Johnson v. Pinson

854 S.E.2d 225

Denise JOHNSON, Plaintiff Below, Petitioner

v.Ruth Ann PINSON, Defendant Below, Respondent

No. 19-1014

Supreme Court of Appeals of West Virginia.

Submitted: October 28, 2020

Filed: November 17, 2020

Andrew S. Nason, Esq., Daniel T. Lattanzi, Esq., Pepper & Nason, Charleston, West Virginia, Counsel for Petitioner.

Paul A. Ryker, Esq., Barboursville, West Virginia, Counsel for Respondent and John A. Proctor, Esq., Frazier, Oxley & Proctor, LC, Huntington, West Virginia, Counsel for Mark Pinson.

WALKER, Justice:

Petitioner Denise Johnson filed this civil action against Respondent Ruth Ann Pinson in the Circuit Court of Cabell County, West Virginia. Mrs. Johnson alleged that Mrs. Pinson's husband, Mark Pinson, violated West Virginia's Uniform Fraudulent Transfers Act's (UFTA)¹ prohibition against fraudulent transfers when he conveyed real property to Mrs. Pinson with the intent to hinder, delay, or defraud Mrs. Johnson's attempt to collect on a judgment assigned to her by a third party. The circuit court entered summary judgment in favor of Mrs. Pinson, and Mrs. Johnson appealed.

At first glance this case appears complex—with its tangle of corporations settling a business dispute and entering into a promissory note, coupled with the parties’ spouses signing a personal guaranty on that promissory note, and a related $1.9 million confessed judgment in Virginia that was registered in West Virginia. But when we cut through this morass, the question at the center of this case is quite simple: did Mrs. Johnson present evidence demonstrating the existence of a material question of fact regarding Mr. Pinson's status as her debtor within the meaning of the UFTA? Considering the record, we conclude that she did not. We therefore affirm the circuit court's order granting summary judgment to Mrs. Pinson.²

I. FACTUAL AND PROCEDURAL BACKGROUND

Dennis Johnson and Mark Pinson were officers and shareholders of Producers Coal, Inc. Their wives—Mrs. Johnson and Mrs. Pinson, respectively—are the Petitioner and Respondent in this case. Mrs. Johnson filed this case against Mrs. Pinson on April 18, 2019, in an attempt to set aside a 2015 real property transfer from Mr. Pinson to Mrs. Pinson as a fraudulent conveyance under the UFTA. Mr. Pinson acquired the property located at 101 Ridgewood Road in Huntington, West Virginia, in 1993. Mr. and Mrs. Pinson married in January 2015, and he conveyed the property to her on April 22, 2015.³

In the complaint, Mrs. Johnson alleged that "James River Coal Sales, Inc., received a court-ordered judgment against Mark B. Pinson on August 8, 2016 in the amount of $1,937,377.00." But this allegation is not supported by the record. Actually, as described below, James River Coal Sales, Inc., received a $1,937,377 confessed judgment against Producers Coal, Inc. Mrs. Johnson claims this confessed judgment was assigned to her. Mrs. Johnson also relies on a personal guaranty to James River Coal Sales, Inc., signed by Mr. Pinson and Mr. Johnson to support her claim that Mr. Pinson is her debtor within the meaning of the UFTA. Mrs. Johnson seeks to set aside the property transfer from Mr. Pinson to Mrs. Pinson so that it can be a source of collection on the confessed judgment.⁴

To better explain the present action, we look to a series of previous events. In 2014, Producers Coal, Inc., settled a financial dispute with James River Coal Sales, Inc., and issued a Promissory Note agreeing to pay James River Coal Sales, Inc., the principal sum of $2,249,438 with interest. The Promissory Note was executed by Mr. Pinson as President of Producers Coal, Inc., on November 25, 2014.⁵ That same day, Mr. Pinson and Mr. Johnson personally signed a Payment Guaranty to James River Coal Sales, Inc., which provides, in part, that they "jointly and severally guarantee" to James River Coal Sales, Inc., "the full and punctual payment when due of all monetary obligations of ... [Producers Coal, Inc.] ... arising out of the Promissory Note[.]"

James River Coal Sales, Inc., initiated proceedings against Producers Coal, Inc., in the Circuit Court of the City of Richmond, Virginia, to collect on the Promissory Note. That litigation concluded by a Confession of Judgment entered on September 30, 2016, to James River Coal Sales, Inc., by Producers Coal, Inc., in the principal sum of $1,937,377.⁶ There is no evidence that James River Coal Sales, Inc., pursued its right to collect payment from Mr. Pinson or Mr. Johnson under the Payment Guaranty.

