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Tri-State Petroleum Corp. v. Coyne

Supreme Court of West Virginia

April 12, 2018

TRI-STATE PETROLEUM CORP., a West Virginia corporation; EJC LEGACY, INC., a West Virginia corporation; INTERSTATE SERVICE STATIONS HOLDINGS, INC., a West Virginia corporation; CONVENIENCE REALTY, LP, a West Virginia limited partnership; COLLEEN C. MCGLINN, an individual; EDWARD J. COYNE II, an individual; ERIN C. MERRICK, an individual; and SHEILA C. ROMANEK, an individual, Defendants Below, Petitioners
v.
KEVIN P. COYNE, Plaintiff Below, Respondent

          Submitted: February 13, 2018

          Appeal from the Circuit Court of Ohio County The Honorable Larry V. Starcher, Judge Civil Action No. 14-C-200

          Benjamin L. Bailey, Esq. Isaac Forman, Esq. J. Zak Ritchie, Esq. Bailey & Glasser LLP Charleston, West Virginia Counsel for Petitioners Convenience Realty LP; EJC Legacy, Inc.; and Tri-State Petroleum Corp.

          James J. Sellitti, Esq. Sellitti, Nogay & McCune Weirton, West Virginia Jeffrey P. Ward, Esq. admitted pro hac vice) Cohen & Grigsby, P.C. Pittsburgh, Pennsylvania Counsel for Petitioners Colleen C. McGlinn; Edward J. Coyne, II; Eric C. Merrick; and Sheila C. Romanek

          W. Howard Klatt, Esq. Klatt Law Offices Wheeling, West Virginia

          Traci S. Rea Aleksandra V. (Sasha) Williams, Esq. James C. Martin, Esq. (admitted pro hac vice) David B. Fawcett, Esq. (admitted pro hac vice) Reed Smith LLP Pittsburgh, Pennsylvania Counsel for Respondent Kevin P. Coyne

          OPINION

          WALKER JUSTICE

         SYLLABUS BY THE COURT

         1. "The appellate standard of review for an order granting or denying a renewed motion for a judgment as a matter of law after trial pursuant to Rule 50(b) of the West Virginia Rules of Civil Procedure [1998] is de novo." Syllabus Point 1, Fredeking v. Tyler, 224 W.Va. 1');">224 W.Va. 1, 680 S.E.2d 16 (2009).

         2. "When this Court reviews a trial court's order granting or denying a renewed motion for judgment as a matter of law after trial under Rule 50(b) of the West Virginia Rules of Civil Procedure [1998], it is not the task of this Court to review the facts to determine how it would have ruled on the evidence presented. Instead, its task is to determine whether the evidence was such that a reasonable trier of fact might have reached the decision below. Thus, when considering a ruling on a renewed motion for judgment as a matter of law after trial, the evidence must be viewed in the light most favorable to the nonmoving party." Syllabus Point 2, Fredeking v. Tyler, 224 W.Va. 1');">224 W.Va. 1, 680 S.E.2d 16 (2009).

         3. "While the officers and directors of a business corporation are accorded a rather broad latitude in the conduct of the affairs of the corporation, they occupy a fiduciary relationship toward it and its shareholders. The same fiduciary relationship exists on the part of the majority shareholders of a business corporation toward its minority shareholders." Syllabus Point 2, Masinter v. WEBCO Co., 164 W.Va. 241');">164 W.Va. 241, 262 S.E.2d 433 (1980).

         4. "A violation of the fiduciary relationship may result from oppressive conduct, which is conduct that departs from the standards of good faith and fair dealing which are inherent in the concept of a fiduciary relationship." Syllabus Point 3, Masinter v. WEBCO Co., 164 W.Va. 241, 262 S.E.2d 433 (1980).

         5. "An attempt to 'freeze or squeeze out' a minority shareholder from deriving any benefit from his investment in a private business corporation, without any legitimate business purpose, may constitute oppressive conduct." Syllabus Point 4, Masinter v. WEBCO Co., 164 W.Va. 241');">164 W.Va. 241, 262 S.E.2d 433 (1980).

