Province v. Province
Annotate this CaseJanuary 1996 Term
_________
No. 22689
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WILLIAM L. PROVINCE,
Plaintiff Below, Appellee
V.
TAMMY M. PROVINCE,
Defendant Below, Appellant
AND
MICHAEL L. PROVINCE AND LINDA D. PROVINCE,
Intervenors Below, Appellees
V.
WILLIAM L. PROVINCE AND TAMMY M. PROVINCE,
Defendants Below
TAMMY M. PROVINCE,
Appellant
_____________________________________________________________
APPEAL FROM THE CIRCUIT COURT OF WOOD COUNTY
HONORABLE GEORGE W. HILL, JUDGE
CIVIL ACTION NO. 90-C-864
REVERSED AND REMANDED
____________________________________________________________
Submitted: April 23, 1996
Filed: May 17, 1996
James M. Powell
Hardman & Powell
Parkersburg, West Virginia
Attorney for Appellant
Tammy M. Province
Robert S. Fluharty
Fluharty & Townsend
Parkersburg, West Virginia
Attorney for Appellees Michael W.
Province and Linda D. Province
JUSTICE CLECKLEY delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. In reviewing a circuit court's certification under Rule 54(b) of the West
Virginia Rules of Civil Procedure, this Court applies a two-prong test. First, we scrutinize
de novo the circuit court's evaluation of the interrelationship of the claims, in order to decide
whether the circuit court completely disposed of one or more claims, which is a prerequisite
for an appeal under this rule. As to the second prong of the inquiry under the rule - whether
there is any just reason for delay - this Court accords the circuit court's determination
considerably more deference than its first-prong determination. The circuit court's
assessment that there is "no just reason for delay" will not be disturbed unless the circuit
court's conclusion was clearly unreasonable, because the task of balancing the contending
factors is peculiarly one for the trial judge, who can explore all the facets of a case.
2. "In reviewing challenges to findings made by a family law master that
also were adopted by a circuit court, a three-pronged standard of review is applied. Under
these circumstances, a final equitable distribution order is reviewed under an abuse of
discretion standard; the underlying factual findings are reviewed under a clearly erroneous
standard; and questions of law and statutory interpretations are subject to a de novo review."
Syllabus Point 1, Burnside v. Burnside, 194 W. Va. 263, 460 S.E.2d 264 (1995).
3. "'Statutes of limitations are not applicable in equity to subjects of
exclusively equitable cognizance. Matters pertaining to fiduciary relationships come within
the rule.' Syllabus Point 3, Felsenheld v. Bloch Bros. Tobacco Co., 119 W. Va. 167, 192 S.E. 545, 123 A.L.R. 334 (1937)." Syllabus Point 3, Rodgers v. Rodgers, 184 W. Va. 82,
399 S.E.2d 664 (1990).
Cleckley, Justice:
In this divorce proceeding, Tammy M. Province, the defendant below and
appellant herein, appeals the order of the Circuit Court of Wood County entered April 15,
1994.(1) In its order, the circuit court adopted the special commissioner's recommended order
of December 20, 1993, concerning property distribution. The defendant contends that a 50-acre farm held in trust for her and the plaintiff together with rental proceeds from a lease
agreement on that property should have been included as part of the marital estate for
equitable distribution purposes. She maintains this property was conveyed to the plaintiff's
brother and sister-in-law in "paper title" only, with the understanding that the conveyance
was for the purpose of protecting the property from creditors and the property would be
reconveyed to the plaintiff and the defendant when their financial situation improved. The
special commissioner refused to hear evidence on this issue presumably because the trust
claim was barred by the statute of limitations. The defendant asserts the commissioner erred
in refusing to hear this evidence. We agree.
I.
FACTUAL AND PROCEDURAL BACKGROUND
William Province, the plaintiff below and one of the appellees herein,(2) and
Tammy Province were married in 1978 and had two children, Billie Jo Province, born in
October, 1978, and Jesse William Province, born in November, 1984. This action arises out
of William Province's divorce petition filed in the Circuit Court of Wood County in 1990.
The relevant facts are as follows.
In 1980, the plaintiff and defendant purchased a 62-acre farm in Mineral Wells,
West Virginia, which is the subject of this appeal. By general warranty deed dated January
7, 1985, the plaintiff and the defendant conveyed fifty acres of that property to Michael and
Linda Province, the plaintiff's brother and sister-in-law.(3) Following the conveyance, the
plaintiff and the defendant continued to live in their home which was part of the property
conveyed, and continued to operate the dairy farm located on the property. On January 22,
1985, the plaintiff and Michael Province entered into a written partnership agreement
concerning the farm. The agreement provided the plaintiff would supply the labor and
Michael Province would supply the farm real estate, that being the same property conveyed
by the plaintiff and defendant to Michael and Linda Province on January 7, 1985.(4)
On September 19, 1988, the two couples entered into an agreement to lease a
15-acre wood lot on the property to the Mead Corporation. The lease agreement provided
that the lessee would pay $12,500 semi-annually to the plaintiff and the defendant, as the
"parties in possession." Prior to the filing of the divorce, all lease payments were received
by the plaintiff and defendant together.
