IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA 

2023 Fall Term 

_____________________________ 

No. 23-ICA-22 

_____________________________ 

KAPITUS SERVICING, INC., 

Plaintiff Below, Petitioner, 

v. 

TIMBERLINE FOUR SEASONS UTILITIES, INC., 

and 

CANAAN VALLEY PUBLIC SERVICE DISTRICT, 

Defendants Below, Respondents. 

________________________________________________________________________ 

Appeal from the Business Court Division of The Circuit Court of Tucker County 

Honorable Michael D. Lorensen, Judge 

Civil Action No. CC-47-2022-C-4 

REVERSED AND REMANDED WITH DIRECTIONS 

________________________________________________________________________ 

Submitted: October 12, 2023 

Filed: October 30, 2023 

Ancil G. Ramey, Esq. 

Sarah C. Ellis, Esq. 

Benjamin McFarland, Esq.

Colton C. Parsons, Esq. 

Steptoe & Johnson PLLC 

Charleston, West Virginia 

Counsel for Petitioner 

Martin P. Sheehan, Esq. 

Sheehan & Associates, PLLC

Wheeling, West Virginia 

Counsel for Respondent Timberline Four 

Seasons Utilities, Inc. 

FILED

October 30, 2023

released at 3:00 p.m.

EDYTHE NASH GAISER, CLERK

INTERMEDIATE COURT OF APPEALS

OF WEST VIRGINIA
John W. Cooper, Esq.

Cooper & Preston, PLLC

Davis, West Virginia

Jeffrey S. Zurbuch, Esq.

Busch, Zurbuch & Thompson, PLLC

Elkins, West Virginia

Counsel for Respondent Canaan Valley 

Public Service District

CHIEF JUDGE GREEAR delivered the Opinion of the Court.

JUDGE LORENSEN, voluntarily recused.

Judge Jason Wharton, sitting by temporary assignment. 
1

GREEAR, Chief Judge:

Petitioner, Kapitus Servicing Inc. (“Kapitus”) appeals the December 20, 2022, order 

of the Business Court Division of The Circuit Court of Tucker County (“business court”) 

granting Respondents, Timberline Four Seasons Utilities, Inc. (“Timberline”) and Canaan 

Valley Public Service District’s (“Canaan PSD”) (collectively “respondents”) Motion to 

Dismiss.

1

Having reviewed this matter, we find that the circuit court erred in granting 

respondents’ motion to dismiss as res judicata precluded any other determination as to the 

validity of the contractual relationship between Kapitus and Timberline following the 

rulings of the United States Bankruptcy Court for the Northern District of West Virginia 

(“bankruptcy court”). Accordingly, we reverse and remand this case to the business court

for further proceedings consistent with this opinion.

I. Background

On April 28, 2017, Timberline voluntarily entered into a Revenue Based Factoring 

Agreement (“Agreement”) with Kapitus.2 Under this Agreement, Kapitus advanced 

1 On April 11, 2022, Timberline and Canaan PSD jointly filed their 12(b)(6) motion 

to dismiss, alleging Kapitus had failed to state a claim upon which relief could be granted, 

and that the matter should be dismissed with prejudice. 

2

 Kapitus is an authorized servicing agent for First U.S. Funding. Based on the 

bankruptcy court’s order, Timberline had partial ownership of the sewer and water systems 

that were created in relation to the development of Timberline Ski Resort in the 1980s. 

This ownership interest was conveyed by the original developer, sometime after the 
2

Timberline $130,000 in exchange for Timberline’s “future receipts, accounts, contract 

rights and other obligations arising from or relating to the payment of monies,” and was 

granted a security interest in Timberline’s personal property from its “customers and/or 

third-party payors.” As part of the Agreement, Timberline made the following 

representations to Kapitus: 

1. Timberline was in good financial condition and not 

insolvent;

2. Timberline obtained all necessary governmental approvals 

to enter the Agreement;

3. Timberline was authorized to enter the Agreement; 

4. Timberline would not enter into any other purchase or 

security agreements related to the purchased receivables; 

and 

5. Timberline had good and marketable title to all purchased 

receivables, free and clear of all liabilities and liens. 

