Brass Ring, Inc. v. Dennis Ray Johnson, etc. ( 2013 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Brass Ring, Inc., and East End Realty Company, FILED
Defendants Below, Petitioners November 8, 2013
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
vs) No. 12-1496 (Cabell County 12-C-273) OF WEST VIRGINIA
Dennis Ray Johnson,
Plaintiff Below, Respondent
and
Dennis Ray Johnson,
Plaintiff Below, Petitioner
vs) No. 12-1532 (Cabell County 12-C-273)
Brass Ring, Inc., and East End Realty Company,
Defendants Below, Respondents
MEMORANDUM DECISION
Dennis Ray Johnson, by counsel Richard W. Weston, appeals the final order of the
Circuit Court of Cabell County, entered August 29, 2012, dismissing his complaint for failure to
state a claim upon which relief could be granted. Brass Ring, Inc. and East End Realty Company,
by counsel Robert H. Sweeney, Jr. and Jason D. Bowles, appeal the final order, entered
November 26, 2012, insofar as it dismissed their counterclaim. We consolidate these cases for
purposes of decision.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
Mr. Johnson filed a complaint in the Circuit Court of Cabell County in April of 2012,
asserting that Brass Ring and East End Realty agreed to sell him property that they jointly owned
on Hal Greer Boulevard in Huntington, then failed to complete the transaction to which they had
agreed. He asserted a claim for breach of contract and sought declaratory judgment that the
subsequent agreement to sell the property to Marshall University was void as a matter of law. He
filed a notice of lis pendens that day, asserting that “there is pending in the above-styled civil
action a claim or interest of [respondent] in the property. . . .”
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Brass Ring and East End Realty filed a motion to dismiss for failure to state a claim upon
which relief could be granted, arguing that Mr. Johnson did not allege in his complaint the
existence of a written, signed contract. Brass Ring and East End Realty explained that they had
given respondent an option to purchase the property in February of 2011, and that an option is
not a contract to purchase real estate. The document memorializing the option, a letter from the
East End Realty president, stated:
Dennis Johnson has the Option to Purchase the property & building located at
329-335 Hal Greer Boulevard[,] Huntington, West Virginia for $550,000 until
March 22, 2011. Property to be sold as is. The buyer agrees to pay any finder’s
fee or commission. The buyer agrees to take care of closing costs and transfer
fees. The buyer agrees to pay $2500.00 (two thousand five hundred dollars) to
take the property off the market until March 22, 2011.
If Dennis Johnson exercises this option he shall have until April 22, 2011 to close
on the purchase. If he does not close on the purchase by this date the owner shall
be able to sell this property to another party unencumbered by this agreement.
Mr. Johnson purports to have accepted this “offer” by letter dated March 21, 2011. Brass Ring
and East End Realty alleged in their answer to the complaint, and it has not been disputed, that
Mr. Johnson never tendered the described $2500.00. In that answer, Brass Ring and East End
Realty denied that a contract existed and asserted a counterclaim for slander of title and abuse of
process, both based on the filing of the notice of lis pendens.
The circuit court entered, on August 29, 2012, an order dismissing Mr. Johnson’s claims
on the basis that he did not tender the $2500.00 required for the option by the requisite date of
March 22, 2012, the date the option was to expire. The court further found that the option itself
was not a contract. Mr. Johnson recorded his release of the notice of lis pendens on August 23,
2012. One week later, he filed a motion to dismiss the counterclaim for failure to state a claim
upon which relief could be granted. He argued that notice of lis pendens functions as
constructive notice that a claim is asserted and is a privileged filing of litigation. The circuit
court agreed and entered a final order dismissing the counterclaim on November 26, 2012.
On appeal, Mr. Johnson presents three assignments of error. He argues, first, that the
circuit court erred in concluding that no real estate contract was formed, because the option, even
without consideration, constituted a revocable offer which Mr. Johnson accepted prior to
revocation. He argues, second, that the circuit court erred in determining that there was a lack of
consideration to support the option contract. Finally, he argues that the circuit court erred in
finding that the option required that money be paid by a date certain, because the option was
silent concerning the time that the money should be paid. Brass Ring, Inc. and East End Realty
present a single assignment of error: that the circuit court improperly applied the litigation
privilege to Mr. Johnson’s filing of the notice of lis pendens when dismissing the counterclaim.
This Court has previously held that “‘[a]ppellate review of a circuit court’s order granting
a motion to dismiss a complaint is de novo.’ Syllabus Point 2, State ex rel. McGraw v. Scott
Runyan Pontiac–Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).” Syl. Pt. 1, Cantley v.
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Lincoln Cnty. Comm'n, 221 W.Va. 468, 655 S.E.2d 490 (2007). We review the parties’
assignments of error according to that standard.
