Kourt Security Partners, LLC v. Judy's Locksmiths, Inc., and Judith J. Ransom , 239 W. Va. 757 ( 2017 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2017 Term
_________________ FILED
October 13, 2017
released at 3:00 p.m.
No. 16-0553 RORY L. PERRY, II CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
__________________
KOURT SECURITY PARTNERS, LLC, d/b/a SELECT SECURITY,
Petitioner
v.
JUDY’S LOCKSMITHS, INC.,
and JUDITH J. RANSOM, d/b/a
JUDY ALARM MASTERS
Respondents
_________________________________________________________
Appeal from the Circuit Court of Kanawha County
The Honorable Tod Kaufman, Judge
Civil Action No. 09-C-1619
REVERSED AND REMANDED
________________________________________________________
Submitted: September 19, 2017
Filed: October 13, 2017
Charles J. Kaiser, Jr., Esq. Charles E. Hurt, Esq.
Jeffery D. Kaiser, Esq. The Law Offices of Charles E. Hurt
Phillips, Gardill, Kaiser & Altmeyer, PLLC Charleston, West Virginia
Wheeling, West Virginia Counsel for Respondents
Counsel for Petitioner
Justice Workman delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. “A circuit court’s entry of summary judgment is reviewed de novo.” Syl.
Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).
2. “A motion for summary judgment should be granted only when it is clear
that there is no genuine issue of fact to be tried and inquiry concerning the facts is not
desirable to clarify the application of the law.” Syl. Pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins.
Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).
3. “Summary judgment is appropriate if, from the totality of the evidence
presented, the record could not lead a rational trier of fact to find for the nonmoving party,
such as where the nonmoving party has failed to make a sufficient showing on an essential
element of the case that it has the burden to prove.” Syl. Pt. 2, Williams v. Precision Coil,
Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995).
4. “A party who moves for summary judgment has the burden of showing that
there is no genuine issue of fact and any doubt as to the existence of such issue is resolved
against the movant for such judgment.” Syl. Pt. 6, Aetna Cas. & Sur. Co. v. Fed. Ins. Co.,
148 W.Va. 160, 133 S.E.2d 770 (1963).
i
5. “A bona fide purchaser is one who actually purchases in good faith.” Syl.
Pt. 1, Kyger v. Depue, 6 W.Va. 288 (1873).
6. “Whatever is sufficient to direct the attention of a purchaser to prior rights
and equities of third parties, so as to put him on inquiry into ascertaining their nature, will
operate as notice.” Syl. Pt. 1, Pocahontas Tanning Co. v. St. Lawrence Boom & Mfg. Co.,
63 W.Va. 685, 60 S.E. 890 (1908).
7. “That which fairly puts a party on inquiry is regarded as sufficient notice,
if the means of knowledge are at hand; and a purchaser, having sufficient knowledge to put
him on inquiry, or being informed of circumstances which ought to lead to such inquiry, is
deemed to be sufficiently notified to deprive him of the character of an innocent purchaser.”
Syl. Pt. 3, Pocahontas Tanning Co. v. St. Lawrence Boom & Mfg. Co., 63 W.Va. 685, 60 S.E.
890 (1908).
8. “One who claims the protection of a court of equity as a bona fide purchaser
must show that he had acquired the legal title before notice or knowledge of facts equivalent
to notice.” Syl. Pt. 4, Clark v. Lambert, 55 W.Va. 512, 47 S.E. 312 (1904).
Workman, Justice:
ii
This is an appeal by Kourt Security Partners, LLC, d/b/a Select Security
(hereinafter “the Petitioner”) from a March 13, 2016, order granting summary judgment in
favor of Judy’s Locksmiths, Inc., and Judith J. Ransom, d/b/a Judy’s Alarm Masters,
(hereinafter “the Respondents”). The Petitioner contends the circuit court erred in granting
summary judgment where genuine issues of material fact exist. Based upon this Court’s
review, we reverse the circuit court’s grant of summary judgment and remand this case for
further proceedings consistent with this opinion.
