Opinion ID: 2808910
Heading Depth: 3
Heading Rank: 1

Heading: e., the Defendants.

Text: Therefore, the Court finds that the statutes of limitation for Plaintiffs’ claims against Defendants were tolled under the discovery rule until no later than February 7, 2007. substantially the same parties.” 1 Franklin D. Cleckley, Handbook on Evidence for West Virginia Lawyers, § 201.03[3][e] (5th ed. 2012). 10 Petitioners do not dispute that the circuit court had the legal power to take judicial notice of the fact that at least some of the Petitioners had previously appealed their tax assessments, and that the developers’ attorneys appealed the case on behalf of Mountain America, LLC, resulting in an opinion being issued by this Court. However, the Petitioners dispute that the prior litigation has any relevancy to the allegations in the action currently sub judice other than the identities of the real estate involved and possibly some of the Petitioners. Additionally, Petitioners allege that the circuit court erred in dismissing their claims as time barred because each Petitioner alleged in the second amended complaint that they were unaware of the Schonberg fraud until this litigation began because the Respondents attempted to conceal it. They maintain that the Schonberger fraud was never disclosed, or discovered by any individual during the 2007 tax appeal. Petitioners allege that in 2007, they may have known that they suffered damage and injury, but they had no idea of the fraud by Respondents. Petitioners contend that it was not until their counsel came into possession of the appraisals submitted by McQuade that the details of the fraudulent acts became known. Respondents assert that the circuit court properly took judicial notice of the adjudicative facts in the tax appeal matter because they are relevant to whether the Petitioners’ claims were timely filed. Respondent contend that the circuit court correctly ruled that the discovery rule tolled the statute of limitations to February 7, 2007, because 11 this is the date Petitioners challenged their tax assessments, arguing that they exceeded the fair market value. Respondents maintain that in this action, Petitioner again allege the same point they argued in their 2007 tax appeal - that they paid more than market value for their properties. They assert that Petitioners had the means at that time to determine the fair market value of their properties and should have known their land was overvalued. Respondents assert that Petitioners never explained exactly why it took until their counsel reviewed the appraisal information in 2009 and 2010 to allege fraud. The only named petitioner in Mountain America, LLC, 224 W. Va. 669, 687 S.E.2d 768, was Mountain America, LLC, the Walnut Springs developers. We noted in the Mountain America, LLC case that, “some four months after the appeal was filed, it is impossible to pick up the court file and determine the name of the Appellants or the tax parcels in question.” Id., 224 W. Va. at 677, 719 S.E.2d at 776. We further noted that “[a] review of the record of the hearing before the Board of Equalization reveals the names of at least some of the persons contesting their assessments, but this is insufficient for purposes of West Virginia Rules of Civil Procedure Rule 10.” Id. In the tax appeal, this Court’s discussion of Mountain America’s arguments centered on due process and equal protection. Specifically, the Appellants assert that the tax assessments are excessive and unequal as compared to the 2007 tax assessments of the property of other taxpayers in Monroe County, and that the assessments are the result of the Assessor’s improper and discriminatory methods in violation of the Appellant’s rights to equal and uniform taxation under 12 the West Virginia Constitution and in violation of the Appellant’s rights to equal protection of the law under the United States Constitution. Id. at 674, 687 S.E.2d at 773. This Court noted that there was no evidence in the record to suggest that the lots in Walnut Springs were excessively valued by the Monroe County Tax Assessor: Mountain America had the burden of proving that the Assessor’s valuation was excessive, but it did not offer any evidence of the true and actual value of the residual property. At the hearing before the County Commission, Mountain America did not offer an appraiser’s opinion of the value of its residue, any evidence as to what it paid to purchase this residue, or any evidence as to the listing price for any of the unsold residue property. Id. at 687, 687 S.E.2d at 786. This Court noted that the calculated unit price per acre as determined by the Assessor was $29,236.00 and that as an accommodation to the landowners, the Assessor lowered the amount to $26,900.00 by striking the two highest sales and the two lowest sales out of the development - which was properly determined by the Assessor to be based on “market value” and “true and actual value.” Id. at 675, 687 S.E.2d at 774. This Court found no abuse of the Assessor’s discretion and affirmed the circuit court’s order affirming the County Commission’s decision upholding the assessment. Id. at 688, 687 S.E.2d at 787. 