         6. "'The testimony of expert witnesses on an issue is not exclusive, and does not necessarily destroy the force or credibility of other testimony. The jury has a right to weigh the testimony of all witnesses, experts and otherwise; and the same rule applies as to the weight and credibility of such testimony.' Syllabus Point 2, Webb v. Chesapeake & Ohio Ry Co., 105 W.Va. 555');">105 W.Va. 555, 144 S.E. 100 (1928)." Syllabus Point 2, Papenhaus v. Combs, 170 W.Va. 211');">170 W.Va. 211, 292 S.E.2d 621 (1982).

         7. "Although the ruling of a trial court in granting or denying a motion for a new trial is entitled to great respect and weight, the trial court's ruling will be reversed on appeal when it is clear that the trial court has acted under some misapprehension of the law or the evidence." Syllabus Point 4, Sanders v. Georgia-Pac. Corp., 159 W.Va. 621, 225 S.E.2d 218 (1976).

         8. "As a general rule, a trial court has considerable discretion in determining whether to give special verdicts and interrogatories to a jury unless it is mandated to do so by statute." Syllabus Point 8, Barefoot v. Sundale Nursing Home, 193 W.Va. 475');">193 W.Va. 475, 457 S.E.2d 152 (1995).

         9. "Generally, this Court will apply an abuse of discretion standard when reviewing a trial court's decision regarding a verdict form." Syllabus Point 4, Perrine v. E.I. du Pont de Nemours & Co., 225 W.Va. 482');">225 W.Va. 482, 694 S.E.2d 815 (2010).

         10. "Ordinarily, attorney's fees in excess of the nominal statutory amounts provided by W.Va. Code, 59-2-14 [1960] are not 'costs.'" Syllabus Point 1, Sally-Mike Prop. v. Yokum, 179 W.Va. 48');">179 W.Va. 48, 365 S.E.2d 246 (1986).

         11. "As a general rule each litigant bears his or her own attorney's fees absent a contrary rule of court or express statutory or contractual authority for reimbursement." Syllabus Point 2, Sally-Mike Prop. v. Yokum, 179 W.Va. 48');">179 W.Va. 48, 365 S.E.2d 246 (1986).

         12. "There is authority in equity to award to the prevailing litigant his or her reasonable attorney's fees as 'costs, ' without express statutory authorization, when the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons." Syllabus Point 3, Sally-Mike Prop. v. Yokum, 179 W.Va. 48');">179 W.Va. 48, 365 S.E.2d 246 (1986).

         13. "Where attorney's fees are sought against a third party, the test of what should be considered a reasonable fee is determined not solely by the fee arrangement between the attorney and his client. The reasonableness of attorney's fees is generally based on broader factors such as: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." Syllabus Point 4, Aetna Cas. & Sur. Co. v. Pitrolo, 176 W.Va. 190');">176 W.Va. 190, 342 S.E.2d 156 (1986).

         14. "In reviewing a circuit court's award of prejudgment interest, we usually apply an abuse of discretion standard. When, however, a circuit court's award of prejudgment interest hinges, in part, on an interpretation of our decisional or statutory law, we review de novo that portion of the analysis." Syllabus Point 2, Hensley v. W.Va. Dep't of Health & Human Res., 203 W.Va. 456, 508 S.E.2d 616 (1998).

         15. "In contract or tort actions, prejudgment interest is available to a litigant as part of compensatory damages if there is an ascertainable pecuniary loss." Syllabus Point 3, Capper v. Gates, 193 W.Va. 9');">193 W.Va. 9, 454 S.E.2d 54 (1994).

         16. "'Where, in the trial of an action at law before a jury, the evidence is conflicting, it is the province of the jury to resolve the conflict, and its verdict thereon will not be disturbed unless believed to be plainly wrong.' Syllabus Point 2, French v. Sinkford, 132 W.Va. 66');">132 W.Va. 66, 54 S.E.2d 38 (1948)." Syllabus Point 3, Pinnacle Min. Co. of N. W.Va. v. Duncan Aircraft Sales of Fla., Inc., 182 W.Va. 307');">182 W.Va. 307, 387 S.E.2d 542 (1989).

