agreement with realtor, Long & Foster. JA 952-65.

(f) An email from the WVDEP concerning the issuance of an NPDES Permit references avers@ayersbuilders.com and is included in the Berkeley County Planning Commission's file with respect to Brookside. J A 1207.

(g) Ayers Builders communicated with contractors regarding the status of the development Brookside. JA 2220.

(h) In 2014, Ayers Builders identified an interest in Lot No. 14 within Brookside on the Report of Values form submitted to its insurance agent and Westfield Insurance Company for use with its Builders Coverage Reporting Form. JA 1320-24. This coincides with the home constructed on Lot No. 14. JA 251-58.

17. In addition to his involvement with the sale of a lot to the Dailey Petitioners, Roger Ayers

was personally involved with the following regarding Brookside:

(a) He performed percolation tests for the lots in the Subdivision. JA 128 at 'll54, 371 at ~[54, 1438.

(b) He communicated with real estate appraisers concerning lots at Brookside, and generally assisted RJM in selling lots, including executing a listing agreement with Long & Foster with respect to property located in Brookside. JA 1 191 at 7, 1182at 109.

5

(c) He individually participated in the digital marketing of Brookside on A and A's website. which included the marketing of homes that were not compliant with the restrictions imposed by the 2007 Declaration. JA 1292-93.

18. On or about June 4,2006, the Petitioner Travis Hill and his aunt, Gretchen Wurzburg,

met with Michael Frye and his mother, Katy Frye, at the home of Ms. Frye, to discuss property available

for sale in Brookside. After briefly discussing the property, Michael Frye drove Petitioner Travis Hill and

Ms. Wurzburg to the subdivision to view the property and discuss with them the plans for the community.

Following the view of the property, they drove back to Ms. Frye's home and Michael Frye represented to

the Petitioner Travis Hill that the subdivision was to be developed as an exclusive, llpscale community.

In order to preserve this community standard, Michael Frye represented, and made assurances, that

restrictions with respect to minimum home sizes and the prohibition on the use of vinyl or aluminum

siding, among other things, would not only be indefinitely preserved, but strictly enforced, which would

enhance the overall quality of living for the community. Based upon these representations, the Petitioner

Hill reached an agreement in principle with Michael Frye to purchase Lot No. 17 in Brookside.

Subsequently, Michael Frye also provided Petitioner Travis Hill with a copy of the 2007 Declaration.

Michael Frye has confirmed that Petitioner Hill would have specifically relied upon these representations.

JA 147-48,907-9,1482,2430 at 16-22.

19. On February 7, 2007, RJM executed a Deed of Trust recorded in the Berkeley County

Clerk's Office at Deed of Trust Book 2071, page 7, et seq., in favor of Centra Bank, Inc., with respect to

Brookside in order to secure a loan in the amount of $3,800,000.00. The prior Deed of Trust, dated June

15, 2005, was subsequently released by Centra Bank, Inc. Once again, Roger Ayers, Jerry Ayers and

Michael Frye were each required to persollally guarantee the loan on behalf of RJM. JA 129,33,534,

2138-39,1537 at 12-15.

20. On June 29,2007, the Hill Petitioners purchased Lot No. 17 in Brookside in reliance

upon representations that it was to be developed as an exclusive, upscale community and that in order to

preserve this community standard, restrictions with respect to minimum home sizes and the prohibition on

6

the use of vinyl or aluminum siding, among other things, would not only be indefinitely preserved, but

strictly enforced. JA 147-48; and JA 243-45.

21. In 2006, Petitioner James W. Dailey, III was working on a website for A and A, which

included marketing materials associated with Brookside. The website did not identify RJM in any

capacity. During the course of this work, the Dailey Petitioners became personally interested in

Brookside and requested additional information from Roger Ayers. During multiple conversations, Roger

Ayers represented to the Dailey Petitioners that Brookside was to be developed as an exclusive, upscale

community and that in order to preserve this community standard, restrictions with respect to minimum

home sizes and the prohibition on the use of vinyl or aluminum siding, among other things, would not

only be indefinitely preserved, but strictly enforced. JA IS I, 914-15.

22. Based upon the representations made by Roger Ayers, the Dailey Petitioners entered into

an Agreement for the Purchase and Sale of Real Property on November 2, 2006, with respect to the

purchase of Lot No. 18 in Brookside for $154,900. Subsequently, the Dailey Petitioners were also

provided with a copy of the 2007 Declaration. JA 1 SO-52.

23. On July 6, 2007, the Dailey Petitioners purchased Lot No. 18 in Brookside. The Dailey

Petitioners specifically purchased Lot No. 18 in Brookside in reliance upon representations that Brookside

was to be developed as an exclusive upscale community and that in order to preserve this community

standard, restrictions with respect to minimum home sizes and the prohibition on the use of vinyl or

aluminum siding, among other things, would not only be indefinitely preserved, but strictly enforced. In

further reliance upon representations made to them about Brookside, and the 2007 Declaration, the Dailey

Petitioners built their dream home in what they believed to be a perfect community where the value of

their investment would be protected. JA 150-152.

24. In 2007, the members of Ayers Holdings, Jerry and Roger Ayers, met at the offices of

the Ayers Companies and indicated that they intended to concentrate on business at the Meadows

Subdivision located in Morgantown, West Virginia, "due to building and development decline in

Berkeley County." JA 881. As noted above, Ayers Holding is one of the two members of RJM.

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25. In 20 10, the Respondents and RJM decided that lots in Brookside were not selling fast

enough. Respondents began discussing amendments to the 2007 Declaration to lessen the restrictive uses

originally placed on the properties so that they could reach a larger market, thereby increasing lot sales

and realize a more rapid return on their investment. On or about January 8, 2013, the members of RJM,

Ayers Holdings (Jerry Ayers and Roger Ayers) and Michael Frye, met at the offices of the Ayers

Companies. During this meeting, the members of RJM discussed Brookside, specifically changing the

2007 Declaration in order to "hopefully help lot sales to pay loan" and possibly offering owner financing

with lot sales if approved by the bank. JA 919-22, 1382 at 12-23.

26. Without providing any notice to any of the existing homeowners in Brookside, on April

16, 2013, RJM in concert with the Respondents executed the Supplementary Declaration of Covenants,

Conditions, and Restrictions ("2013 Declaration") which served to amend the 2007 Declaration by

decreasing the required square footage requirement of homes and permitting the use of vinyl siding. JA

238-40.

27. Following the execution of the 2013 Declaration, three homes were constructed that

failed to comply with the original community standard as set forth in the 2007 Declaration, Lot Nos. 14,

15 and 36. RJM and Ayers Holdings and/or the Respondents have admitted that Lot Nos. 14 and 15 are

not in compliance with the 2007 Declaration, JA 251-58, 260-66, 268-80, 338, 378.

28. A and A built a home on Lot No. 14 in Brookside after the improper amendment to the

2007 Declaration, which is less than 2,800 square feet, excluding basements, garages, decks, porches,

eaves and other similar extensions and overhangs and was constructed with a vinyl siding exterior. JA

250. Excavation for Lot No. 14 was by Frye Construction, and specifically by Michael Frye. Roger

Ayers served as the certified sewer installer. JA141 at'llq[ 111-114, 338 at 'll87-90, 2080-81,2126-27.

Even though construction was ongoing on the Dailey property while a non-compliant home was being

built by A and A, none of the Respondents deemed it necessary to reveal same to the Dailey Petitioners.

JA 1487,2119-2120.

8

29. Michael Frye and Frye Construction were also doing excavation work for the Dailey

Petitioners while also working on Lot No. 14. Although specifically asked by the Dailey Petitioners with

respect to the square footage of the home being constructed on Lot No. 14, Michael Frye evaded the

question and specifically chose not to mention to the Dailey Petitioners that the 2007 Declaration had

been amended. JA 41-42,1473,2126-29.