William Province filed this divorce proceeding in August of 1990. A
preliminary order was entered pursuant to a hearing before a family law master on September
25, 1990. Paragraph 11 of that order states: "Except as provided hereinabove, the parties
shall each be and they are hereby mutually enjoined and restrained from transferring
possession, ownership, or otherwise dissipating, encumbering, or disposing of any of their
real or personal assets until further Order of Court." In apparent contravention of that order,
the plaintiff used two Mead lease checks, payable on October 1, 1990, and April 1, 1991, to
pay one Opal Finch, purportedly as repayment of marital debts.(5)
The defendant subsequently filed a contempt petition complaining, among
other things, that the plaintiff had spent these rental proceeds, disposed of other marital
property, and failed to pay alimony and child support payments to the defendant.(6) From
October 1991 to April 1993, when the lease to the Mead Corporation ended, the semi-annual
rental checks were received by Richard Bush, counsel for plaintiff, as escrow agent.(7) The
circuit court by order of January 3, 1992, disposed of the contempt issue by ordering that the
escrow agent pay to the defendant certain sums owed by the plaintiff, including unpaid
alimony and child support.
On January 14, 1992, the plaintiff moved to refer the case to a special
commissioner for all further proceedings on the issues of equitable distribution and alimony.(8)
On January 21, 1992, Michael and Linda Province filed a motion to intervene arguing they
were the owners of the property in question and were entitled to all lease payments on the
property after April 1, 1991.(9) Both the plaintiff's motion for reference to a commissioner and
the motion to intervene were heard on February 3, 1992, and both were granted by order of
the circuit court.
Hearings on equitable distribution and alimony were held before the special
commissioner on April 2, 1993; June 21, 1993; and August 30, 1993. No transcript was
made of these hearings, but apparently the special commissioner refused to allow the
defendant to introduce evidence to show the intervenors held title to the land in trust for the
defendant and the plaintiff. On September 8, 1993, the defendant filed a proffer of evidence
which was intended to show that the conveyance of the property to the intervenors was made
with the understanding that the intervenors were merely "paper title holders" and all
subsequent acts of the parties show the actual legal owners of the real estate are the plaintiff
and the defendant.(10)
In his recommended order of December 20, 1993, the commissioner said, in
pertinent part, that one-half of the rent checks paid to the plaintiff and defendant by the Mead
Corporation prior to the divorce was credited to the intervenors' "obligation" to the plaintiff
and defendant. He further found that each of the two couples have a vested interest in and
own 50 percent of the lease proceeds paid subsequent to the filing of the divorce and,
therefore, half of those proceeds was a marital asset of the plaintiff and defendant. The
commissioner based this finding on the ground that the dissolution of the partnership
between Michael Province and the plaintiff should not operate to the detriment of the
defendant, who had a vested interest in a portion of the lease proceeds, but had no control
over the dissolution of the partnership. The special commissioner held the defendant's claim
for reconveyance was barred by the statute of limitations.
By order entered April 15, 1994, the circuit court adopted the findings of fact and conclusions of law of the special commissioner and granted the plaintiff and defendant a divorce. The defendant challenges the special commissioner's conclusion that her claim for reconveyance of the trust property is time barred. We will address her contentions below.
II.
DISCUSSION
The question raised on this appeal is whether the lower tribunals committed
error by excluding evidence regarding the establishment of a trust in the property conveyed
to the intervenors by the plaintiff and the defendant. In determining whether this evidence
was probative of any fact of consequence, we must address whether the claim of the
defendant, Tammy M. Province, was barred by the statute of limitations or by the provisions
of W. Va. Code, 36-1-4 (1931). Our review of the record shows that the evidence was
wrongfully excluded. Thus, we remand this case with specific instructions.
A.
APPELLATE JURISDICTION
There is a threshold problem. The parties assume we have jurisdiction to hear the appeal from the April 15, 1994 order of the circuit court regarding equitable distribution. See Note 1, supra. Although our conclusion is by no means obvious, we hold, as have other decisions of this Court, that we do have jurisdiction under these peculiar circumstances. "Under W. Va.Code, 58-5-1 (1925), appeals only may be taken from final decisions of a circuit court. Parkway Fuel Service, Inc. v. Pauley, 159 W. Va. 216, 219, 220 S.E.2d 439, 441 (1975)." James M.B. v. Carolyn M., 193 W. Va. 289, 292, 456 S.E.2d 16, 19 (1995). The required finality is a statutory mandate, not a rule of discretion. In James M.B., we stated a decision is final for purposes of our statute if it ends the litigation on the merits and leaves nothing for the circuit court to do but execute the judgment. 193 W. Va. at 292, 456 S.E.2d at 19. Still pending in the lower court is the part of this proceeding dealing with child support and other matters that were not assigned to the special commissioner. In other words, none of the circuit court's decisions in the April 15, 1994 order relates to child support. Under these circumstances, the best that can be argued is that we have appellate jurisdiction under a liberal reading of W.Va.R.Civ.P. 54(b), which provides in pertinent part:
When more than one claim for relief is presented in an action,
whether as a claim, counterclaim, cross-claim, or third party
claim, or when multiple parties are involved, the court may
direct the entry of a final judgment as to one or more but fewer
than all of the claims or parties only upon an express
determination that there is no just reason for delay and upon an
express direction for the entry of judgment.(11)
Even if we were to assume that the mandates of Rule 54(b) have been met, a circuit court's
determinations, which directly affect the scope of our appellate jurisdiction are not
conclusive on us. See James M.B. v. Carolyn M., supra. Instead, we review such
determinations to see if they fit within the scope of the rule. See Braswell Shipyards, Inc.
v. Beazer East, Inc., 2 F.3d 1331, 1336 (4th Cir. 1993).
