Richardson et al v. The Church of God International

Filing 99

MEMORANDUM OPINION AND ORDER: The Court GRANTS Plaintiffs' 51 MOTION for Extension of Time to File Response and Plaintiffs' 55 Response is deemed timely. The Court GRANTS The Pineville Church of God, Pastor Roy Norman Gray, Gene Harris and Lydge Burns' 23 MOTION to Dismiss; GRANTS Bishop Wayne Wicker's 27 MOTION to Dismiss; GRANTS Terry Smith's 29 MOTION to Dismiss; GRANTS The Church of God International's 33 MOTION to Dismiss and GRANTS David Harris 9; 43 MOTION to Dismiss. As to these Defendants, this action is dismissed. Nothing in this Memorandum Opinion and Order affects the remaining Defendants - Pat Armstrong, Kathy Zaferatos, Jerry Zaferatos and Zaferatos, LLC. Signed by Senior Judge David A. Faber on 8/22/2014. (cc: all counsel of record) (arb)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD

TERESA RICHARDSON, et al.,
Plaintiffs,
v.

Civil Action No: 1:13-21821

THE CHURCH OF GOD INTERNATIONAL,
et al.
Defendants.

MEMORANDUM OPINION AND ORDER
Pending before the court are the motions to dismiss based
on the doctrines of res judicata and collateral estoppel filed
by a majority of the defendants individually in this matter
(Doc. Nos. 23, 27, 29, 33, and 43).

Plaintiffs filed a response

opposing the requested relief after having filed a motion for an
extension of time to respond (Doc. Nos. 51 and 55).

The motion

for extension of time to file a response (Doc. No. 51) is
GRANTED, and plaintiffs’ response (Doc. No. 55) is deemed
timely.

For the reasons stated herein, the court grants the

moving defendants’ motions to dismiss.
I.

Background
On November 4, 2009, plaintiffs Harold Richardson and John

Stephens entered into a contract with defendants Gene Harris,
1

Terry Smith, and Lydge Burns, as trustees of defendant the
Pineville Church of God, to purchase property.

Doc. No. 5 at 4.

Plaintiffs engaged defendant Pat Armstrong to act as their real
estate agent.

Id.

Plaintiffs agreed to purchase the property

for the sum of $82,000, and the closing was to be held on or
before December 19, 2009.

Doc. No. 23 at 3.

Plaintiffs were

permitted to move into the home on the property prior to closing
for an agreed rent of $600 per month while they sought to secure
financing.

Id. at 4-5.

The planned closing never occurred and

plaintiffs continued to live on the property on a month-to-month
basis paying $600 per month in rent.
Eventually plaintiffs stopped paying rent, and the
Pineville Church of God filed an eviction proceeding against
Harold Richardson, Teresa Richardson, and John Stephens in the
Magistrate Court of Wyoming County on or about September 30,
2011.

The action was removed to the Circuit Court of Wyoming

County where plaintiffs (defendants at the time) filed a
counterclaim.

They asserted multiple claims including

retaliation, discrimination, health or safety violations, and
intentional infliction of emotional distress, all of which
allegedly resulted from their dealings with the defendants.
Doc. No. 33-1 at 4-7.
Judge Warren McGraw of the Wyoming County Circuit Court
held a bench trial on March 12, 2012.
2

Plaintiffs represented

themselves throughout the course of the state proceedings.

By

Final Order entered on March 22, 2013, Judge McGraw granted the
Pineville Church of God’s motion for eviction and dismissed the
counterclaims brought by plaintiffs.

Doc. No. 33-1 at 1-3.

The

court found that plaintiffs breached the contract to purchase
real estate, and that they owed rent for the months of June 2011
through March 2012.

Id.

Plaintiffs were further ordered to

vacate the premises within 60 days.

Id.

From the beginning of the transaction to purchase the
property through plaintiffs’ ultimate eviction, plaintiffs
allege a multitude of nefarious, discriminatory, and illegal
actions on the part of the Pineville Church of God, its
trustees, its pastor, plaintiffs’ own real estate agent Pat
Armstrong, Armstrong’s alleged employer Zaferatos, Inc., and
Jerry and Kathy Zaferatos.