30. At no time from June 29, 2007 to April 16, 2013, did RJM or the Respondents, and/or

their representatives ever contact the Hill Petitioners to: (a) inform them that they were considering

amendments to the 2007 Declaration; (b) seek their consent to amend the 2007 Declaration; (c) seek their

consent concerning farming activities in Brookside; and/or (d) seek their permission to conduct farming

activities on Lot No. 17 in Brookside.

31. At no time from July 6,2007 to April 16,2013, did RJM or the Respondents, and/or their

representatives ever contact the Dailey Petitioners to: (a) inform them that they were considering

amendments to the 2007 Declaration; (b) seek their consent to amend the 2007 Declaration; (c) seek their

consent concerning farming activities in Brookside; and/or (d) seek their permission to conduct farming

activities on Lot No. 18 in Brookside.

32. Following the completion of a series of corporate depositions in this matter, RJM and the

Respondents consulted with an attorney not of record in these proceedings regarding a second proposed

amendment to the 2007 Declaration as a potential curative measure to avoid liability related to the 2013

Declaration. JA 2482-89, 2480 at 15-20. While Notice of the proposed changes were purportedly sent to

all lot owners, RJM's corporate designee admitted that no notice was provided to the Hill Petitioners,

Dailey Petitioners, or their counsel as, in RJM's opinion, it would have been a "waste of time." JA 2480-

81.

33. On February 08, 2017, the Second Amendment to Declaration of Covenants, Conditions,

and Restrictions for Brookside ("2016 Amendment") was filed with the Berkeley County Commission.

The 2016 Amendment itself recognizes that it was proposed and ratified as a response to this litigation as

an attempt to cure the 2013 Declaration. The 2016 Amendment modifies the 2013 Declaration's

9

minimum square footage requirements, but nonetheless contravenes the minimum square footage and

vinyl siding restrictions of the 2007 Declaration. JA 1215-37.

B. PROCEEDINGS AND RULINGS BELOW

I. On September 14,2016, the Petitioners filed a Motion for Leave to Amend Complaint

seeking to amend their consolidated Complaint to add Ayers Land, Ayers Builders, A and A, Frye

Construction, Roger Ayers, Jerry Ayers, and Michael Frye as additional Defendants in light of discovery

that had revealed their involvement in Brookside. JA 1003.

2. By Order dated January 4, 2017, the Circuit Court granted Petitioners' Motion for Leave

to Amend. In its Order the Court stated that during "the course of discovery taken place from June to

August of 2016, specifically depositions, the Plaintiffs discovered information tying other companies and

individuals to the Defendants RJM and Ayers Holdings which they allege were involved in some capacity

with Brookside and the covenants and restrictions for the same." JA 103-4.

3. The Petitioners filed their Consolidated Amended Verified Complaint on January 18,

2017, which was subsequently answered by all of the Respondents herein. JA 112, 327, 342,424,508.

4. On February 13, 2017, the Circuit Court entered an Order granting summary judgment in

favor of Ayers Holdings. The Circuit Court found that Ayers Holdings was protected from any liability

by virtue of W.Va. Code § 3IB-3-303. Weighing the evidence, the Circuit Court determined that all

actions concerning Brookside were taken independently and individually by RJM and that any

involvement by Ayers Holdings was related solely to the enactment and execution of documents in its

capacity as a member of RJM. Relying upon this determination, the Circuit Court summarily dismissed

all of the claims asserted by the Petitioners, including, but not limited to, joint venture, civil conspiracy

and fraud without any further discussion or explanation. JA 88-96.

5. On March 13,2017, the Petitioners filed a Motion seeking a Relief from Judgment

concerning the dismissal of Ayers Holdings, or in the alternative that the Court clarify its rulings by

providing findings of fact and conclusions of law with respect to each count dismissed, and that it further

10

declare its rulings final for the purposes of appeal pursuant to West Virginia Rules of Civil Procedure

("W.Va.R.Civ.P.") 54(b). JA 1040-63.

6. On June 15,2017, the Circuit Court entered an Order denying Petitioners' Motion for

Relief. The Court also denied the Plaintiffs' request for clarification of its prior Order. JA 80-87.

Presently, Ayers Holdings has been dismissed with prejudice from these proceedings.

7. In September of 2017. the parties began filing Motions for Summary Judgment.

8. Discovery continued to proceed while the parties were briefing the legal issues in their

respective Motions for Summary Judgment. More specifically, a discovery dispute arose between the

Respondents Ayers and the Petitioners with respect to withheld communications and other documents

identified on a privilege log. JA 2570-89. It is the contention of the Petitioners that much of the

information identified on the privilege log supports their allegations that the Ayers Companies have been

involved in Brookside for a number of years.

9. On November 7,2017, the Circuit Court entered the following Orders:

(a) Order Granting Ayers Defendants Motions for Summary Judgment. JA 23-36; (b) Order Granting Defendant Frye Construction's Motion for Summary Judgment

and Denying Plaintiffs' Motions for Summary Judgment against Defendant Frye Construction. JA 37-56.

(c) Order Granting Defendant Michael Frye's Motion for Summary Judgment and Denying Plaintiffs' Motions for Summary Judgment against Defendant Michael Frye. JA 57-70.

10. On November 9, 2017, the Circuit Court entered an Order denying Plaintiff James W.

Dailey's Motion for Summary Judgment on Count XV [pipestem issue] of the Consolidated Amended

Complaint. JA 16-22.

II. On November 14,2017, the Circuit Court entered an Order Denying Plaintiffs' Motion

for Summary Judgment upon Count III [farming] of the Consolidated Amended Verified Complaint, even

though the Respondents had admitted in their answers that farming was prohibited. JA 8-15,159,337,

376.

12. On November 15,2017, the Circuit Court entered an Order Dismissing Petitioners'

Motion to Compel and Institute III Camera Proceedings as Moot. JA 5-7.

II

13. On December 8, 2017, the Petitioners filed a Motion to Certify as Final the Court's

November 7,2017 Orders Granting Summary Judgment to Select Defendants Pursuant to W.Va.R.Civ.P.

S4(b). JA26IS-23.

14. On December 19,2017, the Circuit Court granted Petitioners' Motion to Certify as Final

the Court's November 7, 2017 Orders Granting Summary Judgment to Select Defendants Pursuant to

W.Va.R.Civ.P. S4(b) and this matter was subsequently appealed on the basis of the same. JA 1-4.

III. SUMMARY OF ARGUMENT

As reflected in its various orders granting summary judgment in favor of the Respondents, the

Circuit Court reached its decision by summarily viewing this matter in its entirety as a standard dispute

over subdivision covenants and restrictions solely between the Petitioners [lot owners] and the developer

of record, RJM. While that is certainly an important nuance, the Petitioners' claims are in actuality

analogous to that of a classic "bait and switch" by Respondents with respect to Brookside. The

Petitioners purchased lots in Brookside in reliance upon uncontroverted promises, representations, actions

and omissions made not only by RJM, but by each of the Respondents in their respective capacities. The

record reflects that RJM and the Respondents are intrinsically linked to one another and the actions (and

in some cases intentional inaction) taken by each of the Respondents with respect to the development,

marketing and operation of Brookside demonstrates their interest and involvement in the same for the

mutual benefit of RJM and themselves. Rather than acknowledge the existence of genuine issues of

material fact raised by the Petitioners, the Circuit Court instead chose to weigh the evidence and

determine the truth of the matter in reaching its conclusions and further, protected the alleged wrongdoers

from a jury's scrutiny by using the corporate and limited liability company forms as a shield. By doing

so, the Circuit Court intruded upon the province of the jury and committed reversible error.