We apply a two-prong test to review a circuit court's Rule 54(b) certification. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10, 100 S. Ct. 1460, 1466, 64 L. Ed. 2d 1, 12 (1980). First, we scrutinize the circuit court's evaluation of the interrelationship of the claims, in order to decide whether the circuit court completely disposed of one or more claims, which is a prerequisite for an appeal under this rule.(12)
Our
scrutiny under this first prong approaches de novo review, because we have a duty to ensure
the limits in our jurisdiction are observed, however, there is some room for deference
particularly where the circuit court has made its reasoning clear. See Curtiss-Wright, 446 U.S. at 10, 100 S. Ct. at 1466, 64 L. Ed. 2d at 12-13 (proper role of appellate court is to ensure
that the circuit court's rule 54(b) related conclusion and assessment are judicially sound and
supported by the record).
Certification should not, however, be routinely granted in any event. See
Curtiss-Wright, 446 U.S. at 8, 100 S. Ct. at 1465, 64 L. Ed. 2d at 11 ("Not all final judgments
on individual claims should be immediately appealable, even if they are in some sense
separable from the remaining unresolved claims"). It should be granted only if there exists
some danger of hardship or injustice through delay, that would be alleviated by immediate
appeal. To be clear, the purpose of Rule 54(b) is to codify the historic practice of
"prohibit[ing] piecemeal disposal of litigation and permitt[ing] appeals only from final
judgments," except in the "infrequent harsh case" in which the circuit court properly makes
the determinations contemplated by the rule. Fed.R.Civ.P. 54(b) advisory committee's note
to 1946 amendment.
Here, we have no concern with whether the circuit court has disposed entirely
of one or more claims. Claims are separable when there is more than one possible recovery,
10 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure,
2657 at 67 (2d ed. 1983), or if "different sorts of relief" are sought, see Seatrain
Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 580-81 & n.18, 100 S. Ct. 800, 805-06
& n.18, 63 L. Ed. 2d 36, 44-45 & n.18 (1980). When either of these circumstances exists,
claims are "separately enforceable" and subject to Rule 54(b) certification even if they arise
out of a single transaction or occurrence.(13) A fair review of the record reveals that the claims
of equitable distribution and child support were bifurcated once the circuit court granted the
parties' request for a special commissioner. What is being appealed are claims dealing only
with equitable distribution. Thus, the first prong has been satisfied.
As to the second prong of the inquiry under the rule - whether there is any just
reason for delay - we accord the circuit court's determination considerably more deference
than we do its first-prong determination. Curtiss-Wright, 446 U.S. at 10, 100 S. Ct. at 1466,
64 L. Ed. 2d at 12-13. We will not disturb the circuit court's assessment that there is "no just
reason for delay" unless the court's conclusion was clearly unreasonable, because "the task
of weighing and balancing the contending factors is peculiarly one for the trial judge, who
can explore all the facets of a case." Curtiss-Wright, 446 U.S. at 12, 100 S. Ct. at 1467, 64 L. Ed. 2d at 14.
Under the second prong, we must examine the circuit court's assessments of
(1) any interrelationship or overlap among the various legal and factual issues involved in
the decided and pending claims, and (2) any equities and efficiencies implicated by the
requested piecemeal review. In reviewing the second prong, we do not have the benefit of
the circuit court's reasoning.(14) Ordinarily, an appellate court cannot properly evaluate this
prong without knowing how the circuit court feels about separating these issues for appellate
purposes. Indeed, the entire purpose of Rule 54(b) is to place this decision in the hands of
the trial court who can best make this delicate balance. As a practical matter, we have gone
as far as an appellate court should go in allowing appeals under Rule 54(b) where there was
no express certification by the circuit court. See State ex rel. McGraw v. Scott Runyan
Pontiac-Buick, Inc.,194 W. Va. 770, 775, 461 S.E.2d 516, 521 (1995); Sisson v. Seneca
Mental Health/ Mental Retardation Council, Inc., 185 W. Va. 33, 404 S.E.2d 425 (1991);
Durm v. Heck's, Inc., 184 W. Va. 562, 401 S.E.2d 908 (1991). The caseload of this Court
has grown faster than any other component of the West Virginia judiciary. A more liberal
construction of Rule 54(b) has a tremendous potential to increase our caseload still more
rapidly, because of the rule's natural tendencies to multiply appeals in a single case. This
case is a good example: even if we were to decide each of the issues raised in the present
appeal, we are quite likely to have to decide one or more additional appeals in this case in
the future.(15) Although it might be easier to decide each appeal in a series of multiple appeals
in the same case than would be an appeal from a final judgment disposing of the entire
lawsuit, the greater simplicity will usually be outweighed by the burden on this Court of
having to reacquaint itself again and again with at least the basic facts of the case. Thus, in
reviewing disputed or questionable Rule 54(b) certifications, we will keep in mind the
purpose and practical implications of the rule.
