## Facts

- RJM Holdings, LLC (RJM) was formed to develop a 117-acre tract in Berkeley County, West Virginia into the Brookside subdivision.
- RJM’s ownership and financing involved Michael Frye and Ayers-related entities; the development was funded through a bank loan that was personally guaranteed by Roger Ayers, Jerry Ayers, and Michael Frye.
- In 2007, RJM recorded plats creating subdivision lots and recorded a declaration of covenants, conditions, and restrictions that imposed minimum home-size requirements and limited exterior building materials.
- James Dailey and other purchasers (including the Hills) bought Brookside lots subject to the recorded covenants, and later began construction on their lots.
- After Brookside experienced poor lot sales, RJM discussed making the subdivision more marketable and recorded amended covenants in 2013 that reduced minimum square footage requirements and allowed materials previously restricted (including vinyl siding).
- The plaintiffs alleged they were not informed of the amended covenants when they should have been, and claimed the changes reduced the value and character of the neighborhood as originally represented by the 2007 covenants.
- The plaintiffs sued Ayers Land Development, LLC, RJM, and other related entities, asserting multiple theories and also seeking to hold individual principals Jerry Ayers, Roger Ayers, and Michael Frye personally liable.
- On veil-piercing, the plaintiffs alleged there was no meaningful separation between RJM and the individual principals and related entities, pointing to shared use of employees, office space, equipment, phone lines, and marketing materials, and to individuals paying RJM’s expenses.
- The defendants moved for summary judgment. The Circuit Court of Berkeley County granted summary judgment and entered a final, appealable order.
- The plaintiffs appealed to the Supreme Court of Appeals of West Virginia.

## Issues

1. Whether the summary-judgment record showed genuine disputes of material fact on the plaintiffs’ theory that RJM and the Ayers/Frye-related defendants acted together as a joint venture in developing Brookside.
2. Whether the summary-judgment record showed genuine disputes of material fact supporting piercing RJM’s LLC/corporate veil to impose personal liability on Roger Ayers, Jerry Ayers, and Michael Frye.
3. Whether the circuit court erred by resolving these fact-driven theories as a matter of law at the summary judgment stage.

## Decision

- The Supreme Court of Appeals of West Virginia reversed the circuit court’s grant of summary judgment on the joint-venture and veil-piercing theories.
- The court held that the plaintiffs produced evidence from which a reasonable fact-finder could infer joint-venture participation by the Ayers/Frye defendants in the Brookside project.
- The court held that the plaintiffs produced evidence supporting disputed fact questions on the veil-piercing elements, including evidence of shared resources and payment of RJM expenses by individuals.
- The case was remanded for further proceedings consistent with the opinion.

## Legal Principles

- Summary judgment is proper only when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law; the evidence is viewed in the light most favorable to the nonmoving party.
- A joint venture is a contractual association for a common business purpose in which participants may contribute money, property, effort, skill, or knowledge and may share responsibility for the venture; whether a joint venture exists is commonly a question for the fact-finder when the record is disputed.
- Piercing an entity veil (including an LLC veil) requires proof (1) of unity of interest and ownership such that separate personalities no longer exist and (2) that an inequitable result would occur if the entity form were respected.
- Veil-piercing is applied sparingly and depends on the totality of the circumstances; where the record contains conflicting evidence on separateness and fairness, the issue should not be decided on summary judgment.

## Conclusion

Dailey held that the circuit court improperly granted summary judgment because the plaintiffs produced evidence creating triable fact disputes about whether the defendants jointly participated in the Brookside development as a joint venture and whether RJM’s entity form should be disregarded to reach the individual principals; the Supreme Court reversed and remanded for fact-finding on those theories.


Dailey v. Ayers Land Development, LLC, 825 S.E.2d 351 (2019)