         Kevin P. Coyne and his brothers and sisters owned three corporations and one limited partnership-Interstate Service Stations Holdings, Inc. (ISSH); EJC Legacy, Inc. (Legacy), which is the sole stockholder of Tri-State Petroleum Corp. (Tri-State); and Convenience Realty, LP (Convenience Realty). After an extended period of conflict with his siblings-Colleen C. McGlinn; Edward J. Coyne, II; Erin C. Merrick; and Sheila C. Romanek-Kevin's employment with Tri-State was terminated in 2012 and his shares and interest in Legacy, Convenience Realty, and ISSH were redeemed. Kevin sued his four siblings and the four entities (collectively, Petitioners) claiming breach of contract, breach of fiduciary duty, and fraud. After an eleven-day trial in the summer of 2016, a jury awarded Kevin $5, 053, 111 on his breach of contract and fiduciary duty claims. Later, the circuit court awarded Kevin attorneys' fees in the amount of $1, 517, 996.40 and prejudgment interest (at the rate of seven percent per year) in the amount of $959, 452.46.

         On appeal, Petitioners argue that they were entitled to judgment as a matter of law on Kevin's breach of contract and fiduciary duty claims. They also challenge various rulings made during the trial and the award of attorneys' fees and prejudgment interest. We find merit only in the assignments of error regarding attorneys' fees and prejudgment interest. We find that the circuit court abused its discretion in awarding attorneys' fees without making sufficient findings of fact and conclusions of law regarding Kevin's entitlement to the sum awarded, or its reasonableness.1 Because Kevin's tort damages were not certain or capable of being rendered certain by reasonable calculation at the time of trial, we also find that the circuit court erred by finding that the entire jury verdict in this case, net of offsets, constituted "special damages" subject to West Virginia Code § 56-3-31 (2012) and awarding Kevin prejudgment interest.

         I. FACTUAL BACKGROUND

         Edward Coyne, Sr., and his wife, Betty, started Tri-State in 1974. The business distributed petroleum products to customers in West Virginia, Ohio and Pennsylvania. The Coynes had five children: Colleen C. McGlinn (Colleen); Edward J. Coyne, II (Ed), Erin C. Merrick (Erin); Sheila C. Romanek (Sheila); and Kevin Coyne (Kevin). Over time, each of the siblings joined their parents as employees of Tri-State. Ed and Erin joined in 1984, followed by Kevin and Sheila in 1987. Colleen earned a law degree in 1983, then moved to Dallas, Texas, to practice law. In 1997, Colleen joined Tri-State as in-house general counsel, although she continued to live outside the Wheeling, West Virginia-Pittsburgh, Pennsylvania area until approximately 2015. Ed served as CEO from approximately 1995 to 2005, when he was succeeded by Colleen.

         In the 1990s, Tri-State expanded beyond its initial petroleum distribution business. Tri-State's affiliate at the time, Interstate Petroleum, [2] purchased several BP gas stations in Ohio and West Virginia, pushing the companies' sales to $45 million by 1998. In 2002, Tri-State purchased approximately eighteen Exxon stations in the Pittsburgh area. Prior to the Exxon acquisition, there were hopes that the company could attain annual revenues of $100 million. The Exxon acquisition actually spurred the company to realize annual revenues of more than $200 million.

         The 2002 Exxon acquisition represented a leap forward for Tri-State and the Coyne siblings. Over the years, Ed and Betty Coyne ceded control and ownership of the various entities to their children, and by February 1995, each sibling owned an equal one-fifth share of the businesses. Following a corporate restructuring in 2002, each of the siblings was employed by Tri-State, and owned twenty percent of the shares of Legacy, a newly-formed holding corporation that was the sole stockholder of Tri-State. The siblings also held equal limited partnership interests in Convenience Realty, a limited partnership 3 formed in 2002 to hold the family's convenience store properties.

