Court Opinion

ID: 4211708
Source: CourtListenerOpinion
Date Created: 2017-10-13 19:16:46.465284+00
Date Added: 2024-06-11T14:40:42.485885
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                September 2017 Term
                                _________________                       FILED
                                                                    October 13, 2017
                                                                        released at 3:00 p.m.
                                     No. 16-0553                      RORY L. PERRY, II CLERK
                                                                    SUPREME COURT OF APPEALS
                                                                         OF WEST VIRGINIA
                                 __________________

         KOURT SECURITY PARTNERS, LLC, d/b/a SELECT SECURITY,
                             Petitioner

                                         v.

                           JUDY’S LOCKSMITHS, INC.,
                           and JUDITH J. RANSOM, d/b/a
                             JUDY ALARM MASTERS
                                   Respondents

         _________________________________________________________

                  Appeal from the Circuit Court of Kanawha County
                        The Honorable Tod Kaufman, Judge
                            Civil Action No. 09-C-1619

                          REVERSED AND REMANDED

         ________________________________________________________

                            Submitted: September 19, 2017
                               Filed: October 13, 2017

Charles J. Kaiser, Jr., Esq.                  Charles E. Hurt, Esq.
Jeffery D. Kaiser, Esq.                       The Law Offices of Charles E. Hurt
Phillips, Gardill, Kaiser & Altmeyer, PLLC    Charleston, West Virginia
Wheeling, West Virginia                       Counsel for Respondents
Counsel for Petitioner

Justice Workman delivered the Opinion of the Court.

                            SYLLABUS BY THE COURT
              1. “A circuit court’s entry of summary judgment is reviewed de novo.” Syl.

Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

              2. “A motion for summary judgment should be granted only when it is clear

that there is no genuine issue of fact to be tried and inquiry concerning the facts is not

desirable to clarify the application of the law.” Syl. Pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins.

Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).

              3. “Summary judgment is appropriate if, from the totality of the evidence

presented, the record could not lead a rational trier of fact to find for the nonmoving party,

such as where the nonmoving party has failed to make a sufficient showing on an essential

element of the case that it has the burden to prove.” Syl. Pt. 2, Williams v. Precision Coil,

Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995).

              4. “A party who moves for summary judgment has the burden of showing that

there is no genuine issue of fact and any doubt as to the existence of such issue is resolved

against the movant for such judgment.” Syl. Pt. 6, Aetna Cas. & Sur. Co. v. Fed. Ins. Co.,

148 W.Va. 160, 133 S.E.2d 770 (1963).

                                               i
              5. “A bona fide purchaser is one who actually purchases in good faith.” Syl.

Pt. 1, Kyger v. Depue, 6 W.Va. 288 (1873).

              6. “Whatever is sufficient to direct the attention of a purchaser to prior rights

and equities of third parties, so as to put him on inquiry into ascertaining their nature, will

operate as notice.” Syl. Pt. 1, Pocahontas Tanning Co. v. St. Lawrence Boom & Mfg. Co.,

63 W.Va. 685, 60 S.E. 890 (1908).

              7. “That which fairly puts a party on inquiry is regarded as sufficient notice,

if the means of knowledge are at hand; and a purchaser, having sufficient knowledge to put

him on inquiry, or being informed of circumstances which ought to lead to such inquiry, is

deemed to be sufficiently notified to deprive him of the character of an innocent purchaser.”

Syl. Pt. 3, Pocahontas Tanning Co. v. St. Lawrence Boom & Mfg. Co., 63 W.Va. 685, 60 S.E.

890 (1908).

              8. “One who claims the protection of a court of equity as a bona fide purchaser

must show that he had acquired the legal title before notice or knowledge of facts equivalent

to notice.” Syl. Pt. 4, Clark v. Lambert, 55 W.Va. 512, 47 S.E. 312 (1904).

Workman, Justice:

                                              ii
              This is an appeal by Kourt Security Partners, LLC, d/b/a Select Security

(hereinafter “the Petitioner”) from a March 13, 2016, order granting summary judgment in

favor of Judy’s Locksmiths, Inc., and Judith J. Ransom, d/b/a Judy’s Alarm Masters,

(hereinafter “the Respondents”). The Petitioner contends the circuit court erred in granting

summary judgment where genuine issues of material fact exist. Based upon this Court’s

review, we reverse the circuit court’s grant of summary judgment and remand this case for

further proceedings consistent with this opinion.