In May of 2017, Kapitus issued full payment to Timberline. By late June of 2017,

Timberline had stopped making payments to Kapitus under the Agreement.3 In February 

of 2019, the West Virginia Public Service Commission (“PSC”) filed a petition in the 

Circuit Court of Tucker County to place Timberline in receivership. The circuit court 

appointed Canaan PSD as receiver for Timberline in March of 2019. According to Kapitus, 

it did not receive notice of Timberline’s receivership prior to filing a civil suit against 

completion of Resort to other individuals. Those individuals then transferred a portion of 

these utilities to Respondent Timberline Four Seasons Utilities, Inc.

3 Kapitus’ complaint alleges that Timberline breached the Agreement by only 

making a total of $42,794 in payments.
3

Timberline in the Commonwealth of Virginia, Hanover County on May 16, 2019, for 

payments missed under the Agreement. On January 28, 2020, the Circuit Court of Hanover 

County granted default judgment in favor of Kapitus against Timberline (“Virginia 

judgment order”).

On March 11, 2021, Timberline filed for Chapter 11 bankruptcy protection. 

Thereafter, Kapitus filed, in bankruptcy court, its initial proof of claim on May 20, 2021, 

and an amended proof of claim on August 2, 2021. The amended proof of claim asserted a 

secured claim against Timberline for $166,355.71 plus interest, attorneys’ fees, and any 

other fees/costs. The bankruptcy court noted that Kapitus had previously perfected its 

security interest by filing its financial statement on August 10, 2016, and renewed the 

company’s financial statement on June 10, 2021. Timberline filed objections to both 

Kapitus’ original and amended proof of claims. 

On August 5, 2021, the bankruptcy court held an evidentiary hearing on 

Timberline’s objections. The court overruled the objections and found that Kapitus’ claim 

was supported by the Virginia judgment order. On September 8, 2021, Timberline filed a 

motion to reconsider with the bankruptcy court, arguing that Hanover County lacked 

jurisdiction to grant judgment against Timberline, and further asserted that the Agreement 

between Kapitus and Timberline was void because it was not approved by the PSC, per 

West Virginia Code § 24-2-12 (1984).
4

On October 25, 2021, the bankruptcy court issued an order setting aside the Virginia 

judgment order based upon a lack of jurisdiction. As to Timberline’s objection to Kapitus’ 

claim, the bankruptcy court first addressed whether the Agreement was enforceable 

without PSC approval. On this issue, it was determined that while West Virginia Code § 

24-2-12 (1984) generally states that contracts entered into by a public utility to sell or 

otherwise dispose of “franchises, licenses, permits, plants, equipment, business, or other 

property” require PSC approval, there are recognized exceptions to this requirement. 

Through those limited exceptions, it was concluded that the Agreement was valid 

notwithstanding a lack of PSC approval. See generally In re Timberline Four Seasons 

Utilities, Inc., No. 2:21-BK-00125, 2021 WL 4952613, at *6-8 (Bankr. N.D.W. Va. Oct. 

25, 2021). The bankruptcy court also found that even though the Agreement was 

enforceable without PSC approval, due to the fraud and misrepresentations by Timberline,

the Agreement was voidable. Specifically, the bankruptcy court concluded that:

[T]he [A]greement is voidable at Kapitus’[sic] discretion and 

may be enforced if it so chooses. Kapitus does wish to enforce 

the agreement, evidenced by its security agreement and 

contesting of [Timberline]’s current proposed plan which treats 

Kapitus’[sic] claims as invalid. Pursuant to the [A]greement 

and valid UCC-3 Continuation Statement dated June 10, 2021, 

Kapitus has a valid security interest in [Timberline]’s accounts 

receivable.

Id. at * 8-10. 