         The Coynes adopted various agreements to govern Legacy, Tri-State, and Convenience Realty as those entities and their operations grew more sophisticated and lucrative. At time relevant to Kevin's breach of contract claim, the stockholders in Legacy-Ed, Colleen, Sheila, Erin, and Kevin-were subject to one such agreement, dated December 1, 2008 (2008 Stockholders Agreement). That agreement provided that, if a stockholder's employment was terminated for "just cause, "[4] then Legacy could redeem the stockholder's entire interest for eighty percent of its "fair market value . . . as determined by the Board of Directors considering, among other factors, the guidelines set forth in Internal Revenue Service Ruling 59-60." The 2008 Stockholders Agreement was signed by Colleen (as a stockholder, and in her capacity as President of Legacy), and Ed, Erin, Kevin, and Sheila as stockholders. Convenience Realty's Limited Partnership Agreement, dated February 1, 2002 (2002 Partnership Agreement), contained a similar provision. As with the 2008 Stockholders Agreement, the 2002 Partnership Agreement was signed by Ed (as a limited partner, and in his then-capacity as President of Tri-State), and Colleen, Erin, Kevin, and Sheila as limited partners.

         A. Kevin's Role in Tri-State and Employment History

         Kevin worked as Tri-State's Vice President of Marketing following his hire in 1987. Early on, Kevin solicited retail gas stations on rural routes to contract with Tri-State. After 2002, Kevin became heavily involved in renovating and rebranding Convenience Realty's new Exxon stations. Kevin held the title of Vice President of Marketing and worked as part of the management team until 2005, when he became Vice President of Real Estate. In March 2006, his title changed to Vice President (dropping the real estate designation) and, in March 2007, he was demoted to Project and Construction Manager.

         Kevin worked for Tri-State from approximately 1987 to 1997 without incurring written discipline. However, beginning in 1997-the year that Colleen joined Tri-State as in-house general counsel-disciplinary memos and other documentation of behavioral problems began to fill Kevin's personnel file. Kevin received written discipline in 1998, 1999, 2002, 2003, 2005, and 2006. Kevin was faulted for outbursts, rudeness, throwing a project file and an ink pen at an employee, directing obscene language at a convenience store clerk within earshot of a customer, exceeding his authority, failing to work well with other members of the management team, and allegedly backing Colleen up against a conference room wall when she was four months pregnant.

         Tri-State responded to Kevin's infractions at various times by suggesting that he seek mental health counseling, suspending him without pay, and demoting him. In 2002, Tri-State gave Kevin what it called a "final warning, " and informed him that if "another violation of the terms of your continued employment . . . occur[ed] . . . we consider this letter formal notice that we have determined that we will be forced to consider termination of your employment." Despite this final warning, and disciplinary memos in 2003, 2005, and 2006, Kevin continued in Tri-State's employ until 2013.

         In May 2010, Tri-State insisted that Kevin take a paid sabbatical for up to one year. Erin (acting in her capacity as Tri-State's Director of Corporate Services) explained in a letter to Kevin that the sabbatical was necessary to allow him to address his personal affairs, namely a protracted divorce. The letter stated that the sabbatical was "put in place with both [Kevin] and the Company's best interests in mind, " and Tri-State had "nothing but concern and best wishes for [Kevin]." By separate email, Erin assured her brother that the sabbatical would not affect his status as a shareholder. Kevin, however, was not amenable to the proposed sabbatical. In a May 19, 2010 email to his siblings, he stated, I am not accepting your proposed leave of absence. . . .

I expect to participate in all activities ans [sic] want my emails answered, not ignored. I want kept informed regarding all negotiations on Martins Ferry and Akron projects. I expect to be informed of all Tri-State Petroleum activities that pertain to me as well!
Why don't you all take a leave of absence!

         The record demonstrates that in August 2010, Tri-State concluded that it would not permit Kevin to return to work and that his sabbatical would end by December 31, 2010. The record also demonstrates that in that same month, Tri-State was considering terminating Kevin's employment involuntarily so as to trigger the provisions of the 2002 Partnership and 2008 Stockholders Agreements that would enable Legacy and Convenience Realty to buy back Kevin's stocks and partnership interest.

