Town of Fayetteville v. Law, et al.
Annotate this Case IN THE SUPREME COURT OF APPEALS OF WEST
VIRGINIA
September 1997 Term
___________
No. 24117
___________
THE TOWN OF FAYETTEVILLE,
AND THE STATE OF WEST VIRGINIA,
Plaintiffs Below, Appellants
v.
LEWIS LAW, INDIVIDUALLY; MINE MANAGEMENT, INC.,
A CORPORATION; MOUNTAIN LAUREL RESOURCES COMPANY
(FORMERLY NEW RIVER COMPANY), A CORPORATION;
CSX MINERALS, INC., A CORPORATION;
CSX CORPORATION, A CORPORATION; AND
CSX TRANSPORTATION, INC., A CORPORATION,
Defendants Below, Appellees
___________________________________________________
Appeal from the Circuit Court of Fayette County
Honorable Robert A. Burnside, Jr., Judge
Civil Action Nos. 84-C-164, 88-C-261, 91-C-194, 93-C-323
REVERSED AND REMANDED
___________________________________________________
Submitted: September 17, 1997
Filed: October 3, 1997
Travers R. Harrington, Jr.
Jesser & Harrington
Fayetteville, West Virginia
Attorney for the Appellant Town of Fayetteville
Mark J. Rudolph
Craig B. Giffin
West Virginia Division of Environmental Protection
Charleston, West Virginia
Attorney for the Appellant State of West Virginia
William G. Broaddus
E. E. Matthews, III
McGuire, Woods, Battle & Boothe
Richmond, Virginia
James M. Brown
Jane E. Harkins
Brown & Levicoff
Beckley, West Virginia
Attorneys for Appellee CSX Corporation
Richard E. Rowe
Suzanne Jett Trowbridge
Goodwin & Goodwin
Charleston, West Virginia
Attorneys for Appellees
CSX Minerals, Inc. and CSX Transportation, Inc.
This Opinion was delivered PER CURIAM.
SYLLABUS BY THE COURT
1.
"Appellate review of a 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, 194 W. Va. 770, 461 S.E.2d 516 (1995).
2. "When a
defendant files a motion to dismiss for lack of personal
jurisdiction under W. Va. R. Civ. P. 12(b)(2), the circuit court
may rule on the motion upon the pleadings, affidavits and other
documentary evidence or the court may permit discovery to aid in
its decision. At this stage, the party asserting jurisdiction
need only make a prima facie showing of personal jurisdiction in
order to survive the motion to dismiss. In determining whether a
party has made a prima facie showing of personal jurisdiction,
the court must view the allegations in the light most favorable
to such party, drawing all inferences in favor of jurisdiction.
If, however, the court conducts a pretrial evidentiary hearing on
the motion, or if the personal jurisdiction issue is litigated at
trial, the party asserting jurisdiction must prove jurisdiction
by a preponderance of the evidence." Syl. pt. 4, State ex
rel. Bell Atlantic-West Virginia, Inc. v. Ranson, No. 23942, ___
W. Va. ___, ___ S.E.2d ___ (July 16, 1997).
3. "A
parent-subsidiary relationship between corporations, one of which
is 'doing business' in West Virginia, does not without the
showing of additional
factors subject the nonresident corporation to
this state's jurisdiction. However, if the parent and its
subsidiary operate as one entity, their formal separate corporate
structures will not prevent the assertion of jurisdiction over
the non-resident corporation. The extent of control exercised by
the non-resident corporation over the corporation doing business
in this state determines whether the non-resident corporation is
subject to this state's jurisdiction." Syl. pt. 2, Norfolk
Southern Railway Company v. Maynard, 190 W. Va. 113, 437 S.E.2d 277 (1993).
4. "A
circuit court's order granting dismissal should set out factual
findings sufficient to permit meaningful appellate review.
Findings of fact include facts which the circuit court finds
relevant, determinative of the issues, and undisputed." Syl.
pt. 1, P.T.P. v. Board of Education of Jefferson County, ___ W.
Va. ___, 488 S.E.2d 61 (1997).
