STATE OF WEST VIRGINIA
 

SUPREME COURT OF APPEALS
 

SCHOOLHOUSE LIMITED LIABILITY COMPANY,
 

a West Virginia limited liability company,
 

Defendant Below, Petitioner
 

vs) No. 13-0812 (Pocahontas County 12-C-33(R)) 

Creekside Owners Association, a West Virginia
 

not-for-profit homeowners association, individually
 

and on behalf of two (2) or more unit owners,
 

Plaintiff Below, Respondent
 

and
 

WIL-KEN, INC., a West Virginia Corporation;
 

BUILDERS GROUP, INC., a West Virginia corporation;
 

BG Millwork, Inc., a West Virginia Corporation;
 

SMITH BACKHOE AND DOZER SERVICE, LLC,
 

a West Virginia limited liability corporation;
 

R.E.H., INC., a West Virginia corporation;
 

DAVIS ELECTRICAL SERVICE, INC., a West Virginia
 

corporation; COOPER ASPHALT, INC., a West Virginia
 

corporation; RELIABLE ROOFING COMPANY, a West
 

Virginia corporation; D'JERICHO, LLC, a West Virginia
 

limited liability company; OLD SPRUCE REALTY
 

AT SNOWSHOE, LLC, a/k/a Remax Old Spruce
 

Properties, a West Virginia limited liability company,
 

Defendants Below, Respondents
 

MEMORANDUM DECISION 

FILED
 

May 8, 2014
 

released at 3:00 p.m. 

RORY L. PERRY II, CLERK 

SUPREME COURT OF APPEALS 

OF WEST VIRGINIA 

The petitioner (defendant below), Schoolhouse Limited Liability Company 

(“Schoolhouse”), appeals from the August 13, 2013, revised order of the Circuit Court of 

Pocahontas County approving a mediation settlement reached between the respondent 

(plaintiff below), Creekside Owners Association (“Creekside”), and the remaining 

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respondents (defendants below).1 The circuit court found that the settlement had been made 

in good faith and dismissed all claims against the settling defendants, including the crossclaim of the non-settling Schoolhouse for implied indemnification against the settling 

defendants. On appeal, Schoolhouse does not assert that the settlement was not made in good 

faith, but it does challenge the circuit court’s dismissal of its implied indemnity cross-claim. 

Upon our review of the parties’ arguments, the pertinent authorities, and 

because we find no prejudicial error upon consideration of the applicable standard of review 

and the appendix record presented, this matter is proper for disposition pursuant to Rule 21 

of the West Virginia Rules of Appellate Procedure. 

I. Facts 

On August 28, 2012, Creekside filed an Amended Complaint against 

Schoolhouse, the developer and declarant2 of Creekside Villas, a condominium complex 

made up of common elements, limited common elements, and condominium units located 

at Snowshoe Mountain, Pocahontas County, West Virginia. Also named as defendants were 

Wil-Ken, Inc. (“Wil-Ken”), the general contractor for the project, D’Jericho, LLC 

(“D’Jericho”), the architect for the project, and Old Spruce Realty at Snowshoe, LLC, a/k/a 

ReMax Old Spruce Properties (“Old Spruce Realty”), the realtor that marketed the project 

to prospective buyers, as well as the various subcontractors and/or suppliers on the project: 

Elkins Builders Supply Company, LLC (“Elkins Builders”), Builders Group, Inc. (“Builders 

Group”), BG Millwork, Inc. (“BG Millwork”), Minighini Construction, LLC (“Minighini 

Construction”), Smith Backhoe and Dozer Service, LLC (“Smith Backhoe”), R.E.H., Inc. 

(“R.E.H.”), Davis Electrical Service, Inc. (“Davis Electric”), Cooper Asphalt, Inc. (“Cooper 

Asphalt”), and Southern States Elkins Cooperative, Inc. (“Southern States”). Creekside 

alleged various claims, including negligence, conspiracy, and breach of warranty in the 

design, construction, marketing, and sale of the common elements, limited common 

elements, and/or condominium units by one or more of the defendants to Creekside and to 

1

Schoolhouse is represented by lawyers James N. Riley, Debra Tedeschi Varner, 

Stephen G. Jory, and Allison S. McClure. Creekside and the settling defendants are 

represented by lawyer Teresa J. Dumire. 

