Mitchell Brozik and MB Security v. Betty Parmer, etc. ( 2017 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Mitchell Brozik and MB Security, LLC, FILED
Defendants Below, Petitioners January 6, 2017
RORY L. PERRY II, CLERK
vs) No. 16-0292 (Monongalia County 13-C-651) SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Betty Parmer, Plaintiff Below, Respondent,
and Kourt Security Partners, LLC,
Third-Party Defendant Below, Respondent
And
Betty Parmer, Plaintiff Below, Petitioner
vs) No. 16-0400 (Monongalia County 13-C-651)
Mitchell Brozik and MB Security, LLC,
Defendants Below, Respondents, and Thomas Kupec
and Brandon Kupec, Defendants Below, Respondents,
and Gregory Morgan, Defendant Below, Respondent
And
Betty Parmer, Plaintiff Below, Petitioner
vs) No. 16-0238 (Monongalia County 14-C-374)
United Bank, Inc., a West Virginia corporation, and
Randall Williams, Defendants Below, Respondents
MEMORANDUM DECISION
These three consolidated appeals concern litigation sparked by a series of financial
transactions involving Betty Parmer; Mitchell Brozik and his company, MB Security, LLC;
Thomas Kupec, Brandon Kupec, and Gregory Morgan, three Clarksburg, West Virginia,
attorneys; and United Bank and its loan officer, Randall Williams. The appeals in Docket Nos.
16-0292 and 16-0400 stem from a jury trial in the Circuit Court of Monongalia County, in which
the jury returned a verdict in favor of Betty Parmer and against Mitchell Brozik and MB
Security, LLC, in the amount of $1.5 million for breach of fiduciary duties, breach of contract,
and fraud, and an additional $200,000 in punitive damages, for a total award of $1.7 million. The
jury also heard Betty Parmer’s claims of negligence, legal malpractice, breach of fiduciary
1
duties, and fraud against Respondents/Defendants below Thomas Kupec, Brandon Kupec, and
Gregory Morgan, but found no liability on the part of these three parties.
Specifically, in Docket No. 16-0292, Petitioners/Defendants below, Mitchell Brozik
(“Mr. Brozik”) and MB Security, LLC (“MB Security”), by counsel William J. Leon, appeal the
circuit court’s “Trial Order,” entered on December 21, 2015, and its “Order Denying Brozik and
MB Security [sic] Post Trial Motions,” entered on February 23, 2016. Respondent/Plaintiff
below Betty Parmer (“Ms. Parmer”), by counsel S. Sean Murphy, filed a response. Additionally,
Respondent/Third-Party Defendant below Kourt Security Partners, LLC (“Kourt Security”), by
counsel Charles J. Kaiser, Jr. and Jeffrey D. Kaiser, filed a response. Mr. Brozik and MB
Security filed a reply.
In Docket No. 16-0400, Ms. Parmer, by counsel S. Sean Murphy, appeals the circuit
court’s “Trial Order,” entered on December 21, 2015, and its order denying her motion for
amended judgment and/or for a new trial, entered on March 15, 2016, as it related to the jury’s
adverse verdict regarding her claims against the three attorney defendants. Mr. Brozik and MB
Security, by counsel William J. Leon, filed a summary response. Thomas Kupec and Brandon
Kupec, by counsel, David D. Johnson, III and Larry A. Winter, filed a response. Gregory
Morgan, by counsel Peter T. DeMasters, Kyle T. Turnbull, and Mina R. Gantous, also filed a
response.
Finally, the third consolidated case, Docket No. 16-0238, arises from the dismissal of a
separate, but related, civil action filed by Ms. Parmer against United Bank, Inc. and Randall
Williams (collectively, “United Bank”). In this appeal, Ms. Parmer, by counsel S. Sean Murphy,
appeals the Circuit Court of Monongalia County’s order granting United Bank’s motion for
summary judgment, entered on February 12, 2016, and its order denying Ms. Parmer’s motion to
reconsider the denial of her motion to amend her complaint, entered on February 18, 2016.
United Bank, by counsel Shawn P. George, filed a response.
This Court has considered the parties’ briefs and the record on appeal in each of the three
above-styled cases. The facts and legal arguments are adequately presented, and the decisional
process would not be significantly aided by oral argument. Upon consideration of the standard of
review, the briefs, and the record presented, the Court finds no substantial question of law and no
prejudicial error. For these reasons, a memorandum decision consolidating the appeals and
affirming the circuit court’s orders is appropriate under Rule 21 of the Rules of Appellate
Procedure.
Factual and Procedural Background
I.
Docket Nos. 16-0292 and 16-0400:
Ms. Parmer’s claims against Mr. Brozik, MB Security,
Thomas Kupec, Brandon Kupec, and Gregory Morgan
A. Introduction
2
These appeals stem from a series of financial transactions, the most important of which
was a secured party sale of corporate assets that occurred on May 5, 2012. At the sale, Ms.
Parmer foreclosed on assets owned by Secure US, a corporation owned by Mr. Brozik.1 Ms.
Parmer is Mr. Brozik’s aunt, with whom he enjoyed a close relationship throughout his life. Ms.
Parmer is a resident of Harrisburg, Pennsylvania, and was 76 years old at the time of the
transaction. Ms. Parmer and her husband built, operated, and sold multiple businesses during
their marriage. Following their divorce in 1991, Ms. Parmer received a business and other
investments worth several million dollars. It is undisputed that Ms. Parmer routinely provided
financial assistance to Mr. Brozik over the years leading up to the 2012 transaction giving rise to
her claims.2
The transaction at the center of this case was the result of Mr. Brozik seeking financial
assistance from his aunt because he was at risk of losing his business, Secure US. In short,
Secure US had pledged all of its assets as collateral to secure a loan that Ms. Parmer purchased
from a creditor of Secure US in April 2012. Following the secured party sale on May 5, 2012,
Ms. Parmer became the owner of Secure US’s assets. Thereafter, Ms. Parmer and Mr. Brozik
entered into a management agreement that provided that a new company formed by Brozik, MB
Security, would manage Secure US’s assets that Ms. Parmer had purchased and would continue
to operate the business as usual.
Ms. Parmer filed suit in September of 2013, naming Mr. Brozik and MB Security as
defendants, and claiming breach of fiduciary duties, fraud, conspiracy, and conversion. Ms.
Parmer also named as defendants three attorneys who were involved in the transaction, Thomas
Kupec, Brandon Kupec, and Gregory Morgan. The Kupecs represented Mr. Brozik and Secure
US; Gregory Morgan is unaffiliated with the Kupecs and presided over the secured party sale on
May 5, 2012. Against the attorney defendants, Ms. Parmer raised the same claims that she raised
against Mr. Brozik and MB Security, and added claims of negligence, legal malpractice, and
breach of contract. In February of 2014, Ms. Parmer sought to terminate the management
agreement with MB Security. By agreed order, the parties terminated the agreement and
transferred operation of the business to Ms. Parmer. Additionally, Mr. Brozik and MB Security
were unsuccessful in their attempts to have the circuit court dismiss Ms. Parmer’s fraud claim on
the basis that it lacked specificity.
Mr. Brozik and MB Security filed their answer and a counterclaim in August of 2014. In
their counterclaim, they asserted breach of contract, tortious interference with business
opportunities, and conversion of Mr. Brozik’s personal property. In addition, Mr. Brozik and MB
Security filed a third-party complaint against Kourt Security, the entity that had purchased the
Secure US assets from Ms. Parmer during the pendency of this case below. Against Kourt
1
Secure US provided residential and commercial fire and security services in North
Central West Virginia.
2
Mr. Brozik also received financial assistance in the past from Milan Puskar, who was
Mr. Brozik’s godfather. The Parmer, Brozik, and Puskar families came to the United States from
the same region of Serbia and remained very close.
3
Security, Mr. Brozik and MB Security raised claims of tortious interference and conversion, and
sought indemnification and contribution for any damages that may be awarded to Ms. Parmer.
Following discovery, the parties filed dispositive motions. Mr. Brozik and MB Security
moved for summary judgment on Ms. Parmer’s breach of fiduciary duty, fraud, and conspiracy
claims, and also argued that Ms. Parmer suffered no damages. The circuit court denied Mr.
Brozik’s and MB Security’s motion by order entered in November of 2015. Kourt Security was
granted summary judgment with respect to Mr. Brozik’s conversion of lost wages and profits and
tortious interference claims. Mr. Brozik’s claim that Kourt converted his personal property, his
claims of quantum meruit for rent, and property damage claim survived summary judgment.
