STATE OF WEST VIRGINIA 

SUPREME COURT OF APPEALS 

Robert Rufus, Jack Tolliver, and 

Greenbrier Property Group, LLC, 

Plaintiffs Below, Petitioners 

vs) No. 13-0218 (Greenbrier County 12-C-107) 

The Greenbrier Sporting Club Development 

Company, Inc., a Delaware corporation, 

James Staton, in his official capacity as Sales 

Representative of the Greenbrier Sporting Club 

Development Company, Inc., United Bank, Inc., 

a West Virginia corporation, Melinda R. Smailes, 

in her official capacity as Vice President and Loan 

Officer of United Bank, Inc., Stan McQuade and 

Thelma McQuade, d/b/a McQuade Appraisal Service, 

Defendants Below, Respondents 

and 

John Smith and Robert Smith,
 

Defendants and Cross-Claim Plaintiffs Below,
 

Petitioners
 

vs) No. 13-0219 (Greenbrier County 12-C-107) 

The Greenbrier Sporting Club Development 

Company, Inc., a Delaware corporation, 

James Staton, in his official capacity as Sales 

Representative of the Greenbrier Sporting Club 

Development Company, Inc., United Bank, Inc., 

a West Virginia corporation, Melinda R. Smailes, 

in her official capacity as Vice President and Loan 

Officer of United Bank, Inc., Stan McQuade and 

Thelma McQuade, d/b/a McQuade Appraisal Service, 

Defendants Below, Respondents 

MEMORANDUM DECISION 

FILED 

November 8, 2013
 

RORY L. PERRY II, CLERK
 

SUPREME COURT OF APPEALS
 

OF WEST VIRGINIA
 

Petitioners Robert Rufus, Jack Tolliver, and Greenbrier Property Group, LLC, by counsel 

Paul E. Biser, and Petitioners John Smith and Robert Smith, by counsel Amy C. Crossan, appeal 

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the January 16, 2013, order of the Circuit Court of Greenbrier County that dismissed their 

respective civil actions. Respondents The Greenbrier Sporting Club Development Company, 

Inc., a Delaware corporation, James Staton, in his official capacity as Sales Representative of the 

Greenbrier Sporting Club Development Company, Inc., United Bank, Inc., a West Virginia 

corporation, Melinda R. Smailes, in her official capacity as Vice President and Loan Officer of 

United Bank, Inc., Stan McQuade and Thelma McQuade, d/b/a McQuade Appraisal Service, by 

counsel E. Taylor George and John L. MacCorkle, filed a response. Petitioners John Smith and 

Robert Smith filed a reply. This Court consolidates the respective appeals for purpose 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. 

FACTUAL AND PROCEDURAL HISTORY1 

In March of 2005, John Smith entered into a purchase and sale agreement to buy an 

undeveloped tract of land located in White Sulphur Springs, Greenbrier County, West Virginia, 

from Respondent The Greenbrier Sporting Club Development Company, Inc., (“Sporting Club”) 

for $595,000. The undeveloped tract of land, identified as #10 Traveler’s Hill (“the property”), is 

located at the Greenbrier Sporting Club. Thereafter, John Smith and Robert Smith (“the Smiths”) 

met with Robert Rufus and Jack Tolliver to discuss this real estate investment opportunity. The 

Smiths informed Rufus and Tolliver that the Sporting Club told them that the owners of the 

property were divorcing and were willing to sell the lot at a substantial loss. The Smiths told 

Rufus and Tolliver that the Sporting Club told them that the fair market value of the lot exceeded 

$900,000. After discussions, the four men agreed to purchase the property with the intent to sell 

it for a profit. 

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This appeal arises out of the dismissal of claims filed in Greenbrier County. We note that 

prior to the Greenbrier County lawsuit, Robert Rufus, Jack Tolliver, John Smith and Robert 

Smith, and Greenbrier Property Group, LLC, filed suit in Cabell County in July of 2011 against 

respondents herein. The Cabell County complaint asserted claims allegedly arising out of the 

same 2005 land sale that would eventually be the subject of the Greenbrier County case. 

After respondents moved to dismiss the Cabell County complaint for improper venue, the 

Cabell County plaintiffs moved to file an amended complaint. The proposed amended complaint 

realigned John Smith and Robert Smith as parties and attempted to reclassify them as defendants. 