2

“‘Declarant’ means any person or group of persons acting in concert who: (i) As part 

of a common promotional plan, offers to dispose of his or its interest in a unit not previously 

disposed of; or (ii) reserves or succeeds to any special declarant right.” W.Va. Code § 36B1-1-3(12) (2011). 

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various condominium owners who comprise Creekside. Schoolhouse answered and asserted 

a cross-claim for implied indemnity and contribution against its co-defendants.3 

On December 5, 2012, Creekside filed a Second Amended Complaint, which 

added subcontractors Reliable Roofing Company, Randy King d/b/a/ Mountain Artisan 

Masonry, and Bruce K. Howell d/b/a BK Construction as defendants in the litigation. 

In May 2013, the parties engaged in a multi-day mediation, which resulted in 

a settlement agreement being reached between plaintiff Creekside and defendants Wil-Ken, 

D’Jericho, Old Spruce Realty, Builders Group, BG Millwork, Smith Backhoe, R.E.H., Davis 

Electrical, Cooper Asphalt, and Reliable Roofing (the “settling defendants”). Under the 

pertinent terms of the settlement, the settling defendants agreed to pay Creekside the sum of 

$600,000 and, in return, Creekside agreed to dismiss its claims against the settling defendants 

with prejudice. The settling defendants also agreed to a dismissal with prejudice of the crossclaims asserted amongst themselves. Although Schoolhouse, Southern States, and Mountain 

Artisan Masonry participated in the mediation, they did not reach a settlement with 

Creekside.4 

On May 22, 2013, counsel for Schoolhouse advised all counsel that its crossclaim for implied indemnity against the settling defendants was not extinguished by the 

settlement. Thereafter, on June 17, 2013, the settling defendants and plaintiff Creekside filed 

a Joint Motion to Approve Settlement and Dismiss Claims (“joint motion”) seeking the 

circuit court’s approval of the mediated settlement and a dismissal of all claims asserted 

against them, including Schoolhouse’s implied indemnity cross-claim; they argued that 

absent the dismissal of all claims, the settlement would not go forward. Schoolhouse 

opposed the motion arguing that its cross-claim survived the settlement because the counts 

3

The only co-defendant against whom Schoolhouse did not assert a cross-claim is 

Elkins Builders. Creekside alleges that Elkins Builders may be affiliated in some capacity 

with Schoolhouse—an allegation that Schoolhouse denies. Elkins Builders was voluntarily 

dismissed by Creekside. 

4

Additional non-settling defendants are Minighini Construction and BK Construction, 

neither of whom made an appearance in the action below. 

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in the Amended Complaint asserted against it were all derivative of the claims asserted 

against the settling defendants.5 

Following a hearing on the joint motion, the circuit court entered an amended 

order on August 13, 2013, approving the settlement and dismissing all claims with prejudice.6 

The circuit court, mindful that the law favors and encourages settlements, found that the good 

faith settlement extinguished Schoolhouse’s implied indemnity cross-claims because the 

remaining claims against Schoolhouse were based on Schoolhouse’s independent 

conduct—not that of the settling defendants. The circuit court concluded that “it [was] [] not 

necessary for [it] [] to disapprove of the settlement agreement to allow Schoolhouse to prove 

theyare blameless.” The circuit court explained that Creekside’s claims against Schoolhouse 

are not derivative of the work performed by the Settling Defendants. . . . [and 

are not] predicated upon imputed, strict or vicarious liability of Schoolhouse 

for the actions or omissions of the Settling Defendants. Therefore, 

Schoolhouse’s potential liability, if any, must necessarily be predicated upon 

its own fault. As a result, this Court finds no legal basis to support 

Schoolhouse’s position that its cross-claims for implied indemnity could 

5

The respondents state in their brief that Creekside has six causes of action against 