Additionally, the circuit court dismissed Mr. Brozik’s and MB Security’s claim against Kourt
Security for indemnification and contribution. The circuit court granted summary judgment in
favor of the Kupecs and Mr. Morgan only with respect to Ms. Parmer’s conspiracy claim.
Finally, Ms. Parmer sought partial summary judgment in which she sought a declaration that she
purchased Secure US’s assets subject to a judgment lien held by Security Alarm Financing
Services, Inc. (“SAFE”), which the circuit court denied.3
After addressing the parties’ respective motions, the following claims were presented to
the jury: (1) Ms. Parmer’s claims of fraud, breach of contract, and breach of fiduciary duty
against Mr. Brozik and MB Security; (2) Ms. Parmer’s claims of fraud, breach of fiduciary duty,
legal malpractice, and negligence against the Kupecs and Mr. Morgan; and (3) Mr. Brozik’s and
MB Security’s claims of conversion of personal property, property damage, and quanum meruit
for rent against Kourt Security. The case proceeded to a jury trial in December of 2015.4
B. The Trial Evidence
The evidence revealed that Mr. Brozik’s financial difficulties, at least as they related to
the present litigation, began around 2008. Secure US defaulted on a loan that it had obtained in
2007 from LaSalle Bank, which was later acquired by Bank of America. Bank of America sued
3
In the early 2000s, Secure US filed a civil action against SAFE, another security
company, in the United States District Court for the Southern District of West Virginia. Secure
US and SAFE were in a dispute over the rights to a third company’s customer accounts and
recurring monthly income therefrom. SAFE asserted a counterclaim against Secure US. In
November of 2010, the district court awarded judgment in favor of SAFE on Secure US’s claim
and awarded SAFE $1.132 million in its counterclaim against Secure US. SAFE later registered
its judgment against Secure US in the Northern District and began efforts in a miscellaneous
action to execute the judgment against Secure US’s assets, including its customer accounts. The
Kupecs took over representation of Secure US in the SAFE matter during the miscellaneous
action. It appears that the SAFE matter was the driving force behind the present litigation.
4
In 2015, Mr. Brozik initiated a separate civil action against Kourt Security Partners and
Boyanna, LLC, which the circuit court consolidated with Civil Action 13-C-651. That suit was
styled Brozik Rentals, LLC, and Mitchell Brozik v. Kourt Security Partners, LLC, and Boyanna,
LLC, Circuit Court of Monongalia County Civil Action No. 15-C-3.
4
Secure US in the United States District Court of the Northern District of Illinois as a result of the
default, and was granted summary judgment on the $3.5 million owed on the LaSalle Bank note.
Secure US was ordered to turn over its assets that it had pledged as collateral on the note. To
avoid Bank of America’s collection efforts, in 2009, Mr. Brozik sought help from Milan Puskar,
a family friend. Mr. Puskar agreed to purchase the loan in order to acquire all of the related debt
and security instruments and to extend Mr. Brozik an additional $900,000 in credit, resulting in
Mr. Brozik and Secure US owing Mr. Puskar approximately $4 million. Mr. Brozik and Secure
US pledged their personal property as collateral to secure the line of credit. The Secure US debt
and security instruments were held by the Puskar Family Trust. Because the indebtedness of
Secure US and Mr. Brozik was prior in time to the SAFE Judgment lien,5 the Puskar lien was
superior in priority.
In July of 2011, SAFE initiated efforts in the United States District Court for the
Northern District of West Virginia to execute on its $1.132 million judgment against Secure US.
As noted above, the Kupecs represented Secure US in the SAFE matter. In March of 2012, a
federal magistrate ordered that a judicial sale of Secure US’s assets be held on May 16, 2012. In
the midst of SAFE’s collection efforts, in October of 2011, Mr. Puskar died unexpectedly. The
Puskar Trust sought to divest itself of the Secure US debt and security instruments, and was
willing to accept $2.5 million from Mr. Brozik for the note with a face value of over $4 million.
Around early April of 2012, Mr. Brozik approached Ms. Parmer to ask her if she was willing to
loan him the $2.5 million. Ms. Parmer agreed to do so, and borrowed the necessary money from
Centra Bank (now United Bank) in Morgantown, West Virginia. Ms. Parmer personally arranged
for the loan and negotiated the terms, without counsel, with bank representative Randall
Williams. Ms. Parmer’s goal was to assist her nephew in keeping his business operating.
However, rather than loaning Mr. Brozik the money, Ms. Parmer agreed to purchase the
notes from the Puskar Trust herself, and then, according to Mr. Brozik and the attorney
defendants, further agreed to foreclose on Secure US’s assets prior to the SAFE judicial
foreclosure scheduled for May of 2012. The alleged plan was for Mr. Brozik to then repay Ms.
Parmer from the profits generated by continuing to operate the business. Mr. Brozik advised
Brandon Kupec of his agreement with Ms. Parmer, and Brandon Kupec called Ms. Parmer and
confirmed her understanding of the transactions.6 Ms. Parmer traveled to Morgantown for the
closing on her loan from United Bank, which took place on April 19, 2012. That same day,
following the closing on the loan, Ms. Parmer met with representatives from the Puskar Trust
and executed the necessary documents for her to acquire the LaSalle/Bank of America note,
Puskar line of credit, and related security instruments. As a result, Ms. Parmer stepped into the
shoes of the Puskar Trust and acquired the total indebtedness of about $4 million secured by a
5
See footnote 3, supra.
6
During their communications, Ms. Parmer indicated to Brandon Kupec that she had
counsel in her home state of Pennsylvania, and Brandon Kupec advised her to consult with him.
However, Ms. Parmer did not seek the advice of her counsel at any stage in these transactions.
Additionally, it appears undisputed that Thomas Kupec never met or spoke with Ms. Parmer.
5
first lien on all of Secure US’s assets, which was superior to SAFE’s $1.132 million judgment
lien against Secure US.
Ms. Parmer’s next action was to give notice to Secure US that she was calling on it to
cure its default under the note and line of credit. Mr. Brozik then responded to Ms. Parmer’s
demand and stated that Secure US was unable to cure the default. By letter dated April 20, 2012,
Ms. Parmer requested that foreclosure proceedings commence. All of the foregoing letters were
drafted by Brandon Kupec on behalf of Secure US. After discovering a conflict of interest with
the initial attorney selected, the Kupecs requested that Gregory Morgan conduct the foreclosure
sale. Mr. Morgan spoke with Ms. Parmer by telephone and explained that he would be
conducting the foreclosure sale, and she confirmed that was her intention. According to Mr.
Morgan, he and Ms. Parmer agreed that the goal of the sale was to make her the owner of the
Secure US assets. Ms. Parmer authorized Mr. Morgan to issue a bid of up to $4 million on her
behalf.
The secured party foreclosure sale took place on May 2, 2012. Of the seventeen
attendees, there were only two bidders: Patrick Egan, owner of Kourt Security, and Mr. Morgan,
on Ms. Parmer’s behalf. Mr. Egan made a final bid of $3.6 million. Mr. Morgan then placed the
winning bid for Ms. Parmer in the amount of $4 million. As a result, Ms. Parmer became the
owner of Secure US’s assets.
Around the time of the sale in May of 2012, Mr. Brozik organized MB Security for the
purpose of operating the security business using the former Secure US assets. At Mr. Brozik’s
request, Brandon Kupec contacted Ms. Parmer to discuss her signing a management agreement
with MB Security, which obligated MB Security to pay the $2.5 million note that Ms. Parmer
obtained from United Bank and entitled MB Security to receive all profits and gains from the
management of the new company. Ms. Parmer requested that Brandon Kupec make several
modifications to the agreement, which he did. Ms. Parmer then signed the agreement in August
of 2012.
