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State ex rel. Ferrell v. McGraw

State ex rel. Ferrell v. McGraw

Case No. 
19-0658
Type of Proceeding: 
Writ of Prohibition
Issues: 

Did the trial court correctly apply the rules of venue in a breach-of-contract case?

Background: 

This case raises a venue issue.  Instead of arising via an appeal, however, it arises via a writ of prohibition.

Petitioner, American Staffing, Inc., and Respondent, Employers Innovated Network, LLC, are professional employer organizations which provide administrative support to businesses including payroll, taxes, etc.  Respondent contracted to purchase Petitioner’s clients and good will.  The contract is alleged to have been made in Kanawha County.  Petitioner allegedly reneged and then caused some of Respondent’s clients to terminate Respondent’s services.  Respondent sued in Wyoming County, seeking damages for breach of contract, slander and outrage. 

Petitioner moved to dismiss, arguing that venue was improper in Wyoming County.  Respondent alleges that as a result of Petitioner’s breach, Respondent lost fees that could have been earned, including fees relating to the employment of 82 UMWA members residing in Wyoming County.  The trial court denied the motion.  Petitioner now seeks relief through prohibition.

Positions of the Parties: 

Petitioners:

Petitioners acknowledge that under West Virginia law, venue in a breach of contract case is proper in any county where (1) the contract was made, (2) the contract was breached, or (3) “substantial damage occurs” as a result of the breach.  To come within paragraph (3), Petitioner argues that Respondent was required “to show some manifestation of the breach in the county whose venue is alleged beyond merely some fees or debts owed involving non-parties.”  Petitioner cites SER Galloway Group v. McGraw, 227 W.Va. 435 711 S.E.2d 257 (2011) as support.  According to Petitioner, any financial benefit Respondent would have gained from its contract with Petitioner occurred at Respondent’s office in Kanawha County.  Accordingly, “any loss of that benefit manifested in Kanawha County.” 

Respondents:

Respondent begins by emphasizing the high standard required for prohibition relief.  Petitioner, it says, has an adequate remedy at law and is not prejudice by the trial court’s ruling.  In any event, the trial court’s ruling was not erroneous as a matter of law.  Galloway, in fact, supports the trial court’s venue ruling.  In this case, the connection to Wyoming County “is not simply that the source of lost fees happen to reside in Wyoming County.”  Instead, the Respondents actually “purchased the source of the fees, namely the employment rights of individuals in Wyoming County, from [Petitioner] and it is that purchase of the employment rights that is the subject of this lawsuit.” 

Probable Impact: 

This a Rule 19 case.  It is unlikely the Supreme Court will break any new ground.  Instead, we will likely see an application of Galloway to the specific facts presented.  This case may be helpful in future cases involving venue issues in the context of complex breach-of-contract allegations.

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