STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Tilhance Creek Investments, LLC, and
FILED
March 29, 2013
Court House Square Investments, LLC, RORY L. PERRY II, CLERK
Plaintiffs Below, Petitioners SUPREME COURT OF APPEALS
OF WEST VIRGINIA
vs) No. 12-0290 (Berkeley County 11-C-688)
BCBank, Inc. and Donald Epperly, as
Trustee for BCBank, Inc.
Defendants Below, Respondents
MEMORANDUM DECISION
Petitioners Tilhance Creek Investments, LLC (“Tilhance”) and Court House Square
Investments, LLC (“Court House”) by counsel Michael J. Novotny, appeal the Circuit Court of
Berkeley County’s “Order Granting Defendant’s Motion to Dismiss” entered on January 18,
2012. Respondents BCBank, Inc., and Donald Epperly, as Trustee for BCBank, Inc., by counsel
Charles S. Trump IV, have filed their response. Petitioners have filed a reply.
This Court has considered the parties= briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
This case arises out of the 2007 purchase of certain parcels of property by petitioners,
which were secured by promissory notes by Petitioner BCBank. By December of 2008, both
Tilhance and Court House were in default on their respective loans. Instead of seeking
foreclosure BCBank agreed to a loan modification wherein the Tilhance loan was secured by the
Court House property, and the Court House loan was secured by the Tilhance property through
cross-collateralization. Petitioners again defaulted on both loans, and foreclosure began on the
Tilhance property on September 10, 2010. After the foreclosure, a sale occurred wherein
BCBank was the only bidder and purchased the property for $800,000. Respondent Epperly was
the trustee who conducted the sale. The trustee’s notice of sale indicated that this sale was being
conducted under the second Tilhance note, which was the cross-collateralization loan. From the
$800,000, sale expenses in the amount of $5,568.37 were disbursed, with the remaining
$794,431.63 applied to the Tilhance note. Foreclosure upon the Court House property occurred
on December 29, 2010, and BCBank was the only bidder, purchasing the property for
$3,940,000. The notice of sale for the Court House property indicated that the sale was
conducted under both the first Court House note and the second Court House note. The proceeds
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of the sale were applied as follows: $3,115,481.66 to the first Court House note and $798,161.20
to the second Court House note.
Petitioners filed their complaint on August 25, 2011, setting forth five causes of action as
follow: fraud, conversion, breach of fiduciary duty, breach of contract, and merger of title.
Petitioners argued that the proceeds of the first sale should have been disbursed as follows:
$5,568.37 to expenses, and $794,431.63 to the Court House note, leaving a balance of
$2,321,050.03 on the Court House note. Petitioners then state that after the second sale, proceeds
after costs were removed were $3,913,642.86. When this amount is applied to the remaining
balance of the Court House note, there is a surplus of $1,592,592.83. Respondents moved to
dismiss the action pursuant to Rule 12(b)(6), to which petitioners responded. On January 18,
2012, the circuit court entered the order granting respondents’ motion to dismiss.
On appeal, petitioners argue several assignments of error, all of which involve how the
proceeds of the sale were distributed. Petitioners first argue that the Tilhance loan was
extinguished when BCBank purchased the Tilhance property at the foreclosure auction
conducted solely under the second Tilhance loan. Along the same line, petitioners also argue that
the doctrine of merger extinguished the first Tilhance loan. Further, petitioners argue that the
circuit court erred in finding that petitioners did not assert valid claims for conversion, breach of
contract, and breach of fiduciary duty. Finally, petitioners argue that the circuit court erred in
dismissing their claim for fraud due to a lack of particularity and by ruling that equitable factors
weigh in favor of the dismissal of petitioners’ complaint.
Respondents respond in favor of the circuit court’s dismissal, arguing first that the
Tilhance debt was not extinguished by the first foreclosure, and that the doctrine of merger is
inapplicable to this case. Respondents also argue that the claim of conversion is without merit,
and that the specific language of the deeds of trust preclude the conversion claim. Respondents
contend that the breach of fiduciary duty and breach of contract claims are likewise without
merit, and that the fraud claim was not pled with particularity. Finally, respondents argue that
equitable factors weighed in favor of dismissal of the complaint, as petitioners defaulted on more
than $4.4 million in loans to respondents.
This Court has previously held that “‘[a]ppellate 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).” Syl. Pt. 1, Posey v. City of Buckhannon,
228 W.Va. 612, 723 S.E.2d 842 (2012). Our review of the record reflects no clear error or abuse
of discretion by the circuit court. Having reviewed the circuit court’s “Order Granting
Defendant’s Motion to Dismiss” entered on January 18, 2012, we hereby adopt and incorporate
the circuit court’s well-reasoned findings and conclusions as to the assignments of error raised in
this appeal. The Clerk is directed to attach a copy of the circuit court’s order to this
memorandum decision.
For the foregoing reasons, we affirm.
Affirmed.
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ISSUED: March 29, 2013
CONCURRED IN BY:
Chief Justice Brent D. Benjamin
Justice Menis E. Ketchum
Justice Allen H. Loughry II
DISSENTING:
Justice Robin Jean Davis
Justice Margaret L. Workman
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