I. Factual and Procedural History
On April 1, 2008, the Respondents entered into an Asset Purchase Agreement
with Secure US, Inc. (hereinafter “Secure US”) and Serbian Fonz, LLC (hereinafter
“Serbian”), companies owned by Mr. Mitchell Brozik (hereinafter collectively referenced as
“the Brozik companies” or individually as “Mr. Brozik”). Pursuant to that agreement, the
Respondents agreed to sell the assets of its business in Charleston, West Virginia, to the
Brozik companies for the purchase price of $420,992.
The Brozik companies made installment payments under the terms of the
agreement until sometime in early 2009. The Respondents thereafter initiated a lawsuit
against the Brozik companies in the Circuit Court of Kanawha County, West Virginia, on
September 1, 2009. Due to significant financial difficulties experienced by Secure US, Mr.
1
Brozik ultimately received assistance from his personal friend, Mr. Mylan Puskar. On
December 26, 2009, the Mylan Puskar Amended and Restated Revocable Trust purchased
the outstanding debt of Secure US in the amount of $3,500,000 and extended an additional
line of credit in the amount of $900,000.
On October 6, 2011, the Respondents settled their civil action with the Brozik
companies, and the companies agreed to pay the Respondents $191,000 over thirty-six
months. The companies made those required payments until approximately March 2014.
In 2012, Mr. Brozik’s aunt, Ms. Betty Parmer, agreed to assist Mr. Brozik with
his companies’ financial challenges by purchasing the debt of Secure US which had been
held by the Milan Puskar trust for $2,500,000. Ms. Parmer thereafter claimed default against
Secure US and moved to have its assets sold at auction. On May 5, 2012, Ms. Parmer
purchased the assets in a secured party sale. Ms. Parmer thereafter retained another company
owned by Mr. Brozik, MB Security, to manage the assets she had purchased. In May 2014,
Ms. Parmer removed MB Security as manager of the former Secure US assets and instead
retained the Petitioner to manage the assets.
On June 19, 2014, based upon the cessation of payments pursuant to the
settlement between the Respondents and the Brozik companies, the circuit court awarded the
Respondents $47,184.24 to be paid by the Brozik companies. This judgment became a lien
2
on July 25, 2014. In November 2014, Ms. Parmer sold the assets of Secure US to the
Petitioner. Thereafter, in July 2015, the Respondents amended their complaint to add the
Petitioner as a defendant.
The Respondents moved for summary judgment against the Petitioner on
January 26, 2016. On March 1, 2016, the circuit court entered an order granting summary
judgment to the Respondents in the amount of $48,730.97. The circuit court based its
decision upon its finding that Ms. Parmer was aware of the Respondents’ judgment against
Secure US when the assets of that company were purchased by Ms. Parmer, even though the
Respondents did not record an abstract of the judgment until a month after the Petitioner
purchased Ms. Parmer’s Secure US assets.
In granting summary judgment to the Respondents, the circuit court found
“Defendant, Kourt Security Partners, cannot be considered as a bona fide purchaser for value,
since it was well aware of all of the aforesaid actions, and participated in such actions.” The
circuit court further held:
Betty Parmer transferred all of the assets of Secure US to Kourt
Security Partners with the view of going out of business, and .
. . nothing was left in Secure US to pay [the Respondents].
Certainly Kourt Security took the assets of Secure US “cum
onere,” which means that something is taken subject to a charge
or burden.
3
The Petitioner now appeals, contending summary judgment was improper
because (1) the judgment was entered against it without consideration of whether Ms.
Parmer had knowledge and/or notice of the Respondents’ lien or judgment encumbering the
assets when she purchased them in May 2012; (2) the circuit court failed to consider statutes
regarding writs of execution; (3) the circuit court failed to recognize that the May 2012 sale
was commercially reasonable and extinguished all subordinate debt interests, including those
of the Respondents; and (4) the circuit court made erroneous factual findings.
II. Standard of Review
As this Court explained in syllabus point one of Painter v. Peavy, 192 W.Va.