Schoolhouse that are separate from the causes of action against the settling defendants: 

Count I (breach of contract); Count II (breach of implied warranty of quality); Count III 

(breach of express warranty); Count IV (negligent development); Count IX (fraud and 

misrepresentation); and Count X (negligent misrepresentation). Counts III, IX, and X are 

also asserted against Old Spruce Realty. Creekside does not reference the counts that were 

asserted against Schoolhouse, Elkins Builders, Wil-Ken, and Old Spruce Realty (Count VIII 

(statutory affiliate liability), Count XI (civil conspiracy), and Count XII (joint venture)). 

These counts were arguably extinguished by Creekside’s settlement with Elkins Builders, 

Wil-Ken, and Old Spruce Realty. Another count not specifically referenced by the 

respondents is Count XIII (breach of obligation of good faith), which was asserted against 

all defendants, including Schoolhouse. 

6

The circuit court’s first order granting the joint motion was entered on July 10, 2013. 

The amended order is identical to the earlier July 10th order with the exception that language 

was added rendering the judgment final and appealable to this Court in accordance with Rule 

54(b) of the West Virginia Rules of Civil Procedure. Both orders reflect that excepted from 

the settlement and the dismissal were certain claims against Old Spruce Realty, including 

Schoolhouse’s cross-claim, to the extent those claims might be covered under an errors and 

omissions insurance policy. 

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remain active after [Creekside] dismisses all of its claims against, and relating 

to work performed by, the Settling Defendants. 

On August 20, 2013, the circuit court entered Plaintiff’s Stipulation of 

Dismissal of All Claims of Vicarious Liability for Work Performed by or Products Supplied 

bythe Settling Defendants and Order Approving Said Dismissal (“Stipulation/Order”).7 This 

Stipulation/Order, which effectively closed the door on any possibility that allegations of 

vicarious liability remained against Schoolhouse, provides that “Plaintiff hereby stipulates 

to the dismissal, with prejudice, [of] any and all claims for vicarious liability for work 

performed by or products supplied by the Settling Defendants that it made or could have 

made against any remaining party Defendant.” The Stipulation/Order concludes that “all 

claims for vicarious liability for work performed by or products supplied by the Settling 

Defendants that have been or could have been made by the Plaintiff against any Defendant 

in this case are hereby DISMISSED WITH PREJUDICE.” This appeal followed. 

II. Standard of Review 

Schoolhouse appeals the circuit court’s order dismissing its cross-claim for 

implied indemnity against the settling defendants. “Appellate review of a circuit court’s 

order granting a motion to dismiss a complaint is de novo.” Syl. Pt. 2, State ex rel. McGraw 

v. Scott Runyan Pontiac–Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995). In light of our 

de novo standard of review, we also consider the standard that was applied by the circuit 

court: 

“The trial court, in appraising the sufficiency of a complaint on a Rule 12(b)(6) 

motion, should not dismiss the complaint unless it appears beyond doubt that 

the plaintiff can prove no set of facts in support of his claim which would 

entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 

L.Ed.2d 80 (1957). 

7

The Stipulation/Order reflects that Creekside and the settling defendants 

consummated their settlement following its approval by the circuit court and that their 

Settlement Agreement and Release includes 

Plaintiff’s release of any and all other entities to the extent, if any, that they 

are, or may be deemed to be, vicariously liable for the work performed or 

products supplied bythe Settling Defendants insofar as those entities mayhave 

contractual and/or implied indemnification claims against the Settling 

Defendants. 

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Syl. Pt. 3, Chapman v. Kane Transfer Co., 160 W.Va. 530, 236 S.E.2d 207 (1977). Under 

these applicable standards, we proceed to address the parties’ arguments.8 

III. Discussion 

Schoolhouse argues that the allegations in its cross-claim were sufficient to 

meet the dismissal standard under Rule 12(b)(6) of the West Virginia Rules of Civil 

Procedure because it denied any wrongdoing and asserted that any damages suffered by 

Creekside were the result of the wrongful conduct of others. According to Schoolhouse, all 

claims asserted against it in the Amended Complaint are derivative9 of the claims asserted 

against the settling defendants; thus, its cross-claims for implied indemnity should survive 

the settlement. In other words, Schoolhouse contends that the negligent acts of the settling 

defendants are the factual predicate for all claims asserted by Creekside. 

