Scott Ellis, Kimberly Ellis, and Tri-State Mine Service,
Inc., by counsel Michael B. Hissam, Isaac R. Forman, and Ryan
M. Donovan, appeal the order of the Circuit Court of Logan
County, entered on April 5, 2017, granting respondents'
motion for summary judgment and dismissing petitioners'
claims and action for declaratory judgment. Respondents
Stephen B. Herndon and Misha Herndon appear by counsel James
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
affirming the order of the circuit court is appropriate under
Rule 21 of the Rules of Appellate Procedure.
Ellis, Kimberly Ellis, and their family-owned company
Tri-State Mine Service, Inc. (collectively, "the
Ellises" or "petitioners") filed the complaint
initiating this action in 2015. The Ellises asserted that
Stephen Herndon, while working as the warehouse manager for
Arch Coal's Mountain Laurel complex, operated a
"kickback" scheme under which vendors were expected
to return to him 10% of the total payment for work performed.
Tri-State Mine Service, Inc. ("Tri-State") was a
vendor. The Ellises also asserted that Mr. Herndon left
Mountain Laurel's employ and "demanded"
partnership in Tri-State as well as employment for his wife,
Misha Herndon, and that when Mr. Herndon's schemes became
publicly known, Tri-State lost business and was devalued. The
Ellises denied that Mr. Herndon was made a partner in the
Tri-State business. Their claims against the Herndons
included: civil conspiracy, extortion, conversion, unjust
enrichment, tortious interference, and breach of fiduciary
duty, and they sought declaratory judgment that there was no
partnership between the Ellises and either of the Herndons.
The Herndons filed a counterclaim, asserting that Mr. Herndon
and Mr. Ellis were equal partners in Tri-State, and that Mr.
Herndon was entitled to half the value of Tri-State.
period of discovery, the Ellises filed a motion for summary
judgment on their declaratory judgment action, and the
circuit court denied it, explaining that there are
"disputed facts in the record in this case that go to
what the agreement was. . . ." The Herndons filed a
motion for summary judgment seeking dismissal of all of the
Ellises' claims. The circuit court cited various theories
of law, and summarily concluded that the Ellises were
estopped from asserting a claim for damages because their
damages grew from an illegal kickback scheme in which they
were willing participants. The court based its determination
on Mr. Ellis's own description, offered in federal court
proceedings, of his part in the scheme. The circuit court
specifically found no wrongdoing on Misha Herndon's part.
The Herndons voluntarily dismissed their counterclaim and the
circuit court confirmed the dismissal by order entered on
March 27, 2017, under the condition that the counterclaim be
reinstated if the court's grant of summary judgment to
the Herndons were eventually set aside by this Court.
Ellises appeal the circuit court's grant of summary
judgment, asserting four assignments of error. First, they
argue that the circuit court made improper credibility
determinations and factual findings "regarding hotly
disputed issues of material fact." Second, they argue
that the circuit court erred in applying the doctrines of
illegal contracts, in pari delicto, waiver,
estoppel, consent, and statute of limitations, because
application of each doctrine was made upon the circuit
court's improper factual findings. Third, they argue that
the circuit court erred in concluding that there is no
evidence of a conspiracy between Mr. Herndon and his wife,
because the evidence showed that Mrs. Herndon received a
substantial salary in exchange for performing "virtually
no work." Finally, they argue that the circuit court
"erred in refusing to apply the West Virginia Uniform
Partnership Act . . . to prohibit Mr. Herndon's
counterclaim that he became a partner in Tri-State Mine
Service, Inc. . . ." Because this appeal is before us on
the circuit court's grant of summary judgment, our review
is de novo. Syl. Pt. 1, Painter v. Peavy, 192 W.Va.
189, 190, 451 S.E.2d 755, 756 (1994).
first and second assignments of error concern
petitioners' assertion that the circuit court made
improper factual determinations in granting summary judgment
to respondents. They argue that Mr. Ellis "has been
unwavering in his position that the Herndons extorted him,
his wife, and their business." Prior to the filing of
the complaint that initiated this action, Mr. Ellis and Mr.
Herndon each pled guilty to a single-count information of
"structuring" in the United States District Court
for the Southern District of West Virginia at a hearing
conducted on July 16, 2014. At the plea hearing, both
defendants affirmed that they had entered into stipulations.