The proposed amended complaint added allegations that the Smiths knew of the purportedly 

fraudulent acts, occurring prior to the purchase of the property at issue, that had been attributed 

to the parties originally named as defendants in Cabell County. 

The Cabell County Circuit Court found that the proposed amended complaint was a 

“sham.” The Circuit Court of Cabell County entered a final order dismissing the case on grounds 

of improper venue. Thereafter, the Greenbrier County complaint was filed which is the subject 

of the instant appeal. 

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The corporate plaintiff, Petitioner Greenbrier Property Group (“GPG”), was formed on 

April 27, 2005, to be the title owner of the property. GPG’s four members are the individual 

plaintiffs below and petitioners herein, Rufus and Tolliver, along with the Smiths, defendants 

and cross-claim plaintiffs below, and petitioners herein.2 GPG financed the purchase of the 

property through Respondent United Bank, Inc. (“United”). United obtained an independent 

appraisal of the property through Respondent McQuade Appraisal Service (“McQuade”), who 

appraised the property at $650,000.3 The loan closed on April 28, 2005, and the Deed of Trust 

was recorded in Greenbrier County on May 2, 2005. 

On May 11, 2012, over seven years after the purchase of the property, petitioners filed a 

seven count complaint asserting the following claims: Count I – fraud in the inducement; Count 

II – constructive fraud; Count III – breach of fiduciary duty; Count IV – negligent 

misrepresentation; Count V – breach of duty to use due diligence and fair dealing; and Count VI 

– civil conspiracy. Count VII of the complaint asserted a breach of fiduciary duty claim against 

the Smiths. The complaint alleged that the Sporting Club marketed and sold property at greatly 

inflated prices and that United had actual knowledge of the inflated values of the property. The 

complaint further alleged that the Sporting Club made false representations, including that the lot 

was a distressed sale, worth over $900,000. The allegations against the Smiths were that they 

were the individuals who dealt with respondents in the negotiations, and with United regarding 

the loan. The Smiths were alleged to have brought the deal to Rufus and Tolliver, representing it 

as a no-risk opportunity. The allegations against the Smiths were that they knew or should have 

known that the actions of the other defendants were fraudulent, and that they had a fiduciary duty 

to use reasonable care in their investigation of the real estate, and that they breached this duty. 

On October 16, 2012, the Smiths filed their answer wherein they admitted every element 

of the complaint except those matters directly stated against them. The Smiths also asserted 

cross-claims against respondents that are identical to petitioners’ claims. The Smiths sought no 

relief against petitioners. In sum, all of the claims are based upon allegations that respondents 

were involved in a fraudulent scheme to sell the property at an inflated price. 

Respondents filed motions to dismiss and motions for judgment on the pleadings with 

respect to all claims. The circuit court heard oral arguments on respondents’ motions on 

December 11, 2012. 

On January 16, 2013, the circuit court dismissed all claims as time-barred pursuant to the 

two-year statute of limitations set forth in West Virginia Code § 55-2-12. The circuit court 

employed the five-part test set forth by this Court in Syllabus Point 5 of Dunn v. Rockwell, 225 

W.Va. 43, 689 S.E.2d 255 (2009), and held that: (1) the identical claims in the complaint and 

2

To avoid confusion, we refer to the two sets of petitioners herein separately. Robert 

Rufus, Jack Tolliver, and GPG are referred to as “petitioners,” John Smith and Robert Smith are 

referred to as “the Smiths.” 

3

The complaint and cross-claim do not allege that McQuade or United made any 

misrepresentations to petitioners or the Smiths regarding this real estate investment opportunity. 

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cross-claim were governed by the two-year statute of limitations; (2) the elements of the causes 

of action occurred no later than April 28, 2005, the date of the loan closing; (3) the discovery 

rule did not apply because the Smiths had knowledge of the alleged fraud on or before April 28, 

2005; (4) there were no allegations that respondents fraudulently concealed facts preventing the 

Smiths from discovering or pursuing their causes of action; and (5) no other tolling doctrine 

applied. Petitioners and the Smiths appeal from this order and request this Court remand the case 

for a jury trial to resolve the factual issue surrounding application of the discovery rule. 

