Sugar Rock, Inc. v. Washburn

237 W.Va. 347

787 S.E.2d 618

Sugar Rock, Inc. ; Gerald D. Hall; Iams Gas Company; Iams Oil Company; Cutright Gas Company; and Keith Oil Company, Defendants Below, Petitioners,

v.D. Michael Washburn; Lisa A. Buzzard; Claire Robinson; Edwin L. Deem; Rea Wedekamm; Mary Wakefield; Kenneth A. Townsend; Anna Lee Townsend Wells; Clyde Townsend; Michael Rubel ; Jerome Rubel; Keith White, Executor of the Estate of Bertie C. Cox; and J.F. Deem, Plaintiffs Below, Respondents.

No. 15–0124

Supreme Court of Appeals of West Virginia.

Submitted: March 8, 2016

Filed: June 3, 2016

W. Henry Lawrence, Amy M. Smith, William J. O'Brien, Steptoe & Johnson PLLC, Bridgeport, West Virginia, Attorneys for the Petitioners.

James S. Huggins, Daniel P. Corcoran, Thiesen Brock, Marietta, Ohio, Attorneys for the Respondents.

Davis, Justice:

The petitioners herein and defendants below, Sugar Rock, Inc., et al. (collectively, “Sugar Rock”),¹ appeal from an order entered January 16, 2015, by the Circuit Court of Ritchie County. By that order, the circuit court granted partial summary judgment to the respondents herein and plaintiffs below, D. Michael Washburn, et al. (collectively, “the Minority Partners”).² More specifically, the circuit court determined that the subject parties' partnerships should be dissolved and appointed a special receiver and a distribution company to achieve this result. On appeal to this Court, Sugar Rock contends that the circuit court erred by granting partial summary judgment because there exist genuine issues of material fact and questions of law regarding the type of partnerships involved in this case, the parties who are the partners thereof, whether the partnerships' property includes leases, and whether the procedural requirements for a decree of dissolution have been satisfied in this case. Upon a review of the parties' arguments, the record designated for appellate consideration, and the pertinent authorities, we reverse the decision of the Ritchie County Circuit Court. To summarize, we find that the circuit court erred by granting partial summary judgment because there exist genuine issues of material fact so as to preclude summary disposition of this matter. Accordingly, we reverse the circuit court's award of partial summary judgment and remand this case for further proceedings consistent with this opinion.

I.FACTUAL AND PROCEDURAL HISTORY

The case sub judice originated when Clifton G. Valentine (“Mr. Valentine”) filed the underlying litigation on November 14, 2011, in the Circuit Court of Ritchie County, West Virginia, against Sugar Rock seeking a dissolution of the subject partnerships,³ alleging them to be mining partnerships.⁴ While Mr. Valentine was the only plaintiff named in his suit, he specifically referenced many of the respondents herein,⁵ attempting to obtain class action status for his litigation against Sugar Rock. Several of these same respondents were added as plaintiffs to the instant proceeding when the First Amended Complaint was filed on December 1, 2011.⁶ Additional respondents were added as plaintiffs in the Second Amended Complaint on September 19, 2012.⁷ The remaining respondents herein were added as plaintiffs when the Third Amended Complaint was filed on or about December 17, 2014.⁸ The Third Amended Complaint also pled in the alternative, averring that the subject partnerships were either mining partnerships or general partnerships.

By order entered July 19, 2013, the circuit court granted the plaintiffs' first motion for partial summary judgment, concluding that the

Defendants cannot assert the statute of frauds as a defense to Plaintiffs' claims. The mines, leases, or lands of the Partnerships need not be titled in the name of each Plaintiff. Plaintiffs therefore need not produce a deed, will, or other written conveyance in order to prove that they are mining partners.

The circuit court also determined that the subject partnerships were common law mining partnerships, and that the respondents herein are successors to the partnerships' original partners.⁹ Thereafter, this Court entertained a certified question in the companion case of Valentine v. Sugar Rock, Inc. , 234 W.Va. 526, 766 S.E.2d 785 (2014), clarifying the nature and requirements of a mining partnership. Specifically, we held in Valentine that, “[f]or a person to establish an ownership interest in a mining partnership, the Statute of Frauds requires that the person show their interest was created or conveyed by a deed, will, or similar written conveyance.” Syl. pt. 5, 234 W.Va. 526, 766 S.E.2d 785.