On November 1, 2021, the PSC filed a motion in bankruptcy court, seeking to lift 

the automatic stay and permit the PSC to perform an investigation into the validity of the 
5

Agreement. On November 2, 2021, Timberline filed a request for the bankruptcy court to 

reconsider its October 25, 2021, ruling. At a hearing on December 15, 2021, the bankruptcy 

court denied Timberline’s motion to reconsider and granted the PSC’s motion, but also 

held that Kapitus’ claim was valid and enforceable regardless of the PSC investigation into 

the validity of the Agreement and that the bankruptcy court’s orders were final and 

enforceable. On December 28, 2021, Timberline filed a motion to dismiss its bankruptcy 

case based on purported issues with fulfilling its reorganization requirements under 

Chapter 11 and noted that returning the receivership to the circuit court was the correct

course of action. Timberline’s motion was granted on January 14, 2022. 

On March 7, 2022, Kapitus filed the underlying civil action in the Circuit Court of 

Tucker County against Timberline and Canaan PSD. Kapitus’ complaint alleged several 

counts, including a breach of contract claim, against Timberline. When the complaint was 

filed, there was a proceeding pending before the PSC entitled, “General Investigation of 

Financing Agreement Between Timberline Four Seasons, Inc., and Kapitus Servicing.” 

According to Timberline, Kapitus was named as a respondent by the PSC and was invited 

to participate in the proceeding but elected not to do so. By recommended decision dated 

March 21, 2022, the PSC’s Administrative Law Judge found that, pursuant to West 

Virginia Code § 24-2-12 (1984), the Agreement was void; that the security agreement 

based upon the Agreement was void; and that the financial statement designed to perfect 

the resulting security agreement was equally void. The PSC adopted this recommendation 

as its final decision on April 10, 2022.
6

On April 11, 2022, respondents jointly filed a Motion to Dismiss pursuant to Rule 

12(b)(6) of the West Virginia Rules of Civil Procedure. In their motion, respondents 

alleged that as a result of the PSC’s decision, Kapitus’ complaint failed to state a claim 

upon which relief could be granted and argued that the matter should be dismissed with 

prejudice. In its accompanying memorandum, respondents argued that the PSC’s order was

res judicata as to Kapitus’ underlying civil action. Kapitus filed a response arguing that the 

PSC order did nothing to negate the effects of the bankruptcy court’s orders, which 

unequivocally determined that Kapitus had a valid claim and security interest against 

Timberline through the Agreement, regardless of PSC approval. Kapitus argued that the 

bankruptcy court’s rulings were binding pursuant to the principles of res judicata.

Thereafter, the civil action was transferred to the business court. 

On October 11, 2022, the business court held a hearing on respondents’ motion to 

dismiss. On December 20, 2022, that court entered an order granting the motion, in part,

and dismissing Kapitus’ breach of contract claim. The business court reasoned that West 

Virginia Code § 24-2-12 (1984) and the Supreme Court of Appeals of West Virginia’s

decision in Lockard v. City of Salem, 127 W. Va. 237, 32 S.E.2d 568 (1944) were

dispositive of the case. West Virginia Code § 24-2-12 (1984), provides, in pertinent part, 

that: 

Unless the consent and approval of the Public Service 

Commission of West Virginia is first obtained: (a) No public 

utility subject to the provisions of this chapter, except railroads 

other than street railroads, may enter into any contract with any 
7

other utility to operate any line or plant of any other utility 

subject thereto, nor which will enable such public utility to 

operate their lines or plants in connection with each other, but 

this shall not be construed to prevent physical connections 

between utilities supplying the same service or commodity, for 

temporary purposes only, upon condition, however, that 

prompt notice thereof be given to the commission for such 

action, if any, as it may deem necessary, and thereafter the 

commission may require such connection to be removed or 

discontinued; (b) no public utility subject to the provisions of 

this chapter, except railroads other than street railroads, may 

purchase, lease, or in any other manner acquire control, direct 

or indirect, over the franchises, licenses, permits, plants, 

equipment, business or other property of any other utility; (c) 