Conversely, the respondents argue that allowing Schoolhouse to maintain its 

cross-claim for implied indemnity would serve no purpose other than to prejudice the settling 

defendants who have bought their peace in this litigation.10 The respondents assert that 

8

Schoolhouse also argues that the circuit court erred when it recited factual allegations 

outside the pleadings in support of its finding that the counts against Schoolhouse in the 

Amended Complaint are independent claims. While the appendix record does not contain 

a transcript of the hearing on the joint motion, the circuit court’s order reflects that the 

allegations that Schoolhouse selected roofing materials and directed asphalt thickness were 

arguments made by Creekside’s counsel to illustrate the independent nature of the claims 

against Schoolhouse. Even if these factual allegations could convert the circuit court’s 

dismissal order to one of summary judgment, our standard of review would be the same—de 

novo. See Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994) (“A circuit 

court’s entry of summary judgment is reviewed de novo.”). 

9

“[T]he Court has clearly acknowledged the fact that there is a technical difference 

between joint tortfeasors and those whose liability is derivative or vicarious[.]” Woodrum 

v. Johnson, 210 W.Va. 762, 768, 559 S.E.2d 908, 914 (2001). 

10 As this Court has consistently made clear in the past, 

“‘[t]he law favors and encourages the resolution of controversies 

by contracts of compromise and settlement rather than by 

litigation[.]’” Syl. pt. 6, in part, DeVane v. Kennedy, 205 W.Va. 

519, 519 S.E.2d 622 (1999) (quoting syl. pt. 1, Sanders v. 

(continued...) 

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Schoolhouse’s potential liability is not predicated upon product liability or strict liability, but 

on its own misrepresentations, fraud, and breach of its separate duty of care as the 

developer/declarant of the Creekside Villas condominium complex. Because Creekside has 

dismissed with prejudice any and all vicarious liability claims arising out of the work of the 

settling defendants, and because Creekside’s claims asserted against Schoolhouse are 

independent causes of action,11 the respondents maintain that Schoolhouse cannot succeed 

on its implied indemnity cross-claim. In short, the respondents argue that if Schoolhouse is 

found to be liable to Creekside, it cannot assert an implied indemnity claim because such 

claims can only be asserted by a fault-free party and, if Schoolhouse is found to be faultless, 

there would be nothing for the settling defendants to indemnify because Schoolhouse will 

not be obligated to pay any damages. We agree. 

Schoolhouse has conceded that its cross-claim for contribution against the 

settling defendants was extinguished by the settlement. See Syl. Pt. 6, Bd. of Educ. v. Zando, 

Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990) (“A party in a civil action 

10(...continued)
 

Roselawn Mem’l Gardens, Inc., 152 W.Va. 91, 159 S.E.2d 784
 

(1968)); see also Board of Educ. of McDowell County v. Zando,
 

Martin & Milstead, Inc., 182 W.Va. 597, 604, 390 S.E.2d 796,
 

803 (1990); State ex rel. Vapor Corp. v. Narick, 173 W.Va. 770,
 

320 S.E.2d 345 (1984); Floyd v. Watson, 163 W.Va. 65, 254
 

S.E.2d 687 (1979); Janney v. Virginian Ry. Co., 119 W.Va. 249,
 

193 S.E. 187 (1937).
 

Woodrum v. Johnson, 210 W.Va. 762, 771, 559 S.E.2d 908, 917; see also, Syl. Pt. 1, in part, 

Sanders v. Roselawn Mem. Gardens, Inc., 152 W.Va. 91, 159 S.E.2d 784 (1968) (“The law 

favors and encourages the resolution of controversies by contracts of compromise and 

settlement rather than by litigation[.]”); Horace Mann Ins. Co. v. Adkins, 215 W.Va. 297, 

303, 599 S.E.2d 720, 726 (2004) (“As a means of promoting judicial economy and 

facilitating the resolution of contested cases, we long have noted that settlements are favored 

under the laws of this State.”); Certain Underwriters v. Pinnoak Resources, LLC, 223 W.Va. 