Per Curiam:
These four
consolidated actions are before this Court upon an appeal from
the final order of the Circuit Court of Fayette County, West
Virginia, entered on July 15, 1996. In the complaints filed
below, the appellants, the Town of Fayetteville and the State of
West Virginia, contend that they are entitled to damages and
injunctive relief because of pollution emanating from a coal
refuse pile in the Summerlee, Fayette County, area. According to
the appellants, a number of defendants, including the appellee,
CSX Corporation, are responsible for the pollution. The sole
issue before this Court, however, is whether the circuit court
committed error in granting the motion of CSX Corporation to
dismiss for lack of personal jurisdiction.
This Court has
before it the joint petition for appeal, all matters of record
and the briefs and argument of counsel. For the reasons stated
below, this Court is of the opinion that the circuit court, in
conducting a hearing on the motion to dismiss pursuant to Norfolk
Southern Railway Company v. Maynard, 190 W. Va. 113, 437 S.E.2d 277 (1993), committed error in failing to consider certain
relevant evidence concerning the relationship between CSX
Corporation, a Virginia corporation, and its wholly owned
subsidiaries doing business in this State, with regard to the
Summerlee site. Accordingly, we reverse the final order and
remand these actions to the circuit court for a more complete
consideration of the jurisdictional question under the Norfolk
Southern case.
I
The Motion to Dismiss
The Summerlee
site, a 241-acre tract of land in Fayette County, was owned by
the New River Company and used for coal mining operations until
the 1950's. Thereafter, New River maintained a coal refuse pile
upon the site and, in 1977, leased the property to Lewis Law and
Mine Management, Inc. for the removal, processing and marketing
of coal from the refuse pile and from slurry ponds located
nearby. On April 1, 1980, New River sold the Summerlee property
in its entirety to Lewis Law and Mine Management, Inc.
Asserting that
coal refuse drainage from the Summerlee site had polluted, and
continues to pollute, the headwaters of streams in the area, the
appellants instituted various civil actions seeking damages and
injunctive relief concerning the problem. The actions were
instituted over a period of years and have now been consolidated.
In addition to naming New River, Lewis Law and Mine Management,
Inc., as defendants in the litigation, the appellants also named
Western Pocahontas Corporation and CSX Corporation as defendants.
Importantly, during the period in question, New River was a
wholly owned subsidiary of Western Pocahontas, and Western
Pocahontas, in turn, was a wholly owned subsidiary of CSX
Corporation. Western Pocahontas was a land holding and leasing
company with offices in Huntington, West Virginia. CSX
Corporation, on the other hand, was a Virginia corporation with
offices in the City of Richmond.See footnote 1 1 According to the
appellants, the defendants' management of the Summerlee site
violated the West Virginia Water Pollution Control Act, W. Va.
Code, 22-11-1 [1994], et seq., and violated this State's common
law relating to public nuisance. Moreover, the appellants assert
that the violations are continuing.
In October 1995,
CSX filed a motion to dismiss for lack of personal jurisdiction.
W. Va. R. Civ. P. 12(b)(2). Specifically, CSX Corporation
asserted that, as a Virginia corporation with little or no
contacts with West Virginia, personal jurisdiction over CSX
Corporation could not be obtained under either State or federal
standards. Syl. pt. 5, Abbott v. Owens-Corning Fiberglas
Corporation, 191 W. Va. 198, 444 S.E.2d 285 (1994).See footnote 2 2 In
response to the motion, the appellants asserted a "piercing
the corporate veil" theory, indicating a lack of corporate
separateness among New River, Western Pocahontas and CSX
Corporation with regard to the Summerlee site. The circuit court
scheduled an evidentiary hearing upon the motion pursuant to
Norfolk Southern, supra.
II
The Motion in Limine
Prior to the
scheduled hearing on the motion to dismiss, CSX Corporation filed
a motion in limine to exclude all post April 1, 1980, evidence.
As the motion in limine stated: "Because the New River
Company sold the property at issue in this matter to Lewis Law on
behalf of Mine Management, Inc., in April 1980, any post April
1980 evidence is irrelevant in proving piercing claims."
Following
argument by the parties, the circuit court, emphasizing that
there was no corporate connection between CSX Corporation and its
affiliated subsidiaries, on the one hand, and Lewis Law and Mine
Management, Inc., on the other, granted the motion in limine. As
the circuit court stated: "Whatever relationship thereafter
existed between New River Company, its parent Western Pocahontas,
or between the successor of Western Pocahontas, CSX Minerals, and
CSX Corporation after that date of New River Company's sale of
the site would not be relevant[.]"