13 In short, there was no evidence of record presented to this Court in Mountain America, LLC that the subject properties were overvalued. Mountain America, LLC was about challenging tax assessments and methodology. There were no allegations, or representations, that the landowners overpaid for their properties. They were challenging the increase of assessments from being minimal one year, to being increased exponentially the next. The central component of the case sub judice is that the Petitioners allege they never paid real market value for their properties because the market was fabricated - a fact that was never revealed in the 2007 tax assessment appeals. Petitioners maintain that it was never revealed because the primary perpetrators of the fraud, the developers, were prosecuting the tax appeal. The Petitioners allege that the circuit court mischaracterized the Petitioners’ as merely people who are upset that they overpaid for real estate. However, Petitioners now contend that they were defrauded and were induced to buy into a fraudulent real estate scheme. In syllabus point three of Dunn v. Rockwell, 225 W.Va. 43, 689 S.E.2d 255 (2009), this Court held as follows: “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.” Syllabus Point 4, Gaither v. City Hosp., Inc., 199 W.Va. 706, 487 S.E.2d 901 (1997). 14 In syllabus point five of Dunn, 225 W.Va. 43, 689 S.E.2d 255, we stated 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. (Emphasis added). “The ‘discovery rule’ is generally applicable to all torts, unless there is a clear statutory prohibition to its application.” Syl. Pt. 2, Dunn, 689 S.E.2d 258. In the second amended complaint, the Petitioners allege facts which sufficiently demonstrate that the discovery rule applies. The Petitioners allege that they were unaware until the initiation of this litigation that the fraud had occurred; that the 15 “appraisals contained information which was camouflaged and nearly devoid of identifying information . . .”; and that the bank, the appraisers, and Walnut Springs Mountain Reserve could have known of the fraud and misconduct which occurred. The only issue as a matter of law for the circuit court to decide was what underlying statute applied. It is undisputed that the underlying statute of limitations for Petitioners’ fraud in the inducement, negligence, intentional or negligent infliction of emotional distress, breach of fiduciary duty, and constructive fraud claims is two years.8 Thus, the circuit court correctly invoked the discovery rule. However, by erroneously taking judicial notice of the tax appeal matter previously before this Court, it arbitrarily initiated the statute of limitation for a date which is factually different from the allegations made by the Petitioners in the second amended complaint. As this Court has previously noted, motions to dismiss under Rule 12(b)(6) are “viewed with disfavor and [should be] rarely granted.” John W. Lodge Distributing Co., Inc. v. Texaco, Inc., 161 W.Va. 603, 606, 245 S.E.2d 157, 159 (1978). More specifically, “[t]he trial court should not dismiss a complaint merely because it doubts 8 Pursuant to W. Va. Code § 55-2-12, a two-year statute of limitations applies to Petitioners’ fraud in the inducement claim, negligence, claim, intentional or negligent infliction of emotional distress claim, breach of fiduciary duty claim, and constructive fraud claim. Under W. Va. Code § 55-2-6, a five-year statute of limitations applies to a breach of implied covenant of good faith and fair dealing. As to Petitioners’ detrimental reliance claim, “our law is clear that there is no statute of limitation for claims seeking equitable relief.” Dunn, 225 W. Va. at 54, 689 S.E.2d at 266. 16 that the plaintiff will prevail in the action, and whether the plaintiff can prevail is a matter properly determined on the basis of proof and not merely on the pleadings.” Id. (citing Wright & Miller, Federal Practice and Procedure: Civil § 1216 (1969)). Given that under 12(b)(6) the complaint is construed in the light most favorable to the plaintiff, we conclude that the court erroneously imposed the February 7, 2007, date as the point at which Petitioners should have known of their claims. Accordingly, we reverse the circuit court’s dismissal of these claims. B) Breach of Implied Covenant of Good Faith and Fair Dealing Next, Petitioners allege that the circuit court erred in dismissing their claims for breach of the implied covenant of good faith and fair dealing under the conclusion that no such tort cause of action exists under West Virginia law.9 The second amended complaint alleges that United Bank, due to its contractual and fiduciary relationship with the Plaintiffs, owed the Plaintiffs an implied covenant of good faith and fair dealing. Specifically, this duty arose when Defendant United Bank accepted the Plaintiffs as customers/clients and entered into agreements to loan them money secured by the subject lots in WSMR. 9 The Petitioners’ claim for breach of the implied covenant of good faith and fair dealing was asserted only against United Bank, not McQuade. 17 Petitioners do not assert that United Bank breached any of those contracts. In dismissing the claim, the circuit court noted that federal courts in West Virginia have held that an implied covenant of good faith and fair dealing does not exist in West Virginia absent a breach of contract claim. See Powell v. Bank of Am., N.A., 842 F.Supp.2d 966, 981 (S.D.W.Va. 2012)(“The West Virginia Supreme Court of Appeals has declined to recognize an independent claim for a breach of the common law duty of good faith, and has instead held that such a claim sounds in breach of contract.”)(Internal citations omitted); see also Wittenberg v. Wells Fargo Bank, N.A., 852 F.Supp.2d 731, 750 (N.D.W.Va. 2012)(“West Virginia does not recognize a stand-alone cause of action for failure to exercise contractual discretion in good faith. As such, a claim for breach of the implied covenant of good faith and fair dealing can only survive if the borrower pleads an express breach of contract claim.”)