IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2017 Term
_______________ FILED
November 14, 2017
No. 16-1006 released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
_______________ SUPREME COURT OF APPEALS
OF WEST VIRGINIA
BLUE RIDGE BANK, INC.,
Petitioner and Defendant Below
v.
CITY OF FAIRMONT,
A West Virginia Municipal Corporation,
Respondent and Plaintiff Below
___________________________________________________________
Appeal from the Circuit Court of Marion County
The Honorable Patrick N. Wilson, Judge
Civil Action No. 12-C-102
AFFIRMED
____________________________________________________________
Submitted: October 31, 2017
Filed: November 14, 2017
Webster J. Arceneaux, III, Esq. S. Sean Murphy, Esq.
Spencer D. Elliott, Esq. Morgantown, West Virginia
Lewis, Glasser, Casey & Rollins, PLLC Counsel for the Respondent
Charleston, West Virginia
Counsel for the Petitioner Kevin V. Sansalone, Esq.
Fairmont, West Virginia
Counsel for the Respondent
JUSTICE KETCHUM delivered the Opinion of the Court.
SYLLABUS BY THE COURT
Under W.Va. Code § 46-9-404(a)(1) (2000), an assignee takes an
assignment subject to the account debtor’s defenses and claims against the assignor. The
rights of the assignee are subject to all terms of the agreement between the account debtor
and assignor, as well as any defense or claim in recoupment arising from the transaction
that gave rise to the contract (unless the account debtor has entered into an enforceable
agreement not to assert defenses or claims). It makes no difference whether the defense
or claim accrued before or after the account debtor was notified of the assignment.
i
Justice Ketchum:
In this case, the City of Fairmont (“the City”) entered into a lease purchase
agreement for equipment with Comvest, Ltd. In the agreement, Comvest agreed to pay
for the City’s acquisition of equipment in exchange for monthly lease purchase payments
from the City. Comvest assigned its interest in the lease purchase agreement, including
its right to the City’s monthly payments, to Blue Ridge Bank (“the Bank”). It was later
discovered that Comvest converted money that was designated to pay for the City’s
equipment. As a result, the City had to independently pay for much of its equipment out
of pocket. Comvest is bankrupt and is not a party to this appeal.
The parties ask this Court whether the City may assert claims and defenses
against the assignee Bank based on the assignor Comvest’s conversion of funds
designated for the purchase of the equipment. Under the Uniform Commercial Code
(W.Va. Code §§ 46-1-101 to 10-104), an assignee generally takes an assignment subject
to the debtor’s claims and defenses against the assignor. We find that the Bank’s rights
under the assignment of the lease purchase agreement are subject to the City’s claims and
defenses against Comvest, and the City may assert claims and defenses against the Bank
based on Comvest’s conversion.
I.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises from the City’s ill-fated attempt to finance a municipal
project. Prior to September 2009, the City’s water filtration plant could not keep up with
1
demand for potable water. The City sought outside financing – in the form of a lease
purchase agreement - to pay for equipment to upgrade its water filtration plant.1
On September 8, 2009, the City entered into a lease purchase agreement
with Comvest. Under the agreement, the City was to order equipment from third-party
vendors as it upgraded its water filtration plant. Upon delivery and acceptance of the
equipment, the City would send the bill to Comvest. The agreement obligated Comvest
to pay for the equipment, which was projected to have a total cost of $1,070,600.00. The
agreement gave Comvest a security interest in the equipment, and it required the City to
send Comvest 180 monthly payments of $8,244.84, totaling $1,484,071.20.