The evidentiary
hearing upon the motion of CSX Corporation to dismiss was
conducted on April 8 and 9, 1996. The evidence submitted by the
appellants included the testimony of employees of New River who
indicated (1) that loans of money were made by CSX Corporation or
Western Pocahontas to New River without the financial
documentation commonly used between independent business
entities,
(2) that, unlike other buyers, New River
employees could purchase CSX Corporation stock at a discount, (3)
that the president of CSX Corporation visited the New River
premises on several occasions and (4) that mine drainage problems
occurred at the Summerlee site prior to 1980. The evidence of CSX
Corporation, however, indicated that the New River Company
conducted business at the Summerlee site in a manner independent
of CSX Corporation and Western Pocahontas. Specifically,
concluding that the evidence of CSX Corporation was persuasive,
the circuit court, inter alia, found (1) that New River did not
have grossly inadequate capital, (2) that the obtaining of
financing by New River was not out of the course of ordinary
business, (3) that no evidence was submitted to the effect that
officers of New River were ever instructed to take action
inconsistent with the interests of the New River Company and (4)
that there was no evidence that New River did not observe the
formal requirements followed by an independent corporation.
Following the
hearing, the circuit court concluded that there was no evidence
of a lack of corporate separateness among CSX Corporation and its
affiliated subsidiaries which would justify piercing the
corporate veil.See footnote
3 3 Accordingly, as reflected in the final order of
July 15, 1996, the circuit court granted the motion of CSX
Corporation to dismiss for lack of personal jurisdiction. In so
ruling, the circuit court allowed the appellants to vouch the
record with post April 1, 1980, evidence, excluded through the
granting of the motion in limine.See footnote 4 4
III
Discussion
Indicating that
the standard of review concerning the granting of a motion to
dismiss generally involves a question of law, this Court observed
in syllabus point 2 of State ex rel. McGraw v. Scott Runyan
Pontiac-Buick, 194 W. Va. 770, 461 S.E.2d 516 (1995), that
"[a]ppellate review of a circuit court's order granting a
motion to dismiss a complaint is de novo." See also
Richardson v. Kennedy, 197 W. Va. 326, 331, 475 S.E.2d 418, 423
(1996). A motion to dismiss for lack of personal jurisdiction is
somewhat exceptional, however, in that a circuit court's
consideration of such a motion can involve an evidentiary
hearing, with the burden of proof upon the party asserting
jurisdiction. As this Court recently held in syllabus point 4 of
State ex rel. Bell Atlantic-West Virginia, Inc. v. Ranson, No.
23942, ___ W. Va. ___, ___ S.E.2d ___ (July 16, 1997):
When
a defendant files a motion to dismiss for lack of personal
jurisdiction under W. Va. R. Civ. P. 12(b)(2), the circuit court
may rule on the motion upon the pleadings, affidavits and other
documentary evidence or the court may permit discovery to aid in
its decision. At this stage, the party asserting jurisdiction
need only make a prima facie showing of personal jurisdiction in
order to survive the motion to dismiss. In determining whether a
party has made a prima facie showing of personal jurisdiction,
the court must view the allegations in the light most favorable
to such party, drawing all inferences in favor of jurisdiction.
If, however, the court conducts a pretrial evidentiary hearing on
the motion, or if the personal jurisdiction issue is litigated at
trial, the party asserting jurisdiction must prove jurisdiction
by a preponderance of the evidence.
Thus,
in addition to the de novo standard of review, where an
evidentiary hearing is conducted upon a motion to dismiss for
lack of personal jurisdiction, this Court's "clearly
erroneous" standard of review is ordinarily invoked
concerning a circuit court's findings of fact. See syl. pt. 1,
McCormick v. Allstate Insurance Company, 197 W. Va. 415, 475 S.E.2d 507 (1996) (underlying factual findings are reviewed under
a "clearly erroneous" standard). Nevertheless, in this
matter, the circuit court's findings of fact notwithstanding, the
dispositive issue before this Court, as explained below, concerns
the propriety of the circuit court's ruling in excluding the post
April 1, 1980, evidence pursuant to the motion in limine.
