Flaherty’s Alonzo Washington obtains summary judgment in a fraud and unjust enrichment case

The U.S.D.C. for the Northern District of West Virginia granted summary judgment in a fraud and unjust enrichment case. Alonzo D. Washington of Flaherty Sensabaugh Bonasso PLLC represented the Defendants, a professional land management company and one of its limited partners. The plaintiffs were a limited liability company and its sole member.

The parties entered into an independent contractor agreement in 2007. Plaintiffs argued that the agreement expired in December 2012 when plaintiffs were promised a percentage equity interest in the defendants’ land management company. Plaintiffs alleged to have been promised a larger equity share in the company in October 2014. The defendants argued that the plaintiffs received a profit-sharing bonus— not an equity interest in the company. In an April 2015 email exchange, the defendants advised the plaintiffs that they were not equity owners of the company. Plaintiffs continued to work for the company until 2021.

Under West Virginia law, claims of fraud are subject to a two-year statute of limitations. The Court determined that the plaintiffs became aware of the alleged fraud in April 2015, when the defendants notified them that they were not equity owners. However, the plaintiffs did not file suit until December 2021, thereby exceeding the statute of limitations and rendering their fraud claim time barred.

Claims of unjust enrichment operate under a five-year statute of limitations period. The Court found that even if the statute of limitations began in October 2014 when the plaintiffs relied on the defendants’ alleged promise of “equity,” the statute of limitations would have tolled in October 2019. Because the plaintiffs did not file suit until December 2021, their unjust enrichment claim was untimely. As such, the Northern District of West Virginia granted summary judgment on this ground and dismissed the plaintiffs’ complaint against the defendants with prejudice.