SAFE believed that it was aggrieved by the May 5, 2012, secured party sale, and filed
suit against Ms. Parmer, Mr. Brozik, and Secure US in the United States District Court for the
Northern District of West Virginia on May 22, 2012. SAFE alleged that the sale was a fraudulent
attempt to deny it the benefit of its $1.132 million judgment against Secure US. SAFE sought a
declaration that its judgment lien survived the secured party sale and that Ms. Parmer be found
personally liable for its judgment against Secure US. The District Court denied SAFE’s motion
for summary judgment that its judgment survived the sale and further ruled that Ms. Parmer
could not be held personally liable under the theory of successor liability. However, despite these
rulings, Ms. Parmer and SAFE entered into a settlement agreement wherein Ms. Parmer
stipulated that (1) she was not a good faith purchaser of the Secure US assets; (2) she took the
Secure US assets subject to SAFE’s judgment lien; and (3) she was personally liable for SAFE’s
judgment lien.7 The crux of Ms. Parmer’s claims in the present lawsuit was that she was unaware
7
Ms. Parmer’s present counsel also represented her in the SAFE suit. Additionally, the
Kupecs and Mr. Morgan state that Ms. Parmer subsequently sold the former Secure US assets to
(continued . . . )
6
that she would become the owner of Secure US’s assets; she alleged that she merely intended to
help her nephew in his time of financial trouble.
C. The Verdict
Following the December of 2015, jury trial, the jury returned the following verdict: (1)
neither Thomas nor Brandon Kupec breached any fiduciary duties owed to Ms. Parmer; (2) Mr.
Brozik and MB Security breached both a contract with and fiduciary duties owed to Ms. Parmer;
(3) neither Thomas Kupec nor Mr. Morgan committed negligence or malpractice; (4) Brandon
Kupec committed negligence and malpractice in his representation of Ms. Parmer, however, the
jury found Brandon Kupec and Ms. Parmer each to be 50 percent at fault; (5) 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; (6) neither Thomas Kupec nor
Brandon Kupec committed fraud; (7) Mr. Brozik and MB Security acted in a willful, wanton,
and reckless manner; and (8) neither Thomas Kupec nor Brandon Kupec acted in a willful,
wanton, and reckless manner. The jury found no liability on any of Mr. Brozik’s conversion
claims, real property claims, or quantum meruit/rent claims against Kourt Security.
With respect to damages, the jury awarded a judgment in favor of Ms. Parmer in the
amount of $750,000 against Mr. Brozik and MB Security for breach of contract and breach of
fiduciary duty; $750,000 against Mr. Brozik and MB Security for fraud; and $200,000 against
Mr. Brozik and MB Security in punitive damages. The circuit court memorialized the jury’s
verdict in a “Trial Order” entered on December 21, 2015.
D. The Post-Trial Motions
Mr. Brozik and MB Security filed a post-trial motion in which they requested that the
circuit court set aside the verdict and grant a new trial. The circuit court denied Mr. Brozik’s and
MB Security’s motion by order entered on February 23, 2016. Ms. Parmer also filed a motion
seeking a new trial with respect to her claims against the Kupecs and Mr. Morgan. The circuit
court denied Ms. Parmer’s post-trial motion by order entered on March 15, 2016. Mr. Brozik/MB
Security and Ms. Parmer each appealed to this Court.
II.
Docket No. 16-0238:
Ms. Parmer’s claims against United Bank and Randall Williams
In April of 2014, while her suit against Mr. Brozik, MB Security, the Kupecs, and
Gregory Morgan was pending, Ms. Parmer filed a separate action against United Bank and its
loan officer, Randall Williams, concerning their role in the transaction. She alleged claims of
negligence, breach of fiduciary duty, and conspiracy. Specifically, Ms. Parmer alleged that when
Kourt Security, owned by Patrick Egan, for $3.2 million, and $1.132 million of those proceeds
went to pay SAFE to discharge the liability she voluntarily agreed to accept. In the present
litigation, Parmer sought to recover, among other sums, the $1.132 million she paid to SAFE.
7
she closed on the $2.5 million loan from United Bank in April of 2012, she was unaware of the
SAFE judgment or that her nephew was the subject of an Internal Revenue Service investigation.
Rather, she alleged that she believed she was merely signing a note for her nephew to help him
with his debt to the Puskar Trust. Ms. Parmer further alleged that United Bank was involved in
every step of the alleged scheme that formed the basis of her claims against Mr. Brozik, MB
Security, the Kupecs, and Greg Morgan. Additionally, she alleged that, without her knowledge,
United Bank loaned an additional $827,000 to MB Security pursuant to the management
agreement and took as collateral the former Secure US assets she owned. However, Ms. Parmer
admitted that she signed the management agreement; that she contacted United Bank to originate
the loan; and that Mr. Williams did not advise her one way or the other about whether to borrow
the money.
On December 16, 2015,8 eighteen days before discovery closed in her suit against United
Bank, Ms. Parmer moved to extend discovery, which United Bank opposed. Nevertheless,
United Bank made their expert available and Ms. Parmer took the deposition. Additionally,
United Bank’s representative and Mr. Williams agreed to be deposed, but Ms. Parmer declined.
United Bank filed a motion for summary judgment on January 6, 2016. Rather than file a
response, Ms. Parmer filed two motions: a motion to disqualify the presiding circuit court judge9
and a motion to reconsider the previous denial of her motion to amend her complaint to allege
fraud. The Chief Justice denied the disqualification motion by Administrative Order on January
22, 2016. Ms. Parmer then timely filed a response to United Bank’s summary judgment motion.
By order entered on February 12, 2016, the circuit court granted United Bank’s motion
for summary judgment. In sum, the circuit court ruled that (1) Ms. Parmer’s negligence claim
failed for a lack of valid legal duty; (2) Ms. Parmer had no breach of fiduciary duty claim
because she did not allege a breach of contract and United Bank owes no fiduciary duty to a
borrower absent special circumstances not present in this case; and (3) Ms. Parmer’s civil
conspiracy claim failed because she did not present any evidence of wrongdoing by United
Bank. By order entered on February 18, 2016, the circuit court denied Ms. Parmer’s motion to
reconsider the denial of her motion to amend her complaint. Ms. Parmer appeals both orders to
this Court.
Discussion
I.
Docket No. 16-0292
8
The jury returned its verdict in Ms. Parmer’s suit against Mr. Brozik, MB Security, the
Kupecs, and Gregory Morgan on December 4, 2015.
9
The Honorable Christopher C. Wilkes presided over the case in the Business Court
Division of the Circuit Court of Monongalia County.
8
We first address the assignments of error raised on appeal by Mr. Brozik and MB
Security in Docket No. 16-0292, which are as follows: (1) that the circuit court erred in denying
their Rule 50(a) motions for judgment as a matter of law and seeking dismiss[al] [of] Ms.
Parmer’s fraud claim; (2) that the circuit court erred in denying their Rule 50(b) post-trial motion
for judgment as a matter of law; (3) that the circuit court erred in ruling that Mr. Brozik breached
a fiduciary duty; (4) that the circuit court erred in denying their Rule 50 motions asserting that
Ms. Palmer suffered no damages; (5) that the circuit court erred in denying their motion to
disqualify Judge Wilkes; and (6) that the circuit court failed to conduct a post-trial analysis of the
jury’s punitive damages award as required by Alkire v. First National Bank of Parsons, 197
W.Va. 122, 475 S.E.2d 122 (1996).
Rule 50(a) of the West Virginia Rules of Civil Procedure, which governs a circuit court’s
entry of judgment as a matter of law, provides as follows:
(1) If during a trial by jury a party has been fully heard on an issue and
there is no legally sufficient evidentiary basis for a reasonable jury to find for that
party on that issue, the court may determine the issue against that party and may
grant a motion for judgment as a matter of law against that party with respect to a
claim or defense that cannot under the controlling law be maintained or defeated
without a favorable finding on that issue.
(2) Motions for judgment as a matter of law may be made at any time
before submission of the case to the jury. Such a motion shall specify the
judgment sought and the law and the facts on which the moving party is entitled
to the judgment.
Moreover, this Court has held that
[i]n ruling . . . on a motion for a judgment notwithstanding the verdict, . . . the
evidence must be viewed in the light most favorable to the nonmoving party. If on
review, the evidence is shown to be legally insufficient to sustain the verdict, it is
the obligation of this Court to reverse the circuit court and to order judgment for
the appellant.
Syl. Pt. 1, in part, Mildred L.M. v. John O.F., 192 W.Va. 345, 452 S.E.2d 436 (1994). We
expanded upon this standard by holding in syllabus point three of Alkire that
[t]he granting of a motion for judgment notwithstanding the verdict is reviewed de
novo, which triggers the same stringent decisional standards that are used by the
circuit courts. While a review of this motion is plenary, it is also circumscribed
because we must review the evidence in a light most favorable to the nonmoving
party.
Moreover,
9
[w]e review the rulings of the circuit court concerning a new trial and its
conclusion as to the existence of reversible error under an abuse of discretion
standard, and we review the circuit court's underlying factual findings under a
clearly erroneous standard. Questions of law are subject to a de novo review.