See Doc. No. 5 at 4-13.

alleged actions form the basis of the instant action.

These
On August

14, 2013, plaintiffs filed a complaint in this court against The
Church of God International.

Doc. No. 4.

On October 16, 2013,

plaintiffs filed an amended complaint, adding additional
defendants Pat Armstrong, Lydge Burns, David Harris, Gene
Harris, the Pineville Church of God, Roy Norman Gray, Terry
Smith, Wayne Wicker, Kathy Zaferatos, Jerry Zaferatos, and
Zaferatos, LLC.

(Doc. No. 5).

The amended complaint asserts

violations of civil rights laws, fraud, breach of contract, and
3

personal injury resulting from uninhabitable conditions, among
others.

Independently, defendants filed motions to dismiss, the

majority of which asserted the doctrines of res judicata and
collateral estoppel. 1
II.

Doc. Nos. 23, 27, 29, 33, and 43.

Governing Law

It is well settled that “[t]he Full faith and Credit Act,
28 U.S.C. § 1738, . . . requires the federal court to ‘give the
same preclusive effect to a state-court judgment as another
court of that State would give’”

Exxon Mobil Corp. v. Saudi

Basic Undus. Corp., 544 U.S. 280, 293 (2005)(citing Parsons
Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 523 (1986)).
As such, in determining what preclusive effect to give to the
West Virginia judgment in this matter, the court is bound by the
res judicata rules that a West Virginia court would apply.
In West Virginia, the doctrine of res judicata or claim
preclusion “generally applies when there is a final judgment on
the merits which precludes the parties or their privies from
relitigating issues that were decided or the issues that could
have been decided in the earlier action.”

Beahm v. 7 Eleven,

Inc., 672 S.E.2d 598, 601-02 (W. Va. 2008)(quoting State v.
Miller, 459 S.E.2d 114, 120 (W. Va. 1995)).
1

The doctrine

Defendants Kathy Zaferatos, Jerry Zaferatos, and Zaferatos, LLC
contend that they are improper parties and filed a motion to
dismiss under Rule 12(b)(6). See Doc. No. 25. This Memorandum
Opinion and Order does not address that motion.
4

“‘protects [] adversaries from the expense and vexation
attending multiple lawsuits, conserves judicial resources, and
fosters reliance on judicial action by minimizing the
possibility of inconsistent decisions.’”

Conley v. Spillers,

301 S.E.2d 216, 219 (W. Va. 1983)(quoting Montana v. United
States, 440 U.S. 147, 153-54 (1979)).

In Blake v. Charleston

Area Med. Ctr., Inc., 498 S.E.2d 41 (W. Va. 1997) the West
Virginia Supreme Court of Appeals established a three-part test
for determining whether res judicata serves to preclude a claim.
First, there must have been a final adjudication
on the merits in the prior action by a court
having jurisdiction of the proceedings.
Second,
the two actions must involve either the same
parties or persons in privity with those same
parties.
Third, the cause of action identified
for resolution in the subsequent proceeding
either must be identical to the cause of action
determined in the prior action or must be such
that it could have been resolved, had it been
presented, in the prior action.
Id. at 49.

Before a party can be denied access to federal

courts because of the preclusive effect of a state court
judgment, it must also be established that the party had a “full
and fair opportunity” to litigate their claim in the state
proceedings.

Allen v. McCurry, 449 U.S. 90, 95 (1980).

Finally, res judicata is an affirmative defense.

And

“[a]lthough an affirmative defense such as res judicata may be
raised under Rule 12(b)(6) ‘only if it clearly appears on the
face of the complaint,’ when entertaining a motion to dismiss on
5

the ground of res judicata, a court may take judicial notice of
facts from a prior judicial proceeding when the res judicata
defense raises no disputed issue of fact.”

Andrews v. Daw, 201

F.3d 521, 524 n. 1 (4th Cir. 2000)(internal citation omitted);
see also Thomas v. Consolidation Coal Co. (Pocahontas Fuel Co.
Div.), 380 F.2d 69, 75 (4th Cir. 1967)(rejecting contention that
res judicata cannot properly be raised in the context of a
motion to dismiss “as against the weight of authority.”).
Several of the moving defendants also raise the related
doctrine of collateral estoppel or issue preclusion.