To be sure, this is not an ordinary case. It involves the bifurcation of distinct
issues that was necessitated by the appointment of a special commissioner to handle only one
of the equitable distribution issues. The remaining issues were to be decided by the family
law master. The special commissioner promptly heard the evidence, prepared its report and
filed it with the circuit court. It is quite apparent from the order entered by the circuit court
that the court felt it was making a final ruling on equitable distribution and treated it like any
other final order. See Strahin v. Lantz, 193 W. Va. 285, 286 n.1, 456 S.E.2d 12, 13 n.1
(1995) (in "[a]ddressing the finality requirement, we adopt a practical interpretation that
looks to the intention of the circuit court"). More significantly, the real parties in interest to
this appeal are different than those in the proceedings before the family law master. Here,
the real appellees are the intervenors who are attempting to protect their claim to property
rights. In one sense, the issue on appeal is unaffected by any rulings made by the family law
master concerning child support. On the other hand, the finality of the ruling on equitable
distribution may have some impact on child support. Because the case could have been
properly certified under Rule 54(b) and the issue we are asked to review is one of clear error
requiring a remand for further proceedings, we reluctantly proceed to decide this aberrational
case on the merits. We think it is clear that the circuit court took the action it did to make
clear that the decision was a final and immediately appealable order. "[T]he key to
determining if an order is final is not whether Rule 54(b) language is included in the order,
but is whether the order 'approximates a final order in its nature and effect.'" State ex rel.
McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 775, 461 S.E.2d 516, 521
(1995), quoting Syllabus Point 2, Durm v. Heck's, Inc., 184 W. Va. 562, 401 S.E.2d 908
(1991).(16) We believe this standard has been satisfied.
Although we have chosen not to detour around this Serbonian bog, our
decision to exercise appellate jurisdiction is buttressed by the familiar tenet that when an
appeal presents a jurisdictional quandry, yet the merits of the underlying issue, if reached,
will in any event do no harm to the party challenging jurisdiction, then the court may forsake
the jurisdictional riddle and simply dispose of the case on the merits. See Norton v.
Mathews, 427 U.S. 524, 530-31, 96 S. Ct. 2771, 2774-75, 49 L. Ed. 2d 672 (1976); Secretary
of Navy v. Avrech, 418 U.S. 676, 677-78, 94 S. Ct. 3039, 3039-40, 41 L. Ed. 2d 1033 (1974).
Neither party challenges jurisdiction in this case. Our decision to remand the case for further
factual development does not ultimately harm either side. Thus, to a large extent we leave
for another day just what limits we place on Rule 54(b) where there is no express
certification by the circuit court and the continuing vitality of our trilogy of cases (McGraw,
Sisson, and Durm).
B.
STANDARD OF REVIEW
The issue on appeal arises from a ruling by a special commissioner. For purposes of appellate review, his opinion will be treated like that of a family law master. See Banker v. Banker, W. Va. , S.E.2d (No. 22166, May 17, 1996). We apply a three-step standard of review in domestic relations cases. Syllabus Point 1 of Burnside v. Burnside, 194 W. Va. 263, 460 S.E.2d 264 (1995), sets forth the standard of review this Court should employ when examining challenges to a decision of the circuit court which adopts the findings of a family law master and, by extension in this case, a special commissioner:
"In reviewing challenges to findings made by a family
law master that also were adopted by a circuit court, a three-pronged standard of review is applied. Under these
circumstances, a final equitable distribution order is reviewed
under an abuse of discretion standard; the underlying factual
findings are reviewed under a clearly erroneous standard; and
questions of law and statutory interpretations are subject to a de
novo review."
Rulings of a special commissioner involving a mixture of law and fact are
reviewed under an abuse of discretion standard. Ordinarily, this would include the rulings
excluding evidence. See State v. Louk, 171 W. Va. 639, 643, 301 S.E.2d 596, 599 (1983);
Syl. Pt. 2, State v. Peyatt, 173 W. Va. 317, 315 S.E.2d 574 (1983). However, the extent to
which the ruling turns on materiality or interpretation of our law, the standard of appellate
review is plenary. See State v. Sutphin, W. Va. , 466 S.E.2d 402 (1995). Because the
determinative questions on appeal involve issues of law, we conduct a de novo review.
C.
ANALYSIS
Essentially, both the special commissioner and the circuit court determined that
evidence regarding the establishment of a trust in the property conveyed to the intervenors
by the plaintiff and the defendant should be excluded as immaterial. Our review of this
evidentiary ruling is controlled by Rules 401 and 402 of the West Virginia Rules of
Evidence. Rule 402 provides in pertinent part that "[a]ll relevant evidence is admissible,
except as otherwise provided..." by our constitutions or other rules of this Court. More
significantly, Rule 401 provides that "'[r]elevant evidence' means evidence having any
tendency to make the existence of any fact that is of consequence to the determination of the
action more probable or less probable than it would be without the evidence." (emphasis
added). The rulings of the lower tribunal could conceivably be premised on two separate
grounds, i.e., statute of limitations or the provisions of W. Va. Code, 36-1-4 (1931)
(fraudulent conveyances). Of course, if the claim upon which the evidence was proffered
is barred by either statute, the evidence was properly excluded as not being "a fact of
consequence." See Franklin D. Cleckley, Handbook on Evidence for West Virginia
Lawyers, 4-1(C), pg. 201 (1994) (under W.Va.R.Evid. 401, relevancy exists only as a
relationship between an item of evidence and a matter properly provable in a case).