Mr. Johnson’s first assignment of error—that the validity of the option contract is
irrelevant because, even without consideration, the option language constituted a revocable offer
which he accepted—fails. In support of that argument, Mr. Johnson directs our attention to
Weaver v. Burr, 31 W.Va. 736, 8 S.E. 743 (1888), and urges us to recognize that where an “offer
or option is without consideration, it is merely a revocable offer.” In Weaver, we considered the
effect of the following language, which we described as a “proposal”:
I am willing to sell my land on which I now reside, in the county of Pocahontas
and state of West Virginia, containing five hundred acres, more or less, for the
price of six dollars and twenty-five cents per acre cash; and the parties for whom
Mr. F. P. Huxthal are negotiating for said land shall have the privilege of buying
said property at said price, and on said terms, for sixty days from the seventh day
of June, 1883.—JOHN BURR.
Id. at 737, 743. The above proposal is distinguished from that in the instant case because it did
not contemplate consideration for the option itself. On its face, it was an offer of sale placing no
obligation on the offeree prior to acceptance. Mr. Johnson has cited no precedent in which we
have bound a party to a contract after that party wholly failed to satisfy the obligations set forth
in an underlying option contract, and we see no reason under the facts before us to so hold.
Having determined that the option language did not create a revocable, continuing offer,
we turn to Mr. Johnson’s arguments concerning the validity of the option contract. According to
our jurisprudence, an option contract
is not a contract to sell, nor an agreement to sell, real estate, because there is no
mutuality of obligation and remedy; but it is a contract by which the owner agrees
with another person that he shall have the right to buy, within a certain time, at a
stipulated price. It is a continuing offer to sell, which may or may not, within the
time specified, at the election of the optionee, be accepted. The owner parts with
his right to sell to another for such time, and gives to the optionee this exclusive
privilege. It is the right of election to purchase, which has been bought and paid
for, and which forms the basis of the contract between the parties. Upon the
payment of the consideration, and the signing of the option, it becomes an
executed contract—not, however, an executed contract selling the land, but the
sale of the option, which is irrevocable by the optionor, and which is capable of
being converted into a valid executory contract for the sale of land. . . .
Pollock v. Brookover, 60 W.Va. 75, 78-79, 53 S.E. 795, 796 (1906) accord American Canadian
Expeditions, Ltd. v. Gauley River Corp., 221 W.Va. 442, 445, 655 S.E.2d 188, 191
(2007)(emphasis supplied).
On this premise, we reject Mr. Johnson’s second assignment of error, in which he argues
that an option contract, supported by valid consideration, was formed. Specifically, he suggests
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that his willingness to accept the property “as is,” pay any necessary finder’s fee, and pay closing
costs was adequate. We disagree. The letter from the East End Realty president specifically
stated that the subject property would be off the market in exchange for the payment of
$2500.00. Pollock instructs that payment of consideration is necessary to the formation of an
option contract. Here, specific and requisite consideration was not paid and no option contract
was formed.1 For this reason, we also decline to accept Mr. Johnson’s third assignment of error,
in which he argues that the East End Realty letter was silent as to when the $2500.00
consideration must be paid. Again, absent the payment, there simply was no option contract. Mr.
Johnson did not remit the money prior to the date that the option would have expired, prior to the
date by which the option would have required that he complete the sale, or prior to Brass Ring’s
and East End Realty’s subsequent agreement with Marshall University. A contract was not
formed at any point in the timeline covered by Mr. Johnson’s complaint.
Finally, we address the counterclaimants’ assignment of error. The notice of lis pendens
that Mr. Johnson filed in conjunction with his complaint stated:
KNOW ALL MEN BY THESE PRESENTS, that the Plaintiff herein, Dennis Ray
Johnson, by counsel . . . and by this Memorandum filed with the Clerk of Cabell
County, West Virginia, gives notice that there is pending in the above-styled civil
action a claim or interest of the Plaintiff, Dennis Ray Johnson, in the property
known as 329-335 Hal Greer Boulevard. . . .
We do not consider today whether the circuit court correctly concluded that litigation
privilege immunity extends to the filing of a notice of lis pendens in our state, because even in
the absence of privilege the counter-claim would fail. On its face, this statement falls short of the
common law requirements for proving slander of title. We have identified the elements of that
claim as: “(1) publication of (2) a false statement (3) derogatory to plaintiff’s title (4) with malice
(5) causing special damages (6) as a result of diminished value in the eyes of third parties.” Syl.