Two days later, on September 10, 2009, Comvest assigned its interest in the
lease purchase agreement to the Bank. At the time of the assignment, the City had not
yet submitted any bills for Comvest to pay on its equipment. The assignment provided
that the Bank would transfer $1,070,600.00 to Comvest which Comvest would use to pay
the third-party equipment vendors for the equipment when it was received and accepted
by the City. In return, the City would send its monthly lease purchase payments to the
Bank. Comvest’s assignment of the lease purchase agreement to the Bank stated, in
pertinent part, and with emphasis added, that:
[Comvest] hereby sells, transfers, delivers, and assigns
to [the Bank] . . . all of [Comvest’s] right, title, duties,
obligations, interest, estate, claims, and demands as lessor (i)
in, to, and under the [Lease Purchase] Agreement . . . . and
1
Under W.Va. Code § 8-12-11 (1969), “[T]he governing body of every
municipality shall have plenary power and authority to enter into and execute a lease
agreement for the obtaining of equipment or material.”
2
(ii) in and to the Equipment, including any title thereto and
security interest therein now owned or hereafter acquired
under the [Lease Purchase] Agreement[.]
Comvest promptly notified the City of the assignment and directed the City to send its
monthly $8,244.84 payments to the Bank.
After the lease purchase agreement was assigned, Comvest was to use the
money it received from the Bank and pay the invoices the City submitted for its
equipment. In other words, after the assignment of the lease purchase agreement, the
relationship between the City, Comvest, and the Bank was as follows: (1) the City would
order equipment from third-party vendors; (2) the City would send Comvest the bill upon
delivery and acceptance of the equipment; (3) Comvest would pay the third-party vendor
for the equipment using the money provided by the Bank; and (4) the City would send the
Bank monthly lease purchase payments.
From September 2009 to March 2010, the City received and accepted
equipment and invoices from third-party vendors for $573,054.42. Comvest paid the
invoices as they were received from the $1,070,600.00 it had obtained from the Bank.
On March 16, 2010, City officials discovered that Comvest had converted $506,823.06 of
the $1,070,600.00 that the Bank sent to Comvest to pay for the City’s equipment.
Moreover, Comvest declared bankruptcy. The City paid for the rest of its equipment out
of pocket.
The City attempted to renegotiate the amount of its monthly lease purchase
payments to the Bank to recoup the $506,823.06 amount it was forced to independently
pay for its equipment out of pocket. Therefore, the City wanted its monthly payments to
3
the Bank reduced from $8,244.84 to $3,782.50. The Bank did not consent to the City
reducing its monthly payments.
The City filed a declaratory judgment action seeking an order declaring that
it could reduce the amount it owes the Bank to reflect the money it paid out of pocket due
to Comvest’s conversion. The Bank filed an answer and a counterclaim demanding
judgment for the City’s missed monthly lease purchase payments in full, attorney’s fees,
and the cost of any repossession of the City’s equipment. The City and the Bank filed
competing motions for summary judgment. On April 24, 2016, the trial court issued an
order granting summary judgment in the City’s favor and denying summary judgment for
the Bank. The Bank now appeals the circuit court’s order.
II.
STANDARD OF REVIEW
The Bank requests that we reverse the circuit court’s summary judgment
order. “We have often stated that we review de novo a circuit court’s entry of summary
judgment under Rule 56 of the West Virginia Rules of Civil Procedure, and apply the
same standard that the circuit courts employ in examining summary judgment motions.”2
That is, summary judgment is proper only when the moving party shows that there is no
2
Nicholas Loan & Mortg., Inc. v. W.Va. Coal Co-Op, Inc., 209 W.Va. 296,
299, 547 S.E.2d 234, 238 (2001).
4
genuine issue as to any material fact and that he/she is entitled to a judgment as a matter
of law.3
III.
ANALYSIS
It is undisputed that Comvest, which is bankrupt and not a party to this
appeal, purloined $506,823.06. As a result, the City had to pay that amount out of pocket
to third-party equipment vendors. On the one hand, if the City is not allowed to reduce
its monthly lease purchase payments to the Bank, it will effectively have to pay twice for
the same equipment. On the other hand, if the City is allowed to reduce its monthly lease
purchase payments, the Bank’s return on its bargain with Comvest will be approximately
halved. Regardless of which party prevails in this appeal, either the City or the Bank will
lose $506,823.06 because of Comvest’s wrongdoing. Our decision in this case is not
made lightly.