IV. STATEMENT REGARDING ORAL ARGUMENT AND DECISION

The Petitioners maintain that oral argument is necessary pursuant to the criteria outlined under

Rule 18(a) of the West Virginia Rules of Appellate Procedure because: (a) the parties have not agreed to

waive oral argument; (b) the petition is not frivolous; (c) the dispositive issues have not previously been

12

authoritatively decided by this Court and the decisional process would be significantly aided by oral

argument. The Petitioners further state that this case is suitable for oral argument pursuant to Rule 19 of

the West Virginia Rules of Appellate Procedure because it involves: (1) assignments of error in the

application of settled law; and (2) the unsustainable exercise of discretion where the law governing that

discretion is settled. This case is further suitable for argument under Rule 20 under the West Virginia

Rules of Appellate Procedure as it potentially involves issues of first impression and issues of

fundamental public importance.

V. ARGUMENT

A. THE STANDARD OF REVIEW FOR A MOTION FOR SUMMARY JUDGMENT IS DE NOVO.

This appeal is from a series of Final Orders Granting Summary Judgment in favor of the

Respondents and denying Petitioners' Motions for Summary Judgment as to certain counts. JA 8-70.

Specifically, three separate Orders were entered on November 7, 2017, which dismissed the Respondents,

with prejudice. I Appellate review of a circuit court's order entering summary judgment is received de

novo. Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189,451 S.E.2d 755 (1994).

Pursuant to Rule 56 of the West Virginia Rules of Civil Procedure, summary judgment is only

appropriate in a case:

[ilf the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law.

W.Va.R.Civ.P. 56(c) (2016).

Pursuant to W.Va.R.Civ.P. 56, summary judgment is required when the record shows that there is

no "genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of

law." Consolidation Coal Co. v. Boston Old Colon), fns. Co., 203 W.Va. 385, 390, 508 S.E.2d 102,107

(1998). "A circuit court's entry of summary judgment is reviewed de novo." Syl. pI. I, Painter, 192

W.Va. at 189,45 I S.E.2d at 755. In considering the propriety of summary judgment, this Court is to

I By Order dated December 19, 2017, the trial court declared all three Orders to be final for purposes of

13

apply the same standard that is applied at the circuit court level. Watson v. Inca Alloys Intern, fnc., 209

W.Va. 234, 238, 545 S.E.2d 294,298 (2001). In reviewing a motion for summary judgment de novo, all

contested questions of fact must be considered in the light most favorable to the party resisting summary

judgment facts. Thus, this Court must resolve all ambiguities and draw all factual inferences in favor of

the Petitioners. Hanlon v. Chambers, 195 W.Va. 99, 105,464 S.E.2d 741,747 (1995) and Estate of

Helmick by Fox v. Martin, 192 W.Va. 501, 504,453 S.E.2d 335,338 (1994).

B. THE CIRCUIT COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT AND FOUND THAT RESPONDENTS WERE NOT LIABLE BY REASON OF A JOINT VENTURE.

The Petitioners maintain that the Circuit Court erred when it granted summary judgment in favor

of the Respondents, finding that the Petitioners had failed to establish the existence of a joint venture

between RJM and the Respondents. As this Court is aware, a joint venture "is an association of two or

more persons to carry out a single business enterprise for profit, for which purpose they combine their

property, money. effects, skill, and knowledge. It arises out of a contractual relationship between the

parties. The contract may be oral or wrillen, express or implied." Syl. Pl. 2. Price v. Halstead, 177

W.Va. 592, 355 S.E.2d 380 (1987); Syl. Pl. 4, Sipple v. Starr, 205 W.Va. 7J 7, 520 S.E.2d 884 (1999).

Petitioners produced evidence and argued to the Circuit Court below that RJM was a shell company that

could not have developed Brookside but for the actions of all of the Respondent anel that those actions

constituted a joint venture. The following evidence was before the Circuit Court:

• A and A advertised Brookside on its websites where visitors were directed to contact A and A for information. As testified by A and A's corporate designee, Roger Ayers, the content for the website is developed by an officer of A and A, Roger Ayers and two of its employees, Jackie McDonald and Roger Lehew. JA 915, 1176-77,1302.

•

•

A and exchanged communications with realtors concerning the sales of lots and homes at Brookside to various realtors and entered into a listing agreement with one realtor, Butch Cazin Realty. JA 952-64, 1352-53. The MRIS listings at Brookside were marked as being "A and A Homes, Inc." as the seller. According to the corporate designee Roger Ayers, A and A listed properties with realtors in its name to "try to sell lots" and to "help RJM move lots." JA 1378.

appeal pursuant to Rule 54 of the West Virginia Rules of Civil Procedure. JA 1.

14

• Planning Commission documents that referenced the applications for road names and other Planning Commission actions identify A and A. JA 1352, 1388-89, 1391.

• Permits for and the construction of the subdivision sign was completed by A and A. JA 1390.

• Frye Construction by and through its officer Michael Frye submitted a proposal to RJM and its members Ayers Holding and Michael Frye to construct the infrastructure for Brookside. This proposal was accepted and Frye Construction and Michael Frye performed the work and received approximately $500,000 for same. JA 2340-42.

• The deposition testimony of Jackie McDonald, Roger Ayers, Jerry Ayers, and Michael Frye concerning the fact that A and A in Inwood, West Virginia, was the only entity that had a physical office location. No rent was paid bet ween RJM and A and A, there was no specific office staff for RJM, rather it was A and A's office staff that undertook the day-to-day operations for RJM and there was no overarching agreement to supply managerial and office administrative services from the corporation to the limited liability company. JA 1192-93,2146-52, 2155.

• The testimony of Jackie McDonald concerning the transfer of funds from A and A to RJM and other Ayers Companies to pay bills (such as the $500,000 excavation costs to Frye Construction, Inc.) were performed on a regular basis. JA 2146-47.

In addition, the fact that each of the Respondents were in some manner involved in the construction of a

home on Lot No. 14 in 2013-2014 that was not compliant with the 2007 Declaration and its subsequent

sale, in and of itself creates a genuine issue of material fact concerning a potential joint venture and the

mutual benefit derived from same to the Respondents. Again, RJM possessed legal title to Lot No. 14.

A and A, without any formal agreement with RJM, built a home on Lot No. 14. Frye Construction

performed the excavation for Lot No. 14 and the operator was Michael Frye. Roger Ayers worked on Lot

No. 14 and specifically was the certified sewer installer used for the home. However, the Circuit Court

took it upon itself to weigh this evidence in the light most favorable to the Respondents, rather than

Petitioners, and determined that no joint venture existed. A contractual relationship was most assuredly

implied and oral when A and A, the Ayers, Frye Construction, and Michael Frye built on Lot 14 in

knowing violation of the very covenants and restrictions that they enacted through RJM in furtherance of

their personal financial gain.

West Virginia Courts have ruled that it is reversible error for a trial court to weigh the evidence

and determine that a joint venture does not exist since that is a matter for a jury to decide. See Bowers v.

15

Wurzbllrg, 207 W.Va. 28,528 S.E.2d 475 (1999); Herrod v. First Republic Mortg. Corp., Inc., 218

W.Va. 611, 625 S.E.2d 373 (2005); Sipple, 205 W.Va. at 717, 520 S.E.2d at 884. In Bowers, this Court

was confronted with whether a lessor of property could be held liable for the action of a lessee under a

joint-venture theory of liability, where the lessor had a contractual right to a percentage of the lessee's

gross sales. WlIrzburg at 28 (1999). This Court ruled that whether "a joint venture exists is to be answered

by the jury." Id. at 38 (1999). A plaintiff has a right to trial upon the factual issues to determine whether a

joint venture existed. Wurzburg at 38. (citing to Las!)' v. Lederman, 147 Cal. App.2d 480,305 P.2d 663

(1957). Whether a relation of a joint venture exists is primarily a question of fact for the trial court to

determine from the facts and the inferences to be drawn therefrom. Id. (citing to Rhodes v. Sunshine Min.

Co., 113 Idaho 162, 742 P.2d 417 (1987)); see also Bahrs v. RMBR Wheels, Inc., 6 Neb. App. 354, 574

N.W.2d 524 (1998); Ja/lIlea, Ille. v. Jamesanlnterests, 741 So.2d 867 (La. App. 1999).