Kizer v. Harper, 211 W. Va. 47, 51, 561 S.E.2d 368, 372 (2001).
With respect to claims of fraud, this Court has held that the plaintiff is required to show
the following by clear and convincing evidence:
“‘(1) that the act claimed to be fraudulent was the act of the defendant or induced
by him; (2) that it was material and false; that plaintiff relied on it and was
justified under the circumstances in relying upon it; and (3) that he was damaged
because he relied on it.’ Syl. Pt. 1, Lengyel v. Lint, 167 W.Va. 272, 280 S.E.2d 66
(1981).” Syllabus Point 2, Muzelak v. King Chevrolet, Inc., 179 W.Va. 340, 368
S.E.2d 710 (1988).
Syl. Pt. 2, in part, Bowling v. Ansted Chrysler-Plymouth-Dodge, Inc., 188 W. Va. 468, 425
S.E.2d 144 (1992).
Rule 50(b) of the West Virginia Rules of Civil Procedure, which governs the renewal of a
motion for judgment after trial and the alternative motion for a new trial, provides as follows:
If, for any reason, the court does not grant a motion for judgment as a matter of
law made at the close of all the evidence, the court is considered to have
submitted the action to the jury subject to the court's later deciding the legal
questions raised by the motion. The movant may renew the request for judgment
as a matter of law by filing a motion no later than 10 days after entry of judgment
and may alternatively request a new trial or join a motion for a new trial under
Rule 59. In ruling on a renewed motion, the court may:
(1) If a verdict was returned:
(A) allow the judgment to stand,
(B) order a new trial, or
(C) direct entry of judgment as a matter of law; or
(2) if no verdict was returned:
(A) order a new trial, or
(B) direct entry of judgment as a matter of law.
With respect to a motion for judgment as a matter of law pursuant to Rule 50(b), we have held as
follows:
1. The appellate standard of review for an order granting or denying a
renewed motion for a judgment as a matter of law after trial pursuant to Rule
50(b) of the West Virginia Rules of Civil Procedure [1998] is de novo.
10
2. When this Court reviews a trial court’s order granting or denying a
renewed motion for judgment as a matter of law after trial under Rule 50(b) of the
West Virginia Rules of Civil Procedure [1998], it is not the task of this Court to
review the facts to determine how it would have ruled on the evidence presented.
Instead, its task is to determine whether the evidence was such that a reasonable
trier of fact might have reached the decision below. Thus, when considering a
ruling on a renewed motion for judgment as a matter of law after trial, the
evidence must be viewed in the light most favorable to the nonmoving party.
3. “In determining whether there is sufficient evidence to support a jury
verdict the court should: (1) consider the evidence most favorable to the
prevailing party; (2) assume that all conflicts in the evidence were resolved by the
jury in favor of the prevailing party; (3) assume as proved all facts which the
prevailing party’s evidence tends to prove; and (4) give to the prevailing party the
benefit of all favorable inferences which reasonably may be drawn from the facts
proved.” Syllabus Point 5, Orr v. Crowder, 173 W.Va. 335, 315 S.E.2d 593
(1983).
Syl. Pts. 1, 2, and 3, Fredeking v. Tyler, 224 W. Va. 1, 680 S.E.2d 16 (2009).
Mr. Brozik and MB Security argue that, in her complaint, Ms. Parmer made nonspecific
allegations that Mr. Brozik and Brandon Kupec caused her to purchase Secure US’s assets
without advising her of the existence of a judgment and “duped” her into signing a management
agreement with MB Security. While Mr. Brozik’s post-trial motion does not reference Rule 50 or
Rule 59, Mr. Brozik and MB Security argue that Ms. Parmer’s own testimony showed that she
and Mr. Brozik were close; that she had helped him before; that she knew exactly what she was
doing; that she personally arranged for the loan from United Bank that she used to buy the notes
from the Puskar Trust; and that she knew that the notes were to be foreclosed upon. Moreover, in
their fourth assignment of error, Mr. Brozik and MB Security argue that the jury’s compensatory
damages award in the amount of $1.5 million in favor of Ms. Parmer was not supported by the
evidence. Mr. Brozik and MB Security argue that, as result of her settlement with SAFE and
subsequent agreement to sell the Secure US assets to Kourt Security, Ms. Parmer lost only
$300,000.
Upon our review of the record in this matter, we find that there was sufficient evidence of
fraud introduced at trial to sustain the jury’s verdict and damages award. Ms. Parmer testified
that she agreed to help Mr. Brozik by obtaining the loan to help him save his business. She
further testified that she did not want to own any more businesses, and she told Mr. Brozik as
much. In her testimony, she denied knowing that she would foreclose on the note and become the
owner of the assets. She further testified that when she asked Mr. Brozik questions about the
transaction, Mr. Brozik told her that Brandon Kupec would take care of everything.
Additionally, Ms. Parmer testified that she did not know that SAFE had a judgment or
that she may get sued as a result thereof. She testified that had she known of the SAFE judgment,
she would have ceased the transaction and not signed the papers at the bank. In fact, the owner of
SAFE testified that SAFE sued Ms. Parmer because he believed Ms. Parmer was in “cahoots”
11
with her nephew to avoid paying the judgment. Ms. Parmer’s testimony convinced the jury that,
but for Brozik’s concealment, Ms. Parmer never would have been a part of this series of
transactions. On appeal, Mr. Brozik and MB Security ask this Court to usurp the role of the jury,
disregard this evidence, and decide the case differently. We decline to do so. See Syl. Pt. 3, Long
v. City of Weirton, 158 W.Va. 741, 214 S.E.2d 832 (1975) (“It is the peculiar and exclusive
province of the jury to weigh the evidence and resolve questions of fact when the testimony is
conflicting.”). Therefore, we reject Mr. Brozik’s and MB Security’s first two assignments of
error.
In their third assignment of error, Mr. Brozik and MB Security argue that the circuit court
erred in finding that Mr. Brozik breached a fiduciary duty to Ms. Parmer. “The fiduciary duty is
‘[a] duty to act for someone else’s benefit, while subordinating one’s personal interests to that of
the other person. It is the highest standard of duty implied by law[.]’ Black’s Law Dictionary 625
(6th ed.1990).” Elmore v. State Farm Mut. Auto. Ins. Co., 202 W. Va. 430, 435, 504 S.E.2d 893,
898 (1998). The circuit court made this ruling in granting Ms. Parmer partial summary judgment.
According to Mr. Brozik and MB Security, the circuit court found that, because Mr. Brozik and
Ms. Parmer signed an agreed order terminating the management agreement, that Mr. Brozik and
MB Security consented to the award of summary judgment and to the finding that that they
breached the management agreement and breached their fiduciary duty. However, Mr. Brozik
argues that the agreed order makes no reference to him admitting that a fiduciary duty existed or
that he breached it, but after being directed by the court that a breach of duty and contract
existed, the jury awarded Ms. Parmer $750,000.
We disagree that the circuit court erred with respect to its ruling on Ms. Parmer’s breach
of contract and breach fiduciary duty claims. The May 6, 2014, “Agreed Order Granting [Ms.
Parmer] Partial Summary Judgment and Injunctive Relief,” signed by Mr. Brozik’s and MB
Security’s then-counsel, states, in part, as follows:
4. Since MB Security, LLC has been managing the assets of Ms. Parmer, the
following has occurred:
a. Ms. Parmer has been named as a defendant in a law suit over the
manner in which she became the owner of the former assets of Secure US;
b. Mitch Brozik has been charged with violation of the Internal
Revenue Code by the United States Attorney’s office and has agreed to plead
guilty to the same;
c. MB Security, LLC has failed to pay on a $2.5 million note owed to
United Bank as previously agreed to by the parties; [and]
d. MB Security, LLC has failed to pay the West Virginia State taxes
and tax liens have been recorded.
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 a competing
12
security company, SAFE. He formed another company, MB Security, in order to use the former
Secure US assets and to continue doing business as usual, without any regard for the duty owed
to his aunt who assisted him. Based on the agreed findings in the order, we cannot find that the
circuit court erred in ruling that Mr. Brozik breached a fiduciary duty to Ms. Parmer.