The Bank and the City both agree that Comvest failed to pay for all of the
City’s equipment. They also agree that the lease purchase agreement was assigned to the
Bank. Their dispute is whether the City may assert claims and defenses against the Bank
based on Comvest’s conversion of funds designated for the purchase of its equipment.
The City asserts it can recoup the money it independently paid out of pocket for the
equipment by reducing the amount the City owes to the Bank on the assigned lease
purchase agreement.
3
West Virginia Rule of Civil Procedure 56(c) [1998].
5
Before we examine the parties’ arguments, we address three principles
which will determine the law that applies to this dispute. First, Articles 2A and 9 of the
Uniform Commercial Code apply to this case because the lease purchase agreement
created both a leasehold interest and a security interest in personal property (that is, the
City’s equipment).4
Second, the lease purchase agreement is a “finance lease,” which under the
Uniform Commercial Code is defined, in pertinent part, as follows:
“Finance lease” means a lease with respect to which:
(i) The lessor does not select, manufacture or supply the
goods; (ii) The lessor acquires the goods or the right to
possession and use of the goods in connection with the lease;
and (iii) One of the following occurs: (A) The lessee receives
a copy of the contract by which the lessor acquired the goods
or the right to possession and use of the goods before signing
the contract[.]5
The lease purchase agreement meets the definition of a “finance lease” for the following
reasons: (1) it required the City, and not Comvest, to select and order the equipment from
third-party vendors; (2) it gave Comvest a security interest in the equipment; and (3) the
City was a party to the contract by which Comvest was given a security interest in the
equipment.
4
See W.Va. Code § 46-2A-102 (1996) (“This article applies to any
transaction, regardless of form, that creates a lease.”); W.Va. Code § 46-9-109(a) (2005)
(“Except as otherwise provided in subjections (c) and (d) of this section, this article
applies to: (1) A transaction, regardless of its form, that creates a security interest in
personal property or fixtures by contract[.]”).
5
W.Va. Code 46-2A-103(g) (2012).
6
Third, and finally, under Article 9 of the Uniform Commercial Code, the
City is an “account debtor” on the lease purchase agreement because it is “a person
obligated on an account[.]”6 The definition of an “account” includes “a right to payment
of a monetary obligation, whether or not earned by performance: (i) For property that has
been or is to be . . . leased[.]”7 In the lease purchase agreement, the City agreed to pay
Comvest money for equipment to be leased.
Now we return to our main inquiry: whether the City may assert claims and
defenses based on Comvest’s conversion and recoup the money it independently paid out
of pocket for the equipment by reducing its monthly payments to the Bank. The Bank
contends that the assignment did not confer upon it any of Comvest’s duties and
obligations under the lease purchase agreement, so its right to the City’s full monthly
payments cannot be diminished by virtue of Comvest’s conversion.
Generally, the assignment of a lease under the Uniform Commercial Code
transfers to the assignee both the assignor’s rights under the agreement and the assignor’s
duties and obligations. As W.Va. Code § 46-2A-303(5) (2000), provides:
A transfer of “the lease” or of “all my rights under the
lease”, or a transfer in similar general terms, is a transfer of
rights and, unless the language or the circumstances, as in a
transfer for security, indicate the contrary, the transfer is a
delegation of duties by the transferor to the transferee.
Acceptance by the transferee constitutes a promise by the
6
W.Va. Code § 46-9-102(3) (2013). Under the Uniform Commercial
Code, a government, in this case a municipality, falls under the definition of a “person.”
W.Va. Code § 46-1-201(27) (2006).
7
W.Va. Code § 46-9-102(2).
7
transferee to perform those duties. The promise is
enforceable by either the transferor or the other party to the
lease contract.
