Court Opinion

ID: 9893888
Source: CourtListenerOpinion
Date Created: 2023-10-30 19:14:52.527165+00
Date Added: 2024-06-11T09:06:52.077895
License: Public Domain

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA

                                 2023 Fall Term                                 FILED
                         _____________________________                 October 30, 2023
                                                                            released at 3:00 p.m.
                                 No. 23-ICA-22                          EDYTHE NASH GAISER, CLERK

                         _____________________________                INTERMEDIATE COURT OF APPEALS
                                                                            OF WEST VIRGINIA

                            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.                          Martin P. Sheehan, Esq.
Sarah C. Ellis, Esq.                          Sheehan & Associates, PLLC
Benjamin McFarland, Esq.                      Wheeling, West Virginia
Colton C. Parsons, Esq.                       Counsel for Respondent Timberline Four
Steptoe & Johnson PLLC                        Seasons Utilities, Inc.
Charleston, West Virginia
Counsel for Petitioner
                                              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.
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
                                             1
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.
                                            2
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).

                                            3
       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

                                                4
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.

                                            5
        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

                                              6
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[.]

                                7
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 Pontiac-

Buick, 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

                                              8
              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).
                                              9
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 UCC-
               3 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

                                             10
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.
                                               11
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.

                                             12
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.

                                              13
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.

                                             14
        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

                                               15
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 non-

mandatory 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

                                              16
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.

                                             17
                                    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

                                          18