                            I. Factual and Procedural History

              On April 1, 2008, the Respondents entered into an Asset Purchase Agreement

with Secure US, Inc. (hereinafter “Secure US”) and Serbian Fonz, LLC (hereinafter

“Serbian”), companies owned by Mr. Mitchell Brozik (hereinafter collectively referenced as

“the Brozik companies” or individually as “Mr. Brozik”). Pursuant to that agreement, the

Respondents agreed to sell the assets of its business in Charleston, West Virginia, to the

Brozik companies for the purchase price of $420,992.

              The Brozik companies made installment payments under the terms of the

agreement until sometime in early 2009. The Respondents thereafter initiated a lawsuit

against the Brozik companies in the Circuit Court of Kanawha County, West Virginia, on

September 1, 2009. Due to significant financial difficulties experienced by Secure US, Mr.

                                             1
Brozik ultimately received assistance from his personal friend, Mr. Mylan Puskar. On

December 26, 2009, the Mylan Puskar Amended and Restated Revocable Trust purchased

the outstanding debt of Secure US in the amount of $3,500,000 and extended an additional

line of credit in the amount of $900,000.

              On October 6, 2011, the Respondents settled their civil action with the Brozik

companies, and the companies agreed to pay the Respondents $191,000 over thirty-six

months. The companies made those required payments until approximately March 2014.

              In 2012, Mr. Brozik’s aunt, Ms. Betty Parmer, agreed to assist Mr. Brozik with

his companies’ financial challenges by purchasing the debt of Secure US which had been

held by the Milan Puskar trust for $2,500,000. Ms. Parmer thereafter claimed default against

Secure US and moved to have its assets sold at auction. On May 5, 2012, Ms. Parmer

purchased the assets in a secured party sale. Ms. Parmer thereafter retained another company

owned by Mr. Brozik, MB Security, to manage the assets she had purchased. In May 2014,

Ms. Parmer removed MB Security as manager of the former Secure US assets and instead

retained the Petitioner to manage the assets.

              On June 19, 2014, based upon the cessation of payments pursuant to the

settlement between the Respondents and the Brozik companies, the circuit court awarded the

Respondents $47,184.24 to be paid by the Brozik companies. This judgment became a lien

                                                2
on July 25, 2014. In November 2014, Ms. Parmer sold the assets of Secure US to the

Petitioner. Thereafter, in July 2015, the Respondents amended their complaint to add the

Petitioner as a defendant.

              The Respondents moved for summary judgment against the Petitioner on

January 26, 2016. On March 1, 2016, the circuit court entered an order granting summary

judgment to the Respondents in the amount of $48,730.97. The circuit court based its

decision upon its finding that Ms. Parmer was aware of the Respondents’ judgment against

Secure US when the assets of that company were purchased by Ms. Parmer, even though the

Respondents did not record an abstract of the judgment until a month after the Petitioner

purchased Ms. Parmer’s Secure US assets.

              In granting summary judgment to the Respondents, the circuit court found

“Defendant, Kourt Security Partners, cannot be considered as a bona fide purchaser for value,

since it was well aware of all of the aforesaid actions, and participated in such actions.” The

circuit court further held:

              Betty Parmer transferred all of the assets of Secure US to Kourt
              Security Partners with the view of going out of business, and .
              . . nothing was left in Secure US to pay [the Respondents].
              Certainly Kourt Security took the assets of Secure US “cum
              onere,” which means that something is taken subject to a charge
              or burden.

                                              3
              The Petitioner now appeals, contending summary judgment was improper

because (1) the judgment was entered against it without consideration of whether Ms.

Parmer had knowledge and/or notice of the Respondents’ lien or judgment encumbering the

assets when she purchased them in May 2012; (2) the circuit court failed to consider statutes

regarding writs of execution; (3) the circuit court failed to recognize that the May 2012 sale

was commercially reasonable and extinguished all subordinate debt interests, including those

of the Respondents; and (4) the circuit court made erroneous factual findings.