W.Va. Code § 46-2A-303(5), allows the parties to transfer the duties of the assignor
(Comvest) to the assignee (the Bank). Comment 9 to W.Va. Code § 46- 2A-303 makes
clear that this statute applies to commercial assignments.
The Bank asserts that the assignment of the lease purchase agreement
required it to transfer $1,070,600.00 to Comvest who would pay for the City’s equipment
rather than the Bank paying the third-party equipment vendors directly. The Bank further
contends that upon this payment to Comvest, it had no further duties under the assigned
lease purchase agreement. However, the assignment between Comvest and the Bank
plainly states that the Bank accepted the duties and obligations of Comvest. The
assignment of the lease purchase agreement clearly provides, with emphasis added, that:
“[Comvest] hereby sells . . . to [the Bank] all of [Comvest’s] right, title, duties,
obligations, [etc.].” Because the Bank accepted the duties and obligations of Comvest
under the assignment of the lease purchase agreement, the City contends that it may
assert defenses and claims against the Bank based on Comvest’s conversion.
Ordinarily, an assignee takes an assignment subject only to the claims and
defenses of the debtor against the assignor which accrue before the debtor receives
notification of the assignment.8 However, W.Va. Code § 46-9-404(a) (2000), provides
that:
8
See generally, Syl. Pt. 10, Lightner v. Lightner, 146 W.Va. 1024, 124
S.E.2d 355 (1962) (“Ordinarily an assignee acquires no greater right than that possessed
8
Unless an account debtor has made an enforceable
agreement not to assert defenses or claims, and subject to
subsections (b) through (e), inclusive, of this section, the
rights of an assignee are subject to:
(1) All terms of the agreement between the account
debtor and assignor and any defense or claim in recoupment9
arising from the transaction that gave rise to the contract;
and
(2) Any other defense or claim of the account debtor
against the assignor which accrues before the account debtor
receives a notification of the assignment authenticated by the
assignor or the assignee.
(Footnote and emphasis added). Comment 2 to W.Va. Code § 46-9-404(a)(1) further
explains, with emphasis added, that: “[I]f the account debtor’s defenses on an assigned
claim arise from the transaction that gave rise to the contract with the assignor, it makes
no difference whether the defense or claim accrues before or after the account debtor is
notified of the assignment.”
by his assignor, and he stands in his shoes; and an assignee takes subject to all defenses
and all equities which could have been set up against an instrument in the hands of an
assignor at the time of the assignment.”).
9
“Recoupment” is not defined in the Uniform Commercial Code. Black’s
Law Dictionary defines “recoupment,” in part as “[t]he right of a defendant to have the
plaintiff’s claim reduced or eliminated because of the plaintiff’s breach of contract or
duty in the same transaction.” Bryan A. Garner, Black’s Law Dictionary at 1388 (9th ed.
2009). See also, First Nat’l Bank of Louisville v. Master Auto Serv. Corp., 693 F.2d 308,
310 n.1 (4th Cir. 1982) (“Recoupment is the right of the defendant to have the plaintiff’s
monetary claim reduced by reason of some claim the defendant has against the plaintiff
arising out of the very contract giving rise to the plaintiff’s claim.”).
9
One scholarly treatise, Anderson on the Uniform Commercial Code,10
provides the following illustration of how W.Va. Code § 46-9-404(a)(1) applies to claims
or defenses which accrue after the debtor’s notification of the assignment:
Retailer enters into an agreement with Wholesaler
under which Wholesaler will deliver to Retailer fifty pieces of
inventory per month. . . . The first installment is delivered in
January. Retailer pays for the installment. In February,
Wholesaler assigns the agreement to Financier. In March,
Financier gives notice of the assignment to Retailer. In April,
the second installment is delivered. Retailer makes payment
to Financier. In May, the third installment is delivered.
Within a few days of delivery, Retailer discovers that the first
two installments are defective. Financier demands payment
of the third installment.