336, 345, 674 S.E.2d 197, 206 (2008) (“Courts should favor and encourage settlement 

agreements.”). 

11The respondents assert that if Schoolhouse is correct in its assertion that Creekside’s 

claims against it are not independent claims, Schoolhouse can seek summary judgment in the 

circuit court. Schoolhouse suggested the possibility of such a dispositive motion in its reply 

brief. 

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who has made a good faith settlement with the plaintiff prior to a judicial determination of 

liability is relieved from any liability for contribution.”). While contribution is a mechanism 

through which joint tortfeasors can seek to recover from one another for sums paid to an 

injured party that exceeds their own percentage of fault, “[i]mplied indemnity is based upon 

principles of equity and restitution and one must be without fault to obtain implied 

indemnity.” Syl. Pt. 2, Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440, 288 S.E.2d 

511 (1982). We previously established the elements of an implied indemnity claim, as 

follows: 

(1) an injury was sustained by a third party; (2) for which a putative 

indemnitee has become subject to liability because of a positive duty created 

by statute or common law, but whose independent actions did not contribute 

to the injury; and (3) for which a putative indemnitor should bear fault for 

causing because of the relationship the indemnitor and indemnitee share. 

Syl. Pt. 4, in part, Harvest Capital v. W.Va. Dep’t of Energy, 211 W.Va. 34, 560 S.E.2d 509 

(2002). 

In addressing implied indemnity in the context of settlements in multiparty 

litigation, we held in syllabus point six of Dunn v. Kanawha County Board of Education, 194 

W.Va. 40, 459 S.E.2d 151 (1995), that 

[i]n a multiparty product liability lawsuit, a good faith settlement 

between the plaintiff(s) and the manufacturing defendant who is responsible 

for the defective product will not extinguish the right of a non-settling 

defendant to seek implied indemnification when the liabilityof the non-settling 

defendant is predicated not on its own independent fault or negligence, but on 

a theory of strict liability. 

We later expanded upon our holding in Dunn to non-product liability actions. In Hager v. 

Marshall, 202 W.Va. 577, 505 S.E.2d 640 (1998), we held that “[i]n non-product liability 

multi-party civil actions, a good faith settlement between a plaintiff and a defendant will 

extinguish the right of a non-settling defendant to seek implied indemnity unless such 

non-settling defendant is without fault.” Id. at 580-81, 505 S.E.2d at 643-44, syl. pt. 7.12 

12Both Schoolhouse and the respondents rely upon Hager for their respective 

positions. In Hager, independent causes of action were asserted against a non-settling 

defendant, in additional to vicarious claims, which exposed the non-settling defendant to 

(continued...) 

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Subsequently, we cited our holding in Hager and explained that “a vicariously liable 

defendant’s right to implied indemnity is not affected by settlement between a plaintiff and 

other liable parties.” Woodrum v. Johnson, 210 W.Va. 762, 769, 559 S.E.2d 908, 915 (2001) 

(citing Syl. Pt. 7, Hager, 202 W.Va. at 580-81, 505 S.E.2d at 643-44). 

In the case at bar, as the respondents argue and as the circuit court found, the 

Amended Complaint does not assert any claims against Schoolhouse predicated upon 

imputed, strict, or vicarious liabilityof Schoolhouse for the actions or omission of the settling 

defendants. The circuit court concluded that 

[the] settlement agreement and competing claims for implied indemnity are 

unique, in that the settlement agreement extinguishes any claim for which the 

putative indemnitors could be held liable. The claims that would survive this 

Court’s approval of the parties’ settlement agreement allege independent 

conduct by the respective non-settling defendants. As such, any verdict 

rendered on the remaining claims cannot be attributed to the Settling 

Defendants . . . . 