DISCUSSION 

On appeal to this Court, petitioners assert that the circuit court improperly disposed of 

their lawsuit by way of a dismissal on the pleadings. The Smiths contend further that the circuit 

court improperly dismissed their cross-claims of fraud and misrepresentation on the basis of res 

judicata. We begin our analysis with the standard of appellate review. Then, we will address the 

merits of the parties’ arguments. 

Standard of Review 

This case is before the Court on appeal from the circuit court’s order granting 

respondents’ motion to dismiss made pursuant to Rule 12(b)(6) of the West Virginia Rules of 

Civil Procedure. This Court reviews a circuit court’s order granting a motion to dismiss a 

complaint under a de novo standard. Syl. Pt. 2, State ex rel. McGraw v. Scott Runyan PontiacBuick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995). 

Petitioners’ Claims 

Petitioners argue that the discovery rule is applicable because they did not become aware 

of the alleged fraudulent scheme until November of 2010. Petitioners also contend that the 

circuit court erred in granting a motion for judgment on the pleadings by accepting as true the 

allegations set forth in their complaint. 

Respondents, conversely, contend that all claims were dismissed properly because the 

two-year statute of limitations period lapsed on April 28, 2007. Respondents assert that the 

discovery rule is not applicable because the complaint alleged the Smiths had knowledge of the 

alleged fraud at the time the property was purchased in 2005 and that knowledge was therefore 

imputed to GPG.4 

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Respondents also argue that the claims of the individual petitioners must be dismissed 

for other reasons not resolved below. Respondents argue that Petitioners Rufus and Tolliver and 

the Smiths lacked standing to assert any claims arising from the purchase of the property. The 

transaction at issue, the sale of the property, was between a single business entity, GPG, and a 

non-party, Old Gun Properties, LLC. Respondents request we find that Petitioners Rufus and 

Tolliver and the Smiths have no interest in the property at issue that would give them standing to 

assert claims as individuals. As discussed further in this decision, we affirm the circuit court’s 

order dismissing the claims as time-barred. Therefore, we decline to address the issue of 

standing. 

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To resolve the question of whether the claims are time-barred, we apply the analysis 

articulated in Syllabus Point 5 of Dunn v. Rockwell, 225 W.Va. 43, 689 S.E.2d 255 (2009), 

which states, 

A five-step analysis should be applied to determine whether a cause of action is 

time-barred. First, the court should identify the applicable statute of limitation for 

each cause of action. Second, the court (or, if questions of material fact exist, the 

jury) should identify when the requisite elements of the cause of action occurred. 

Third, the discovery rule should be applied to determine when the statute of 

limitation began to run by determining when the plaintiff knew, or by the exercise 

of reasonable diligence should have known, of the elements of a possible cause of 

action, as set forth in Syllabus Point 4 of Gaither v. City Hosp., Inc., 199 W.Va. 

706, 487 S.E.2d 901 (1997). Fourth, if the plaintiff is not entitled to the benefit of 

the discovery rule, then determine whether the defendant fraudulently concealed 

facts that prevented the plaintiff from discovering or pursuing the cause of action. 

Whenever a plaintiff is able to show that the defendant fraudulently concealed 

facts which prevented the plaintiff from discovering or pursuing the potential 

cause of action, the statute of limitation is tolled. And fifth, the court or the jury 

should determine if the statute of limitation period was arrested by some other 

tolling doctrine. Only the first step is purely a question of law; the resolution of 

steps two through five will generally involve questions of material fact that will 

need to be resolved by the trier of fact. 

The only pertinent step of the above analysis at issue in this appeal is whether petitioners 

are entitled to the benefit of the discovery rule.5 Upon reviewing the appendix record and the 

briefs of the parties, we find that the circuit court was correct to conclude that application of the 

discovery rule would not serve to toll the statute of limitations. Therefore, we affirm the decision 

of the circuit court because it is evident from the pleadings that the claims are time-barred. 