. . . . [S]ince Financier takes subject to all of the
defenses and claims in recoupment that Retailer has against
Wholesaler, Retailer could raise any breach of warranty claim
[against Financier] that he may have. . . . Since the claims in
recoupment arose out of the transaction that gave rise to the
agreement, Retailer can raise his breach of warranty claim as
to both the first installment that accrued before notification of
the assignment and as to the second installment which
accrued after notification.11
Other courts interpreting the Uniform Commercial Code provision
embodied in W.Va. Code § 46-9-404(a)(1) agree that an account debtor may assert
defenses and claims seeking recoupment of the debtor’s funds against an assignee that
10
Ronald A. Anderson & Lary Lawrence, 9 Anderson on the Uniform
Commercial Code (3d ed. 1999).
Id., 9 Anderson on the Uniform Commercial Code § 318:16 at 460-61.
11
(Footnote added)
10
arise from the contract between the account debtor and assignor – even when the claim or
defense accrued after the account debtor was notified of the assignment.12
Therefore, we hold that under W.Va. Code § 46-9-404(a)(1) (2000), an
assignee takes an assignment subject to the account debtor’s defenses and claims against
the assignor. The rights of the assignee are subject to all terms of the agreement between
the account debtor and assignor, as well as any defense or claim in recoupment arising
from the transaction that gave rise to the contract (unless the account debtor has entered
into an enforceable agreement not to assert defenses or claims). It makes no difference
whether the defense or claim accrued before or after the account debtor was notified of
the assignment.
The Bank’s rights under the assignment are subject to the City’s defenses
and claims for recoupment of the money the City paid out of pocket for its equipment.
Additionally, Comvest’s conversion of the money that was intended to be used to pay for
12
See, e.g., Pioneer Comm. Funding Corp. v. United Airlines, Inc., 122
B.R. 871, 883 (S.D.N.Y., 1991)(“[New York’s equivalent of W.Va. Code § 46-9
404(a)(1)] requires our review of the Presidential/United contract to see if a right of setoff
is established therein. If it is, Pioneer takes its assignment subject to that right, regardless
of when United received notification of the assignment.”); First Nat’l Bank of Louisville
v. Master Auto Serv. Corp., 693 F.2d 308, 310-12 (4th Cir. 1982) (finding that, under
Kentucky equivalent to W.Va. Code § 46-9-404(a)(1), debtor may assert defenses arising
from assignor’s breach of contract as setoff against amount owed assignee, even though
defense accrued after assignment); United Cal. Bank v. Eastern Mountain Sports, Inc.,
546 F. Supp. 945, 963 (D. Mass. 1982) (stating as to account debtor’s claims or defenses
which arise from the assigned contract: “Regardless of when they accrue, these claims
and defenses may be asserted by the account debtor as offsets against the amount owed
the assignee on the contract or assigned account.”).
11
the City’s equipment is a defense which arises from the lease purchase agreement.
Therefore, the City may assert claims and defenses based on Comvest’s conversion
against the Bank, even though they did not accrue until after the lease purchase
agreement was assigned to the Bank. That is, unless the City entered into an enforceable
agreement not to assert against the Bank the claims or defenses it has against its assignor,
Comvest.
The Bank argues that the lease purchase agreement provides that the City
may not assert claims or defenses which it has against the assignor Comvest. The lease
purchase agreement states, in pertinent part, that: “The obligation of [the City] to make
Rental Payments or any other payments required hereunder shall be absolute and
unconditional in all events.” This type of provision is commonly known as a “hell or
high water” provision (i.e., the lessee will pay rent “come hell or high water”).13
Furthermore, because the lease purchase agreement is a finance lease, the “hell or high
water” provision is automatically incorporated into it through W.Va. Code § 46-2A
407(1) (1996).14 W.Va. Code § 46-2A-407(1) states: “In the case of a finance lease that
is not a consumer lease the lessee’s promises under the lease contract become irrevocable
and independent upon the lessee’s acceptance of the goods.”