         In September 2010, Ed, Colleen, and Erin sent Kevin a letter stating that Tri-State was imposing certain conditions on Kevin's return to full-time employment due to an angry confrontation between Kevin and Ed about employment-related matters at Ed's home earlier that month. Those conditions included undergoing a medical exam to identify and treat any conditions that could have contributed to Kevin's anger in the workplace. The letter concluded by informing Kevin that his sabbatical would continue until May 11, 2011, so long as he provided Tri-State's board of directors with evidence that he was actively taking steps to meet these newly-imposed conditions.

         Despite the representation that the sabbatical would end in May 2011, it actually continued until July 2012.[5] At that time, Tri-State's board of directors (Colleen, Ed, and Erin) determined that Kevin's employment would end based on events that had occurred while he was on sabbatical. A consent in lieu of special meeting adopted by the board described those events in some detail:

(i) Kevin's continued refusal to comply with the conditions to return to full-time employment, (ii) his own acknowledgments that he lacked interest in returning to work, (iii) Kevin's acknowledgment's [sic] to senior management that he is incapable of working with other members of the management team, (iv) in the entire time Kevin has been on paid leave, he has never once requested to return to full-time employment, (v) Kevin has been actively involved in several other business activities and ventures since May 2010, and (vi) the fact that adequate time and allowances have been made for Kevin to have been able to satisfy the terms and conditions of the September 29, 2010 letter and return to work, and no effort whatsoever has been made by Kevin to return to work.

         This document lacked any reference to Kevin's pre-2010 disciplinary memos or a statement that Tri-State's board of directors was terminating his employment for "just cause, " so as to trigger the redemption options found in the 2008 Stockholders and 2002 Partnership Agreements.

         On September 12, 2012, Legacy's board of directors (Ed, Colleen, and Erin), and all of Legacy's shareholders (Ed, Colleen, Erin, and Sheila), excluding Kevin, endorsed another consent in lieu of special meeting. That document included the following representations: (1) on July 11, 2012, Tri-State had terminated Kevin's employment "for cause"; (2) dating back to at least 2002, Kevin had a documented history of behavioral problems at work that "could have potentially put the company at risk for other potential liability"; and (3) Kevin had recently physically attacked another Legacy shareholder.[6] For those reasons, the board and the Legacy shareholders (excluding Kevin) concluded that it was in the best interest of the business to exercise their rights under the 2008 Stockholders Agreement to redeem Kevin's shares in Legacy.

         Legacy then retained a valuation firm, Gleason & Associates P.C. (Gleason P.C.), to determine the fair market value of Kevin's stock and partnership interests as of June 30, 2012, the effective date of Kevin's termination of employment. Gleason P.C. valued the entire business at approximately $22, 660, 000 and the fair market value of Kevin's interest at $2, 249, 000 ($1, 600, 000 in Legacy; $535, 000 in Convenience Realty, and $114, 000 in ISSH). On June 20, 2013, Kevin received approximately $1.7 million for his interests (the fair market value according to Gleason P.C., minus a twenty percent discount to be applied under the terms of the 2002 Partnership and 2008 Stockholders Agreement in the case of a just cause termination) by way of payments totaling $360, 236 and promissory notes totaling $1, 349, 400.

         B. The Bridgeville and Oakland Properties

         As part of the larger 2002 Exxon deal, Convenience Realty acquired two Exxon gas stations in Bridgeville, Pennsylvania (the Bridgeville property), and on Forbes Avenue in Pittsburgh's Oakland neighborhood (the Oakland property). Prior to the termination of Kevin's employment with Tri-State and the redemption of his shares and partnership interest, Kevin put together materials and binders outlining development ideas for various properties owned by Convenience Realty, including those in Bridgeville and Oakland.

         For Bridgeville, Kevin proposed a grocery-anchored shopping center. Kevin also identified adjacent property then owned by GE Ionics as a purchase necessary to realize the development goal for the Bridgeville property. As to Oakland, Ed testified that Kevin "bounced around a lot of ideas to me. He talked about a hotel. He had talked about a parking garage. He had talked about, you know, [the University of Pittsburgh] putting another building there. He had said [we] needed to acquire another piece of property where a Chinese restaurant was."