189, 451 S.E.2d 755 (1994), “[a] circuit court’s entry of summary judgment is reviewed de
novo.” Pursuant to Rule 56 of the West Virginia Rules of Civil Procedure, “[a] motion for
summary judgment should be granted only when it is clear that there is no genuine issue of
fact to be tried and inquiry concerning the facts is not desirable to clarify the application of
the law.” Syl. Pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins. Co. of New York, 148 W.Va. 160, 133
S.E.2d 770 (1963). This Court has also specified: “Summary judgment is appropriate if,
from the totality of the evidence presented, the record could not lead a rational trier of fact
to find for the nonmoving party, such as where the nonmoving party has failed to make a
sufficient showing on an essential element of the case that it has the burden to prove.” Syl.
Pt. 2, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995). Utilizing these
4
standards as guidance, this Court addresses the propriety of summary judgment in this matter.
III. Discussion
The Petitioner contends there are genuine issues of material fact which should
have precluded summary judgment in this case. As this Court expressed in syllabus point
six of Aetna Casualty, “[a] party who moves for summary judgment has the burden of
showing that there is no genuine issue of fact and any doubt as to the existence of such issue
is resolved against the movant for such judgment.” 148 W.Va. at 162, 133 S.E.2d at 772, syl.
pt. 6. Thus, it is apparent that the Respondents had the burden of showing that there was no
genuine issue of material fact. Doubt will be resolved against the Respondents, as the party
moving for summary judgment.
The status of Ms. Parmer as a bona fide purchaser is the primary controversy
underlying the Petitioner’s arguments. This Court has explained that a bona fide purchaser
is:
“‘one who purchases for a valuable consideration, paid or parted
with, without notice of any suspicious circumstances to put him
upon inquiry.’” Stickley v. Thorn, 87 W.Va. 673, 678, 106 S.E.
240, 242 (1921) (quoting Carpenter Paper Co. v. Wilcox, 50
Neb. 659, 70 N.W. 228 (1897)). See also Simpson v. Edmiston,
23 W.Va. 675, 680 (1884) (“[A] bona fide purchaser is one who
buys an apparently good title without notice of anything
calculated to impair or affect it.”); Black’s Law Dictionary
1249 (7th ed.1999) (defining a bona fide purchaser as “[o]ne
who buys something for value without notice of another’s claim
to the item or of any defects in the seller’s title; one who has in
5
good faith paid valuable consideration for property without
notice of prior adverse claims.”).
Subcarrier Commc’ns, Inc. v. Nield, 218 W.Va. 292, 300, 624 S.E.2d 729, 737 (2005).
As this Court succinctly explained in syllabus point one of Kyger v. Depue, 6
W.Va. 288 (1873): “A bona fide purchaser is one who actually purchases in good faith.” See
also Wolfe v. Alpizar, 219 W.Va. 525, 530, 637 S.E.2d 623, 628 (2006) (finding status as
bona fide purchaser for value without notice where “innocent purchaser” bought land in
absence of “documentation of which [purchaser] could have or should have been aware that
would have alerted her to the appellants’ claims. . . .”). In syllabus point one of Pocahontas
Tanning Co. v. St. Lawrence Boom & Manufacturing Co., 63 W.Va. 685, 60 S.E. 890 (1908),
this Court held: “Whatever is sufficient to direct the attention of a purchaser to prior rights
and equities of third parties, so as to put him on inquiry into ascertaining their nature, will
operate as notice.” This Court continued in syllabus point three of Pocahontas: “That which
fairly puts a party on inquiry is regarded as sufficient notice, if the means of knowledge are
at hand; and a purchaser, having sufficient knowledge to put him on inquiry, or being
informed of circumstances which ought to lead to such inquiry, is deemed to be sufficiently
notified to deprive him of the character of an innocent purchaser.” Id. at ___, 60 S.E. at 890,
syl. pt. 3. In syllabus point four of Clark v. Lambert, 55 W.Va. 512, 47 S.E. 312 (1904), this
Court also addressed this issue of notice and held: “One who claims the protection of a court
6
of equity as a bona fide purchaser must show that he had acquired the legal title before notice
or knowledge of facts equivalent to notice.”