In Herrod, the issue before this Court was whether the purchaser of a mortgage loan had an

agreement with the creditor in regard to obtaining loans, which the purchasers of the home signed.

Herrod, 218 W. Va. at 611. The trial court granted summary judgment to the purchaser of the loan finding

that there was no joint venture, conspiracy, and/or agency with any of the other defendants. This Court

ruled, "the question whether a joint venture exists is to be answered by the jury" and further that "[a]

plaintiff has a right to a jury trial upon the factual issues to determine whether a joint venture existed." Id.

at 617. This Court found that while the report of the Appellants' expert appeared to be the sole evidence

of an arrangement of the parties, it remains up to a jury to decide whether there is sufficient evidence of a

joint venture, agency, or conspiracy between the these parties. Id. at 621. Therefore, the trial court's

ruling was reversed and remanded to allow a jury to determine whether a joint venture was present.

In Sipple, the appellant sought to hold respondent liable for the death of her son by attempting to

establish that a joint venture was present bet ween respondent and the purchaser of gasoline. Sipple at 717.

Appellant introduced evidence that respondent "provided the property, in the form of signs, and

associated equipment, as well as its skill and knowledge in the sale of gasoline, to the operation of the gas

station". Id. at 725. The appellant further introduced evidence that the gas station did not pay directly to

16

the respondent some fractional share of every sale of beer or groceries, even though respondent could still

be said to have profited from those sales. Id. This Court ruled that the appellant introduced substantial

evidence that "a jury may be able to consider whether the arrangement produced mutual benefit for both

the gas station and the respondent"' as the respondent provided "property, money, efforts, skills [and]

knowledge" to the operation of the gas station, and that both parties made contributions "promotive of the

enterprise." Id. (Emphasis added). Therefore, the appellant "raised a question to the jury" as to whether a

joint venture was present and summary judgment was improper in the lower court. Id.

With respect to the case at hand, the Petitioners presented a multitude of evidence which

demonstrated genuine issues of material facts with respect to the existence of a joint venture. As in the

Sipple case, RJM and each of the Respondents derived a mutual benefit with respect to the development

of Brookside and subsequent sale of lots. Moreover, the evidence also reflects a monetary benefit to RJM,

A and A and Frye Construction associated with the infrastructure and subsequent sale of lots. While the

Circuit Court may have been of the opinion that the weight of the evidence did not favor the Petitioners,

that was not the lower court's role at the summary judgment stage, as that decision, according to West

Virginia law, lies with a jury. In that regard the Circuit Court committed reversible error.

c. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY DISMISSING THE PETITIONERS' CAUSE OF ACTION FOR ACTUAL AND/OR CONSTRUCTIVE FRAUD AS AGAINST THE RESPONDENTS

There were no specific findings in the Circuit Court's orders granting summary judgment on the

count of Fraud as required by this Court's holdings in Wurzburg at 37, 528 S.E.2d at 484. See also Horton

v. Profl Bureau ofColleetions of Maryland, Inc., 238 W.Va. 310,794 S.E.2d 395, 399 (2016); Jane Doe-

J 1'. Corporation of President of The Church of Jesus Christ of Latter-day Saints, 239 W.Va. 428, 801

S.E.2d 443,472 (2017).

During his deposition, Petitioner Travis A. Hill testified: "[I]t seems like the more as years went

on, it was more of a bait and switch. We're going to develop this area and it's going to be the premier

area in Martinsburg, and now all o[f] a sudden you're going to change the game. And I have made a

valuable investment as long as - with Mr. and Mrs. Dailey and some other lot owners, and now you're

17

going to change the game. I don't think that's fair." JA 2093 at 50. In a quintessential "bait and switch"

lawsuit, when there are numerous disputed facts, a jury trial is warranted. In the instant case. the

minimum square footage of a home in Brookside was changed three times. As this Court is well aware,

fraud may be either actual or constructive. The word "fraud" is a general term and construed in its

broadest sense embraces both actual and constructive fraud. Actual fraud, or fraud involving guilt, is

defined as anything falsely said or done to the injury of property rights of another. Hulillgs v. Hulings

Lumber Co., 38 W.Va. 351, 18 S.E. 620 (1893). Actual fraud is intentional, and consists of intentional

deception to induce another to part with property or to surrender some legal right, which accomplishes the

end designed. Miller v. HUllIingtoll & Ohio Bridge Co., 123 W.Va. 320,15 S.E.2d 687 (1941). See also

Steele v. Steele, 295 F.Supp. 1266 (S.D.W.Va.1969); Bmvie \'. Sorrell, 113 F.Supp. 373 (W.D.Va.1953).

Constructive fraud is a breach of a legal or equitable duty which, irrespective of moral guilt of the

fraud feasor, the law declares fraudulent because of its tendency to deceive others, to violate public or

private confidence, or to injure public interests. Miller, 123 W.Va. at 320,15 S.E.2c1 at 687. Perhaps the

best definition of constructive fraud is that it exists in cases in which conduct, although not actually

fraudulent, ought to be so treated, that is, in which conduct is a constructive or quasi fraud, which has all

the actual consequences and legal effects of actual fraud. III re: Arbuckle's Estate, 98 Cal.App.2d 562,

220 P.2d 950 (1950). Constructive fraud does not require proof of fraudulent intent.

Even though the record is replete with disputed facts concerning an outright effort to conceal the

fact from the Petitioners that the 2007 Covenants had been amended, the Circuit Court summarily

determined that: (a) there was no evidence of intent to defraud the Plaintiffs, but that the weight of the

evidence reflected that the changes to the Covenants and Declarations that were enacted by in 2013 were

due to the changes in the economy JA 32; (b) that Jerry Ayers, Rogers Ayers and Michael Frye were

insulated from any liability by virtue of their being members of an LLC or officer of a corporation; and

(c) there was no civil conspiracy because the Petitioners had failed to prove the existence of a joint

venture.

18

Were the underlying subject of the case of fraud other than real estate in an affluent

neighborhood, the Circuit Court may not have been so quick to summarily dismiss the claims. Often

times "bait and switch" type claims involve personal property such as products, or vehicles, not real estate

in what was to have been the premier subdivision in Berkeley County. Michael Frye testified at his

deposition that:

Q. When Mr. Hill was talking to you about the lot, one of the things was a beautiful view, right?

A. Yes. Q. And the other thing was that it was going to be really nice custom homes, right? A. We certainly hoped to be, yes. Q. Well, that's what you were telling him in 2005. A. Yes. Q. 2006, excuse me. No vinyl siding, right? A. Right. Q. No RV's parked in driveways? A. No. Q. Three thousand plus square foot homes basically, right? A. That's what we hoped, yes. Q. Did you talk about the covenants and restrictions and the idea, your concept with

Mr. Hill? Because there's no zoning in Berkeley County you were going to have very restrictive covenants to protect the integrity of the community, fair to say?

A. Yes, yeah. Q. And those types of things were important to Mr. Hill. A. r must assume so, yes.

JA 1481-82,2078-79,2255-56.

Further, Roger Ayers testified, as the corporate designee for RJM, that:

A. An upscale development, gave him the covenants. Q. Was it to be the premier development in Berkeley County? A. Yes. Q. Who had input into the original declarations and covenants? A. Roger Ayers. Mike Frye.

JA 1500.

By analogy, in Bowling v. Ansted CllI}'sler-Plymouth-Dodge, Inc., 188 W. Va. 468, 469, 425

S.E.2d 144, 145 (1992). Twenty-one plaintiffs sued a dealership alleging that "vehicles sold to them by

the dealership and Mr. Akers were fraudulently misrepresented to be 'demonstrators' when they were

actually used rental cars." In that case, the trial court submitted the matters to the jury which rendered a

verdict for all seventeen plaintiffs. In that case, Akers, individually, was held liable as well. Akers was

19

President of the corporation and held 60 percent of the stock. This court reversed the circuit court's order

directing a verdict for Akers, the individual defendarit. finding the "evidence could lead a reasonable jury

to conclude that Mr. Akers knew, approved, and sanctioned the fraudulent scheme and, thus, find him

personally liable for fraud." Id. at 474,425 S.E.2d at 150. The Ansted case is analogous to the case at

bar with at least one important difference. In Ansted, the President of the company did not make the

"sales pitch" to the purchasers. In the instant case, principals of corporations and limited liability

companies were the sales persons and decision makers. The "sales" were made by individuals whom the

circuit court now shields from personal liability by means of their corporate structure. At a minimum, the

Petitioners should have been allowed to have the matter go to the jury and determine whether the changes

in the declarations were for a legitimate purpose or whether it was part of a scheme to defraud the Daileys

and Hills.

D. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY DISMISSING THE PETITIONERS' CAUSE OF ACTION FOR CIVIL CONSPIRACY AS AGAINST THE RESPONDENTS WITHOUT ADDRESSING OR INCLUDING ANY FINDINGS OF FACT AND CONCLUSIONS OF LA W WITH RESPECT TO SAME

Assuming arguendo that the Circuit Court was correct in granting summary judgment on the issue

of protection from personal liability by virtue of being a member in a LLC, this Court has recently held

that when questions of fact are at issue and are contested, summary judgment is not appropriate on the

determination of civil conspiracy. The Circuit Court below, in considering and weighing the evidence

substituted its judgment for that of a jury, in contravention of this Court's directive on issues. The Circuit

Court, as to actual and constructive fraud, civil conspiracy, and joint venture, ignored the contested

material facts before it. Petitioners' claims of fraud and civil conspiracy require detailed factual inquiries

to be resolved by a jury. See Horton, 238 W. Va. at 310, 794 S.E.2d at 399; Doe, 801 S.E.2d at 472. In

the Orders granting summary judgment, the Circuit Court made 110 findings offact with regard to the

allegations of conspiracy. Such a blatant dismissal in cursory fashion was in violation of this Court's

holdings in Doe, Id.

20

It is reversible error to dismiss a cause of action for civil conspiracy without addressing or

including any findings of fact and conclusions of law with respect to same and when the instant matter is

complex and includes isslles involving motive and intent, sllch issues involving motive and intent then

necessitate a question of fact for the jury. See Painter, 192 W.Va. at 189,451 S.E.2d at 755; Alpine

Property Owners Ass 'n, Inc. 1'. Mountaintop Development Co., 179 W.Va. 12, 365 S.E.2d 57 (1987);

Hively v. Merrifield, 212 W.Va. 804,575 S.E.2d 414 (2002); Dunn v. Rockwell, 225 W.Va. 43, 689

S.E.2d 255 (2009); and Doe, 801 S.E.2d at 4n.

"A civil conspiracy is a combination of two or more persons by concerted action to accomplish

an unlawful purpose or to accomplish some purpose, not in itself unlawful, by unlawful means." Dunn,

225 W.Va. at 43, 689 S.E.2d at 255. A civil conspiracy is not a per se. stand-alone cause of action; it is

instead a doctrine under which liability for a tort may be imposed on people who did not actually commit

a tort themselves but who shared a common plan for its commission with the actual perpetrator(s). Kessel

v. Leavitt, 204 W.Va. 95, 129,511 S.E.2d no, 754 (1998). See also Gulf Atlantic Life Ins. Co. v. Hurlbut,

696 S.W.2d 83, 102 (Tex. App. 1985), reversed on other grounds by Hurlbut v. Gulf Atlantic Life Ins.

Co., 749 S.W.2d 762 (Tex. 1987). ("The gist of a civil conspiracy is the damage resulting from

commission of a wrong that injures another and not the conspiracy itself. Thus an actionable civil

conspiracy must consist of wrongs that would have been actionable against the conspirators

individually."). Fitz.gerald v. Seamans, 384 F. Supp. 688, 693 (D.D.C. 1974).

In Doe, 239 W.Va. at 428, 801 S.E.2d at 443, this Court ruled: "it is clear, however, that the

circuit court improperly made determinations reserved to a jury and wrongly assumed the veracity of

statements made by defense witnesses as a precursor to its conclusions" found within this matter. Id. at

4n."If a jury were to resolve the disputed evidence, make credibility determinations, and draw

reasonable inferences, all in the plaintiffs' favor. it could find that the [respondent] was part of a

conspiracy and that his conduct furthered or promoted unlawful purposes ... " ld. This Court found that:

"[a]ccordingly, and for these reasons, we find the circuit court erred in granting [respondent's] motion for

summary judgment." ld.

21

In Estate of Robinson ex rei. Robinson l'. Randolph County Com 'n, 209 W.Va. 505, 549 S.E.2d

699, 705 (2001), the circuit court's summary judgment order did not comply with the factors listed in

Lilly. See Fayette COllnty National Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997). The Court

further observed that: "the order merely sets out legal conclusions. It omits findings of fact." Jd. at 705.

This Court ruled that: "[W]e find the absence of factual findings particularly troubling" with respect to

whether there was a duty owed. Id. The case was remanded to the circuit court to determine what findings

of facts were necessary.

In the instant case, the Orders entered in granting Summary Judgment to Respondents were

devoid of specific findings as to the facts presented and in dispute. See disputed facts, supra, Argument

as to Joint Venture. The Circuit Court, when substituting its own judgment and weighing the evidence

rather than allowing the matter to proceed to a jury with regard to Ayers Land, ignored the fact that the

owner of the primary offices for A and A and all other entities was Ayers Land. Ayers Land provided

cash infusions to RJM according to the deposition testimony of A and A's office manager, Jackie

McDonald. JA 972, 1194, 1327, 2144. The Circuit Court, with regard to Ayers Builders, ignored the fact

that the Berkeley County Planning Commission filed contact information for RJM was sent to Ayers

Builders at ayersbuilders.com. JA 1207. Again, RJM itself had no independent telephone or electronic

mail platforms. JA 997. Ayers Builders acted in the stead of RJM in that regard.

The facts presented to the Circuit Court were that Ayers Land was a party to the Exclusive Right

to Sell Listing Agreement: (a) Ayers Land owns the building that serves as the collective office of RJM

and the Ayers Companies. JA 118-20; (b) Ayers Builders is referenced in the Berkeley County Planning

Commission's file with respect to Brookside. JA 1208; (c) Ayers Builders communicated with contractors

regarding the status of Brookside. JA 1317; and (d) Ayers Builders lists itself as having interests in

property within Brookside as part of its report of values to Westfield Insurance Company. JA 1319-23.

The evidence before the Circuit Court demonstrated that Ayers Land and Ayers Builders held

more than a nominal interest in the development of Brookside and the civil conspiracy to perpetrate fraud

upon the homeowners of Brookside so that they, and their members, could realize personal financial

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gam. JA 112. Accordingly, a genuine issue of material fact exists with respect to Plaintiffs' tort claims

against Defendants Ayers Land and Ayers Builders.

This Court has stated that "the circuit court's function at the summary judgment stage is not 'to

weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue

for trial. '" Anderson v. Liberty Lobby, Ille., 477 U.S. 242, 249 (1986). Consequently, we must draw any

permissible inference from the underlying facts in the light most favorable to the party opposing the

motion. "In accessing the factual record we must grant the non-moving party the benefit of inferences, as

[c]redibility, determinations, the weighing of the evidence, in the drawing of legitimate inferences from

the facts are jury functions, not those of a Judge[.]" Williams v. Precision Coil, Il1c., 194 W.Va. 52, 59,

459 S.E.2d 329, 336 (1995) (internal citations omitted). Since none of the orders granting summary

judgment on the fraud and civil conspiracy claims contain findings of fact and conclusions of law

regarding those causes of action, this court is left to infer that the Circuit Court weighed the evidence.

Given that the findings are insufficient, the matter should be remanded for further evidentiary findings by

a jury.

E. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR WHEN IT CONCLUDED THA T THE RESPONDENTS ROGER AYERS, JERRY AYERS AND MICHAEL E. FRYE CANNOT BE HELD LIABLE FOR ANY ACTIONS TAKEN BY THEM, OR PARTICIPATION IN ANY TORT, WITH RESPECT TO BROOKSIDE BY VIRTUE OF BEING MEMBERS OF LIMITED LIABILITY COMPANIES OR SHAREHOLDERS OF CORPORA TIONS

The Circuit Court committed reversible error when it concluded that: (a) three individuals could

not be held liable for any actions taken by them, or participation in any tort because of their being

members of limited liability companies or shareholders of corporations; (b) the three individuals are

members of an LLC, which acts to completely insulate any action taken by them. See Laya v. Erin

Homes, IIlC., 177 W.Va. 343, 352 S.E.2d 93 (1986); Klibicall v. The Tavern, LLC 232 W.Va. 268, 752

S.E.2d 299 (2013).

The Circuit Court adopted the position of the Respondents, which advanced certain "threshold"

arguments as to whether liability may attach to Jerry A. and Roger E. Ayers, and Michael Frye - in

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essence, whether the corporate veil of certain Ayers Companies and Frye Construction may be pierced.

The Circuit Court tacitly adopted the arguments advanced, that being a member of a limited liability

company or a corporate officer serves as a wholesale preclusion from liability for torts participated in,

ratified, or committed in an individual capacity. An example of this adoption by the lower Court of facts

which were disputed was set forth in the Order:

JA 35.

28. This Court finds that, based on deposition testimony of the parties and discovery responses in this matter, there was never any evidence adduced that any of the Ayers Defendants had any sort of agreement, either implied or express, to share in the profits of the alleged joint venture. Absent such evidence, the Plaintiffs' joi nt venture fails as a matter of law and this claim is dismissed, with prejudice.

The Circuit Court ignored West Virginia law that liability may attach to LLC members and/or

corporate officers who individually commit, paI1icipate in, or approve, sanction, or ratify tortious acts;

piercing the corporate veil is simply an alternative means by which liability may be attached. In order to

find the members of the corporation personally liable, the corporate veil must be pierced. Courts are

reluctant to pierce the corporate veil and have discussed the reasons for such reluctance:

"[g]iven the purpose of promoting commerce by providing limited liability for shareholders in state corporation laws, courts have been reluctant to pierce the corporate veil, even when the express purpose of incorporation was to limit the liability of the incorporators. Indeed, courts of every jurisdiction have recognized the legitimacy of incorporating to avoid personal liability. Consequently, something more than a shareholders' desire to avoid personal liability must exist to justify piercing the corporate veil."

Laya at 97.

Regardless, "[t]he burden of proof is on a party soliciting a court to disregard the corporate

structure." Id. (citing to Southern Etec. Supply Co. v. Raleigh Count)' Nat. Bank, 173 W.Va. 780, 320

S.E.2d SIS, 521-22 (1984)); Under exceptional circumstances, the corporate entity may be disregarded to

remove the barrier to personal liability of the shareholder(s) actively participating in the operation of the

business when justice so requires. Id. "Justice may require that courts look beyond the bare legal

relationship of the parties to prevent the corporation from being used to perpetrate injustice, defeat public

convenience or justify wrong." Southern Slates Co-op, Inc. v. Dailey, 167 W.Va. 920 ---,280 S.E.2d 821,

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827 (1981). The West Virginia Supreme Court of Appeals has expressed the principle of "piercing the

corporate veil" in the following manner discussed within syllabus point 10 of Sanders v. Roselawn

Memorial Gardens, Inc., 152 W.Va. 91, 159 S.E.2d 784 (1968):

While, legally speaking, a corporation constitutes an entity separate and apart from the persons who own it, such is a fiction of the law introduced for purpose and convenience and to sub serve the ends of justice; and it is now well settled, as a general principle, that the fiction should be disregarded when it is urged with an intent and not within its reason and purpose, and in such a way that its retention would produce injustices or inequitable consequences.

See also Southern Elec. Supply Co., 173 W. Va. 780, ---, 320 S.E.2d 515, 521-22; syl. pt. 4, Caj7isch

Lumber Co. v. Lake LYlln Lumber & Supply Co., 119 W.Va. 668, 195 S.E. 854 (1938); syl. pt. 4, Tynes v.

Shore, 117 W.Va. 355, 185 S.E. 845 (1936).

"Piercing the corporate veil" is an equitable remedy, the propriety of which must be examined on

an ad hoc basis." See 1 W. Fletcher, Cyclopedia of the Law of Private Corporations § 41.25 (rev.perm.ed.

1983). "[D]ecisions to look beyond, inside and through corporate facades must be made case-by-case,

with particular attention to factual details." Southern £lec., 320 S.E.2d at 523. There are nineteen factors

courts will consider, taking in the totality of the circumstances when deciding whether to pierce the

corporate veil. Amongst those, courts have ruled that: "[t]his evidence must be analyzed in conjunction

with evidence that a corporation attempted to use its corporate structure to perpetrate a fraud or do grave

injustice on an innocent third party seeking to 'pierce the veil.' ld.

In Laya, this Court further ruled that "it is also clear that the propriety of piercing the corporate

veil should rarely be determined upon a motion for summary judgment." Laya, 352 S.E.2d at 97. The

propriety of piercing the corporate veil usually includes numerous questions of fact for the trier of the

facts to determine upon all of the evidence. ld. See also Wheeling Kitchen Equipment Co. v. R & R

Sewing Center, Inc., 154 W.Va. 715,719-20,179 S.E.2d 587,589-90 (1971); Aloma Coat Cmp Inc. v.

Behr, 408 So.2d 496, 498 (Ala. 1981) (motion to dismiss).

In Kubican, 232 W.Va. at 273 n.9, 752 S.E.2d at 304 n.9, the certified question posed to the court

was whether West Virginia's version of the Uniform Limited Liability Company Act, afford[s] complete

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protection to members of a limited liability company against a plaintiff seeking to pierce the corporate

veil. The Supreme Court answered in the negative and found that the statute does not provide complete

protection. ld at 313. "The provision of the Uniform Limited Liability Company (LLC) Act addressing

the liability of the LLC members and managers permits the equitable remedy of piercing the veil to be

asserted against an LLC". ld at Syl. Pt. 9. The Supreme Court found that: "to pierce the veil of a limited

liability company in order to impose personal liability on its member(s) or manager(s), it must be

established that (I) there exists such unity of interest and ownership that the separate personalities of the

business and of the individual member(s) or manager(s) no longer exist and (2) fraud, injustice, or an

inequitable result would occur if the veil is not pierced." !d. at 313.

In this case, Petitioners presented evidence to the Circuit Court that, at a minimum, created

genuine issues of material fact on this issue of piercing the corporate veil. It was alleged and

substantiated that Jerry A. Ayers and Roger E. Ayers' individual commission, participation, and approval

and/or ratification of tortious conduct was part of a civil conspiracy to defraud homeowners within

Brookside, specifically Petitioners. Petitioners argued to the Circuit Court that Jerry A. Ayers and Roger

E. Ayers, and the several entities they controlled, were instrumental in directing the activities of multiple

interconnected businesses that undertook development, operation, and sales of lots and homes at

Brookside and shared inter alia office space, profits, expenses, and employees.

It is axiomatic in West Virginia that individuals or entities that directly participate in tortious

conduct are not shielded from liability by corporate structures. West Virginia Code §31 B-3-303 is not an

absolute shield to liability for members of a limited liability company. Under West Virginia law, this

Court has ruled that liability may attach to limited liability company members, such as the Defendants

that were dismissed by the Circuit Court in this case. This Court has indicated that liability may attach to

those LLC members who individually commit acts, participate in conduct, or who approve, sanction, or

ratify conduct to be undertaken by or on behalf of the limited liability company. See Kuhican; Syl PI. 3

Bowling, 188 W. Va. at 468, 425 S.E.2d at 144; Peters v. KC Transport, Inc., No. 2:15-cv-15609, 2016

WL 4522188 at *9 (SDWV A Aug. 29, 2016). Furthermore, the Uniformed Limited Liability Company

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Act permits an equitable remedy of "piercing the veil" as an alternative means by which liability may

attach to limited liability company members. As this Court has stated,

To pierce the veil of a limited liability company in order to impose personal liability on its member(s) or manager(s), it must be established that (1) there exists such unity of interest and ownership that the separate personalities of the business and of the individual member(s) or managers(s) no longer exist and (2) fraud, injustice, or an inequitable result would occur if the veil is not pierced. This is a fact driven analysis that must be applied on a case-by-case basis.