         1. The Bridgeville Property

         Ed, Colleen, Erin, and Sheila took steps to develop Convenience Realty's Bridgeville property during Kevin's paid sabbatical (May 2010 - July 2012), but did not inform Kevin of their actions. They formed Bridgeville Realty, LP (BRLP) in November 2011.[7] In December 2011, Tri-State gave BRLP a $300, 000 line of credit. Also in December 2011, BRLP entered into an agreement with GE Ionics to purchase the 6.8 acres adjacent to the Bridgeville property-the parcel previously identified by Kevin as necessary to develop the Bridgeville property.

         In June 2012, ISSH[8] made one $7, 500 distribution each to Ed, Colleen, Sheila, and Erin. Ed, Colleen, Sheila, and Erin each wrote a $7, 500 check to BRLP ($30, 000 total), which then paid $25, 000 to Chicago Title Insurance to obtain an extension of a development-related deadline at the Bridgeville property. Kevin did not receive a $7, 500 distribution from ISSH, although he was an equal shareholder to Ed, Colleen, Erin, and Sheila (and was still employed by Tri-State) in June 2012.

         By September 2012, BRLP was not only under contract to purchase the GE Ionics property adjacent to Convenience Realty's Bridgeville property, it had also engaged an engineering firm to prepare an initial site plan for the property and received a formal letter of intent from the project's anchor tenant, grocery chain Aldi. The following September, approximately three months after Kevin's interest in Convenience Realty was redeemed, Convenience Realty transferred the Bridgeville property to Colleen, Ed, Erin, and Sheila, individually. They, in turn, transferred the property to BRLP as a capital contribution. As of the 2016 trial, BRLP had completed development of the Bridgeville property. Grocery chain Aldi anchors the development.

         2. The Oakland Property

         As Colleen acknowledged at trial, the Oakland property-a gas station-is in a good location on a major thoroughfare near the University of Pittsburgh campus. In July 2012, Ed, Colleen, Sheila, and Erin created Comhdan Realty, LP (CRLP). That same month, CRLP contracted to purchase the Chinese restaurant adjacent to the Oakland property-the parcel identified by Kevin as necessary to the development of the Oakland property.9 In August 2013, Convenience Realty transferred the Oakland property to Colleen, Ed, Erin, and Sheila, individually. They, in turn, transferred the property to CRLP as a capital contribution. The transfer of the Oakland property from Convenience Realty to CRLP had been contemplated as early as June 2012, the month before Tri-State terminated Kevin's employment.

         II. Procedural History

         Kevin filed a civil complaint in the Circuit Court of Ohio County in July 2014 bringing claims against his siblings and the four corporate entities for breach of contract and fiduciary duty. In August 2015, Kevin filed an amended complaint in which he asserted a fraud claim against Colleen, individually; a claim of usurpation of corporate opportunities under West Virginia Code § 31D-14-1430 (2002); conversion and breach of fiduciary duty against his siblings; and breach of contract against his siblings and corporate defendants. The circuit court then dismissed the § 31D-14-1430 and conversion claims because, it reasoned, Kevin lacked standing to pursue those derivative claims because he was no longer a Legacy shareholder.

         In May 2016, the circuit court granted Kevin leave to file a second amended complaint, which, of relevance here, included claims for breach of contract against Petitioners; breach of fiduciary duty against Colleen, Ed, Erin, and Sheila; and fraud against Colleen. The breach of fiduciary duty claim in the second amended complaint included factual allegations regarding the Bridgeville and Oakland properties that had previously been part of Kevin's § 31D-14-1430 and conversion claims. The parties then filed cross-motions for summary judgment, which the circuit court denied in June 2016 "because if there is a case that there is [sic] questions of fact, it's certainly this case." Trial commenced on June 21, 2016, and concluded on July 7, 2016, with the jury returning a verdict of $5, 053, 111 for Kevin on both his breach of contract and fiduciary duty claims. Neither Kevin nor Petitioners objected to the dual form of this award or asked the circuit court to inquire further of the jury as to the allocation of this verdict between those causes of action. The jury found for Colleen on Kevin's fraud claim.