Mr. Ellis's stipulations provided, in part:
To ensure that Tri-State received rebuild work from the
Mountain Laurel Mining Complex, Mr. Ellis participated in a
bid-rigging scheme with several other vendors. In exchange
for guaranteeing the winning bid on certain rebuild jobs,
each of the participating vendors were required to pay an
Arch employee. . . .
Most of the payments . . . were delivered through the
Mountain Laurel warehouse manager, Stephen Herndon. Mr. Ellis
usually delivered the cash in an envelope to Mr. Herndon or
another Arch employee . . . .
Around April 1, 2011, Mr. Herndon left Arch Coal and Mr.
Ellis gave him a half-interest in Tri-State. . . .
Between April 1, 2011, and September 30, 2013, Mr. Herndon
and Mr. Ellis, working in concert with each other, structured
cash from various personal and business accounts in an amount
of $183, 835. Mr. Herndon and Mr. Ellis estimate they used
virtually all of these structured funds to pay cash kickbacks
. . . and that during that time period, they paid $237, 000
in cash kickbacks . . . .
Mr. Ellis's sentencing memorandum, submitted by his
counsel to the federal district court, explains that Mr.
Ellis entered the kickback scheme with Mr. Herndon's
predecessor at Mountain Laurel, and Mr. Herndon entered the
scheme later. However, petitioners assert that Mr. Ellis
informed his attorney in the federal action that he had been
the victim of extortion by Mr. Herndon but that Mr.
Ellis's attorney (who also represented Mr. Herndon)
"didn't want [Mr. Ellis] to worry about it" and
advised him to enter into the stipulation as written above.
Petitioners assert that a genuine issue of material fact
exists-and was ignored by the circuit court-because Mr. Ellis
disavowed his federal court stipulation. Petitioners argue
without citation to legal authority, that a jury may credit
his testimony that he knowingly entered into a false
explained that a party to litigation does not create a
genuine issue of material fact sufficient to defeat a motion
for summary judgment with his own inconsistent evidence
unless the contradiction is adequately explained. Syl. Pt. 4,
Kiser v. Caudill, 215 W.Va. 403, 599 S.E.2d 826
(2004). The contradiction was not adequately addressed before
the circuit court, inasmuch as the history of the kickback
scheme and structuring events was well known to Mr. Ellis at
the time he entered his plea in federal district court, and
inasmuch as he offered no evidence addressing the
inconsistency in this civil litigation other than his own
testimony. Under the unique circumstances before us, we find
that the circuit court was justified in determining that
there was no genuine issue of material fact. Furthermore, we
are not persuaded by petitioners' argument that the
damages claimed in this action are separate from the monetary
withdrawals on which Mr. Ellis's structuring plea was
based. The stipulation conveys Mr. Ellis's admission that
he was a willing principle in the scheme as well as in the
resultant illegal structuring activity. He thus was a willing
participant in the activities that petitioners assert led to
the devaluation of Tri-State. We find no error with respect
to petitioners' first assignment. Having found that the
circuit court did not make improper factual or credibility
determinations, we likewise find no error in the circuit
court's application of facts to the various legal
doctrines described in petitioners' second assignment.
their third assignment of error, petitioners argue that the
circuit court wrongly found that the Herndons engaged in no
conspiracy, because Mrs. Herndon received a great deal of
money from her employment with Tri-State. "'A civil
conspiracy is . . . a legal doctrine under which liability
for a tort may be imposed on people who did not actually
commit a tort themselves but who shared a common plan for its
commission with the actual perpetrator(s).' Syl. Pt. 9,
in part, Dunn v. Rockwell, 225 W.Va. 43, 689 S.E.2d
255 (2009)." Jane Doe-1 v. Corp. of President of The
Church of Jesus Christ of Latter-day Saints, 239 W.Va.
428, 801 S.E.2d 443, 448 (2017). We have held that, "In
order for civil conspiracy to be actionable it must be proved
that the defendants have committed some wrongful act or have
committed a lawful act in an unlawful manner to the injury of
the plaintiff. . . ." Syl. Pt. 1, in part, Dixon v.
Am. Indus. Leasing Co., 162 W.Va. 832, 832, 253 S.E.2d
150, 151 (1979). Because Ms. Herndon's testimony
reflected that she left employment paying approximately $30,
000 per year in order to earn $520, 000 per year at
Tri-State, petitioners assert that they have met this burden.