no public utility subject to the provisions of this chapter, except 

railroads other than street railroads, may assign, transfer, lease, 

sell, or otherwise dispose of its franchises, licenses, permits, 

plants, equipment, business or other property or any part 

thereof; but this shall not be construed to prevent the sale, 

lease, assignment or transfer by any public utility of any 

tangible personal property which is not necessary or useful, nor 

will become necessary or useful in the future, in the 

performance of its duties to the public; (d) no public utility 

subject to the provisions of this chapter, except railroads other 

than street railroads, may, by any means, direct or indirect, 

merge or consolidate its franchises, licenses, permits, plants, 

equipment, business or other property with that of any other 

public utility; (e) no public utility subject to the provisions of 

this chapter, except railroads other than street railroads, may 

purchase, acquire, take or receive any stock, stock certificates, 

bonds, notes or other evidence of indebtedness of any other 

public utility; (f) no public utility subject to the provisions of 

this chapter, except railroads other than street railroads, may, 

by any means, direct or indirect, enter into any contract or 

arrangement for management, construction, engineering, 

supply or financial services or for the furnishing of any other 

service, property or thing, with any affiliated corporation, 

person or interest[.]
8

The business court rejected the bankruptcy court’s ruling, which distinguished Lockard in 

finding that under West Virginia law, the Agreement was voidable at the election of 

Kapitus, but not void. The court did not address either party’s res judicata argument. 

Instead, relying solely on deference, the court concluded that the breach of contract claim 

must be dismissed. The business court found that its ruling was an appealable order 

pursuant to Rule 54(b) of the West Virginia Rules of Civil Procedure. It is from this order 

that Kapitus now appeals. 

II. Standard of Review

The parameters of our appellate review of the circuit court's order granting a motion 

to dismiss a complaint is de novo. Syl. Pt. 2, State ex. rel. McGraw v. Scott Runyan PontiacBuick, Inc., 194 W. Va. 770, 773, 461 S.E.2d 516, 519 (1995). “The term ‘de novo’ means 

‘anew.’ In other words, we review the circuit court’s ruling in the same way that the circuit 

court made the ruling, as though the ruling were never made.” State v. Legg, 207 W. Va. 

686, 691 n.8, 536 S.E.2d 110, 115 n.8 (2000). With this standard in mind, we consider the 

issues raised on appeal.

III. Discussion

On appeal, Kapitus asserts five assignments of error:

1. The circuit court erred by failing to apply res judicata to the 

bankruptcy court’s orders;

2. Assuming the bankruptcy court’s orders were not entitled to 

claim preclusion, the circuit court erred by failing to afford 
9

issue preclusion to the factual findings and legal conclusions 

contained therein, issues fatal to Timberline’s defense;

3. The circuit court erred by holding that Timberline’s strategic 

dismissal of its bankruptcy proceedings somehow invalidated 

the bankruptcy court’s orders or stripped them of their 

preclusive effect;

4. The circuit court’s application of Lockard was clearly 

erroneous; and 

5. Kapitus did not waive its right to argue that res judicata applied 

to the bankruptcy court’s order by electing not to participate in 

the Public Service Commission proceeding. 

Several of Kapitus’ arguments on appeal involve one central question which we find 

dispositive of the case; specifically, did the business court err in failing to find that the 

bankruptcy court’s order regarding the validity of the contractual relationship between 

Kapitus and Timberline was res judicata.

4 To this question we answer, yes and find that 

the bankruptcy court’s order had a preclusive effect and was res judicata. Specifically, we 

find the business court erred in failing to find that the bankruptcy court’s October 25, 2021,

order was res judicata as to the current dispute between the parties.

However, as a prelude to addressing Kapitus’ claims on appeal, we must first 

determine if, under the limited facts and circumstances of this case, that the bankruptcy 

4 See generally Tudor’s Biscuit World of Am. v. Critchley, 229 W. Va. 396, 402, 729 

S.E.2d 231, 227 (2012) (assignments of error will be consolidated and discussed 

accordingly).
10

court’s October 25, 2021, order is enforceable following the dismissal of the bankruptcy 

case. We find that it is. 

The October 25, 2021, bankruptcy order determined that while West Virginia Code 

§ 24-2-12 (1984) generally requires contracts entered into by a public utility to sell or 

otherwise dispose of “franchises, licenses, permits, plants, equipment, business, or other 

property” require PSC approval, there are recognized exceptions to this requirement. 