         Petitioners then timely moved for judgment as a matter of law under Rule 50(b) of the West Virginia Rules of Civil Procedure on Kevin's breach of contract and fiduciary duty claims, and, alternatively, for a new trial. On December 7, 2016, the circuit court entered an order denying that motion, granting Kevin attorneys' fees in the amount of $1, 517, 996.40, [10] and directing the clerk to enter a final judgment order. The circuit court also ordered that seven percent prejudgment interest be imposed on the net jury verdict ($3, 233, 911[11]) from September 12, 2012-the date Legacy notified Kevin that it was redeeming his shares. It is from this order that Petitioners now appeal.

         II. STANDARD OF REVIEW

         Petitioners' various assignments of error call for different standards of review. We state the particular standard of review applicable to each assignment of error in the corresponding portion of the opinion, below.

         III. DISCUSSION

         Petitioners raise seven assignments of error on appeal. We address them in the following order, as described by the substance of each assignment of error: (1) Kevin's breach of fiduciary duty claim; (2) Kevin's breach of contract claim; (3) evidence admitted in support of Kevin's fraud claim against Colleen; (4) the 2010 releases; (5) the circuit court's verdict form; (6) the award of attorney's fees; and (7) the award of prejudgment interest.

         A. Breach of Fiduciary Duty

         At trial, the jury found in Kevin's favor on his breach of fiduciary duty claim against Colleen, Ed, Erin, and Sheila. Petitioners argued at summary judgment, and then again in their post-trial motion for judgment as a matter of law under Rule 50(b), that Kevin was barred from pursuing this claim for two reasons. First, Petitioners argued that Kevin's breach of fiduciary duty claim was a really a claim for breach of the 2002 Partnership and 2008 Stockholders Agreements, and that this Court's reasoning in Gaddy Engineering Co. v. Bowles Rice McDavid Graff & Love, LLP[12] barred Kevin's tort claim as a matter of law. Second, Petitioners argued that the circuit court's dismissal of the § 31D-14-1430 (usurpation of corporate opportunity) and conversion claims from the amended complaint barred Kevin from including allegations related to the Bridgeville and Oakland properties to the breach of fiduciary duty claim in his second amended complaint.

         Kevin responds that settled West Virginia law authorizes direct breach of fiduciary claims such as his in the context of close corporations, and that the dismissal of the usurpation of corporate opportunity and conversion claims from the amended complaint does not prevent him from including allegations regarding the Bridgeville and Oakland properties in his second amended complaint in support of his breach of fiduciary duty claim.

         This Court reviews a circuit court's denial of a Rule 50(b) motion de novo. Where issues of fact are concerned, however, we must view the evidence offered at trial in the light most favorable to the nonmoving party.

The appellate standard of review for an order granting or denying a renewed motion for a judgment as a matter of law after trial pursuant to Rule 50(b) of the West Virginia Rules of Civil Procedure [1998] is de novo.
When this Court reviews a trial court's order granting or denying a renewed motion for judgment as a matter of law after trial under Rule 50(b) of the West Virginia Rules of Civil Procedure [1998], it is not the task of this Court to review the facts to determine how it would have ruled on the evidence presented. Instead, its task is to determine whether the evidence was such that a reasonable trier of fact might have reached the decision below. Thus, when considering a ruling on a renewed motion for judgment as a matter of law after trial, the evidence must be viewed in the light most favorable to the nonmoving party.[13]

         We now analyze Petitioners' arguments in view of that standard.

         Legacy-a holding company and sole shareholder of Tri-State, Kevin's former employer-is a close corporation. "A 'close corporation' has been defined as a corporation with a small number of shareholders whose shares are not generally traded in the securities market."[14] The parties do not dispute that when Kevin's employment was terminated in 2012, and his shares in Legacy were redeemed the following year, he owned approximately seventeen percent of that corporation and Convenience Realty. He owned twenty percent of ISSH. His siblings, Ed, Colleen, Sheila, and Erin, owned equal portions of the remainder of the corporations and partnership. Thus, Kevin occupied a minority position in the family businesses relative to his siblings prior to the redemption of his shares and partnership interest in 2013.