Inasmuch as the "clearly erroneous" standard is not
helpful in that regard, the de novo standard must be applied.
As indicated
above, the circuit court conducted the evidentiary hearing
concerning the motion of CSX Corporation to dismiss pursuant to
the Norfolk Southern case. In Norfolk Southern, an injured worker
instituted an action in the Circuit Court of Mingo County, West
Virginia, under the Federal Employers' Liability Act. The
defendant, Norfolk Southern Railway Company, a Virginia
corporation, filed a motion to dismiss for lack of personal
jurisdiction. The circuit court denied the motion. Upon review,
the issue before this Court, in Norfolk Southern, was whether the
injured worker had established that Norfolk Southern Railway
Company, the Virginia corporation, and Norfolk and Western
Railway Company, a wholly owned subsidiary which did business in
West Virginia, had operated as "one entity" for
jurisdictional purposes.
In Norfolk Southern, this Court recognized that the determination of when a foreign parent corporation, whose subsidiary is present in this State, is subject to this State's jurisdiction "must be made on a case by case basis." 190 W. Va. at 118, 437 S.E.2d at 282.See footnote 5 5 As syllabus point 2 of Norfolk Southern states:
A
parent-subsidiary relationship between corporations, one of which
is 'doing business' in West Virginia, does not without the
showing of additional factors subject the nonresident corporation
to this state's jurisdiction. However, if the parent and its
subsidiary operate as one entity, their formal separate corporate
structures will not prevent the assertion of jurisdiction over
the non-resident corporation. The extent of control exercised by
the non-resident corporation over the corporation doing business
in this state determines whether the non-resident corporation is
subject to this state's jurisdiction.
Under
the facts of Norfolk Southern, however, this Court noted a
"lack of evidence" concerning Norfolk Southern Railway
Company's actions concerning its West Virginia subsidiary.
Accordingly, this Court resolved the problem by holding that the
parties were entitled to an evidentiary hearing before the
circuit court upon the jurisdictional issue.
In this matter,
although an evidentiary hearing was conducted pursuant to the
Norfolk Southern case, evidence concerning the relationship,
after April 1, 1980, between CSX Corporation and its wholly owned
subsidiaries doing business in this State, with regard to the
Summerlee site, was excluded as irrelevant pursuant to the motion
in limine. According to CSX Corporation, the circuit court
correctly excluded that evidence because, on that date, the
property was conveyed in its entirety to Lewis Law and Mine
Management, Inc. In that regard, CSX Corporation contends that it
is not subject to personal jurisdiction in West Virginia because
(1) neither it nor its affiliated subsidiaries are responsible
for the actions of the unrelated grantees, i.e., Lewis Law and
Mine Management, Inc., and (2) the "piercing the corporate
veil" theory is applicable only to the time during which New
River owned the Summerlee site and, thus, could have allowed
pollution to occur on the property. See William C. Atwater &
Co. v. Fall River Pocahontas Collieries, 119 W. Va. 549, 561, 195 S.E. 99, 105 (1937) (stating that "the corporate entity
cannot be disregarded haphazardly.").
The appellants,
on the other hand, contend that a substantial portion of their
evidence, in establishing personal jurisdiction over CSX
Corporation, was excluded by the granting of the motion in
limine. Thus, according to the appellants, the evidence actually
adduced at the hearing was less than dispositive of the motion of
CSX Corporation to dismiss. Rather, the appellants emphasize that
they have made allegations to the effect that the defendants,
including CSX Corporation through its control of its affiliated
subsidiaries, have polluted, and continue to pollute, streams in
the Summerlee area through coal refuse drainage. As the
appellants state, those allegations, if proved, constitute
violations of the West Virginia Water Pollution Control Act,
W. Va. Code, 22-11-1 [1994], et seq., and this State's
common law relating to public nuisance.
In the recent
decision of this Court in State ex rel. Smith v. Kermit Lumber
& Pressure Treating Co., No. 23831, ___ W. Va. ___, ___
S.E.2d ___ (June 24, 1997), a case involving hazardous waste
drainage, the Water Pollution Control ActSee footnote 6 6 and the law
relating to public nuisance were discussed. In Kermit, a lessee
operated a lumber treating business in Mingo County, West
Virginia, which resulted in multiple spills of harmful chromium
and arsenic into the soil and nearby river. The business was
opened in 1977 and terminated in 1988. According to the West
Virginia Division of Environmental Protection, however, instead
of remediating the problem, the lessee dismantled the business
site and regraded the soil to hide the contamination. For several
years subsequent to 1988, the hazardous waste remained on the
property.