First, we address the statute of limitations. Statutes of limitations "represent
a pervasive legislative judgment . . . that 'the right to be free of stale claims in time comes
to prevail over the right to prosecute them.'" United States v. Kubrick, 444 U.S. 111, 117,
100 S. Ct. 352, 357, 62 L. Ed. 2d 259, 266 (1979), quoting Order of Railroad Telegraphers
v. Railway Express Agency, 321 U.S. 342, 349, 64 S. Ct. 582, 586, 88 L. Ed. 788, 792
(1944); Donley v. Bracken, 192 W. Va. 383, 387, 452 S.E.2d 699, 703 (1994). Because
statutes of limitations are themselves expressions of important legislative policies, they
should not be judicially abrogated without due consideration of those policies. Of course,
like all general rules, statutes of limitations have numerous statutory and common law
exceptions. One exception that profoundly impacts a strict and literal application of the
statute is a matter exclusively of an equitable nature. See West Virginia Human Rights
Commission v. Garretson, ___ W. Va. ___ n. 8, ___ S.E.2d ___ n. 8 (No. 23078, February
15, 1996) (suggesting that in matters of equity "[o]ther time restraints may be relevant in
determining the extent to which a claimant is entitled to equitable remedies").
Because this claim is in equity, the statute of limitations may not apply.
Syllabus Point 3 of Rodgers v. Rodgers, 184 W. Va. 82, 399 S.E.2d 664 (1990), states:
"'Statutes of limitations are not applicable in equity to subjects of exclusively equitable
cognizance. Matters pertaining to fiduciary relationships come within the rule.' Syllabus
Point 3, Felsenheld v. Bloch Bros. Tobacco Co., 119 W. Va. 167, 192 S.E. 545, 123 A.L.R.
334 (1937)." While there is a substantial conflict among jurisdictions, in absence of a
specific statute of limitations, West Virginia firmly is committed to the rule that statutes of
limitations do not apply to claims exclusively of an equitable nature. Depue v. Miller, 65
W. Va. 120, 64 S.E. 740 (1909). It is unquestionable that a constructive or resulting trust
is a typical remedy available in equity. Thus, the equitable doctrine that permits a resulting
or constructive trust,(17) when properly invoked, estops the opposition from relying on a
general statute of limitations as an affirmative defense.
The difficulty with the ruling made below on this issue is that the special
commissioner failed to make specific, non-conclusory factual and legal findings in
accordance with our directive in prior cases. See Burnside v. Burnside, 194 W. Va. 263,
275, 460 S.E.2d 264, 276; Whiting v. Whiting, 183 W. Va. 451, 456, 396 S.E.2d 413, 418
(1990); W. Va. Code, 48-2-32 (f)(1984). Indeed, we are not told what specific statute of
limitations was applied in this case.(18) Our directive serves to (1) engender care on the part
of the family law master (special commissioner) in ascertaining the facts and law; and (2)
make possible meaningful appellate review. To be clear, being explicit about its reasoning
not only assists the hearing tribunal itself in analyzing legal claims and the equities of the
situation, but also facilitates appellate review of matters affecting equitable distribution. The
touchstone for whether the family law master has satisfied our directives is whether he or she
has supported its conclusion by clearly and cogently expressing its reasoning and the factual
and legal determinations supporting that reasoning. The order must be sufficient to indicate
the factual and legal basis for the court's ultimate conclusion so as to facilitate a meaningful
review of the issues presented. Where the lower tribunals fail to meet this standard - i.e.
making only general, conclusory or inexact findings - we must vacate the judgment and
remand the case for further findings and development.(19)
We are sensitive to the burdens placed on family law masters,(20) but they have
an experiential advantage over this Court in parsing out claims and defenses. If the family
law master does not explain itself, as is the case here, we do not get the benefit of its
experience and reasoning. In such a case, any deference we might otherwise accord such a
ruling will be nullified by the absence of a meaningful explanation. In the instant case, we
cannot meaningfully review the special commissioner's legal and factual ruling regarding the
statute of limitations because the findings and legal conclusions (1) do not explain why
the statute of limitations is even applicable to a matter that is presumptively equitable in
nature; (2) do not explicitly explain which statute of limitations was relied upon; and (3) do
not explain or set forth the essential subsidiary facts necessary to support its conclusion
concerning defendant's lack of compliance with the statute of limitations.
Although the statute of limitations may be inapplicable, the facts of this case
may give rise to other defenses in bar, i.e., laches(21) and the "clean hands" doctrine. First,
"[a]s this Court has suggested many times, laches is an equitable doctrine based on the
maxim that equity aids the vigilant, not those who slumber on their rights. See Syllabus Pt.
2, Phillips v. Piney Coal & Coke Co., 53 W. Va. 543, 44 S.E. 774 (1903) ('A court of equity
will not assist one who has slept upon his [her] rights and shows no excuse for his laches in
asserting them')." Banker v. Banker, ___ W. Va. ___, ___ S.E.2d ___ (No. 22166, May 17,
1996). See also Whitney v. Fox, 166 U.S. 637, 17 S. Ct. 713, 41 L. Ed. 1145 (1897)
(sustaining the defense of laches in a suit to establish the existence of a trust in plaintiff's
favor).
The elements of laches consist of (1) unreasonable delay and (2) prejudice. See State, Dept. of Health and Human Resources, Child Advocate Office on Behalf of Robert Michael B. v. Robert Morris N., W. Va. , 466 S.E.2d 827 (1995). Specifically, the Court stated:
"Mere delay will not bar relief in equity on the ground of laches.
'Laches is a delay in the assertion of a known right which works
to the disadvantage of another, or such delay as will warrant the
presumption that the party has waived his right.'" Syllabus Point
2, Bank of Marlinton v. McLaughlin, 123 W.Va. 608, 17 S.E.2d 213 (1941).
