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Business Court May Host Case

Karl Recommends Cameron Project Lawsuit Be Heard Elsewhere

June 30, 2013
By J.W. JOHNSON JR. Marshall County Bureau Chief , The Intelligencer / Wheeling News-Register

MOUNDSVILLE - Despite arguments from the Marshall County Board of Education requesting otherwise, Marshall County Circuit Judge Mark Karl last week recommended to the West Virginia Supreme Court of Appeals that a lawsuit regarding the Cameron High School project be transferred to the West Virginia Business Court Division.

In a June 17 letter addressed to Chief Justice Brent Benjamin, Karl cites "the number and nature of parties, complexity of legal issues, complexity of discovery, the volume of evidence in discovery, discovery disputes, the amount in controversy, equitable claims, and the complexity and number of anticipated motions" as his basis for the recommendation.

The recommendation comes after a motion was filed May 20 by Scalise Industries Corp. requesting the case be transferred.

Other parties suing the board of education over the project are Gito Inc., on behalf of Nello Construction Co., and Cost Co., which originally filed the suit in January.

In its motion, Scalise points out the Business Court has jurisdiction to handle "litigation involving commercial issues," and while the board of education is not a business, it is engaged in a business transaction. The motion cites case law in which other public bodies involved in lawsuits with private businesses have had cases heard and decided by the court.

Additionally, Scalise said because the case involves claims of breach of warranty, contract, and implied duty of good faith based on "complex and multi-faceted business transactions ... in the context of a multi-million dollar construction project," the court is justified in taking the case. Gito Inc. filed a motion in support of moving the case on June 10.

In its June 12 response to Scalise, the board's attorney states the board of education's non-business status exempts the case from being handled by the Business Court. Additionally, the response states the issues presented in the lawsuit "are not complex" and "specialized treatment" is not needed for resolution.

The motion also states that "simply because the (board of education) is permitted to enter into and be a party to business contracts does not make it a 'business entity.'"

The board's response also notes the project was partially paid for using funds from the West Virginia School Building Authority, which has strict rules regarding contracts and projects. The board states, "if the (board of education) were to be considered a business entity, it would be presumed that it could engage in any type of contract and it would be acting as a business for profit." Instead, the response notes the board acts solely in the interest of education.

In asking for the case not to be transferred, the board states the lawsuit, discovery and other issues mentioned by Scalise are "basic" and the level of knowledge and expertise within the Business Court is not needed.

Scalise submitted a rebuttal to the board's response on June 14, pointing out the board, as defined by West Virginia code, is able to operate as any business would. Additionally, the response states just because the board does not operate "for profit," that does not make it any less of a business entity in the case.

Scalise also maintains that the case is complex, stating the board's statements "are simply not accurate and mischaracterize virtually every aspect of the dispute." As an example of what Scalise believes is a misrepresentation, the company said while the board acknowledges damages "in excess of $1 million," the claims of cost and Scalise are in excess of $3 million.

Karl filed his motion recommending the transfer June 18 in Marshall County Circuit Court. On Friday, a clerk with the Business Court Division said the case had not yet been officially transferred.

A Marshall County case assigned to Business Court would typically be heard in Pleasants County. Berkeley County Circuit Judge Christopher C. Wilkes chairs the Business Court division and would assign a judge to hear the case.

 
 

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