In 1995, the
Division of Environmental Protection, in Kermit, filed an action
in the Circuit Court of Mingo County alleging, inter alia, that
the lessee had transgressed this State's Water Pollution Control
Act and the common law of public nuisance. The Division sought to
compel the lessee to clean up the hazardous waste at the site
and, in addition, sought civil penalties and damages. Upon the
lessee's motion, however, the circuit court dismissed the action
as untimely under the statute of limitations. This Court, in
Kermit, reversed the dismissal and held in syllabus points 10 and
11 as follows:
10.
The general one-year statute of limitations found in W. Va. Code,
55-2-12(c) [1959] 'accrues' when any person 'violates any
provision of [the Water Pollution Control Act, found in W. Va.
Code, 22-11-1 et seq.] or of any rule or who violates any
standard or order promulgated or made and entered under the
provisions of [the Act]' or when a 'violation occurred or is
occurring' under the Act. W. Va. Code, 22-11-22 [1994]. Thus, any
'sewage, industrial wastes or other wastes, or the effluent
therefrom, produced by or emanating from any point source [and
currently] flow[ing] into the waters of this state[,]' W. Va.
Code, 22-11-8(b)(1) [1994], in violation of any provision of the
Water Pollution Control Act constitutes a continuing violation of
the Act.
11.
When a public nuisance action is brought in order to remediate a
business site containing hazardous waste found in the soil and
flowing into the waters of this State, the one-year statute of
limitations found in W. Va. Code, 55-2-12(c) [1959] does not
accrue until the harm or endangerment to the public health,
safety and the environment is abated.
In
Kermit, the record indicated that the Division of Environmental
Protection, in its 1995 complaint, raised the Water Pollution
Control Act for the first time approximately 7 years after the
lessee vacated the property. Nevertheless, noting that the
complaint alleged that hazardous waste "currently
remains" in the soil at the site and that hazardous waste
has contaminated a nearby river, this Court concluded, in Kermit,
that because the Division of Environmental Protection alleged
"that a 'violation . . . is occurring' under the Water
Pollution Control Act, the statute of limitations has not yet
begun to run." ___ W. Va. at ___, ___ S.E.2d at ___.
Similarly, with regard to the Division of Environmental
Protection's public nuisance claim, which consisted of
allegations of hazardous waste found at the site and leaching
into the nearby river, this Court stated:
As
long as the arsenic remains on the Kermit Lumber business site in
amounts above the regulatory limits and as long as the arsenic is
flowing into the Tug Fork River, the harm or nuisance continues
and thus, is a continuing (or temporary) nuisance. It is
inconceivable that the arsenic caused all the damage it could
prior to 1988 when the [lessee] vacated the business site.
___ W. Va. at ___, ___ S.E.2d at __.
Here, the sole
issue before this Court is whether the circuit court committed
error in granting the motion of CSX Corporation to dismiss for
lack of personal jurisdiction. Clearly, it is not necessary for
the appellants to prove their allegations as to liability before
personal jurisdiction over CSX Corporation may be considered. It
is noteworthy, however, that although the parties and the circuit
court have not had the benefit of the recent Kermit decision, CSX
Corporation acknowledged that the circuit court's granting of the
motion in limine did not "immunize New River, or any CSX
Corp. subsidiary, for any acts for which they were
responsible." Certainly, to the extent that New River
or Western Pocahontas may be responsible for continuing
violations of law concerning pollution emanating from the
Summerlee site, as the appellants have alleged they are, the
actions of CSX Corporation toward those entities after April 1,
1980, are relevant to the question of personal jurisdiction.
According to the appellants, after the sale to Lewis Law and Mine
Management, Inc., there existed (1) interlocking directorates
among CSX Corporation and its affiliated subsidiaries, (2)
control, generally, by CSX Corporation over its subsidiaries and
(3) the "usurpation of assets" by CSX Corporation of
its subsidiaries. See n. 4, supra. In view of such matters, this
Court is of the opinion that the circuit court committed error in
excluding the post April 1, 1980, evidence.