                                   II. Standard of Review

              As this Court explained in syllabus point one of 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.” Pursuant to Rule 56 of the West Virginia Rules of Civil Procedure, “[a] motion for

summary judgment should be granted only when it is clear that there is no genuine issue of

fact to be tried and inquiry concerning the facts is not desirable to clarify the application of

the law.” Syl. Pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins. Co. of New York, 148 W.Va. 160, 133

S.E.2d 770 (1963). This Court has also specified: “Summary judgment is appropriate if,

from the totality of the evidence presented, the record could not lead a rational trier of fact

to find for the nonmoving party, such as where the nonmoving party has failed to make a

sufficient showing on an essential element of the case that it has the burden to prove.” Syl.

Pt. 2, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995). Utilizing these

                                               4
standards as guidance, this Court addresses the propriety of summary judgment in this matter.

                                       III. Discussion

              The Petitioner contends there are genuine issues of material fact which should

have precluded summary judgment in this case. As this Court expressed in syllabus point

six of Aetna Casualty, “[a] party who moves for summary judgment has the burden of

showing that there is no genuine issue of fact and any doubt as to the existence of such issue

is resolved against the movant for such judgment.” 148 W.Va. at 162, 133 S.E.2d at 772, syl.

pt. 6. Thus, it is apparent that the Respondents had the burden of showing that there was no

genuine issue of material fact. Doubt will be resolved against the Respondents, as the party

moving for summary judgment.

              The status of Ms. Parmer as a bona fide purchaser is the primary controversy

underlying the Petitioner’s arguments. This Court has explained that a bona fide purchaser

is:

              “‘one who purchases for a valuable consideration, paid or parted
              with, without notice of any suspicious circumstances to put him
              upon inquiry.’” Stickley v. Thorn, 87 W.Va. 673, 678, 106 S.E.
              240, 242 (1921) (quoting Carpenter Paper Co. v. Wilcox, 50
              Neb. 659, 70 N.W. 228 (1897)). See also Simpson v. Edmiston,
              23 W.Va. 675, 680 (1884) (“[A] bona fide purchaser is one who
              buys an apparently good title without notice of anything
              calculated to impair or affect it.”); Black’s Law Dictionary
              1249 (7th ed.1999) (defining a bona fide purchaser as “[o]ne
              who buys something for value without notice of another’s claim
              to the item or of any defects in the seller’s title; one who has in

                                              5
              good faith paid valuable consideration for property without
              notice of prior adverse claims.”).

Subcarrier Commc’ns, Inc. v. Nield, 218 W.Va. 292, 300, 624 S.E.2d 729, 737 (2005).

              As this Court succinctly explained in syllabus point one of Kyger v. Depue, 6

W.Va. 288 (1873): “A bona fide purchaser is one who actually purchases in good faith.” See

also Wolfe v. Alpizar, 219 W.Va. 525, 530, 637 S.E.2d 623, 628 (2006) (finding status as

bona fide purchaser for value without notice where “innocent purchaser” bought land in

absence of “documentation of which [purchaser] could have or should have been aware that

would have alerted her to the appellants’ claims. . . .”). In syllabus point one of Pocahontas

Tanning Co. v. St. Lawrence Boom & Manufacturing Co., 63 W.Va. 685, 60 S.E. 890 (1908),

this Court held: “Whatever is sufficient to direct the attention of a purchaser to prior rights

and equities of third parties, so as to put him on inquiry into ascertaining their nature, will

operate as notice.” This Court continued in syllabus point three of Pocahontas: “That which

fairly puts a party on inquiry is regarded as sufficient notice, if the means of knowledge are

at hand; and a purchaser, having sufficient knowledge to put him on inquiry, or being

informed of circumstances which ought to lead to such inquiry, is deemed to be sufficiently

notified to deprive him of the character of an innocent purchaser.” Id. at ___, 60 S.E. at 890,

syl. pt. 3. In syllabus point four of Clark v. Lambert, 55 W.Va. 512, 47 S.E. 312 (1904), this

Court also addressed this issue of notice and held: “One who claims the protection of a court

                                              6
of equity as a bona fide purchaser must show that he had acquired the legal title before notice

or knowledge of facts equivalent to notice.”