Since

claim preclusion principles are sufficient to dispose of the
present motions, the court will confine its analysis to res
judicata or claim preclusion.
III. Analysis
a. Final Adjudication on the Merits
As to the first element, there was a final adjudication on
the merits by a court having jurisdiction of the proceedings.
By Final Order entered by Judge Warren McGraw of the Wyoming
County Circuit Court, plaintiffs’ counterclaims were dismissed.
Doc. No. 27-1 at 2.

This order came after a full hearing on the

matter in which the parties were permitted to call witnesses and
produce evidence in support of their claims and counterclaims.

6

b. Same Parties or Persons in Privity with those Parties
Second, the state court action must involve either the same
parties or persons in privity with those parties.

This element

is primarily concerned with assuring fairness towards the party
or parties against whom res judicata is raised.

“[T]he concept

of privity with regard to the issue of claim preclusion is
difficult to define precisely but the key consideration for its
existence is the sharing of the same legal right by parties
allegedly in privity, so as to ensure that the interests of the
party against whom preclusion is asserted have been adequately
represented.”

West Virginia Human Rights Comm’n v. Esquire

Grp., Inc., 618 S.E.2d 463, 469 (W. Va. 2005).

The Supreme

Court of Appeals of West Virginia has utilized the doctrine of
“virtual representation” whereby “‘relitigation of any issue
that [has] once been adequately tried by a person sharing a
substantial identity of interests with a nonparty’” is
precluded.

Beahm, 672 S.E.2d at 602 (quoting Galanos v. Nat’l

Steel Corp., 358 S.E.2d 452, 454 (W. Va. 1987).

“[T]he privity

concept is fairly elastic under West Virginia law, as
elsewhere.”

Gribben v. Kirk, 466 S.E.2d 147, 157 n. 21 (W. Va.

1995).
The plaintiffs in this matter – Teresa Richardson, Harold
Richardson, and John Stephens – were all parties to the state
court action.

See Doc. No. 27-1.
7

As defendants in the state

unlawful detainer action, they brought counterclaims against the
Pineville Church of God.

As such, the primary concern of the

privity requirement, protecting the interests of the parties
against whom res judicata is raised, is met.
The only defendant in the present matter that was involved
in the prior litigation was the Pineville Church of God.
clearly then, it can satisfy the second element.

Quite

Furthermore,

the remaining moving defendants are all in privity with the
Pineville Church of God.

With respect to the trustee defendants

- Gene Harris, David Harris, Lydge Burns, and Terry Smith - they
are certainly in privity with the Pineville Church of God.

They

are sued in their capacities as trustees for the Pineville
Church of God.

The actions alleged against them were all

performed in their roles as trustees.

“One relationship long

held to fall within the concept of privity is that between a
nonparty and a party who acts as the nonparty’s representative.”
Rowe v. Grapevine Corp., 527 S.E.2d 814, 826 (W. Va.
1999)(quoting E.E.O.C. v. U.S. Steel Corp., 921 F.2d 489, 493
(3d Cir. 1990)).

This can include a variety of representatives

including “trustee actions.”

Rowe, 527 S.E.2d at 826.

The

trustee defendants acted as the representatives of the Pineville
Church of God.
Likewise, the remaining moving defendants, are in privity
with the Pineville Church of God.
8

Defendant Roy Norman Gray is

a pastor at the church.

Doc. No. 5 at 3.

As such, he shares a

substantial identity of interests with the Pineville Church of
God.

As alleged by plaintiffs, “Defendant [Wayne] Wicker is an

employee and Bishop of the Church of God, presiding over and
responsible for Pineville and for the actions of Gray and the
Trustees.”

Id.

And finally, defendant The Church of God is the

parent organization of the Pineville Church of God.

Plaintiffs

allege that the Pineville Church of God operates “with the
permission of and under the authority and direction of the
Church of God.”

Id. at 2.

Furthermore, all of the claims

against the Church of God are based on the alleged actions of
the individuals and entities involved in the subject real estate
transaction.
Plaintiffs have not shown that the legal interests among
the moving defendants are in any manner divergent.