As indicated
above, the circuit court, upon granting the motion in limine,
allowed the appellants to vouch the record with their post-April
1, 1980, evidence concerning jurisdiction. That evidence was
presented to the circuit court in summary fashion, and CSX
Corporation did not have occasion to respond. Consequently, under
those circumstances, and in view of the fact that the circuit
court did not consider that evidence in ruling upon the motion of
CSX Corporation to dismiss, it would be inappropriate for this
Court to state whether the appellants met their burden of proving
personal jurisdiction over CSX Corporation. See Bell Atlantic,
supra. Accordingly, we remand these actions to the circuit court
for a more complete consideration, and findings, under the
Norfolk Southern case, concerning the jurisdictional question. As
this Court stated in syllabus point 1 of P.T.P. v. Board of
Education of Jefferson County, ___ W. Va. ___, 488 S.E.2d 61
(1997): "A circuit court's order granting dismissal should
set out factual findings sufficient to permit meaningful
appellate review. Findings of fact include facts which the
circuit court finds relevant, determinative of the issues, and
undisputed."
Upon all of the
above, therefore, the final order of the Circuit Court of Fayette
County, entered on July 15, 1996, is reversed, and these actions
are remanded to that court for proceedings consistent with this
opinion.
Reversed and remanded.
Footnote:
1 1
As stated above, the sole issue before this Court is whether the
circuit court committed error in granting the motion of CSX
Corporation to dismiss for lack of personal jurisdiction.
Accordingly, it is not necessary to extensively set forth the
complex history of this litigation or the convoluted identities
of the various corporations involved.
It
should be noted, however, that, in March 1995, the circuit court
entered summary judgment against Lewis Law and Mine Management,
Inc., upon the issue of liability. An appeal from that ruling was
refused by this Court on May 29, 1996. In addition, Lewis Law and
Mine Management, Inc., were criminally prosecuted for the
discharge of pollution at the Summerlee site, and felony
convictions were obtained. United States v. Law, 979 F.2d 977
(4th Cir. 1992), cert. denied, 507 U.S. 1030 (1993).
With
regard to corporate identities, it should be noted that the New
River Company, the grantor of the Summerlee site, later became
Mountain Laurel Resources Company. Its parent, Western
Pocahontas, became CSX Minerals, Inc. CSX Corporation, the parent
of Western Pocahontas, owned another subsidiary by the name of
CSX Transportation, Inc.
There are no corporate connections between CSX Corporation and its affiliated subsidiaries, on the one hand, and Lewis Law and Mine Management, Inc., on the other. Moreover, only CSX Corporation has raised the issue of personal jurisdiction before this Court. Lewis Law, Mine Management, Inc., and New River have not participated in this appeal. CSX Minerals, Inc. (Western Pocahontas), and CSX Transportation, Inc., filed a joint brief in support of CSX Corporation.
Footnote:
2 2
As W. Va. R. Civ. P. 12(b)(2) provides, "the following
defenses may at the option of the pleader be made by motion: . .
. lack of jurisdiction over the person [.]" In that regard,
syllabus point 5 of Abbott, supra, states:
A
court must use a two-step approach when analyzing whether
personal jurisdiction exists over a foreign corporation or other
nonresident. The first step involves determining whether the
defendant's actions satisfy our personal jurisdiction statutes
set forth in W. Va. Code, 31- 1-15 [1984] and W. Va. Code,
56-3-33 [1984]. The second step involves determining whether the
defendant's contacts with the forum state satisfy federal due
process.
Here, in support of the motion to dismiss, CSX Corporation filed the affidavit of Rachel E. Geiersbach, its Assistant Corporate Secretary, which stated, in part, that CSX Corporation had no offices or employees in West Virginia and owned no real or personal property in West Virginia. Moreover, as the affidavit concluded: "CSX Corporation neither does business nor transacts business in West Virginia, nor is it or has it ever been authorized under West Virginia law to do business in West Virginia."
Footnote:
3 3
The final order entered by the circuit court states:
Because Plaintiffs have failed to meet their burden of proving the lack of corporate separateness between New River and Western Pocahontas and between Western Pocahontas and CSX Corporation, CSX Corporation does not, by virtue of its relationship with these two companies,
or by its own activities, have sufficient contacts with West Virginia to subject it to the jurisdiction of this State's court.