Although the circuit court based its summary judgment order in this case upon
the premise that Ms. Parmer had knowledge and appreciation of the circumstances under
which she purchased the assets of Secure US and was consequently not a bona fide purchaser
without notice of an adverse claim against the company, the Petitioner contends genuine
issues of material fact exist on that issue.1 For instance, a judgment was not obtained by the
Respondents against the Brozik companies until June 19, 2014, and a writ of execution was
not obtained until July 25, 2014, almost two years after Ms. Parmer purchased the assets of
Secure US.2 In their summary judgment motion, the Respondents asserted, in conclusory
fashion, that Ms. Parmer had actual or constructive knowledge of the Respondents’ judgment
against Secure US prior to the recording of the lien; they did not, however, present evidence
establishing such knowledge or notice.
1
The Petitioner also contends that the Respondents failed to submit evidence
indicating that the sale to Ms. Parmer was in any manner commercially unreasonable. Thus,
the Petitioner contends that the circuit court must address the issue of a commercially
reasonable sale and the consequent extinguishment of all subordinate debt interests.
2
As the Petitioner contends, the judgment lien had not attached to the assets Ms.
Parmer purchased that were eventually purchased by the Petitioner. As stated in syllabus
point four of Hartman v. Corpening, 116 W.Va. 31, 178 S.E. 430 (1935), “[t]he lien of a
perfected execution is both immediate and progressive, but not retroactive.”
7
Moreover, this Court issued a memorandum decision in Brozik v. Parmer, No.
16-0238, 2017 WL 65475 (W.Va. Jan. 6, 2017) (memorandum decision), affirming a jury
verdict in a civil action brought by Ms. Parmer against Mr. Brozik on the issue of Mr.
Brozik’s fraudulent activity and Ms. Parmer’s lack of awareness of all circumstances
surrounding her financial assistance to Mr. Brozik in connection with the purchase of the
assets of Secure US. In that case, the jury returned a verdict finding that Mr. Brozik and MB
Security breached contractual and fiduciary duties owed to Ms. Parmer. Id. at *4. Critical
to the application of those findings to the present case, this Court affirmed the jury’s finding
that Mr. Brozik and MB Security “made false representations, untrue statements, failed to
provide Ms. Parmer necessary and important information, and fraudulently induced Ms.
Parmer into a series of transactions that made her the owner of Secure US’s assets. . . .” Id.
We also observed that the “evidence revealed that Mr. Brozik caused his aunt to become the
owner of his company’s assets as part of a scheme to avoid paying a lawful judgment
obtained by” another “competing security company. . . .” Id. at *9. Thus, the Petitioner in
the present case argues that whether Ms. Parmer was aware of the business circumstances
surrounding the indebtedness of Secure US to the Respondents was a question of fact
rendering summary judgment inappropriate.
The sole question currently before this Court is whether this matter should have
been decided through the procedural vehicle of summary judgment. Courts have broadly
recognized that issues surrounding an entity’s status as a bona fide purchaser may not be
8
appropriate for resolution by summary judgment. In Hanlon v. Bowman, 169 W.Va. 405,
287 S.E.2d 519 (1982), this Court encountered a question of whether a defendant knew of
a fiduciary relationship between the original grantor and grantees and whether summary
judgment was appropriate. Id. at 408, 287 S.E.2d at 520. Knowledge of that relationship
was deemed “material to the appellant’s right to recover,” and the evidence “suggested that
[the original grantee and third parties]3 were involved in something other than an arm’s
length transaction.” Id. In reversing the circuit court’s summary judgment order, this Court
observed the ineffectiveness of summary judgement where unresolved factual issues
predominate. We held that the case “involves knowledge of a fiduciary relationship,
establishment of which is similar to establishment of motive or intent.” Id. This Court also
addressed that concept in Masinter v. WEBCO Co., 164 W.Va. 241, 262 S.E.2d 433 (1980),
recognizing that summary judgment is often unwarranted “where issues involving motive and
intent are present.” Id. at 243, 262 S.E.2d at 436.