Indeed, the

moving defendants share a common interest of absolving the
Pineville Church of God and those associated with the church of
any fault.

Furthermore, the moving defendants could have been

added to the state court case, and plaintiffs failed to do so.
Because the moving defendants are in privity with the Pineville
Church of God, the second element has been satisfied.
c. Identical Causes of Action
Finally, the causes of action against the moving defendants
are identical to those in the counterclaim or they are such that
9

they could have been resolved had they been presented.

A cause

of action consists of “the fact or facts which establish or give
rise to a right of action.”

Blake v. Charleston Area Med. Ctr.,

Inc., 498 S.E.2d 41, 48 (W. Va. 1997)(quoting White v. SWCC, 262
S.E.2d 752, 756 (W. Va. 1980)).

When the claims are not

identical, the “same evidence” test applies to determine
“whether two claims should be deemed to be the same for purposes
of claim preclusion.”

Slider v. State Farm Mut. Auto Ins. Co.,

557 S.E.2d 883, 888 (W. Va. 2001).
There appears to be no dispute among the parties that the
counterclaims in the state case are virtually the same as the
causes of action in the instant matter.

In response to the

various motions to dismiss in this matter, plaintiffs never once
make the argument that the substance of the claims is different
nor that they would involve different evidence.

Indeed, in a

letter sent to Magistrate Judge VanDervort, plaintiff’s counsel
stated that “if you look at the Richardsons’ counterclaims in
their Wyoming county case filed years before we met, and their
claims in federal court, they are virtually the same, just
researched and polished a little better as you would expect for
federal court.”

Doc. No. 50 at 4.

He added that plaintiffs

were pursuing “the admittedly very same claims.”

Id.

A review

of the state case counterclaims and the claims raised in the
instant matter against the moving defendants confirms this
10

understanding.

Compare plaintiffs’ counterclaims, Doc. No. 27-2

with plaintiffs’ amended complaint, Doc. No. 5 (generally
alleging discrimination based on race, religion, and age; injury
as a result of poor maintenance and repair of the home; injury
as a result of unsafe housing conditions; that plaintiffs were
taken advantage of by the Pineville Church of God; and that
Pastor Gray improperly showed the home and managed the real
estate).

As such, the third element has been met.

d. Full and Fair Opportunity to Litigate
In plaintiffs’ very brief response to the moving
defendants, they make essentially one argument without citation
to any legal authority.

Namely, they contend that they did not

have a full and fair opportunity to litigate their claims in the
state case.

Doc. No. 55.

In support of their contention,

plaintiffs attach the transcript of the bench trial held in the
Wyoming County Circuit Court case.

Doc. No. 55-1.

A review of

the transcript reveals that plaintiffs were given ample
opportunity to make out their case.

Their failure to do so does

not mean they did not have the opportunity to do so.

At the

hearing, Judge McGraw clearly instructed Mrs. Richardson that
she “will then be allowed to call [her] witnesses to tell [her]
side of the story.”

Id. at 6.

Mrs. Richardson acknowledged

that she had “to prove my countersuit.”

Id. at 15.

The

transcript further reveals that plaintiffs had every opportunity
11

to cross-examine witnesses put on by the Pineville Church of
God.

At no time during cross-examination did Mrs. Richardson

delve into the counterclaims.

Neither did she address the

counterclaims when asking questions of the Richardsons’ only
witness, John Stephens.

Plaintiffs simply failed to produce any

evidence at the bench trial to support their counterclaims.
Having failed to present any such evidence, Mrs. Richardson
agreed on the record that she was ready to submit the case for
the court’s consideration.

Id. at 66.

After Judge McGraw

orally announced his decision, Mrs. Richardson questioned him
about the counterclaims to which Judge McGraw responded that
they would be dismissed.

Id.

The court recognizes that

plaintiffs were pro se in the state court proceedings.
there is no pro se exception to res judicata.

However,

See Depaz v. Home

Loan Servs., Inc., 2011 WL 1630323, at *3 (D. Md. Apr. 28,
2011)(“[T]his Court cannot carve out a categorical pro se
exception to the well-established rule of claim preclusion.”).
To be sure, the state court’s treatment of the
counterclaims was cursory.