Even though a finding of laches rests primarily within the discretion of the
special commissioner and circuit court, we will not approve such finding if the party
asserting the defense fails to prove prejudice. The burden of proving unreasonable delay and
prejudice is upon the litigant seeking relief. No rigid rule can be laid down as to what delay
will constitute prejudice; every claim must depend upon its own circumstances. To be clear,
the plea of laches cannot be sustained unless facts are alleged to show prejudice to the
opposing party, or that the ascertainment of the truth is made more difficult by the delay in
seeking immediate relief.
For purposes of remand, however, we note that relief in equity may yet be
denied on the ground of a plaintiff's laches even when a statute of limitations is not a bar.
The doctrine of laches may apply in equity, whether or not a statute of limitations also
applies and whether or not an applicable statute of limitations has been satisfied. See 27
Am.Jur.2d Equity 157, at 693 (1966). That question will require resolution by the trial
court.
Next, the appellees, the intervenors below, audaciously contend that even if the special commissioner was wrong as to the applicability of the statute of limitations, the evidence was excluded properly on other grounds. Specifically, the appellees argue that the lower tribunals were correct in not allowing the introduction of evidence to support a claim of trust because, by the appellant's own admission, the conveyance was made to avoid creditors and was therefore fraudulent. Accordingly, the appellees invoke the equitable maxim that a party who seeks equity must come with clean hands. "Equity never helps those who engage in fraudulent transactions, but leave them where it finds them." Moore v. Mustoe, 47 W. Va. 549, 552, 35 S.E. 871, 873 (1900). This doctrine has been expressly and specifically made a part of the organic law in this State. Thus, the intervenors partially are correct that the provision of W. Va. Code, 36-1-4 (1931), relied upon by the defendant is inapplicable to fraudulent conveyances.(22) However, we have held previously that the fraud contemplated in these situations is fraud in the conveyance itself. In Syllabus Point 3 of Hoglund v. Curtis, 134 W. Va. 735, 61 S.E.2d 642 (1950), we stated:
"Where, under Code, 36-1-4, a grantor in a
conveyance, absolute on its face, seeks to establish a trust
imposing on the grantee the duty to reconvey the property
conveyed, the grantee seeks to interpose the defense of fraud as
a bar to the establishment of a trust, such fraud to be effective
as a basis of defense must permeate the conveyance itself and
the concomitant promise to reconvey. Fraud, not entering into
the conveyance itself, on which conveyance the grantor relies to
establish a trust by parol evidence under Code, 36-1-4, will not
serve to vitiate a trust in favor of a grantor in the conveyance,
which has been established by competent parol testimony so
clear that no doubt can exist that the parties intended to establish
a trust in grantor's favor."
In the Hoglund case, the plaintiff testified that the conveyance was a "pretended contract"
and that he signed it for the purpose of saving his property.(23) On the scant record before us,
we find that W. Va. Code, 36-1-4, does not bar the granting of a resulting or constructive
trust because there is no evidence of fraud in the conveyance.
Nevertheless, a court could find the "lack of clean hands" bars equitable relief even independently of the statute, In Syllabus Point 2 of Bailey v. Banther, 173 W. Va. 220, 314 S.E.2d 176 (1983), we held as follows:
"Courts are reluctant to decree trusts in favor of
parties who transferred property to avoid creditors or liabilities.
However, if those creditors or liabilities are nonexistent,
imaginary or unproved, a grantor can enforce a constructive or
resulting trust against his grantee."
Again, the record is insufficient to permit meaningful appellate review as to the more general
application of the "clean hands" doctrine. Additionally, the string of cases in Bailey cited
in support of its holding includes cases which stand for the proposition that the conveyance
of a homestead to avoid creditors cannot be a fraudulent conveyance because a homestead
is not subject to claims of creditors.(24) Bailey, 173 W. Va. at 223-24, 314 S.E.2d at 180. It
is possible that at least a portion of the property in this case may fit within the homestead
exception to the "clean hands" rule if, indeed, the evidence shows a trust was established in
favor of the plaintiff and defendant. The determinative equity-based principles at work here
are highly fact-sensitive that require a full hearing of the evidence on the issue. It would be
extremely difficult for the special commissioner to understand the entire transaction without
all evidence of the negotiations and maneuverings. Accordingly, we find the special
commissioner abused its discretion in not allowing evidence on the issue of whether a trust
in land was created in favor of the plaintiff and defendant.
IV.
CONCLUSION
Because the special commissioner's order (and the circuit court) failed to make the specific and clear findings required, we are unable to determine whether the court correctly applied the statute of limitations. Thus, we vacate the judgment of the circuit court and remand this case for further proceedings. On remand, the special commissioner after allowing the parties to present evidence concerning the creation of a trust for the benefit of the plaintiff and defendant and held by the intervenors, should then make specific findings and conclusions of law as required by this opinion.
Reversed and remanded.
1. 1A final order has not yet issued in this case. On, January 25, 1996, the family law master issued an order which states, in part: "The above-styled case was decided on June 28, 1995. On August 30, 1995, Mr. Powell [attorney for the defendant] prepared the Recommended Order and Judgment. To date I have not received these orders."
2. 2The plaintiff did not file a brief or otherwise appear before this Court.
3. 3Apparently twelve acres of the original 62-acre farm were conveyed to another party.
4. 4The defendant asserts that the parties entered this agreement to shield the plaintiff and defendant from creditors in Ohio, as detailed below.