              Although the circuit court based its summary judgment order in this case upon

the premise that Ms. Parmer had knowledge and appreciation of the circumstances under

which she purchased the assets of Secure US and was consequently not a bona fide purchaser

without notice of an adverse claim against the company, the Petitioner contends genuine

issues of material fact exist on that issue.1 For instance, a judgment was not obtained by the

Respondents against the Brozik companies until June 19, 2014, and a writ of execution was

not obtained until July 25, 2014, almost two years after Ms. Parmer purchased the assets of

Secure US.2 In their summary judgment motion, the Respondents asserted, in conclusory

fashion, that Ms. Parmer had actual or constructive knowledge of the Respondents’ judgment

against Secure US prior to the recording of the lien; they did not, however, present evidence

establishing such knowledge or notice.

       1
        The Petitioner also contends that the Respondents failed to submit evidence
indicating that the sale to Ms. Parmer was in any manner commercially unreasonable. Thus,
the Petitioner contends that the circuit court must address the issue of a commercially
reasonable sale and the consequent extinguishment of all subordinate debt interests.
       2
        As the Petitioner contends, the judgment lien had not attached to the assets Ms.
Parmer purchased that were eventually purchased by the Petitioner. As stated in syllabus
point four of Hartman v. Corpening, 116 W.Va. 31, 178 S.E. 430 (1935), “[t]he lien of a
perfected execution is both immediate and progressive, but not retroactive.”

                                               7
              Moreover, this Court issued a memorandum decision in Brozik v. Parmer, No.

16-0238, 2017 WL 65475 (W.Va. Jan. 6, 2017) (memorandum decision), affirming a jury

verdict in a civil action brought by Ms. Parmer against Mr. Brozik on the issue of Mr.

Brozik’s fraudulent activity and Ms. Parmer’s lack of awareness of all circumstances

surrounding her financial assistance to Mr. Brozik in connection with the purchase of the

assets of Secure US. In that case, the jury returned a verdict finding that Mr. Brozik and MB

Security breached contractual and fiduciary duties owed to Ms. Parmer. Id. at *4. Critical

to the application of those findings to the present case, this Court affirmed the jury’s finding

that Mr. Brozik and MB Security “made false representations, untrue statements, failed to

provide Ms. Parmer necessary and important information, and fraudulently induced Ms.

Parmer into a series of transactions that made her the owner of Secure US’s assets. . . .” Id.

We also observed that the “evidence revealed that Mr. Brozik caused his aunt to become the

owner of his company’s assets as part of a scheme to avoid paying a lawful judgment

obtained by” another “competing security company. . . .” Id. at *9. Thus, the Petitioner in

the present case argues that whether Ms. Parmer was aware of the business circumstances

surrounding the indebtedness of Secure US to the Respondents was a question of fact

rendering summary judgment inappropriate.

              The sole question currently before this Court is whether this matter should have

been decided through the procedural vehicle of summary judgment. Courts have broadly

recognized that issues surrounding an entity’s status as a bona fide purchaser may not be

                                               8
appropriate for resolution by summary judgment. In Hanlon v. Bowman, 169 W.Va. 405,

287 S.E.2d 519 (1982), this Court encountered a question of whether a defendant knew of

a fiduciary relationship between the original grantor and grantees and whether summary

judgment was appropriate. Id. at 408, 287 S.E.2d at 520. Knowledge of that relationship

was deemed “material to the appellant’s right to recover,” and the evidence “suggested that

[the original grantee and third parties]3 were involved in something other than an arm’s

length transaction.” Id. In reversing the circuit court’s summary judgment order, this Court

observed the ineffectiveness of summary judgement where unresolved factual issues

predominate. We held that the case “involves knowledge of a fiduciary relationship,

establishment of which is similar to establishment of motive or intent.” Id. This Court also

addressed that concept in Masinter v. WEBCO Co., 164 W.Va. 241, 262 S.E.2d 433 (1980),

recognizing that summary judgment is often unwarranted “where issues involving motive and

intent are present.” Id. at 243, 262 S.E.2d at 436.