West Virginia law provides that a limited liability company, such as GPG, is credited 

with the knowledge of each of its individual members.6 The knowledge of the Smiths, as 

5

In Syllabus Point 4 of Gaither v. City Hospital, Inc., 199 W.Va. 706, 487 S.E.2d 901 

(1997), this Court stated that the discovery rule may toll the statute of limitations if the following 

conditions are met: 

In tort actions, unless there is a clear statutory prohibition to its application, under 

the discovery rule the statute of limitations begins to run when the plaintiff 

knows, or by the exercise of reasonable diligence, should know (1) that the 

plaintiff has been injured, (2) the identity of the entity who owed the plaintiff a 

duty to act with due care, and who may have engaged in conduct that breached 

that duty, and (3) that the conduct of that entity has a causal relation to the injury. 

6 West Virginia Code § 31B-1-102(e) states that 

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members of GPG, is therefore imputed to GPG. In their complaint, petitioners alleged that two 

members of GPG knew or should have known of the existence of the alleged fraudulent scheme 

prior to the land sale at issue. We begin with the proposition that “[f]or purposes of the motion to 

dismiss, the complaint is construed in the light most favorable to plaintiff, and its allegations are 

to be taken as true.” Cantley v. Lincoln County Com’n, 221 W.Va. 468, 470, 655 S.E.2d 490, 492 

(2007) (quoting John W. Lodge Distributing Co., Inc. v. Texaco, Inc., 161 W.Va. 603, 605, 245 

S.E.2d 157, 158 (1978). Thus, petitioners admitted that GPG was or should have been aware of 

the alleged fraudulent scheme, immediately upon formation of the limited liability company in 

April of 2005, because as at least two of its four members, the Smiths, knew of the scheme at the 

relevant time. 

It is imperative to acknowledge that the transaction at issue here is the purchase of the 

property. All four members of GPG acted on its behalf in that transaction – all four members 

signed the deed of trust. Accordingly, the knowledge possessed by each of those members was 

imputed to the limited liability company on that date.7 

The Smiths’ Cross-claims 

The circuit court found that because petitioners and the Smiths relied “upon the exact 

same facts to establish their causes of action, the same results apply equally to cross-claimants” 

as to petitioners. We agree and find that dismissal of the complaint bars the identical crossclaims on the basis of res judicata. See Blake v. CAMC, Inc., 201 W.Va. 469, 476, 498 S.E.2d 41, 

48 (1997) (“under the doctrine of res judicata, a judgment on the merits in a prior suit bars a 

second suit involving the same parties or their privies based on the same cause of action”) 

(quoting Porter v. McPherson, 198 W.Va. 158, 166, 479 S.E.2d 668, 676 (1996)). 

[a]n entity knows, has notice or receives a notification of a fact for purposes of a 

particular transaction when the individual conducting the transaction for the entity 

knows, has notice, or receives a notification of the fact, or in any event when the 

fact would have been brought to the individual’s attention had the entity exercised 

reasonable diligence. An entity exercises reasonable diligence if it maintains 

reasonable routines for communicating significant information to the individual 

conducting the transaction for the entity and there is reasonable compliance with 

the routines. Reasonable diligence does not require an individual acting for the 

entity to communicate information unless the communication is part of the 

individual’s regular duties or the individual has reason to know of the transaction 

and that the transaction would be materially affected by the information. 

7 Petitioners seek to avoid this result by focusing on the wrong date. They contend the 

relevant transaction is the execution of the contract to purchase the property by John Smith, 

which occurred on March 11, 2005, before GPG was formed. This argument ignores the fact that 

no claims existed until the property was actually purchased. Here, the mere signing of the 

contract to purchase the property is not the relevant act for purposes of the statute of limitations 

analysis. 

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CONCLUSION 

It is clear from the pleadings that the cause of action accrued in April of 2005. Petitioners 

filed their complaint over seven years later, and the Smiths filed their cross-claims thereafter. 

Accordingly, we find the circuit court properly applied the two-year statute of limitations in 

dismissing the claims. See Franklin D. Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., 

Litigation Handbook on West Virginia Rules of Civil Procedure § 12(b)(6)[2], at 388 (4th ed. 

2012) (“A statute of limitations may support dismissal under Rule 12(b)(6), where it is evident 

from the plaintiff’s pleading that the action is barred, and the pleading fails to raise some basis 

for tolling or the like.”). 

For the foregoing reasons, we affirm. 

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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