Footnote:
4 4
The appellants contend that the post April 1, 1980, evidence is
critical to the issue of jurisdiction over CSX Corporation
because CSX Corporation allegedly controlled New River during
that period and depleted New River's assets in order to avoid
financial responsibility associated with the "continuing
nature" of coal refuse drainage emanating from the Summerlee
site. In fact, asserting that Lewis Law and Mine Management,
Inc., took no action "to create the mine dump or to add to
it," and lacked the financial resources to deal with the
problem, the Town of Fayetteville's reply brief filed before this
Court states: "[T]he reason the citizens of Fayetteville and
the taxpayers of West Virginia are left holding the bag, is
because CSX removed the viable assets of . . . New River without
consideration. . . . If the ruling below stands, CSX will have
successfully compartmentalized its liability subsidiaries from
its asset subsidiaries."
Specifically, following the granting of the motion in limine, both appellants filed a written offer of proof to vouch the record before the circuit court. According to the appellants, the excluded post April 1, 1980, evidence revealed, inter alia, (1) interlocking directorates among CSX Corporation and its affiliated subsidiaries, (2) control, generally, by CSX Corporation over its subsidiaries and (3) the "usurpation of assets" by CSX Corporation of its subsidiaries.
Footnote:
5 5
In stating that personal jurisdiction, in the parent-subsidiary
context of Norfolk Southern, "must be made on a case by case
basis," this Court, in the Norfolk Southern opinion, set
forth the following factors to be considered concerning piercing
the corporate veil:
(1)
Whether the parent corporation owns all or most of the capital
stock of the subsidiary;
(2)
Whether the parent and subsidiary corporations have common
directors and officers;
(3)
Whether the parent corporation finances the subsidiary;
(4)
Whether the parent corporation subscribes to all the capital
stock of the subsidiary or otherwise causes its incorporation;
(5)
Whether the subsidiary has grossly inadequate capital;
(6)
Whether the parent corporation pays the salaries and other
expenses or losses of the subsidiary;
(7)
Whether the subsidiary has substantially no business except with
the parent corporation or no assets except those conveyed to it
by the parent corporation;
(8)
Whether in the papers of the parent corporation or in the
statement of its officers, the subsidiary is described as a
department or division of the parent corporation, or its business
or financial responsibility is referred to as the parent
corporation's own;
(9)
Whether the parent corporation uses the property of the
subsidiary as its own;
(10)
Whether the directors or executives of the subsidiary do not act
independently in the interest of the subsidiary but take their
orders from the parent
corporation in the latter's interest; and
(11)
Whether the formal legal requirements of the subsidiary are not
observed.
190 W. Va. at 118, 437 S.E.2d at 282.
Although limiting its consideration to pre-April 1, 1980, evidence, the circuit court herein utilized the above factors in granting the motion of CSX Corporation to dismiss.
Footnote:
6 6
W. Va. Code, 22-11-8(b) [1994], of the Water Pollution Control
Act, provides, in part:
(b)
It is unlawful for any person, unless the person holds a permit
therefor from the division, which is in full force and effect,
to:
(1)
Allow sewage, industrial wastes or other wastes, or the effluent
therefrom, produced by or emanating from any point source, to
flow into the waters of this state . . .
(6)
Construct, install, modify, open, reopen, operate or abandon any
mine, quarry or preparation plant, or dispose of any refuse or
industrial wastes or other wastes from any such mine or quarry or
preparation plant: Provided, That the division's permit is only
required wherever the aforementioned activities cause, may cause
or might reasonably be expected to cause a discharge into or
pollution of waters of the state, except that a permit is
required for any preparation plant[.]
Moreover, W. Va. Code, 22-11-20 [1994], of the Act, provides, in part:
No right to violate the rules of the board or director or to continue existing pollution of any of the waters of the state exists nor may such right be acquired by virtue of past or future pollution by any person. The right and control of the state in and over the quality of all waters of the state are hereby expressly reserved and reaffirmed. It is recognized that with the passage of time, additional efforts may have to be made, by all persons toward control and reduction of the pollution of the waters of the state, irrespective of the fact that such persons may have previously complied with all orders of the director or board.
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