Mr. Brozik’s and MB Security’s fifth assignment of error is that the circuit court judge
should have disqualified himself. By motion filed on the eve of the jury trial, Mr. Brozik and MB
Security sought the disqualification of the Honorable Judge Russell Clawges. The motion was
prompted by an exchange between Mr. Brozik’s trial counsel, Edward Kuhout, and the court in
which the judge, outside of the presence of the jury, made statements to the effect that everyone
in the courtroom could see that the defendants were acting to the disadvantage “of this poor
lady,” referring to Ms. Parmer.
Upon our review, we find no error in Judge Clawges’ denial of the motion to disqualify.
The United States Supreme Court has held that for alleged bias to rise to the level of requiring
recusal, the bias must stem from an extrajudicial source. U.S. v. Grinnell Corp., 384 U.S. 563,
583 (1966). The Supreme Court has stated that, “[i]f the judge did not form judgments of the
actors in those court-house dramas called trials, he could never render decisions.” Liteky v. U.S.,
510 U.S. 540, 551 (1994). In the present case, the circuit court denied that it was biased; rather,
the circuit court ruled that its statements were based upon “its unvarnished perception of the
facts” derived from his presiding over the case for nearly two years. Accordingly, we find no
error.
In their final assignment of error, Mr. Brozik and MB Security argue that the circuit court
failed to conduct a post-trial analysis of the jury’s punitive damages award as required by Alkire.
In syllabus point five of Alkire, we held as follows:
Under our punitive damage jurisprudence, it is imperative that the amount of the
punitive damage award be reviewed in the first instance by the trial court by
applying the model specified in Syllabus Points 3 and 4 of Garnes v. Fleming
Landfill, Inc., 186 W.Va. 656, 413 S.E.2d 897 (1991), and Syllabus Point 15 of
TXO Production Corp. v. Alliance Resources Corp., 187 W.Va. 457, 419 S.E.2d
870 (1992), aff’d, 509 U.S. 443, 113 S. Ct. 2711, 125 L. Ed. 2d 366 (1993).
Thereafter, and upon petition, this Court will review the amount of the punitive
damage award, applying the standard specified in Syllabus Point 5 of Garnes.
Mr. Brozik and MB Security argue that, in the present case, Ms. Parmer failed to request
a post-trial review of the punitive damages award.10 Upon our review, we note that in the January
14, 2016, hearing on Mr. Brozik’s and MB Security’s post-trial motions, the circuit court
determined that, based on case law, punitive damages can be recovered in a case where the jury
finds fraud. The circuit court then found that, based on the evidence and the finding of fraud, the
10
The record also fails to reflect that Mr. Brozik and MB Security requested such a
review.
13
jury’s award of punitive damages would stand. We also note that, pursuant to Garnes, we decline
to disturb a punitive damages award of $200,000, when accompanied by a compensatory
damages award in the amount of $1.5 million. Therefore, having addressed and rejected each of
the arguments raised on appeal by Mr. Brozik and MB Security in Docket No. 16-0292, we
affirm the Circuit Court of Monongalia County’s December 21, 2015, “Trial Order” inasmuch as
it relates to the jury’s verdict against Mr. Brozik and MB Security, and its February 23, 2016,
order denying Mr. Brozik’s and MB Security’s post-trial motions.
II.
Docket No. 16-0400
We turn now to Docket No. 16-0400, wherein Ms. Parmer appeals the circuit court’s
December 21, 2015, “Trial Order,” and its March 16, 2016, order denying her amended
judgment and/or a new trial,11 inasmuch as the jury rejected her claims against the Kupecs and
Gregory Morgan. In her appeal, Ms. Parmer raises the following assignments of error: (1) the
circuit court should have directed a verdict for Ms. Parmer as to her claims of professional
negligence/malpractice against each of the lawyer defendants; (2) the circuit court gave
inconsistent and conflicting jury instructions that misstated the law; (3) the circuit court gave
instructions that were not warranted by the facts or the applicable law and failed to properly
instruct the jury as to the burden of proof applicable to affirmative defenses; (4) the circuit court
should have given Ms. Parmer’s proffered instructions regarding the Uniform Commercial Code;
(5) the verdict is inconsistent with the facts presented to the jury; (6) the circuit court should
have permitted Ms. Parmer to question Mr. Brozik regarding his federal tax evasion conviction
and enter evidence regarding the same; (7) the circuit court should not have permitted the
attorney defendants’ expert Steven Thomas to offer opinions regarding the Uniform Commercial
Code; and (8) the circuit court should have granted Ms. Parmer’s motion for partial summary
judgment and thereafter granted her motion for a directed verdict regarding the issue of whether
SAFE’s judgment lien survived the secured party sale. We address each assignment of error
below.
First, Ms. Parmer argues that the circuit court should have directed a verdict12 in her
favor with respect to her claims versus the Kupecs and Gregory Morgan. Ms. Parmer essentially
argues that she was entitled to a directed verdict because she called an expert witness, Robert
Davis, Esq., to testify that these three defendants breached duties owed to her, and further that
the attorney defendants failed to call an expert to rebut those opinions. She filed three post-trial
11
The order is titled “Order Denying Plaintiff’s Renewed Motion Pursuant to Rule 50 of
the West Virginia Rules of Civil Procedure and Motion For Amended Judgment and/or for New
Trial Pursuant to Rule 59 of the West Virginia Rules of Civil Procedure, and, Order Denying
Plaintiff’s Supplemental Motion for Directed Verdict Pursuant to Rule 50 of the West Virginia
Rules of Civil Procedure and/or Motion for Amended Judgment/New Trial Pursuant to Rule 59
of the West Virginia Rules of Civil Procedure.”
12
Ms. Parmer refers to her motion for a directed verdict; however, pursuant to Rule 50,
the proper motion is for a judgment as a matter of law.
14
motions, in which she argued for a judgment as a matter of law pursuant to Rule 50(b); to alter or
amend judgment pursuant to Rule 59(e); and for a new trial pursuant to Rule 59(a)(1),
respectively.
As noted above in our discussion of Mr. Brozik’s and MB Security’s Rule 50(b) motion,
it is not the task of this Court to review the facts to determine how it would have
ruled on the evidence presented. Instead, its task is to determine whether the
evidence was such that a reasonable trier of fact might have reached the decision
below. Thus, when considering a ruling on a renewed motion for judgment as a
matter of law after trial, the evidence must be viewed in the light most favorable
to the nonmoving party.
Syl. Pt. 2, in part, Fredeking v. Tyler, 224 W. Va. 1, 680 S.E.2d 16 (2009). Additionally, “issues
not raised in an initial Rule 50(a) motion may not be asserted in a subsequent post-verdict motion
for judgment as a matter of law under Rule 50(b).” Franklin D. Cleckley, Robin J. Davis, &
Louis J. Palmer, Jr., Litigation Handbook on West Virginia Rules of Civil Procedure § 50(b), at
1114 (4th ed. 2014) (citations omitted).
In the present case, despite calling her motion a “renewed” motion for judgment as a
matter of law, the circuit court correctly determined, based on its review of the transcript, that
Ms. Parmer failed to make a Rule 50(a) motion before the case went to the jury, and thus, she
was not entitled to pursue a Rule 50(b) motion. Accordingly, we find no error in the denial of
Ms. Parmer’s Rule 50(b) motion.
With respect to our review of a motion to alter or amend a judgment pursuant to Rule
59(e), we have held that
[t]he standard of review applicable to an appeal from a motion to alter or amend a
judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard that
would apply to the underlying judgment upon which the motion is based and from
which the appeal to this Court is filed.
Syl. Pt. 1, Wickland v. Am. Travellers Life Ins. Co., 204 W. Va. 430, 513 S.E.2d 657 (1998).
Furthermore,
[a] motion under Rule 59(e) of the West Virginia Rules of Civil Procedure should
be granted where: (1) there is an intervening change in controlling law; (2) new
evidence not previously available comes to light; (3) it becomes necessary to
remedy a clear error of law or (4) to prevent obvious injustice.
Syl. Pt. 2, Mey v. Pep Boys-Manny, Moe & Jack, 228 W. Va. 48, 717 S.E.2d 235 (2011).
In the present case, Ms. Parmer identified no intervening change in controlling law, new
evidence, clear error of law, or obvious injustice as a result of the verdict. Therefore, her Rule
59(e) motion was properly denied by the circuit court.