(Internal citations omitted). In its order, the circuit court stated that the federal district courts have based this opinion on this Court’s logic in Highmark West Virginia, Inc. v. Jamie, 221 W. Va. 487, 492, 655 S.E.2d 509, 514 (2007): In that regard, while we recognize that it has been held that an implied covenant of good faith and fair dealing does not provide a cause of action apart from a breach of contract claim, Stand Energy Corp. v. Columbia Gas Transmission, 373 F.Supp. 2d 631, 644 (S.D.W.Va. 2005), and that “[a]n implied contract and an express one covering the identical subject matter cannot exist at the same time,” syl. pt. 3, in part, Rosenbaum v. Price Construction Company, 117 W. Va. 160, 184 S.E. 261 (1936), the allegations of Count 3 construed in the light favorable to the appellant demonstrate 18 that, while inartfully drafted as a claim upon an implied covenant, Count 3 is, in reality, a breach of contract claim covering matters not identical to those specified in Counts 1 and 2. Id. at 492, 655 S.E.2d at 514. Petitioners allege that in Highmark, the Court ultimately held that the cause of action for breach of the implied covenant of good faith and fair dealing would proceed under the guise of breach of contract since there was already a breach of contract claim which did not contain identical allegations. Id. Petitioners assert that Highmark did not hold that there is no independent cause of action for breach of implied covenant of good faith and fair dealing. Rather, the issue was not addressed definitively one way or the other. Our federal district court has observed that West Virginia law “implies a covenant of good faith and fair dealing in every contract for purposes of evaluating a party’s performance of that contract.” Stand Energy Corp. v. Columbia Gas Transmission, 373 F.Supp.2d 631, 644 (S.D.W.Va. 2005) (quoting Hoffmaster v. Guiffrida, 630 F.Supp. 1289, 1291 (S.D.W.Va. 1986)). However, by the same token, this Court has observed that “[t]he implied covenant of good faith and fair dealing cannot give contracting parties rights which are inconsistent with those set out in the contract.” Barn–Chestnut, Inc. v. CFM Dev. Corp., 193 W.Va. 565, 457 S.E.2d 502, 509 (1995). 19 Most recently in Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP, 231 W.Va. 577, 587, 746 S.E.2d 568, 578 (2013), this Court reiterated that this covenant “does not provide a cause of action apart from a breach of contract claim.” Highmark West Virginia, Inc. v. Jamie, 221 W.Va. 487, 492, 655 S.E.2d 509, 514 (2007). It has been observed “that the West Virginia Supreme Court of Appeals has declined to recognize an independent claim for a breach of the common law duty of good faith and has instead held that such a claim sounds in breach of contract.” Corder v. Countrywide Home Loans, Inc., No. 2:10-0738, 2011 WL 289343 at  (S.D.W.Va.2011) (internal quotation marks and citation omitted). Based upon our review of the applicable law, we affirm the circuit court’s ruling that the Petitioners’ failure to allege a breach of contract was fatal to their claim for a breach of the implied covenant of good faith and fair dealing. C) Detrimental Reliance Petitioners lastly assert that the circuit court erred in dismissing the Petitioners’ claims for detrimental reliance pursuant to Rule 12(b)(6) for the same reasons that the circuit court erred in dismissing their fraud claim. Petitioners contend that to the extent that the detrimental reliance claim is a restatement of the fraud claim, or another count for fraud, they reassert their arguments against the dismissal of the fraud claim as were argued supra. 20 In dismissing Petitioners’ claim for detrimental reliance, the circuit court found that it lacked jurisdiction because the detrimental reliance claim sounded in equity and Petitioners were not seeking equitable relief, but rather sought to recover monetary damages. See Syl. Pt. 4, Mountain State Coll. v. Holsinger, 230 W. Va. 678, 742 S.E.2d 94 (2013)(“A court of equity is without jurisdiction to entertain a suit based on an alleged fraudulent misrepresentation to the prejudice of the complaining party, where the sole relief sought therein is the recovery of damages. In such a case the remedy of the injured party at law is plain, adequate and complete.”)10 Additionally, the circuit court found that: Plaintiffs’ detrimental reliance claim is essentially a restatement of their fraud in the inducement claims under Count One. Accordingly, the Court finds that the Plaintiffs had an adequate remedy at law, albeit untimely filed, pursuant to their fraud in the inducement claims and are precluded from bringing an equitable claim for detrimental reliance. United Bank asserts that Petitioners’ argument fails to meet the requirements of Rule 10(c)(7) of the West Virginia Rules of Appellate Procedure because it fails to address the circuit court’s first basis for dismissal of the detrimental reliance claim for lack of a proper claim for equitable relief. Therefore, United Bank contends that any alleged error on this ruling should be deemed waived for the purposes of this appeal. 10 See Syl. Pt. 2, Miller v. Robinson, 171 W. Va. 653, 301 S.E.2d 610 (1983) (“The procedural distinctions between law and equity have been abolished under Rule 2 of our Rules of Civil Procedure.”) 21 Noland v. Virginia Ins. Reciprocal, 224 W.Va. 372, 378, 686 S.E.2d 23, 29 (2009) (“Issues not raised on appeal or merely mentioned in passing are deemed waived.”) (citing Tiernan v. Charleston Area Med. Ctr., Inc., 203 W.Va. 135, 140 n.10, 506 S.E.2d 578, 583 n.10 (1998)). We agree with United Bank’s argument and conclude that Petitioners fail to address the substantive merits of the circuit court’s ruling and, thus, the issue has been waived for purposes of appeal. The circuit court’s ruling dismissing the Petitioners’ detrimental reliance claim is therefore affirmed.