There is no elaboration in the Final

Order other than the brief statement that “the Defendants’
[plaintiffs here] Counterclaim if (sic) hereby DISMISSED.”
However, this is likely a product of there being no evidence
presented by the Richardsons to support their counterclaims.
is hardly expected that a court would give anything but short
12

It

shrift to claims not based on any evidence.

Furthermore, to the

extent that the dismissal of plaintiffs’ counterclaims in the
Wyoming County action was based on a faulty or legally dubious
rationale, their remedy was an appeal in the state court system.
Defendants have indicated that plaintiffs did not appeal, and
plaintiffs have provided no information to contradict that
contention.

Error correction is properly a function of

appellate courts, not one to be taken up in a collateral matter.
See Gahr v. Trammel, 796 F.2d 1063, 1070 (8th Cir. 1986)(holding
that the failure to appeal an adverse state court decision will
lead to federal preclusion on the same claims).

Having not

availed themselves of the full procedures available under state
law, plaintiffs cannot now profess that such procedures were not
full or fair.

See Kremer v. Chem. Const. Corp., 456 U.S. 461,

485 (1982)(“The fact that [plaintiff] failed to avail himself of
the full procedures provided by state law does not constitute a
sign of their inadequacy.”).

Plaintiffs had a full and fair

opportunity to litigate their claims.
As the West Virginia Supreme Court of Appeals stated over a
century ago,
It is sufficient that the status of the suit was
such that the parties might have had the matter
disposed of on its merits, if they had presented
all their evidence, and the court had properly
understood the facts, and correctly applied the
law to the facts. If either party fails to
present all his evidence, or mismanages his case,
13

or afterwards discovers additional evidence, or
if
the
court
itself
decides
erroneously,
nevertheless
the
judgment
or
decree,
until
vacated or corrected by appeal, or in some other
appropriate manner, is as conclusive upon the
parties
as
though
all
such
legitimate
and
incidental matters had been litigated, and the
controversy
settled
in
accordance
with
the
principles of abstract justice
Sayre’s Adm’r v. Harpold, 11 S.E. 16 (W. Va. 1890).
IV.

Conclusion

The claims in this action made against the Church of God,
the Pineville Church of God, Wayne Wicker, Roy Norman Gray, Gene
Harris, David Harris, Terry Smith, and Lydge Burns are barred by
the doctrine of res judicata.

Nothing in this Memorandum

Opinion and Order affects the remaining defendants – Pat
Armstrong, Kathy Zaferatos, Jerry Zaferatos, and Zaferatos, LLC. 2
For the reasons expressed above, the court GRANTS
plaintiffs’ motion to extend time to file a response (Doc. No.
51), and GRANTS the motions to dismiss of defendants the

2

The Zaferatos defendants moved to dismiss this action for
reasons other than res judicata (Doc. No. 25). They did,
however, raise res judicata as a defense to the claims against
them for the first time in their reply brief (Doc. No. 62).
“The ordinary rule in federal courts is that an argument raised
for the first time in a reply brief or memorandum will not be
considered.” Clawson v. FedEx Ground Package Sys., Inc., 451 F.
Supp. 2d 731, 734 (D. Md. 2006). The reason behind this is
sound “as doing so would deny the party opposing the motion an
opportunity to respond.” Short v. Walls, Civil Action No. 2:0700531, 2009 WL 914085, *8 (S.D.W. Va. Mar. 31, 2009). For this
reason, the court declines to consider whether res judicata bars
the claims against the Zaferatos defendants.
14

Pineville Church of God, Roy Norman Gray, Gene Harris, Lydge
Burns, Terry Smith, Wayne Wicker, the Church of God
International, and David Harris (Doc. Nos. 23, 27, 29, 33, and
43).

As to these defendants, this action is dismissed.
The Clerk is directed to send copies of this Memorandum

Opinion and Order to all counsel of record.
IT IS SO ORDERED this 22nd day of August, 2014.
Enter:

David A. Faber
Senior United States District Judge

15