15
Finally, with respect to a motion for a new trial under Rule 59(a), we have held as
follows:
“A motion for a new trial is governed by a different standard than a motion for a
directed verdict. When a trial judge vacates a jury verdict and awards a new trial
pursuant to Rule 59 of the West Virginia Rules of Civil Procedure, the trial judge
has the authority to weigh the evidence and consider the credibility of the
witnesses. If the trial judge finds the verdict is against the clear weight of the
evidence, is based on false evidence or will result in a miscarriage of justice, the
trial judge may set aside the verdict, even if supported by substantial evidence,
and grant a new trial. A trial judge's decision to award a new trial is not subject to
appellate review unless the trial judge abuses his or her discretion.” Syllabus
Point 3, In re State Public Building Asbestos Litigation, 193 W.Va. 119, 454
S.E.2d 413 (1994), cert. denied sub nom., W.R. Grace & Co. v. West Virginia,
515 U.S. 1160, 115 S. Ct. 2614, 132 L. Ed. 2d 857 (1995).
Syl. Pt. 2, Sayre v. Roop, 205 W. Va. 193, 517 S.E.2d 290 (1999). Additionally,
“‘[t]he ruling of a trial court in granting or denying a motion for a new trial is
entitled to great respect and weight, [and] the trial court's ruling will be reversed
on appeal [only] when it is clear that the trial court has acted under some
misapprehension of the law or the evidence.’ Syl. pt. 4, in part, Sanders v.
Georgia–Pacific Corp., 159 W.Va. 621, 225 S.E.2d 218 (1976).” Syllabus point
2, Estep v. Mike Ferrell Ford Lincoln–Mercury, Inc., 223 W.Va. 209, 672 S.E.2d
345 (2008).
Syl. Pt. 2, Peters v. Rivers Edge Min., Inc., 224 W. Va. 160, 680 S.E.2d 791 (2009).
As we noted above, Ms. Parmer’s argument is based upon the notion that the circuit court
was obligated to grant her post-trial motions because she presented the testimony of an expert to
support her claims against the attorney defendants, and the attorney defendants failed to present
expert testimony in rebuttal. However, contrary to Ms. Parmer’s argument, there is no law that
bounds a circuit court to grant her motion in these circumstances. In fact, we have long held as
follows with respect to expert testimony:
“The testimony of expert witnesses on an issue is not exclusive, and does not
necessarily destroy the force or credibility of other testimony. The jury has a right
to weigh the testimony of all witnesses, experts and otherwise; and the same rule
applies as to the weight and credibility of such testimony.” Syl. pt. 2, Webb v.
Chesapeake & Ohio Railway Company, 105 W.Va. 555, 144 S.E. 100 (1928).
Syl. Pt. 2, Papenhaus v. Combs, 170 W. Va. 211, 292 S.E.2d 621 (1982).
Consistent with this long-standing precedent, the circuit court instructed the jury that
“[y]ou may give expert testimony whatever weight you think it deserves, or you may give it no
16
weight.” The jury heard all of the evidence and simply did not adopt the opinions of Ms.
Parmer’s expert witness that the attorney defendants breached their duties to her. Clearly, the
evidence at trial was conflicting with respect to Ms. Parmer’s claims against the attorney
defendants, despite the fact that the attorney defendants did not rely on expert testimony in their
defense. As we noted above in our discussion of Mr. Brozik’s and MB Security’s appeal, “[i]t is
the peculiar and exclusive province of the jury to weigh the evidence and to resolve questions of
fact when the testimony is conflicting.” Syl. Pt. 3, Long, supra. Therefore, we find no error in the
circuit court’s denial of Ms. Parmer’s motion for judgment notwithstanding the verdict, motion
to alter or amend judgment, or her motion for a new trial.
Next, we address Ms. Parmer’s second and third assignments of error together. Ms.
Parmer’s second assignment of error is that the circuit court gave inconsistent and conflicting
jury instructions that misstated the law with regard to comparative fault. Ms. Parmer points to a
part of the instruction that stated, on the one hand, that she would not be barred from recovery
unless her negligence “equals or exceeds fifty percent of the total negligence,” and then stated,
on the other hand, that any recovery would be reduced if the jury attributed fault to her that “does
not exceed fifty percent.” Her third assignment of error is that there was insufficient evidence to
warrant the circuit court giving the comparative instruction at all. We have held that
“[t]he formulation of jury instructions is within the broad discretion of a circuit
court, and a circuit court’s giving of an instruction is reviewed under an abuse of
discretion standard. A verdict should not be disturbed based on the formulation of
the language of the jury instructions so long as the instructions given as a whole
are accurate and fair to both parties.” Syllabus Point 6, Tennant v. Marion Health
Care Foundation, Inc., 194 W.Va. 97, 459 S.E.2d 374 (1995).
Syl. Pt. 1, Walters v. Fruth Pharmacy, Inc., 196 W.Va. 364, 472 S.E.2d 810 (1996).
Upon our review, we reject Ms. Parmer’s arguments.13 Ms. Parmer singles out only a
portion of the instruction to advance her point. When one examines the entire charge, it is clear
that the jury was properly instructed -- multiple times -- that Ms. Parmer was not barred from
recovery unless her percentage of negligence equaled or exceeded fifty percent of the total
negligence that caused the harm she alleged. This Court has held as follows:
“A trial court’s instructions to the jury must be a correct statement of the law and
supported by the evidence. Jury instructions are reviewed by determining whether
the charge, reviewed as a whole, sufficiently instructed the jury so they
understood the issues involved and were not misle[d] by the law. A jury
instruction cannot be dissected on appeal; instead, the entire instruction is looked
at when determining its accuracy. A trial court, therefore, has broad discretion in
13
Mr. Morgan correctly points out that Ms. Parmer failed to specifically object to the
wording of the comparative fault instruction as being inconsistent or incorrect. Therefore, she
has waived her right to assign error to the instruction on appeal. See Shaw v. Perfetti, 147 W.Va.
87, 125 S.E.2d 778 (1962). Nevertheless, we will examine the merits of her argument.
17
formulating its charge to the jury, as long as the charge accurately reflects the law.
Deference is given to a trial court’s discretion concerning the specific wording of
the instruction, and the precise extent and character of any specific instruction
will be reviewed only for an abuse of discretion.” Syllabus point 4, State v.
Guthrie, 194 W.Va. 657, 461 S.E.2d 163 (1995).
Syl. Pt. 2, Reynolds v. City Hosp., Inc., 207 W. Va. 101, 529 S.E.2d 341 (2000). When reviewed
as a whole, the circuit court’s comparative fault instruction was a correct statement of the law;
from the verdict form, we see no evidence that the jury was confused. As for Ms. Parmer’s
argument that the circuit court should not have even given the instruction, her own trial
testimony negates her argument. She admitted that she chose to enter into the transactions on her
own, despite Brandon Kupec’s suggestion that she consult her own attorney. Thus, we reject Ms.
Parmer’s second and third assignments of error.
Ms. Parmer next argues in her fourth assignment of error that the circuit court improperly
refused her instruction regarding the Uniform Commercial Code (“UCC”). Specifically, the
circuit court instructed the jury that “[e]very aspect of a disposition of collateral must be
commercially reasonable. . . . The term commercially reasonable is a legal term of art throughout
the UCC. It is up to you, the jury, to determine if this sale was conducted in a commercially
reasonably manner.” Ms. Parmer states that the UCC defines “commercially reasonable” as “the
usual manner in any recognized market.” However, she argues that the court refused to give her
proposed instruction on this definition, as well as her instruction that a secured party sale
conducted with the intent to harm present or future creditors is fraudulent. She contends that the
undisputed evidence was that the sale was conducted to extinguish SAFE’s lien and allow
business to go on as usual for Mr. Brozik.
The attorney defendants objected to Ms. Parmer’s proffered definition of commercially
reasonable because “recognized market” applies to markets with standardized price quotations
for products that are fungible, such as stock exchanges. Mr. Morgan correctly argues that there
was no standardized price for the Secure US customer accounts. Rather, the testimony
demonstrated that the price would depend on who was buying them and for what purpose.
Therefore, Ms. Parmer’s requested instruction on the definition of commercially reasonable was
contrary to the facts of the case, and was properly rejected by the circuit court. Moreover, Ms.
Parmer did not plead that the lawyer defendants violated Uniform Fraudulent Transfers Act
(“UFTA”), codified, in part, in West Virginia Code § 40-1A-4. Likewise, SAFE did assert a
UFTA claim against Ms. Parmer in its suit. Therefore, there was no basis for the circuit court to
instruct the jury on the intent behind the sale. “A trial court’s instructions to the jury must be a
correct statement of the law and supported by the evidence.” Syl. Pt. 2, in part, Reynolds, supra.