Syl. Pt. 7, Kubican, 232 W. Va. at 268, 752 S.E.2d at 299,301.

The Circuit Court adopted the reasoning of the Ayers Companies that the "only way" Petitioners

could recover against Jerry Ayers and Roger Ayers was to "pierce the corporate veil." At its core, the

question of whether to pierce the corporate veil is a fact-intensive inquiry in which the Circuit Court

failed to engage. Basic and fundamental fairness justified penetrating the corporate veil to prevent the

Respondents from escaping liability for their decision making and actions, regardless of the "hat" they

wore at the time .... a member of an LLC (of which there were several) or the "hat" of a corporation. The

fact that RJM itself had no cash or assets other than the real estate which was encumbered should have

drawn the Circuit Court's attention. Note that the record indicated that cash obtained was used to pay for

infrastructure in the development, which was completed and paid for to another Respondent in another

corporate form. Lots were allowed to be built upon by a Respondent without the exchange of paperwork.

JA 1173, 1179-80, 1192-93. The "sales price" paid from one entity to another was determined by one of

the three individuals that are Respondents ... the same Respondents that individually guaranteed the RJM

loans. JA 333 at q[9[ 38, 44. RJM even established a line of credit to pay its loan to the bank. JA 1451 at

6. All the time, RJM was allowing cash payments or improvements at the development by Ayers' and/or

Frye. JA 987-88, 1958-59,2008,2341. RJM was merely a facade for the operation of the individuals,

Ayers' and Frye.

To pierce the corporate veil in order to hold the shareholder(s) actively participating in the

operation of the business personally liable, there is normally a two-prong test: (1) there must be such

unity of interest and ownership that these separate personalities of the corporation and the individual

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shareholder(s) no longer exist and (2) an inequitable result would occur if the acts are treated as those of

the corporation alone (a fairness requirement). Laya, 177 W.Va. at 349, 352 S.E.2d at 99. Also, as the

Supreme Court elaborated in Laya, "the corporate form will never be disregarded lightly." [d. at 347,352

S.E.2d at 97.

Pursuant to West Virginia law LLC members and corporate officers may be held liable for their

participation in tortious conduct irrespective of whether said conduct was undertaken in furtherance of the

interests of the LLC ancl/or corporation and irrespective of whether "veil piercing" is alleged. Kubicall,

232 W.Va. at 273 n.9, 752 S.E.2d at 304 n.9; Syl. PI. 3, Bowling, 188 W.Va. at 468, 425 S.E.2d at 144

(holding that a corporate officer can be liable for the tortious acts of the corporation only where that

officer "participated in, approved of, sanctioned, or ratified such acts"). Furthermore, West Virginia

Code § 31 B-3-303 is not so expansive as to shield LLC members who participate in the tortious conduct

complained of from liability, irrespective of whether said conduct was being performed by the member

(individual or entity) on behalf of the LLC. Kubican, 232 W.Va. at 273 n.9, 752 S.E.2d at 304 n.9.

The Circuit Court weighed the evidence and found that there was insufficient evidence that the

Ayers' were "acting independently from their position with Ayers Holdings ... " JA 29. The Circuit Court

made similar rulings with respect to Michael Frye. Such a ruling ignored West Virginia authority which

provides that liability may be proven by evidence of the individual commission of tortious acts or that

Roger and Jerry Ayers and Michael Frye played "some role in directing or approving the tortious acts" of

the LLCs ancl/or corporations for which they were members ancl/or corporate officers. Peters, 2016 WL

4522188, at *9.

It was uncontroverted that Jerry Ayers and Roger Ayers controlled and authorized the acts of

several entities comprising the tortious conduct set forth and alleged in the Consolidated Amended

Verified Complaint. JA 973-88, 1195-1206, 1325-26,2145-52. Further, the Circuit Court below did not

make any findings with respect to whether Defendant Ayers Holdings' conduct was tortious. Likewise,

Michael Frye exercised control over two entities, RJM and Frye Construction. In addition, Roger Ayers

and Michael Frye were inherently involved in the development of Brookside, specifically the construction

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aspect, as well as with certain individual lots where homes were to be constructed. No findings were

made regarding these actions.

Petitioners provided the Circuit Court with specific supporting evidence in the record, that was

grounds for piercing the corporate veil. For purposes of clarity, those facts are restated here:

(a) Roger Ayers or Jerry Ayers, together or separately, were the decision makers in decisions involving Brookside, acting at times as manager, controller, salesperson or marketer for the development; JA 118-21 atljlljl 14 and 16-24. (b) the "shell" entities under the control of both Ayers' and Frye were insolvent at the time of the creation of the subdivision, with cash used from other Ayers entities to pay RJM bills; JA 2146-47. (c) there were no operating agreements between the various defendants for the cross use of personnel, office space, equipment use, no separate phone lines or marketing material, and one website to market Brookside that being A and A website (developed by Dailey and paid for by A and A); JA 1192-93,2146-52,2155. (d) RJM siphoned off corporate funds to Michael Frye/Frye Construction to the amount of over half a million dollars to pay for infrastructure, even though the company had no cash. JA 333 at ljIljI 38 and 44, 987-88,1451 at 6,1958-59,2008,2341.

This Court has held that any veil piercing inquiry is both factually intensive and within the

province of the jury: "[t]he propriety of piercing the corporate veil should rarely be determined upon a

motion for summary judgment. Instead, the propriety of piercing the corporate veil usually involves

numerous questions of fact for the trier of the facts to determine upon all of the evidence." Syl. Pt.

6, Lava. 177 W.Va. at 343, 352 S.E.2d at 93 (emphasis added). The Petitioners conceded that veil

piercing is to be determined on a case-by-case basis with "particular attention to factual details."

SOllthem Elec., 173 W. Va. at 787, 320 S.E.2d at 523. JA 23. On this basis alone, the granting of the

Summary Judgment in favor of the Respondents was in error and reversal of the Circuit Court orders is

warranted.

In regard to corporate veil piercing in general, this Court has held "[t]he law presumes ... that

corporations are separate from their shareholders; but, nevertheless, "[ w ]hile, legally speaking, a

corporation constitutes an entity separate and apaI1 from the persons who own it, such is a fiction of the

law introduced for purpose of convenience and to subserve the ends of justice; and it is not well settled, as

a general principle, that the fiction should be disregarded when it is urged with an intention not within its

reason and purpose, and in such a way that its retention would produce injustice or inequitable

29

consequences." Syl. pt. 10, Sanders, 152 W.Va. at 91,159 S.E.2d at 784. More specifically, in order to

"pierce the corporate veil" in order to hold the shareholder(s) actively participating in the operation of the

business personally liable ... there is normally a two-pronged test: (l) there must be such unity of interest

and ownership that the separate personalities of the corporation and of the individual shareholder(s) no

longer exist (a disregard of formalities requirement) and (2) an inequitable result would occur if the acts

are treated as those of the corporation alone (a fairness requirement). Kubican, 232 W.Va. at ---, 752

S.E.2d at 312.

F. THE CIRCUIT COURT COMMITTED REVERSlliLE ERROR BY DISMISSING THE PETITIONERS' STAND-ALONE CAUSES OF ACTION FOR: (A) CREA TING A CLOUD ON TITLE; (B) BREACH OF RESTRICTIONS, CONDITIONS AND COVENANTS; (C) SLANDER OF TITLE; (D) TRESPASS AND UNLA WFUL CONVERSION OF MONIES RECEIVED FOR FARMING ACTIVITIES; AND (E) AND PROMISSORY EQUITABLE ESTOPPEL WITHOUT ANY FINDINGS OF FACT AND CONCLUSIONS OF LA W.