         This Court previously considered the majority-minority shareholder relationship in Masinter v. WEBCO Company.[15] In that case, Masinter, Cohen, and Webb owned equal shares of WEBCO Company.[16] Over a number of years, the three men fell out. Cohen and Webb then removed Masinter from the corporate board, which terminated his corporate salary.[17] The pair also excluded Masinter from direct participation in WEBCO's operations.[18] Later, WEBCO, which was based in Huntington, opened a store in Charleston. Masinter believed that WEBCO's new store was intended to hurt his own retail business in Charleston, so he filed suit seeking dissolution of WEBCO and damages from Webb and Cohen individually due to their allegedly oppressive conduct.[19]

         On review, this Court found that Masinter's relief was not limited to dissolution of WEBCO, and so reversed the circuit court's order granting summary judgment to Webb and Cohen. We held that Masinter could seek damages from Webb and Cohen individually for breaching their fiduciary duties-duties they owed to Masinter by virtue of their position as majority shareholders. We explained:

While the officers and directors of a business corporation are accorded a rather broad latitude in the conduct of the affairs of the corporation, they occupy a fiduciary relationship toward it and its shareholders. The same fiduciary relationship exists on the part of the majority shareholders of a business corporation toward its minority shareholders.[20]

         We also explained the following with regard to the duties owed by officers and directors to the corporation and its shareholders, and therefore also owed by majority shareholders to minority shareholders:

Directors are not technically trustees, but are agents who bear a relation of trust and confidence to their principal. They stand in a fiduciary relation to the corporation and are held to the utmost good faith in their dealings with it. They must manage its business with a view to promote the common interests, and cannot directly or indirectly derive personal profit or advantage from their position which is not shared by all the stockholders. . . .[21]

         We also explained in Masinter the broad types of majority shareholder conduct that may constitute a breach of the fiduciary duties owed by the majority to the minority:

A violation of the fiduciary relationship may result from oppressive conduct, which is conduct that departs from the standards of good faith and fair dealing which are inherent in the concept of a fiduciary relationship.
An attempt to "freeze or squeeze out" a minority shareholder from deriving any benefit from his investment in a private business corporation, without any legitimate business purpose, may constitute oppressive conduct.[22]

         Thus, in Syllabus Points 2, 3, and 4 of Masinter, this Court recognized that, in the context of a close corporation, a minority shareholder may have a direct cause of action for breach of fiduciary duty against a majority shareholder(s) based upon the majority's oppressive conduct. We are not unique in taking this position: "Most states have adopted the view that a dissolution statute does not provide the exclusive remedy for injured shareholders and that the courts have equitable powers to fashion appropriate remedies where the majority shareholders have breached their fiduciary duty to the minority by engaging in oppressive conduct."[23] Similarly, a regularly cited treatise provides that: "Fiduciary duties increasingly can be enforced as direct suits brought by individual shareholders, particularly in closely held firms. Judicial authority exists in half of the states authorizing such direct suits and is sometimes provided by statute; the number of states with such authority have been growing for several decades."[24]

         Nevertheless, Petitioners draw upon the 2002 Partnership and 2008 Stockholders Agreements to argue that Kevin's breach of fiduciary duty claim is an impermissible rehash of his claim against Petitioners for breaching those agreements, and is barred by the gist of the action doctrine. This Court last examined the gist of the action doctrine in Gaddy Engineering, which involved a joint venture between a law firm and engineering company.[25] The engineering company alleged that it had formed a fee-sharing agreement with the law firm, which, it claimed, the law firm had breached.[26] The engineering company also asserted a fraud claim, alleging that the law firm misrepresented to the engineering firm that it would share its legal fees.[27]

         This Court found that the gist of the engineering company's action against the law firm was the breach of their alleged fee agreement, and not fraud, and that the engineering company's tort claim was therefore barred. We explained that:

Under this [gist of the action] doctrine, recovery in tort will be barred when any of the following factors is demonstrated:
(1) where liability arises solely from the contractual relationship between the parties; (2) when the alleged duties breached were grounded in the contract itself; (3) where any liability stems from the contract; and (4) when the tort claim essentially duplicates the breach of contract claim or where the success of the tort claim is dependent on the success of the breach of contract claim.[28]

         In sum, "whether a tort claim can coexist with a contract claim is determined by examining whether the parties' obligations are defined ...


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