Next, Ms. Parmer argues that the jury’s verdict is internally inconsistent with the
evidence. Ms. Parmer contends that the jury’s determination that Mr. Brozik defrauded her is
tantamount to a finding that she was not fully aware of the details surrounding the series of
transactions conducted on her behalf, and that such a finding necessarily precludes the finding
that the attorney defendants satisfied their professional obligations to her or that she was
comparatively negligent.
We disagree. This Court has held that
18
“[w]hen jury verdicts answering several questions have no logical internal
consistency and do not comport with instructions, they will be reversed and the
cause remanded for a new trial.” Syl. Pt. 1, Reynolds v. Pardee & Curtin Lumber
Co., 172 W.Va. 804, 310 S.E.2d 870 (1983). In determining whether jury verdicts
are inconsistent, the Court has observed that with respect to inconsistent verdict,
“such inconsistency must appear after excluding every reasonable conclusion that
would authorize the verdict.” Prager v. City of Wheeling, 91 W.Va. 597, 599, 114
S.E. 155, 156 (1922).
Modular Bldg. Consultants of West Virginia, Inc. v. Poerio, Inc., 235 W. Va. 474, 479, 774
S.E.2d 555, 560 (2015). Ms. Parmer’s argument ignores that there were various parties involved
in the series of transactions, all of whom had different roles and obligations. Stated simply, there
is nothing inconsistent about the jury finding that Mr. Brozik defrauded his aunt and breached
duties owed to her, but that Mr. Morgan and Thomas Kupec did not. As for Brandon Kupec, the
jury found that he was negligent, but that Ms. Parmer’s own negligence negated her recovery.
Moreover, the fact that the jury found Brandon Kupec negligent undermines Ms. Parmer’s
argument that the verdict is internally inconsistent. Accordingly, we find no error.
In her sixth assignment of error, Ms. Parmer argues that the circuit court erred by
allowing Steven Thomas to testify as an expert on behalf of the attorney defendants regarding the
UCC. Ms. Parmer’s argument is based upon the circuit court’s pre-trial ruling that prohibited
attorney experts from testifying as to the substantive law, but that they would be permitted to
testify to their opinions as to the application of the law to the facts of the case. “The admissibility
of testimony by an expert witness is a matter within the sound discretion of the trial court, and
the trial court’s decision will not be reversed unless it is clearly wrong.” Syl. Pt. 1, Watson v.
Inco Alloys Int’l, Inc., 209 W. Va. 234, 545 S.E.2d 294 (2001) (citations omitted).
Upon our review, we find that Mr. Thomas testified consistent with the court’s ruling.
Mr. Thomas testified about his experience with conducting foreclosure sales, and that the
foreclosure sale in the present case was conducted properly. As Mr. Morgan correctly argues, it
was Ms. Parmer’s counsel who cross-examined Mr. Thomas by asking Mr. Thomas about
various sections of the West Virginia Code, which necessitated Mr. Morgan’s counsel to have
Mr. Thomas clarify his testimony. Additionally, it is worth noting that the circuit court afforded
Ms. Parmer’s attorney expert, Robert Davis, considerable latitude when he testified about the
application of the Rules of Professional Conduct in light of Ms. Parmer’s claims against the
attorney defendants. Accordingly, we reject Ms. Parmer’s sixth assignment of error.
Ms. Parmer’s seventh assignment of error is that the circuit court erred by failing to rule
in her favor, as a matter of law, that the SAFE judgment lien on the Secure US assets survived
the secured party sale. Ms. Parmer asserts that it was undisputed that Mr. Morgan planned to
terminate the secured party sale if an individual bid in excess of $4 million, which was his
maximum bidding authority for Ms. Parmer. Ms. Parmer insinuated below, and continues to do
so on appeal, that the sale was fraudulent because the outcome was predetermined – that she
would become the owner of the Secure US assets regardless of the other bidders, or the sale
would be cancelled. Ms. Parmer concludes by arguing that the transferee in fraudulent sale takes
19
the property subject to the lien. See W.Va. Code §§ 46-9-617(b) and 46-9-617(c)(3). We review
the circuit court’s summary judgment rulings de novo. See Syl. Pt. 1, Painter v. Peavy, 192 W.
Va. 189, 451 S.E.2d 755 (1994).
Upon our review, we reject Ms. Parmer’s argument because it is based on a false premise.
A closer review of Mr. Morgan’s testimony reveals that he did not intend to terminate the sale if
someone outbid Ms. Parmer; rather, his testimony was that he would suspend the sale for only
long enough to determine whether he should increase the bid on her behalf. Accordingly, we find
no error in the failure of the circuit court to grant partial summary judgment in favor of Ms.
Parmer on the issue of whether the SAFE judgment lien survived the secured party sale.
Ms. Parmer’s final assignment of error centers on the circuit court’s alleged failure to
properly address the conduct of Mr. Brozik and his counsel, Edward Kuhout.14 Ms. Parmer
contends that the court failed to adequately resolve discovery disputes or to sanction Mr. Brozik
or his counsel for their conduct. However, from our review of the record, we fail to identify any
specific failure by the circuit court that deprived Ms. Parmer of due process. Ms. Parmer also
argues that the circuit court permitted the matter to be unnecessarily complicated by allowing
Mr. Brozik and MB Security to file a counterclaim and third-party complaint, and by
consolidating with this case a separate suit filed by Mr. Brozik and MB Security. As the circuit
court correctly noted, Ms. Parmer objected to all efforts below by the attorney defendants to
bifurcate the various claims, and thus, cannot be heard to now complain about the alleged
complexity of the litigation now on appeal. Accordingly, having addressed and rejected each of
Ms. Parmer’s assignments of error in Docket No. 16-0400, we affirm the circuit court’s denial of
her post-trial motions.
III.
Docket No. 16-0238
We turn now to Ms. Parmer’s appeal of the circuit court’s order granting United Bank’s
motion for summary judgment and its order denying her motion to reconsider the denial of her
motion to amend her complaint. In this appeal, Ms. Parmer argues that (1) she should have been
permitted to amend her complaint, pursuant to Rule 15(a) of the West Virginia Rules of Civil
Procedure, because United Bank had yet to file a responsive pleading; and (2) genuine issues of
material fact existed, which should have precluded the granting of summary judgment.15 Upon
our review, we find that neither of Ms. Parmer’s assignments of error have any merit.
14
Mr. Brozik and MB Security went through several attorneys in the proceeding below.
The first was Andrew Fusco, who withdrew. They were then represented by Trent Redman and
Michael Payne, who also withdrew. Ultimately, Mr. Brozik and MB Security were represented
by Edward Kuhout at trial. They are now represented by William J. Leon on appeal. For reasons
unrelated to the present case, this Court annulled Mr. Kuhout’s law license by opinion issued on
November 15, 2016.
15
Ms. Parmer raises a third assignment of error – that the circuit court erred in denying
her motion to amend the scheduling order. However, she fails to provide any argument in
support thereof. Accordingly, we decline to address the issue. See W.Va. R. App. Proc. 10(c)(7)
(continued . . . )
20
Ms. Parmer’s first contention is that the circuit court erred in denying her motion to
reconsider the denial of her motion to amend her complaint. A bit of additional procedural
background is necessary. Ms. Parmer filed the present suit on April 21, 2014. She indicates that
the parties stipulated that United Bank would have until June 23, 2014, to “answer, move, or
otherwise respond.” On June 23, 2014, United Bank filed a motion to dismiss, pursuant to Rule
12(b)(6) of the West Virginia Rules of Civil Procedure, in which it argued that Ms. Parmer’s
claims were barred by the two-year statute of limitations.16 On February 27, 2015, Ms. Parmer
moved to amend her complaint to allege, among other things, a “continuing tort” of fraud. The
circuit court denied United Bank’s motion to dismiss on March 18, 2015. On April 2, 2015, the
circuit court denied Ms. Parmer’s motion to amend her complaint. On April 3, 2015, United
Bank filed its answer.
Rule 15(a) of the West Virginia Rules of Civil Procedure states, in part, that “[a] party
may amend the party’s pleading once as a matter of course at any time before a responsive
pleading is served.” Ms. Parmer argues that United Bank’s Rule 12(b)(6) motion was not
included as part of a responsive pleading; rather, it was filed as a separate motion. Therefore, Ms.