Through those limited exceptions, it was concluded that the Agreement was valid 

notwithstanding a lack of PSC approval. See generally In re Timberline Four Seasons 

Utilities, Inc., 2021 WL 4952613 at *6-8. The bankruptcy court held the Agreement 

enforceable without PSC approval. Based upon the misrepresentations by Timberline, the 

bankruptcy court held the Agreement was voidable, finding:

[T]he [A]greement is voidable at Kapitus’s discretion and may 

be enforced if it so chooses. Kapitus does wish to enforce the 

agreement, evidenced by its security agreement and contesting 

of [Timberline]’s current proposed plan which treats Kapitus’s 

claims as invalid. Pursuant to the [A]greement and valid UCC3 Continuation Statement dated June 10, 2021, Kapitus has a 

valid security interest in [Timberline]’s accounts receivable.

The United States Bankruptcy Appellate Panel of the Sixth Circuit has held that 

“[a]n order determining the validity or priority of a claim is a final order.” See Beneke Co., 

Inc. v. Economy Lodging Systems, Inc. (In re Economy Lodging Systems., Inc.), 234 B.R. 

691, 693 (6th Cir. BAP 1999) (order disallowing unsecured claim and denying 

administrative priority for post-petition fees is final appealable order). In the underlying 
11

case, the bankruptcy court issued a memorandum opinion and subsequently entered a final 

judgment, on October 25, 2021.

5 Timberline did not appeal the bankruptcy order, however 

it filed a motion for reconsideration of the court’s ruling, which was denied by in the 

bankruptcy court in a December 16, 2021, order. Similarly, Timberline did not appeal the

order denying its request for reconsideration. Instead, Timberline filed a motion to dismiss 

the bankruptcy proceeding, with the alleged questionable intent of avoiding the application 

of the final order of the bankruptcy court regarding the validity of the Agreement, a contract 

under the law of West Virginia.

Timberline argues that a dismissal of its bankruptcy proceeding nullified the 

bankruptcy court’s orders and returned the parties to status quo ante. While respondents 

fail to cite any authority supporting this position in their brief,

6 a review of Section 349(b)2 

of the Bankruptcy Code, 11 U.S.C.A. § 349 instructs that:

Unless the court, for cause, orders otherwise, a dismissal of a 

case other than under section 742 of this title ... (2) vacates any 

order, judgment, or transfer ordered, under section 522(i)(1), 

542, 550, or 553 of this title[.]

5 Pursuant to Rule 58 of the Federal Rules of Civil Procedure, which is made 

applicable in bankruptcy proceedings by Rule 7058 of the Federal Rules of Bankruptcy 

Procedure. 

6 During oral arguments before this Court, Respondents’ counsel represented to this 

Court that in crafting the response(s) to the continued validity of the bankruptcy court order 

and its preclusive effect, that he consciously choose not to provide what he contended to 

be dispositive authority to the contrary. Obviously, this Court will not consider alleged 

controlling authority which a party voluntarily refuses to reveal.
12

As evidenced by the case law, “[u]nless the court indicates otherwise, the general effect of 

an order of dismissal is to restore the status quo ante. It is as though the bankruptcy case 

never had been brought.” In re Lewis & Coulter, Inc., 159 B.R. 188, 190 (Bankr. W.D. Pa. 

1993). However, in the instant case, the judgment of the bankruptcy court was not issued 

pursuant to section 522(i)(1), 542, 550, or 553. Here, the bankruptcy court denied 

Timberline’s motion for reconsideration and, by doing so expressed its intention to have 

the preclusive effect of the final order entered on October 25, 2021, order remain regardless 

of any PSC’s determination regarding the Agreement.

Courts have previously recognized that a bankruptcy court’s determination

disallowing a claim is preclusive. In re Negrea, 2019 WL 507516, (Bankr. C.D. Cal. 2019)

(finding courts had previously given preclusive effect to orders both allowing and 

disallowing claims, as well as noting that prior decisions have held that res judicata was 

applicable even in bankruptcy cases that were dismissed/where a debtor did not receive 

discharge). The Negrea court reasoned: 

In light of these cases, the Court finds that the Disallowance 

Order is entitled to preclusive effect. Because the Disallowance 

Order was a decision on the merits, has not been vacated by 

statute and is no longer subject to appeal or reconsideration, 

the Disallowance Order stands as a final order . . . . In fact, to 

hold otherwise would provide a windfall to a debtor who may 

lose on the merits of an objection to a creditor’s claim, cause 

the dismissal of his or her bankruptcy case prior to 

confirmation or discharge and file a new case, hoping to 

relitigate allowance of the claim with new arguments. 