3
Like the present case, the Hanlon matter involved a complex set of relationships
among the parties and an allegation that Ms. Dorothy Bowman “had failed to transfer the
stock as promised in consideration of” a transfer of property to her by James and Nellie
Hanlon and “had subsequently, in breach of her trust and without authority, conveyed the
property to Earl L. Corbin and H. Louise Corbin, the other appellees.” 169 W.Va. at 406-07,
287 S.E.2d at 519-20. Thus, the question became whether the Corbins were bona fide
purchasers or knew or should have known of the arrangement between the Hanlons and Ms.
Bowman.
9
Emphasizing the imprudence of summary judgment in complex factual matters
involving bona fide purchaser status, the Court of Appeals of Minnesota reasoned as follows
in Behr v. EverBank, No. A13-1556, 2014 WL 1272390 (Minn. Ct. App. Mar. 31, 2014):
A bona-fide purchaser “is one who gives valuable consideration
without actual, implied or constructive notice of inconsistent
outstanding rights of others.” Miller v. Hennen, 438 N.W.2d
366, 369 (Minn. 1989). “Whether one is a good-faith purchaser
is a factual determination.” Stone v. Jetmar Props., LLC, 733
N.W.2d 480, 488 (Minn. App. 2007). Thus, the propriety of
deciding the question at summary judgment is suspect. We
therefore conclude that summary judgment is not appropriate on
that ground.
Id. at *6; see also Dollar v. Dollar, 105 S.E.2d 736, 740 (Ga. 1958) (“The question as to
whether the defendant . . . had actual notice, or as to whether the circumstances were
sufficient to put him on notice of the state of the title, were questions to be determined by the
jury.”); R.W. Holdco, Inc. v. SCI/RW Holdco, Inc., 551 S.E.2d 825 (Ga. Ct. App. 2001)
(whether circumstances were sufficient to put purchaser on notice of appellants’ interest in
property was question of fact to be determined by trier of fact); Green v. Tanner, 49 Mass.
411, 422 (Mass. 1844) (whether defendants are bona fide purchasers is question of fact);
Proteon, Inc. v. Digital Equip. Corp., No. CV981533F, 2000 WL 1298130, *4 (Mass. Super.
Ct. Mar. 3, 2000) (“As there are genuine issues of material fact on the legal issue of whether
or not Cabletron was a bona fide purchaser, this matter is not appropriate for summary
judgment.”).
10
The dispositive “question of notice often requires a factual determination that
is not appropriate for summary judgment.” Anthony Marano Co. v. J & S Produce Corp.,
No. 12 C 1906, 2014 WL 4922324, *8 (N.D. Ill. Sept. 30, 2014); see also Gargiulo v. G.M.
Sales, Inc., 131 F.3d 995, 1000 (11th Cir. 1997) (reversing summary judgment because
“genuine issues of material fact exist as to whether the bank was a bona fide purchaser and
whether the bank was without notice of [a breach of trust.]”); Albee Tomato, Inc. v. A.B.
Shalom Produce Corp., 155 F.3d 612, 617 (2d Cir. 1988) (reversing summary judgment
based upon existence of factual questions regarding defendant’s notice); Hahn v. Love, 321
S.W.3d 517, 527 (Tex. App. 2009) (“The evidence shows that this case is no exception to the
rule that fraudulent transfer and bona fide purchaser status are generally questions for the
trier of fact that are inappropriate for summary judgment.”).
In the case sub judice, the Respondents did not satisfy their burden of showing
the absence of any genuine issues of material fact regarding whether Ms. Parmer was a bona
fide purchaser. Having recognized the admonition of syllabus point six of Aetna Casualty,
requiring doubts as to the existence of material issues to be construed against the movant, this
Court finds that summary judgment should not have been granted in this case.4
IV. Conclusion
4
Finding reversal necessary based upon the genuine issues of material fact surrounding
the bona fide purchaser issue, we do not address the Petitioner’s other assertions of error.
11
Accordingly, for the reasons set forth above, the final order of the Circuit Court
of Kanawha County entered on March 1, 2016, is reversed, and this case is remanded to the
lower court for further proceedings.
Reversed and remanded.
12