Mrs. Johnson maintains that the confessed judgment was assigned to her by James River Coal Sales, Inc., although she did not submit documentation to support that claim. Nevertheless, in May 2017, Mrs. Johnson took steps to register this alleged assignment in the Circuit Court of Cabell County;⁷ she filed a Notice of Registration of Uniform Enforcement of Foreign Judgments Act, stating she was the "Assignee Judgment Creditor" of James River Coal Sales, Inc. On this document, Mrs. Johnson listed the defendant as "Produceers [sic] Coal, Inc." and its "Obligor: Mark B. Pinson" and attached the Certification of Official Record from the City of Richmond, Virginia, for the Confession of Judgment against Producers Coal, Inc.

Based on Mrs. Johnson's filing, the circuit court entered an Abstract of Judgment in June 2017 which provides, in part, "Judgment in favor of Plaintiff, James River Coal Sales, Inc., and against the Defendant, Producers Coal, Inc., and Obligor Mark Pinson for $1,937,377[.]" "Judgment assigned to Denise Dawn Johnson via Sale and Assignment Agreement dated March 29, 2017."

After Mrs. Johnson filed the present action to set aside Mr. Pinson's property conveyance, Mrs. Pinson moved to dismiss or, in the alternative, for summary judgment, arguing that Mr. Pinson was not a judgment debtor in the Virginia case as alleged. In the memorandum of law in support of her motion, Mrs. Pinson attached several documents including the Confession of Judgment, Abstract of Judgment, and Promissory Note. Mrs. Pinson stated that the confessed judgment was against Producers Coal, Inc., not against Mr. Pinson. Mrs. Johnson filed a response to the motion to dismiss and attached the Payment Guaranty of Mr. Pinson and Mr. Johnson. On July 25, 2019, the circuit court held a hearing on this motion, and Mr. Pinson, by counsel, made a special appearance.

Following the hearing, Mrs. Johnson moved to amend the complaint to add Mr. Pinson as a defendant. Mrs. Johnson did not concede that Mr. Pinson was an indispensable party in this action because a claim under the UFTA can be brought against a transferee of the property. But, Mrs. Johnson explained that she moved to amend the complaint because "the circuit court appeared to express the opinion that Mr. Pinson may be a necessary party to the case at the hearing."

On October 7, 2019, the circuit court denied Mrs. Johnson's motion to amend the complaint to add Mr. Pinson as a defendant.

Because there was no judgment against Mr. Pinson, it found no basis for the motion. The circuit court stated that Mrs. Johnson "has never provided any documentation that she in fact has any right to stand in the shoes of James River Coal Sales, Inc. with regard to its Judgment against Producer's Coal" and her "erroneous or falsified document with the Circuit Clerk of Cabell County, West Virginia does not magically create a legal obligation for a Judgment that does not exist." The circuit court noted that Mrs. Johnson had nearly four years after the transfer of the property at issue and was obviously aware of the transaction when she filed the complaint but neglected to timely join Mr. Pinson.

Also on October 7, 2019, the circuit court granted Mrs. Pinson's motion for summary judgment. It found that all of the evidence produced demonstrated that the confessed judgment was exclusively against Producers Coal, Inc., with Mr. Pinson merely signing documents on the corporation's behalf as its officer. The only reference in the confessed judgment to the word "obligor" is to Producers Coal, Inc., and not to Mr. Pinson in his individual capacity. It further determined that the parties had sufficient time to obtain relevant records regarding the confessed judgment and that there had not been any motions to continue in order to obtain affidavits or deposition testimony. The circuit court found that Mrs. Pinson was entitled to summary judgment as a matter of law.⁸ It further criticized Mrs. Johnson's effort to register the confessed judgment as far as her filings set forth that Mr. Pinson was an "obligor." The circuit court found these documents were "false, null and void, and of no effect."

II. STANDARD OF REVIEW

Mrs. Johnson appeals the order of the circuit court granting summary judgment in favor of Mrs. Pinson. We have held that "[a] circuit court's entry of summary judgment is reviewed de novo. "⁹ In undertaking a de novo review, we apply the same standard for granting summary judgment that is applied by the circuit court. Under that standard "[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."¹⁰ And,

[s]ummary judgment is appropriate where the record taken as a whole 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.^{[11 ]}

We are mindful that "[t]he circuit court's function at the summary judgment stage is not to weigh the evidence and determine the truth of the matter, but is to determine whether there is a genuine issue for trial."¹²

Mrs. Johnson also appeals the order denying her motion to amend the complaint. This Court typically affords circuit courts broad discretion in ruling upon motions to amend:

"A trial court is vested with a sound discretion in granting or refusing

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