       3
       Like the present case, the Hanlon matter involved a complex set of relationships
among the parties and an allegation that Ms. Dorothy Bowman “had failed to transfer the
stock as promised in consideration of” a transfer of property to her by James and Nellie
Hanlon and “had subsequently, in breach of her trust and without authority, conveyed the
property to Earl L. Corbin and H. Louise Corbin, the other appellees.” 169 W.Va. at 406-07,
287 S.E.2d at 519-20. Thus, the question became whether the Corbins were bona fide
purchasers or knew or should have known of the arrangement between the Hanlons and Ms.
Bowman.

                                             9
               Emphasizing the imprudence of summary judgment in complex factual matters

involving bona fide purchaser status, the Court of Appeals of Minnesota reasoned as follows

in Behr v. EverBank, No. A13-1556, 2014 WL 1272390 (Minn. Ct. App. Mar. 31, 2014):

               A bona-fide purchaser “is one who gives valuable consideration
               without actual, implied or constructive notice of inconsistent
               outstanding rights of others.” Miller v. Hennen, 438 N.W.2d
               366, 369 (Minn. 1989). “Whether one is a good-faith purchaser
               is a factual determination.” Stone v. Jetmar Props., LLC, 733
               N.W.2d 480, 488 (Minn. App. 2007). Thus, the propriety of
               deciding the question at summary judgment is suspect. We
               therefore conclude that summary judgment is not appropriate on
               that ground.

Id. at *6; see also Dollar v. Dollar, 105 S.E.2d 736, 740 (Ga. 1958) (“The question as to

whether the defendant . . . had actual notice, or as to whether the circumstances were

sufficient to put him on notice of the state of the title, were questions to be determined by the

jury.”); R.W. Holdco, Inc. v. SCI/RW Holdco, Inc., 551 S.E.2d 825 (Ga. Ct. App. 2001)

(whether circumstances were sufficient to put purchaser on notice of appellants’ interest in

property was question of fact to be determined by trier of fact); Green v. Tanner, 49 Mass.

411, 422 (Mass. 1844) (whether defendants are bona fide purchasers is question of fact);

Proteon, Inc. v. Digital Equip. Corp., No. CV981533F, 2000 WL 1298130, *4 (Mass. Super.

Ct. Mar. 3, 2000) (“As there are genuine issues of material fact on the legal issue of whether

or not Cabletron was a bona fide purchaser, this matter is not appropriate for summary

judgment.”).

                                               10
              The dispositive “question of notice often requires a factual determination that

is not appropriate for summary judgment.” Anthony Marano Co. v. J & S Produce Corp.,

No. 12 C 1906, 2014 WL 4922324, *8 (N.D. Ill. Sept. 30, 2014); see also Gargiulo v. G.M.

Sales, Inc., 131 F.3d 995, 1000 (11th Cir. 1997) (reversing summary judgment because

“genuine issues of material fact exist as to whether the bank was a bona fide purchaser and

whether the bank was without notice of [a breach of trust.]”); Albee Tomato, Inc. v. A.B.

Shalom Produce Corp., 155 F.3d 612, 617 (2d Cir. 1988) (reversing summary judgment

based upon existence of factual questions regarding defendant’s notice); Hahn v. Love, 321

S.W.3d 517, 527 (Tex. App. 2009) (“The evidence shows that this case is no exception to the

rule that fraudulent transfer and bona fide purchaser status are generally questions for the

trier of fact that are inappropriate for summary judgment.”).

              In the case sub judice, the Respondents did not satisfy their burden of showing

the absence of any genuine issues of material fact regarding whether Ms. Parmer was a bona

fide purchaser. Having recognized the admonition of syllabus point six of Aetna Casualty,

requiring doubts as to the existence of material issues to be construed against the movant, this

Court finds that summary judgment should not have been granted in this case.4

                                       IV. Conclusion

       4
       Finding reversal necessary based upon the genuine issues of material fact surrounding
the bona fide purchaser issue, we do not address the Petitioner’s other assertions of error.

                                              11
             Accordingly, for the reasons set forth above, the final order of the Circuit Court

of Kanawha County entered on March 1, 2016, is reversed, and this case is remanded to the

lower court for further proceedings.

                                                                    Reversed and remanded.

                                             12