Peter Breslauer, “Finance Lease, Hell or High Water Clause, and Third
13
Party Beneficiary Theory in Article 2A of the Uniform Commercial Code,” 77 Cornell L.
Rev. 318, 322 (1992).
14
Cmt. 1, W.Va. Code § 46-2A-407 (“This section extends the benefits of
the classic ‘hell or high water’ clause to a finance lease that is not a consumer lease. This
section is self-executing; no special provision need be added to the contract.”).
12
The City acknowledges that “hell or high water” provisions are generally
enforceable in finance leases upon the lessee’s acceptance of the goods. However, it
contends that there are circumstances where a “hell or high water” provision cannot be
used to preclude a lessee from asserting defenses against an assignee. The City asserts
that this case falls into one of those exceptions because, as to the equipment that Comvest
did not pay for, the City did not accept the equipment under the terms of the lease
purchase agreement. Instead, after Comvest’s conversion of the money that was intended
to be used to pay for the City’s equipment, the City had to deal directly with the third-
party equipment vendors and independently pay for its equipment out of pocket. These
out of pocket payments and purchases by the City were not made through the lease
purchase agreement.
It is well-established that: “The hell or high water clause is not . . .
watertight.”15 First, the plain terms of W.Va. Code § 46-2A-407(1) limit its application
to after “lessee’s acceptance of the goods” under the lease purchase agreement. Second,
the comments to W.Va. Code § 46-2A-407 clarify that a “hell or high water” provision is
subject to the lessee’s revocation of acceptance of goods,16 the lessor’s obligation of good
15
Breslauer, “Finance Lease, Hell or High Water Clause, and Third Party
Beneficiary Theory in Article 2A of the Uniform Commercial Code,” 77 Cornell L. Rev.
at 327.
16
Cmt. 1, W.Va. Code § 46-2A-407 (“The provisions of this section remain
subject to . . . the lessee’s revocation of acceptance (Section 2A-517).”
13
faith,17 and certain warranty obligations of the lessor.18 Third, courts have found “hell or
high water” provisions unenforceable where the lessor consented to cancellation of the
lease19 or where the lease was found to be unconscionable at the time it was entered
into.20
The Bank has not directed us to a single case wherein a court enforced a
“hell or high water” provision against a lessee who has not accepted the goods bargained
for under the terms of the lease agreement or who has independently paid for the goods
outside of the lease agreement. By contrast, it has been noted:
It is also common for personal property leases to
contain so-called “hell or high water” covenants under which
the lessee unconditionally agrees to make lease payments to
the lessor notwithstanding any foreseeable or unforeseeable
17
Cmt. 1, W.Va. Code § 46-2A-407 (“The provisions of this section remain
subject to the obligation of good faith (Sections 2A-103(4) and 1-203)[.]”).
18
Cmt. 2, W.Va. Code § 46-2A-407 (“[T]he lessee may, however, have and
pursue a cause of action against the lessor, e.g., breach of certain limited warranties
(Section 2A-210 and 2A-211(1)).”).
19
Info. Leasing Corp. v. GDR Investments, Inc., 152 Ohio App.3d 260, 266,
787 N.E.2d 652, 657 (2003) (finding that “hell or high water” provision may not be
enforceable against debtor where there was a genuine dispute as to whether the lessor
consented to cancellation of lease”); Colonial Pac. Leasing Corp. v. J.W.C.J.R. Corp.,
977 P.2d 541, 548 (Utah Ct. App, 1999) (“We note that even the ‘hell or high water’
provision provides a mechanism by which a lessee can escape its harsh strictures. . . . .
the consent of the party to whom the promise runs.”).
20
Info. Leasing Corp., 152 Ohio App.3d at 264 & 266, 787 N.E.2d at 655
56 (“Even commercial finance leases, however, are subject to certain defenses, including
. . . unconscionability. . . . [However,] simply because a finance lease has a ‘hell or high
water clause’ does not make it unconscionable.”).