Pt. 3, TXO Production Corp. v. Alliance Resources Corp., 187 W.Va. 457, 419 S.E.2d 870
(1992). Brass Ring and East End Realty asserted in the counterclaim that Mr. Johnson published
a false statement because he had no legal right or claim to the property. However, the statement
of the notice of lis pendens was “that there is pending in [a] civil action a claim or interest of the
[p]laintiff. . . .” Mr. Johnson had made a claim through the filing of a civil action, and this
statement was true.2
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Mr. Johnson argues, parcel to this assignment of error that it is “disingenuous” for East
End Realty and Brass Ring to refuse to honor the contract over “this small amount in relation to
the overall deal.” We again refer to our long-standing caution that an option contract is not an
agreement to sell. Pollock, 60 W.Va. 75 at 78-79, 53 S.E. 795 at 796. The bargain for the option
and the bargain for the sale were not a single “overall deal” and we will not contemplate the
worth of $2500.00 “in relation to” to purchase price.
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Despite the urging of Brass Ring and East End Realty, we will not find that Mr. Johnson
made a false statement under the application of TXO Production Corp. v. Alliance Resources
Corp., 187 W.Va. 457, 419 S.E.2d 870 (1992), wherein the jury found that the appellant had
knowingly and maliciously filed a frivolous quitclaim deed. In TXO we wrote, “Although we
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Furthermore, the filing of the notice of lis pendens does not support a claim for abuse of
process.3 “‘Generally, abuse of process consists of the willful or malicious misuse or
misapplication of lawfully issued process to accomplish some purpose not intended or warranted
by that process.’ Preiser v. MacQueen, [177] W.Va. [273, 279], 352 S.E.2d 22, 28 (1985).” Syl.
pt. 2, Wayne County Bank v. Hodges, 175 W.Va. 723, 338 S.E.2d 202 (1985). This Court has
explained:
The distinctive nature of an action for abuse of process, as compared with
the actions for malicious prosecution and false imprisonment, is that it lies for the
improper use of a regularly issued process, not for maliciously causing process to
issue, or for an unlawful detention of the person. . . . The authorities are
practically unanimous in holding that to maintain the action [for abuse of process]
there must be proof of a willful and intentional abuse or misuse of the process for
the accomplishment of some wrongful object—an intentional and willful
perversion of it to the unlawful injury of another.
Preiser, 177 W.Va. at 279, 352 S.E.2d at 28 (quoting Glidewell v. Murray-Lacy and Company,
124 Va. 563, 569, 571, 98 S.E. 665, 667, 668 (1919)).
“Process” is a “summons or writ, esp. to appear or respond in court.” Black’s Law
Dictionary 1325 (9th ed. 2004). A “summons” is “a writ or process commencing the plaintiff’s
action and requiring the defendant to appear and answer” or “a notice requiring a person to
appear in court as a juror or witness.” Id. At 1574. A “writ” is “a court’s written order, in the
name of a state or other competent legal authority, commanding the addressee to do or refrain
from doing some specified act.” Id. at 1747. Notice of lis pendens commences no action,
commands no act, and confers no obligation of appearance. In an action affecting the interest in
real estate in this state, the parties claiming a right or title may file with the clerk of the county in
which the subject real estate is situated a notice of the pendency of the action, or lis pendens.
W.Va. Code § 55-11-12 (2008). From the time of the filing of the appropriate notice, prospective
purchasers are warned regarding the acquisition of property that is affected by litigation. See
Thomas v. Lupis, 96 W.Va. 100, 122 S.E. 365 (1924). However, notice of lis pendens alone
want to discourage people from slandering the title of others, we do not want to discourage
people from making legitimate (though possibly weak) claims of their own” and further that “we
also distinguish between cases in which the claimant legitimately raises questions of title in
himself and cases in which the claimant raises his own claim without any reasonable grounds.”
Id. at 466, 879. Under the limited circumstances of the case before us, where Mr. Johnson had
the proposed option language as a basis for his claim that Brass Ring and East End Realty were
obligated to sell particular property to him, we find that his claim—though weak—was not
absurd. While the facts before us do not support a claim upon which relief could be granted, it
was not unreasonable for Mr. Johnson to think it possible. The statement, contained in the notice
of lis pendens, that he had made a claim was proper.
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Mr. Johnson sought specific performance of the sale of the property. There is, then, a
presumption that the notice of lis pendens was properly filed. Syl. Pt. 1, State ex rel. Watson v.
White, 185 W.Va. 487, 408 S.E.2d 66 (1991).
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creates no lien or claim on the property. Id. at 367-68. A notice of lis pendens is not process; it is
merely notice of process. The Court thus finds that Brass Ring and East End Realty have failed
to state a claim for abuse of process, inasmuch as the document about which they complain was
not legal process, but simply a formal notice reasonably filed to warn potential purchasers of the
pending claim, and timely released upon the circuit court’s dismissal of the subject claim.
For the foregoing reasons, we affirm the orders of the Circuit Court of Cabell County.
Affirmed.
ISSUED: November 8, 2013
CONCURRED IN BY:
Chief Justice Brent D. Benjamin
Justice Robin Jean Davis
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Allen H. Loughry II
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