As previously stated, the circuit court's function at the summary judgment stage is not "to weigh

the evidence and determine the truth of the matter but to determine whether there is a genuine issue for

trial." Anderson, 477 U.S. at 249. In the counts of the complaint which addressed: (a) creating a cloud on

title; (b) breach of restrictions, conditions and covenants; (c) slander of title; (d) trespass and unlawful

conversion of monies received for farming activities; and (e) and promissory equitable estoppel without

any findings of fact and conclusions of law, there were absolutely no findings of fact and conclusion of

law in the orders granting summary judgment. There was a conclusory sentence in the Circuit Court's

Orders which dismissed all of these counts as "moot" in light of the Courts findings as to Joint Venture.

The absence of the Court conducting an analysis of the evidence in the light most favorable to the

Petitioners was to deny them justice. Petitioners are left bereft of a legitimate factual and/or legal

reason(s) by which to understand dismissal of their case. Uncontroverted evidence existed that Michael

Frye individually farmed property in violation of restrictions, Roger Ayers assisted with seeking property

tax relief from the County Assessor by filing State Farm Census and Farm Use Valuation Applications

even though farming was prohibited under the covenants and Jerry Ayers was aware that farming was

taking place. JA 1648-50, 1653-54, 1658-59, 1661-82. That simple uncontested and admitted fact was

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enough to sustain and warrant the case proceeding to jury trial. This is but an example of why the

Petitioners were not afforded the protection of West Virginia law at this summary judgment stage.

G. THE CIRCUIT COURT COMMITTED REVERSIBLE ERROR BY ENTERING SUMMARY JUDGMENT IN FAVOR OF RESPONDENTS WHILE DISCOVERY WAS ONGOING AND PETITIONERS' MOTION TO COMPEL AND INSTITUTE IN CAMERA PROCEEDINGS WAS PENDING.

The Circuit Court committed reversible error by entering summary judgment while (a) discovery

was ongoing; and (b) Petitioners' Motion to Compel and institute In Camera Proceedings was pending.

See POll'deridge Vnit Owners Ass'n v. Highland Properties, Ltd., 196 W.Va. 692, 474 S.E.2d 872 (1996);

Truman v. Farmers & MerchanTs Bank, 180 W. Va. 133, 375 S.E.2d 765 (1988); Masinter v. WEBCO

Co., et. al., 164 W.Va. 241, 262 S.E.2d 433 (1980); Doe, 239 W.Va. at 428,901 S.E.2d at 443.

As a general rule, summary judgment is appropriate "only after adequate time for discovery."

POll'deridge, 196 W.Va. at 702, 474 S.E.2d at 882 (citing to Celotex Corp. v. Catrett, 477 U.S. 317, 322,

(1986». Further, the West Virginia Supreme Court of Appeals ruled in Powderidge that: "[a] party

opposing a motion for summary judgment must have a reasonable "opportunity to discover information

that is essential to [its] opposition" to the motion. Id. at 882. In Board of Ed. of Ohio Count)' v. Buren and

Firestone Architects, Inc., 165 W.Va. 140, 144,267 S.E.2d 440, 443 (1980), the Supreme Court of

Appeals of West Virginia stated that granting a motion for summary judgment before the completion of

discovery is "precipitous." Id.

In POll'deridge, the Supreme Court ruled that a party must have availed itself of West Virginia

Rules of Civil Procedure Rule 56(f) in order to establish summary judgment should be overturned. Id.

Noncompliance with this rule is grounds for rejecting a claim that the opportunity was inadequate;

however, this Court has ruled that "invocation of Rule 56(f) does not demand hypertechnical compliance

with its terms." !d. "In appropriate surroundings, some alternative statement might serve" such as a letter,

or some other nonaffidavit pleading. See Littlejohn v. Shell Oil Co., 483 F.2d 1140,1146 (5th Cir., 1973),

(en bane), cert. denied, 414 U.S. 1116, IIII (lOth Cir. 1991) ("[t]he plaintiff's complaint may also be

31

considered an affidavit if it alleges facts based on the plaintiff's personal knowledge and has been sworn

under penalty of perjury.").

In Truman, the Supreme Court of Appeals ruled that: "[tJhe trial court should have considered the

merits of the motion for a protective order and the motion to compel discovery before addressing whether

summary judgment was proper." Truman, 180 W.Va. at 135,375 S.E.2d at 767. This Court further ruled:

"[t]he essential claim made on appeal is that by foreclosing any discovery on the part of the [petitioner]

by failing to rule on motion to compel discovery deprived [petitioner] of developing" the case so as to

resist the respondent's motion for summary judgment. ld. at 767. See also Board of Ed., 165 W.Va. at

144,267 S.E.2d at 443 (trial court granted summary judgment while discovery was being pursued by the

plaintiff; this Court concluded the circuit court had acted too precipitously and reversed the summary

judgment order).

In Masilllcr, the Supreme Court of Appeals of West Virginia held in Syl. PI. I that: "[e]ven if the

trial judge is of the opinion to direct a verdict, he should nevertheless ordinarily hear evidence and, upon a

trial, direct a verdict rather than try a case in advance on a motion for summary judgment." Masinler, 164

W.Va. at 241,262 S.E.2d at 433.

VI. CONCLUSION

As a preliminary matter, it is important to note that the dismissal of the Petitioners' causes of

action by the Circuit Court via summary judgment, which are the subject of this appeal, all stem from the

fact that the Circuit Court discounted circumstantial evidence, invaded the province of the jury, and failed

to allow Petitioners to present their case to a jury for disposition.

The gravamen of this appeal is not whether the Petitioners would prevail before a jury at the trial

of this matter. Rather, the issues as to whether or not the Circuit Court erred in entering summary

judgment in favor of the Defendants is whether the Circuit Court erred in substituting its judgment for

that of the jury in making the determination that there had not been alleged sufficient evidence to survive

the summary judgment phase on the claim. There were no facts upon which the Circuit Court made

findings in dismissing the Defendants from the cause from Petitioners' Complaint that were not in

32

dispute. See Doe, 801 S.E.2d at 443. The facts of the case are highly contested and a jury, under West

Virginia jurisprudence, should determine the facts at issue in this case, not the Court. To allow protection

to an undercapitalized limited liability company's members and actors is contrary to West Virginia

precedent.

The Petitioners respectfully request that this court remand this matter with direction to the circuit

court to allow for the discovery matters to be resolved, and for the matter to go to a jury for its resolution.

JACKSON KELLY PLLC

JAMES A. DAILEY, III, NICOLE DAILEY, TRA VIS A. HILL, AND SCARLETT J. HILL, BY COUNSEL

'w/pu-~ ~"""-""'~~""--"~~.JL+-~-=E 1/ A+J Q.. yo. i M-( (WV $ E :#l032-3)

Susan R. Snowden W.Va. State Bar No. 3644 Post Office Box 1068 Martinsburg, West Virginia 25402 Telephone: (304) 260-4947 Facsimile: (304) 263-7110 E-Mail: susan.snowden@jacksonkelly.com Counsel for Petitioners

33

CERTIFICA TE OF SERVICE

I, Susan R. Snowden, counsel for Petitioners hereby certify that I served a true copy of the

foregoing upon the following individuals, via U.S. Mail, postage prepaid, on this the 19th day of April,

2018:

Christopher Luttrell Luttrell LC 206 West Burke Street Martinsburg, West Virginia 25401

Matthew R. Whitler Pullin, Fowler, Flanagan, Brown & Poe, PLLC 261 Aikens Center, Suite 301 Martinsburg, West Virginia 25404

~~~r·rv~~Rkl~ Susan R. Snowden V ( WV~ ~'M("3 Z.3)

34