Moreover, the circuit court found “no legal basis to support Schoolhouse’s 

position that its cross-claims for implied indemnity could remain active after [Creekside] 

dismisses all of its claims against, and relating to work performed by, the Settling 

Defendants.” Thereafter, any lingering question in this regard was answered in the 

Stipulation/Order that dismissed with prejudice any and all vicarious claims.13 Thus, in this 

instance, the respondents’ good faith settlement does, in fact, extinguish Schoolhouse’s 

implied indemnity cross-claim. Indeed, even if we were to assume, arguendo, that 

12(...continued) 

potential liability even if it were found to be without fault. Hager, 202 W.Va. 577, 505 

S.E.2d 640. 

13In addition, the Settlement Agreement and Release specifically provides that 

Creekside “further releases any and all other entities to the extent, if any, that they are, or 

may be deemed to be, vicariously liable for the work performed or products supplied by the 

Settling Defendants insofar as those entities may have contractual and/or implied 

indemnification claims against the Settling Defendants.” 

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Schoolhouse is correct and that the claims asserted against it allege vicarious liability,14 such 

claims are nonexistent. 

As it currently stands, if Schoolhouse is found to be at fault for its own actions, 

inaction, or conduct under the independent theories of liability that have been asserted 

against it, Schoolhouse would not be able to seek implied indemnity as it would not be faultfree. Conversely, if Schoolhouse is found to be without fault, there would be nothing to 

indemnify as it will not be made to pay damages on either the independent claims asserted 

against it, or on any “claims for vicarious liability for work performed by or products 

supplied by the Settling Defendants that Creekside made or could have made against any 

remaining party Defendant[,]”15 which have been dismissed. Consequently, we conclude 

that the circuit court correctly found that there is “no legal basis to support Schoolhouse’s 

position that its cross-claims for implied indemnity could remain active after the Plaintiff 

dismisses all of its claims against, and relating to work performed by, the Settling 

Defendants.”16 

14The mere fact that Creekside’s claims arise out of the same set of underlying facts 

does not make the claims asserted against Schoolhouse vicarious. Cf. St. Paul Fire & Marine 

Ins. v. Hanover Ins., 187 F.Supp.2d 584, 594 n.12 (E.D.N.C. 2000) (applying North Carolina 

law and observing that “a general contractor’s liability for the torts of its sub-contractor is 

direct and not vicarious. As a practical matter, a finding that a subcontractor is liable for 

negligence may be accompanied by a finding that a general contractor negligently breached 

its own duty to ensure that the subcontractor took appropriate precautionary measures. 

However, the subcontractor’s negligence in such a situation is not imputed to the general 

contractor. Rather, the subcontractor’s negligence is simply evidence of the general 

contractor’s breach of its own duty.”). Here, Creekside’s claims against Schoolhouse are 

based on Schoolhouse’s independent responsibilities and duties as the developer/declarant 

of the Creekside Villas condominium complex. 

15See Stipulation/Order, supra. 

16Creekside has greatly narrowed the scope of its action through both its settlement 

agreement and its stipulated dismissal with prejudice of any and all vicarious claims arising 

out of the work performed by or products supplied by the settling defendants that it made or 

could have made against any remaining defendant. Consequently, if Creekside were to 

violate the reduction in scope it has established for itself as this matter proceeds below, 

Schoolhouse can address that situation in the first instance in the circuit court. 

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For the foregoing reasons, we find that under the facts and circumstances of 

this case, the circuit court did not err in dismissing Schoolhouse’s cross-claim for implied 

indemnity against the settling defendants. 

Affirmed. 

ISSUED: May 8, 2014 

CONCURRED IN BY: 

Chief Justice Robin Jean Davis 

Justice Brent D. Benjamin 

Justice Margaret L. Workman 

Justice Menis E. Ketchum 

Justice Allen H. Loughry II 

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