14
consequences. While such “hell or high water” covenants are
generally enforceable . . . , arguably they may not be enforced
in situations in which a lessee lawfully withholds rental
payments as a result of the lessor’s failure to provide the
lessee with peaceable possession of the leased equipment
over the lease term.21
The record shows that between September 2009 and March 2010, the City
accepted $573,054.42 worth of equipment that was paid for by Comvest under the lease
purchase agreement. As to the equipment that was paid for by Comvest, the City’s
obligation to make rental payments to the Bank is irrevocable. However, by March 2010,
Comvest converted $506,824.06 of the money that was designated to pay for the City’s
equipment. After Comvest’s conversion, the City purchased the equipment itself and
paid the third party vendors out of pocket. The lease purchase agreement provides that
acceptance of the equipment is not complete until the City has submitted to Comvest a
certificate of acceptance and a bill for the equipment. Instead of submitting its equipment
bills to Comvest under the lease purchase agreement, the City was forced by Comvest’s
conversion to purchase the equipment itself by independently paying the third-party
equipment vendors out of pocket. As to the $506,824.84 of equipment the City
independently paid for out of pocket, the City did not purchase the equipment under the
terms of the lease purchase agreement as required for the “hell or high water” provision
to be enforceable under W.Va. Code § 46-2A-407.
21
Angelle v. Energy Builders Co., Inc., 496 So.2d 509, 513 (La. Ct. App.
1986) (internal citations and quotations omitted).
15
Because the City did not accept or purchase the equipment under the terms
of the lease purchase agreement, we find that under W.Va. Code § 46-9A-404(a)(1), the
City may assert its defenses or claims in recoupment arising from Comvest’s breach of
the agreement to reduce the amount it owes to the Bank on the assignment of the lease
purchase agreement.22
IV.
CONCLUSION
The Bank took its assignment subject to the City’s claims and defenses
arising from Comvest’s breach of the lease purchase agreement. Therefore, the City was
entitled to recoup the amount it paid out of pocket to the third-party equipment vendors
by reducing the amount it owes the Bank based on Comvest’s conversion. We affirm the
22
The Bank also contended the trial court erred in the following ways: (1) it
failed to hold that the assignment, which was not signed by the bank, violated the statute
of frauds; (2) it failed to find that Comvest met our four-part test in Paxton v. Crabtree,
184 W.Va. 237, 400 S.E.2d 245 (1990), for determining whether an agency relationship
existed between Comvest and the City for purposes of respondeat superior; and (3) it
failed to grant the Bank’s nunc pro tunc motion to deem a previous motion timely filed.
First, the Bank waived its statute of frauds defense. Under West Virginia
Rule of Civil Procedure 8(c) (1998), the statute of frauds is an affirmative defense that
must be pleaded below. The Bank failed to plead statute of frauds in its responsive
pleadings. Second, the Bank’s argument that Comvest satisfied our four-part test for
determining an agency relationship for purposes of respondeat superior is not relevant to
this case because this appeal arises from contract claims, not tort claims. Third, the
Bank’s argument on the trial court’s denial of its nunc pro tunc motion is based on W.Va.
Trial Ct. R. 15.13 (2008), which provides that, in certain situations: “the Court may, upon
satisfactory proof, enter an order permitting the document to be filed or served nunc pro
tunc to the date it was first attempted to be e-filed and served.” (Emphasis added).
“[T]he word ‘may’ inherently connotes discretion.” Syl. Pt. 1, in part, Pioneer Pipe, Inc.
v. Swain, 237 W.Va. 722, 791 S.E.2d 168 (2016). We find nothing in the record
indicating that the trial court abused its discretion under W.Va. Trial Ct. R. 15.13.
16
trial court’s order granting summary judgment to the City and denying summary
judgment to the Bank.
Affirmed.
17