Parmer contends that she had the right to amend her complaint because no responsive pleading
had been filed when she requested the amendment.
After a careful review of the circumstances surrounding Ms. Parmer’s motion below, we
find no error in the circuit court’s denial of her motion to amend her complaint or in the denial of
reconsideration thereof. This Court has held as follows:
A trial court is vested with a sound discretion in granting or refusing leave to
amend pleadings in civil actions. Leave to amend should be freely given when
justice so requires, but the action of a trial court in refusing to grant leave to
amend a pleading will not be regarded as reversible error in the absence of a
showing of an abuse of the trial court's discretion in ruling upon a motion for
leave to amend.
Syl. Pt. 6, Perdue v. S. J. Groves & Sons Co., 152 W. Va. 222, 161 S.E.2d 250 (1968).
In the present case, the parties agreed to extend the time for United Bank to “answer,
move, or otherwise respond” to the complaint. United Bank then timely filed a motion to
dismiss, which was fully briefed by the parties, including the filing of proposed findings of fact
and conclusions of law. Then, after the case had been pending for almost a year, Ms. Palmer
sought to amend her complaint to allege a “continuing tort.” It appears clear to this Court that the
basis for Ms. Parmer’s proposed amendment was simply to avoid the possibility of her suit being
dismissed as barred by the statute of limitations. However, once the circuit court denied United
Bank’s motion, the amendment became unnecessary because, as the court correctly determined,
(permitting this Court to “disregard errors that are not adequately supported by specific
references to the record on appeal.”)
16
United Bank’s motion was based on the fact that the closing for Ms. Parmer’s loan
occurred on April 19, 2012, but that she did not file the instant suit until April 21, 2014.
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“all factual allegations raised in the proposed amended complaint were capable of being
addressed in discovery.”17 The circuit court was correct to rule that Ms. Parmer “had failed to
show any compelling reason to amend the Complaint and had failed to offer any valid reason for
delay in seeking the amendment.” As for Ms. Parmer’s motion for reconsideration of that ruling,
the circuit court properly determined that “granting the motion at this late date would be futile,
unduly prejudicial to [United Bank], a waste of judicial resources, and would not serve the
interests of justice.” Accordingly, we find no abuse of discretion by the circuit court in its
February 18, 2016, “Order Denying Plaintiff’s Motion to Reconsider Court’s Denial of
Plaintiff’s Motion to Amend Complaint.”
Petitioner next argues that the circuit court erred in granting United Bank’s motion for
summary judgment.18 To summarize, Ms. Parmer argues that the verdict in her suit against Mr.
Brozik, MB Security, and the attorney defendants should have no bearing on the present suit
against United Bank, i.e., her claims are not barred by collateral estoppel; that there were
“special circumstances” that existed between Ms. Parmer and United Bank that should have
created a duty on United Bank’s behalf to protect Ms. Parmer from harm in the underlying loan
transaction; that there were issues of fact regarding Ms. Parmer’s conspiracy claim; that United
Bank had conflicts of interest; that there were issues of fact as to whether United fraudulently
induced Ms. Parmer into the loan transaction by making false representations about Mr. Brozik’s
payment history; and that under the management agreement between Ms. Parmer and Mr.
Brozik, United continued to loan over $800,000 to Mr. Brozik using the former Secure US assets
as collateral, while subordinating Ms. Parmer’s security interests in those assets to United Bank’s
interests.
With respect to our review of the grant of summary judgment, this Court has held as
follows:
1. A circuit court's entry of summary judgment is reviewed de novo.
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.’ Syllabus Point 3, Aetna
Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160,
133 S.E.2d 770 (1963).” Syllabus Point 1, Andrick v. Town of Buckhannon, 187
W.Va. 706, 421 S.E.2d 247 (1992).
17
According to the order, Ms. Parmer’s counsel conceded that he focused his efforts on
pursuing the other defendants involved in the same transaction.
18
The circuit court’s order granting summary judgment preceded its order denying
reconsideration of the denial of Ms. Parmer’s motion to amend her complaint by six days.
However, the circuit court noted in the latter order that it considered the reconsideration motion
prior to granting summary judgment, and found that the reconsideration motion “could not
remedy the fatal defects presented in [Ms. Parmer’s] case,” which entitled United Bank to
summary judgment.
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3. The circuit court’s function at the summary judgment stage is not to weigh
the evidence and determine the truth of the matter, but is to determine whether
there is a genuine issue for trial.
4. Summary judgment is appropriate where the record taken as a whole 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. Pts. 1, 2, 3 and 4, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). Upon our
review, we find that United Bank was entitled to summary judgment. We address Ms. Parmer’s
contentions in the context of her three claims: negligence, breach of fiduciary duty, and
conspiracy.
First, without determining whether United Bank is entitled to invoke the doctrine of
collateral estoppel, we nonetheless find that her negligence claims fail as a matter of law because
she has failed to establish that United Bank owed any duty to her. Under West Virginia law, a
bank has no implied duty of good faith and fair dealing absent a breach of contract claim. See
Evans v. United Bank, Inc., 235 W.Va. 619, 775 S.E.2d 500 (2015). Ms. Parmer did not allege a
breach of contract; therefore, her negligence claim must fail for lack of a duty. See Syl. Pt. 1,
Parsley v. Gen. Motors Acceptance Corp., 167 W.Va. 866, 280 S.E.2d 703 (1981) (“In order to
establish a prima facie case of negligence in West Virginia, it must be shown that the defendant
has been guilty of some act or omission in violation of a duty owed to the plaintiff. No action for
negligence will lie without a duty broken.”).
As to Ms. Parmer’s breach of fiduciary duty claim, the circuit court concluded below that
Ms. Parmer seeks to cast United Bank and Mr. Williams as her advisors, similar to an attorney
who provides counsel to a client. However, she cites to no binding West Virginia authority for
the existence of such a duty. In this case, United Bank acted as nothing more than a lender to Ms.
Parmer, who admitted that she sought to help her nephew and “let her heart rule her head.”
Additionally, there are no “special circumstances” in this case that would create such a duty. Ms.
Parmer admitted that she asked Mr. Williams about assisting Mr. Brozik, but that Mr. Williams
did not advise her one way or the other. She further admitted knowing that Mr. Brozik owed
money to the Puskar Trust, which is why she agreed to help him. From the record, it appears
clear to this Court that the issues that Ms. Parmer encountered subsequent to obtaining the $2.5
million loan were not attributable to United Bank. Accordingly, Ms. Parmer’s breach of fiduciary
duty claim fails as a matter of law.
Finally, Ms. Parmer alleged that United Bank conspired with Mr. Brozik and Brandon
Kupec to cause her the harm for which she sought recovery. We have held as follows regarding a
civil conspiracy:
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. The cause of action is not created by the conspiracy
but by the wrongful acts done by the defendants to the injury of the plaintiff.
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A civil conspiracy is not a per se, stand-alone cause of action; it is instead a legal
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).
Syl. Pts. 8 and 9, Dunn v. Rockwell, 225 W. Va. 43, 689 S.E.2d 255 (2009).
In the present case, despite almost two years of discovery, Ms. Parmer failed to produce
any evidence that United Bank or Mr. Williams acted unlawfully. From the record, it is clear that
Ms. Parmer contacted the bank to obtain a loan to help Mr. Brozik, and that Mr. Williams
assisted her in doing so. There is no evidence that, to United Bank, this transaction was anything
other than a routine loan. As for United Bank’s subsequent loans to MB Security, these loans
were made pursuant to the management agreement that Ms. Parmer admits she negotiated and
signed with Mr. Brozik and Brandon Kupec. Ms. Parmer failed to present evidence of any
conspiracy in this regard; therefore, her conspiracy claim fails as a matter of law.
Conclusion
For the foregoing reasons, we affirm the Circuit Court of Monongalia County’s “Trial
Order,” entered on December 21, 2015; its “Order Denying Brozik and MB Security [sic] Post
Trial Motions,” entered on February 23, 2016; its order denying Ms. Parmer’s motion for
amended judgment and/or for a new trial, entered on March 15, 2016; its order granting United
Bank’s motion for summary judgment, entered on February 12, 2016; and its order denying Ms.
Parmer’s motion to reconsider the denial of her motion to amend her complaint, entered on
February 18, 2016.
Affirmed.
ISSUED: January 6, 2017
CONCURRED IN BY:
Chief Justice Allen H. Loughry II
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Elizabeth D. Walker
DISSENTING:
Justice Robin Jean Davis
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