5. 5On November 8, 1991, a circuit court hearing was held on a contempt
petition filed by the defendant. The plaintiff testified he was able to cash the checks by
putting the first one in the joint account he shared with his wife and by signing his wife's name to the second one. The record as presented to us is silent as to whether criminal charges were filed against the plaintiff.
6. 6The circuit court, in its preliminary order of September 25, 1990, ordered the plaintiff to pay $50.00 per week child support and $25.00 per week alimony to the defendant on a temporary basis.
7. 7It is not clear from the record how this arrangement came about. The circuit court did state in its order of January 3, 1992, that the parties had agreed on the plaintiff's attorney as the escrow agent.
8. 8A hearing was held before the family law master on December 3, 1991. On January 14, 1992, the plaintiff filed a motion for reference to a commissioner. In his motion, the plaintiff stated the child support award would be based, in major part, upon a determination of whether the lease payment "made to the Plaintiff" was characterized as a marital asset or income. He further stated the issue of the equitable distribution of the
marital assets and liabilities of the parties was a complex one, and the family law master had indicated she was "unable and/or unwilling to devote large blocks of in-court time" to the issue. We decline to address these issues further as they are not presented on appeal.
9. 9The intervenors did not state why they should receive all the rental proceeds paid after April, 1991. However, in his recommended order, the special commissioner indicated the reason was due to the dissolution in early 1991 of the partnership between the plaintiff and the intervenor Michael Province. The commissioner noted that both the plaintiff and Michael Province testified the Mead lease was considered part of the operation of the farm partnership originally formed on January 22, 1985.
10. 10We note that the defendant asserts, in part: (1) the plaintiff and the defendant continued
to reside on the real estate, to operate the dairy farm thereon, and to pay no rent to the
intervenors; (2) the intervenors paid rent to the plaintiff and defendant for the house in which
they resided, which was located on the property conveyed to the intervenors; (3) the plaintiff
and defendant made payments on the deed of trust against the real estate; (4) the agreement
leasing a wood lot on the property provided the lessee would pay the plaintiff and defendant
and this income was reported on their income tax return; (5) the plaintiff and intervenors
made statements that the property belonged to the plaintiff and defendant and would be
reconveyed to them when their financial problems were solved; (6) the checking account
relating to the dairy farm operation was controlled by the plaintiff and defendant after the
conveyance; (7) the plaintiff and defendant paid the taxes on the real estate after they
conveyed it to the intervenors; (8) the attorney for the plaintiff and defendant at the time of
the conveyance stated at that time that the conveyance was for the purpose of protecting the
property for the plaintiff and defendant in the event creditors from their previous Ohio farm
operation attempted to attach or force a sale of the Mineral Wells dairy farm.
(The record indicates the plaintiff and defendant bought a dairy farm in Waterford, Ohio in 1982, and moved there to conduct the farm operation. The purchase was financed with mortgages from Farmers' Home Administration and a Joseph Detweiler. When the farm proved unprofitable, the plaintiff and defendant moved back to their dairy farm in Mineral Wells, West Virginia, in 1984. On June 7, 1985, the Court of Common Pleas of Washington County, Ohio, issued a default judgment to Joseph Detweiler against William and Tammy Province for $50,437.)
11. 11Rule 54(b) permits entry of a final judgment as to fewer than all claims or parties upon an express determination that there is "no just reason for delay" in entering judgment. Although no party has challenged jurisdiction under Rule 54(b), neither party has argued the affirmative that we have jurisdiction under Rule 54(b). We are duty bound to take up the jurisdictional issue sua sponte, because it implicates the scope of our appellate jurisdiction.
12. 12A judgment properly may be certified under Rule 54(b) only if it possesses the requisite
degree of finality. That is, the judgment must completely dispose of at least one substantive
claim. A partial or interlocutory adjudication of a claim cannot be certified merely because
it is labelled a "partial final judgment," "partial summary judgment" or labelled a 12(b)(6)
dismissal, even if the requisite express determination has been made.
13. 13See Cold Metal Process Co. v. United Engineering & Foundry Co., 351 U.S. 445, 452, 76 S. Ct. 904, 908, 100 L. Ed. 1311, 1318 (1956); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436-37 & n. 9, 76 S. Ct. 895, 900-01 & n.9, 100 L. Ed. 1297, 1306-07 & n.9 (1956).
14. 14In it's critical role as Rule 54(b) dispatcher, the circuit court is to consider the strong
judicial policy disfavoring piecemeal appellate review by carefully comparing the claims that
have been disposed of and the unadjudicated claims for indications of substantial overlap -
to ensure that this Court is not confronted in successive appeals with common issues of law
or fact to the deteriment of judicial efficiency.
When the circuit court provides a sufficient written statement of the grounds for certification, as it should, we normally accord its discretionary decision substantial deference and will refuse an appeal for lack of jurisdiction only if the court's certification was clealy unreasonable. See Curtiss-Wright, 446 U.S. at 10, 100 S. Ct. at 1466 ("once such juridical concerns have been met, the discretionary judgment of the [circuit] court should be given substantial deference.")
15. 15Subsequent circuit court proceedings could very well render superfluous whatever interim appellate resolution might be predicated on this fragile hypothetical foundation, and this Court could be required to revisit the very facts of this case again. Such piecemeal appellate exercises sacrifice judicial efficiency and risk serious, unintended res judicata effects.