The plaintiffs below filed a second motion for partial summary judgment, requesting that certain leases be declared partnership property and seeking a dissolution of the subject partnerships as well as the appointment of a special receiver and a distribution company to accomplish the dissolution. By order entered January 16, 2015, the circuit court determined that the partnerships, whether they be mining partnerships or general partnerships,¹⁰ were not fulfilling their economic purpose of making a profit on the partnerships' oil and gas wells. Thus, the circuit court opined that, because the losses attributable to these ventures had been continuing for approximately fifteen years, it was not reasonable to expect them to suddenly become profitable or to earn a profit sufficient to recoup the substantial losses they had incurred. Therefore, the circuit court determined that the partnerships should be dissolved and, in doing so, determined that certain leases were property of the partnerships. The circuit court additionally appointed a special receiver and a distribution company to facilitate and oversee the partnerships' dissolution. From this adverse ruling, Sugar Rock appeals to this Court.

II.STANDARD OF REVIEW

The case sub judice comes before this Court on appeal from the circuit court's order granting partial summary judgment. Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” W. Va. R. Civ. P. 56(c). Accord Syl. pt. 5, Wilkinson v. Searls , 155 W.Va. 475, 184 S.E.2d 735 (1971) (“A motion for summary judgment should be granted if the pleadings, exhibits and discovery depositions upon which the motion is submitted for decision disclose that the case involves no genuine issue as to any material fact and that the party who made the motion is entitled to a judgment as a matter of law.”). Thus, “[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. Federal Ins. Co. of New York , 148 W.Va. 160, 133 S.E.2d 770 (1963).

We previously have defined the standard of review applicable to a circuit court's award of summary judgment as follows: “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). By equal measure, “[a]ppellate review of a partial summary judgment order is the same as that of a summary judgment order, which is de novo .” Syl. pt. 1, West Virginia Dep't of Transp., Div. of Highways v. Robertson , 217 W.Va. 497, 618 S.E.2d 506 (2005). Guided by this standard, we proceed to consider the parties' arguments.

III.DISCUSSION

The pivotal issue in this case is whether the circuit court erred by ordering the dissolution of the parties' partnerships. In rendering its ruling, the circuit court opined that it need not determine the precise nature of the partnerships at issue herein by denominating them as either mining partnerships or general partnerships insofar as all types of partnerships are governed by and subject to the provisions of the Revised Uniform Partnership Act (“RUPA”), W. Va. Code § 47B–1–1 et seq. Specifically, the circuit court explained that

[i]t appears from the facts in the record that most of the Plaintiffs herein (“Documented Plaintiffs”) have produced documentation sufficient to satisfy the statute of frauds but that some (“Undocumented Plaintiffs”) have not and cannot.¹¹ Given that the Documented and Undocumented Plaintiffs have asserted claims related to the same Wells and Leases, the precise nature of the Partnerships at issue here, i.e., whether they be mining partnerships or general partnerships in mining, is unclear. For the reasons set forth below, however, this Court concludes that it need not resolve this issue for the purpose of considering Plaintiffs' Second Motion for Summary Judgment.

(Footnote in original). The circuit court additionally observed that

[t]he Supreme Court of Appeals held in Valentine that “for a person to establish an ownership interest in a mining partnership, the statute of Frauds requires the person to show their interest was created or conveyed by a deed, will, or similar written conveyance.” Id. at 40. The Supreme Court of Appeals went on, however, explaining that a member of a general partnership that owns and operates oil and gas wells under a mineral lease is not subject to the same requirement. Id. at 40–41.... Thus, even if certain Plaintiffs herein are unable to show their interest in a mining partnership in accordance with the requirements of the Statute of Frauds, the law does not bar them from requesting relief as members of a general partnership.

(Emphasis in original; footnote omitted). In its arguments to this Court, Sugar Rock contends that the circuit court erred by refusing to determine the precise type of partnerships at issue herein because such a determination is essential to ascertaining the partners thereof, the resolution of which is a necessary prerequisite to ordering their dissolution. By contrast, the Minority Partners assert that the circuit court committed no...