Allowing such relitigation of an issue previously decided on 

the merits would deplete judicial and party resources.
13

In re Negrea, at *6-9.

Additionally, the United States Supreme Court has long held that federal court 

judgments are entitled to full faith and credit in the states. The Supreme Court has 

consistently held that, a determination by a bankruptcy court which was never appealed 

was res judicata and “settled the contest over jurisdiction.” See Stoll v. Gottlieb, 305 U.S. 

165, 59 S.Ct. 134, 83 L.Ed. 104 (1938). The disappointed party [creditor] could only obtain 

review of that determination (even if it was incorrect) by direct appeal, and not through a 

collateral proceeding in a state court. Id. at 171-72, 59 S.Ct. 134. The Supreme Court of 

Appeals of West Virginia has recognized “full faith and credit” and has previously noted 

that when a federal court sitting in diversity jurisdiction makes a determination of a state 

law question, such determination shall receive full faith and credit if the state's rules of res 

judicata or claim preclusion dictate such preclusive effect of said judgment. See Dan Ryan 

Builders, Inc. v. Crystal Ridge Dev., Inc., 239 W. Va. 549, 559, 803 S.E.2d 519, 529 (2017).

Having determined, under the limited facts and circumstances of this case, that the 

bankruptcy court’s October 25, 2021, order was enforceable following the dismissal of the 

bankruptcy, we now examine whether that order was res judicata as to the current dispute 

between the parties. “The doctrine of res judicata is based on a recognized public policy to 

quiet litigation and on a desire that individuals should not be forced to litigate an issue 

more than once.” Baker v. Chemours Co. FC, LLC, 244 W. Va. 553, 557, 855 S.E.2d 344, 

348 (2021) (internal citations omitted). As discussed in syllabus point 4 of Blake v. 
14

Charleston Area Medical Center, Inc., 201 W. Va. 469, 498 S.E.2d 41 (1997), the Supreme 

Court of Appeals of West Virginia has stated that res judicata requires: 

First, there must have been a final adjudication on the merits in 

the prior action by a court having jurisdiction of the 

proceedings. Second, the two actions must involve either the 

same parties or persons in privity with those same parties. 

Third, the cause of action identified for resolution in the 

subsequent proceeding either must be identical to the cause of 

action determined in the prior action or must be such that it 

could have been resolved, had it been presented, in the prior 

action.

Id. (emphasis added). We will address each of these factors in turn. 

We find it compelling that Timberline chose to submit itself to the jurisdiction of 

the bankruptcy court pursuant to Chapter 11 and that both Timberline and Kapitus 

participated in that action. During the bankruptcy process, the bankruptcy court is obligated 

to review disputed claims against a debtor and is empowered with the ability to determine 

validity and priority of such claims. Therefore, we find the subject matter on dispute was 

well within the bankruptcy court’s jurisdiction. As admitted by Timberline and evidenced 

in the record, Timberline failed to file a direct appeal to the entered judgment of the 

bankruptcy court that found a voidable but enforceable contract between itself and Kapitus. 

It is without doubt that the validity of this contractual relationship was incorporated into 

an enforceable final order before the bankruptcy court. As discussed above, the subsequent 

dismissal of the bankruptcy action is without effect in that regard.
15

With the bankruptcy court having subject matter jurisdiction and a final 

adjudication on the merits, we look to the identity of the parties. Res judicata requires that 

the prior and current litigation must involve the same parties or parties in privy. It is 

undisputed that both, Kapitus and Timberline, were present before the bankruptcy court.

Nothing within the procedural history, nor in the appellate record, suggests that Timberline 

and Kapitus did not have a full and fair opportunity to litigate the issues in the bankruptcy

action. Since the parties to this litigation and the bankruptcy were identical and had the 

opportunity to litigate the issue, this res judicata factor has been satisfied.