16. 16The preferable approach for any litigant who expects to appeal interlocutory less than all the issues in an action is to request a certification order as required by Rule 54(b). If the circuit court is persuaded that Rule 54(b) is appropriate, the circuit court should support its conclusion by clearly and cogently expressing its reasoning and the factual and legal determinations supporting that reasoning. Cf. Explosives Supply Co., Inc. v. Columbia Nitrogen Corp., 691 F.2d 486 (11th Cir. 1982) (a district court is not required, in every case, to express its reasoning, although "the desirability of such a statement of reasons is obvious since such an explanation would assist appellate courts in reviewing district court decisions").
17. 17A constructive trust is an implied trust and arises by operation of law when equity so demands.
18. 18The intervenors posit that the special commissioner relied on West
Virginia Code, 48-2-33(f)(3)(1993), which states, in part:
"(3) Any assets with a fair market value of five hundred dollars or more which would be considered part of the estate of either or both of the parties if owned by either or both of them at the time of the action, but which was transferred for inadequate consideration, wasted, given away or otherwise unaccounted for by one of the parties, within five years prior to the filing of the petition or length of the marriage, whichever is shorter, shall be presumed to be part of the estate and shall be subject to the disclosure requirement contained in this section. With respect to such transfers the spouse shall have the same right
and remedies as a creditor whose debt was contracted at the time the transfer was made
under article one-a [ 40-1A-1 et seq.], chapter forty of this code."
Although this statute has a time period, it is not a statute of limitations. It creates a presumption that transfers without adequate consideration, if conveyed within five years or the length of the marriage, is marital property subject to equitable distribution. Moreover, the defendant does not rely upon this provision to recover the property in question. She contends that her right to have property brought back into the marital estate arises out of our common law in equity. Furthermore, this statute does not preclude the defendant from seeking equitable relief to have the property included in equitable distribution. It merely denies her the benefit of the presumption. To the extent the special commissioner relied upon this statute as "the statute of limitations," we find he erred as a matter of law.
19. 19In order to satisfy the adequate findings requirement, the family law master must include as many of the subsidiary facts as necessary to permit us to determine the steps
by which it reached its ultimate conclusion. Where we are provided only legal conclusions unsupported by specific facts or by an explanation of the court's reasoning with respect to the ultimate conclusion, a reviewing court simply is unable to determine whether or not the conclusion is an abuse of discretion.
20. 20See State v. Buzzard, 194 W.Va. 544, 553, 461 S.E.2d 50, 59 (1995) (dissenting opinion of Judge Fox).
21. 21As discussed in the main text, laches is an equitable remedy that prevents a party from asserting a claim due to a lapse of time. Although the doctrine of laches is not
bound by any statute of limitations, the statute of limitations is one measure of whether a claim has become stale. Laches and statutes of limitations are analogs.
22. 22W. Va. Code, 36-1-4, states:
"No declaration of trust of land shall be enforceable, unless it be made in writing, signed by the person who declares such trust or by his agent. If a conveyance of land, not fraudulent, is made to one in trust either for the grantor or a third person, such trust may be enforced, though it be not disclosed on the face of the conveyance, nor evidenced by a writing: Provided, however, that trusts arising by construction or operation of law shall not be subject to the provisions of this section."
23. 23The plaintiff in Hoglund conveyed the property to the defendant with the understanding that it would be reconveyed to the plaintiff. The reason for the conveyance was to aid the plaintiff in acquiring an FHA loan to construct a house. The FHA had made a commitment to loan funds to the plaintiff, but revoked that commitment when the plaintiff was inducted into the army. The defendant agreed to acquire a loan for the plaintiff after the plaintiff conveyed the property to the defendant in trust. The Court found this was not the kind of fraud which would bar the plaintiff in a court of equity from establishing a parol trust in his favor under W. Va. Code, 36-1-4. The Court was of the opinion that "whatever fraud there was, it did not enter into the promise sought to be enforced," Hoglund v. Curtis, 134 W. Va. at 750, 61 S.E.2d at 651, and that "[a] reading of Code, 36-1-4, serves to show that the fraud contemplated by the Legislature in the enactment of the statute must be in the conveyance itself on the basis of which a trust is sought to be established." 134 W. Va. at 749, 61 S.E.2d at 650.
24. 24"Bobier v. Horn, 95 Okl. 8, 222 P. 238 (1923) (dictum--even though
this grantor conveyed to his son to avoid suit on a promissory note, the land was grantor's homestead and not subject to his debts, so its conveyance was not in fraud of creditors); Evans v. Evans, 180 Okl. 46, 67 P.2d 779 (1937) (the conveyance of a homestead to a son to avoid creditors cannot be a fraudulent conveyance because a homestead is not subject to claims of creditors--the unclean hands doctrine has no application); . . . Cowles v. Cowles, 89 Nev. 327, 131 N.W. 738 (1911) (a plaintiff got back property that he transferred to his mother to avoid payment of a judgment because it was his homestead and exempt from lien); . . . Rossow v. Peters, 277 Ill. 436, 115 N.E. 524 (1917) (plaintiff was permitted to recover land deeded to his son-in-law to avoid creditors because it was his homestead and statutorily exempt from creditors' claims); . . . Wantulok v. Wantulok, 67 Wyo. 22, 214 P.2d 477, 21 A.L.R.2d 572, reh. denied, 67 Wyo. 45, 223 P.2d 1030, 21 A.L.R.2d 585 (1950) (a grantor's estate was entitled to property he conveyed to another to avoid purported indebtedness because it was his homestead and exempt)." Bailey, 173 W. Va. at 223-224, 314 S.E.2d at 179.
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