825 S.E.2d 351
W. Va.2019Background
- Developers Roger and Jerry Ayers (and related entities Ayers Holdings, Ayers Land Development, Ayers Builders, A and A Homes) and Michael Frye (Frye Construction) partnered via RJM Holdings, LLC to develop Brookside subdivision; Ayers and Frye each owned 50% of RJM and personally guaranteed RJM’s loan.
- RJM recorded 2007 Covenants imposing minimum house sizes and banning vinyl siding; in 2013 RJM recorded amended covenants reducing square‑foot requirements and allowing vinyl siding.
- Homeowners (Dailey and Hill families) bought lots under the 2007 Covenants; some later homes in Brookside did not comply with the 2007 Covenants.
- Petitioners sued RJM and later added the Ayers entities and Frye, alleging joint venture, fraud, breach of covenants, and seeking to pierce corporate veils to hold individuals personally liable; summary judgment was granted to the non‑RJM respondents and certified as final.
- The Supreme Court of Appeals of West Virginia reversed and remanded, holding that genuine issues of material fact exist on joint venture and veil‑piercing theories and that many claims require resolution by a jury.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of joint venture between respondents and RJM | Ayers/Frye contributed money, marketing, staff/office use, and construction—so they combined resources to promote Brookside | Respondents said evidence is insufficient; no agreement to share profits or joint control | Reversed: evidence raised genuine fact issues about a joint venture; jury should decide |
| Piercing corporate veil to reach individual members | Entities commingled funds, used same office/staff, transferred funds between entities, and used entities as shells—supports veil piercing | Respondents asserted separate corporate formalities maintained; mere common ownership not enough | Reversed: veil‑piercing is fact specific; summary judgment inappropriate given disputed facts |
| Dismissal of other claims (fraud, breach, conspiracy, slander of title, estoppel, etc.) | These claims stand independently and were wrongly dismissed based on joint venture finding; factual disputes remain | Respondents argued dismissal proper because no joint venture and no individual wrongdoing established | Reversed in part: because joint venture/veil issues raise factual disputes, other claims cannot be resolved on summary judgment; trial required |
| Whether summary judgment was premature while discovery pending | Petitioners argued discovery incomplete, privilege log and motion to compel unresolved | Respondents proceeded with motions for summary judgment | Court noted summary judgment generally inappropriate before adequate discovery but reversed on other grounds; remanded for further proceedings |
Key Cases Cited
- Aetna Cas. & Sur. Co. v. Fed. Ins. Co., 148 W. Va. 160, 133 S.E.2d 770 (1963) (standard for granting summary judgment)
- Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994) (de novo review of summary judgment; judge must not weigh evidence)
- Price v. Halstead, 177 W. Va. 592, 355 S.E.2d 380 (1987) (definition of joint venture)
- Armor v. Lantz, 207 W. Va. 672, 535 S.E.2d 737 (2000) (joint venture requires agreement to share profits and joint management/control)
- Sipple v. Starr, 205 W. Va. 717, 520 S.E.2d 884 (1999) (contributions of property, skill, or effort can create jury question on joint venture even without explicit profit sharing)
- Laya v. Erin Homes, Inc., 177 W. Va. 343, 352 S.E.2d 93 (1986) (factors for piercing corporate veil; fact‑intensive totality‑of‑circumstances test)
- Kubican v. The Tavern, LLC, 232 W. Va. 268, 752 S.E.2d 299 (2013) (LLC veil‑piercing applicable; reiterates two‑prong test)
- S. Elec. Supply Co. v. Raleigh Cty. Nat’l Bank, 173 W. Va. 780, 320 S.E.2d 515 (1984) (corporate separateness presumption; veil piercing allowed to prevent injustice)