Lastly, “[o]ne of the essentials of res judicata is that the issue raised in the second 

action or suit must be identical with the issue raised and determined in the first action or 

suit.” Syl. Pt. 1, Soto v. Hope Nat. Gas Co., 142 W. Va. 373, 95 S.E.2d 769 (1956). In the 

instant case, the question before the bankruptcy court was whether there was an enforceable

contractual relationship between Timberline and Kapitus when their Agreement was not 

preapproved by the PSC pursuant to West Virginia Code § 24-2-12 (1984). We find this 

question to be identical to that presented to the Circuit Court of Tucker County, Business 

Division.

Having determined that the bankruptcy court’s memorandum opinion satisfies the 

factors to establish res judicata, the opinion must be provided its preclusive effect. 

Therefore, we find the business court erred in failing to find that the bankruptcy court’s
16

October 25, 2021, order was res judicata as to the current dispute between the parties. As 

we find this error to be dispositive, we need not address the remaining assignments of error. 

In an attempt to avoid preclusion, Timberline asserts that Kapitus waived any res 

judicata entitlement which may have resulted from the bankruptcy order due to Kapitus’ 

failure to participate and assert such before the PSC. We disagree. It is well settled law that 

the principles of res judicata do not permit a litigant to abandon a claim in one proceeding 

between parties so that it may assert such claim in another proceeding between the same 

parties. See Am. Indus. Leasing Co. v. Law, 458 F. Supp. 764, 769 (D. Md. 1978). Further,

Kapitus’ presence before the PSC was not mandatory. There was not a mandatory 

counterclaim nor defense required to be filed with the PSC when Kapitus had already 

obtained a final order on contractual validity and was engaged in a circuit court action to 

obtain relief. There is no requirement that an aggrieved party must exhaust all 

administrative remedies before the PSC before pursuing a claim for damages in a circuit 

court. See Hedrick v. Grant Cnty. Pub. Serv. Dist., 209 W. Va. 591, 595–96, 550 S.E.2d 

381, 385–86 (2001). Finally, Timberline has provided no authority to support the concept 

that a party may waive a res judicata argument by failing to appear and assert it in a nonmandatory administrative proceeding.

Timberline further argues that the PSC determination is entitled to res judicata 

effect. Again, we disagree with Timberline. The bankruptcy court entered a final order

from which Timberline could have filed a direct appeal; however Timberline failed to file 
17

such appeal in the matter. Once such determination became final, the PSC was precluded 

from making a determination to the contrary. See Bison Ints., LLC v. Antero Res. Corp., 

244 W. Va. 391, 398, 854 S.E.2d 211, 218 (2020) (An adjudication by a court having 

jurisdiction of the subject-matter and the parties is final and conclusive, not only as to the 

matters actually determined, but as to every other matter which the parties might have 

litigated as incident thereto and coming within the legitimate purview of the subject-matter 

of the action). Res judicata seeks to avoid parties being “twice vexed for one and the same 

cause.” See Conley v. Spillers, 171 W. Va. 584, 588 301 S.E.2d 216, 219 (1983). Below, 

Kapitus was not required to participate in the PSC proceedings initiated by respondents. 

Thus, as Kapitus was not a party to the PSC proceedings, under Blake and the principles 

of res judicata, it would be inappropriate to bind it to the PSC’s decision. To allow 

Timberline’s argument frustrates the purpose of finality and the application of res judicata.

Therefore, as it relates to the October 25, 2021, bankruptcy court order, we conclude 

the principles of res judicata under the existing laws of the state of West Virginia are 

satisfied in their application and, as such, require the Circuit Court of Tucker County, 

Business Division, to provide the bankruptcy court’s final order its preclusive effect as to 

the issue of enforceability. As we find this error to be dispositive, we need not address the 

remaining assignments of error. 
18

IV. Conclusion

Wherefore, for the foregoing reasons, the December 20, 2022, order of the Business 

Court Division of The Circuit Court of Tucker County, is hereby reversed. This case is 

remanded to the Business Court Division of The Circuit Court of Tucker County for the 

entry of an order denying respondents’ Motion to Dismiss. 

 Reversed and Remanded with Directions