                             STATE OF WEST VIRGINIA
                           SUPREME COURT OF APPEALS

Kourt Security Partners, LLC,
Defendant Below, Petitioner                                                           FILED
                                                                                    May 26, 2020
                                                                                  EDYTHE NASH GAISER, CLERK
vs.) No. 19-0395 (Monongalia County 15-C-733)                                     SUPREME COURT OF APPEALS
                                                                                      OF WEST VIRGINIA

United Bank, Inc.,
Plaintiff Below, Respondent


                               MEMORANDUM DECISION

        Petitioner Kourt Security Partners, LLC, by counsel Charles J. Kaiser Jr. and Jeffrey D.
Kaiser, appeals the circuit court’s “Order Granting [Respondent United Bank, Inc.’s] Motion to
Secure Loan Collateral and Denying [Petitioner’s] Motion for Rule 60 Relief.” Respondent United
Bank, Inc., by counsel Shawn P. George and Jennie Ovrom Ferretti, submitted a response to which
petitioner submitted a reply.

       This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these reasons,
a memorandum decision is appropriate under Rule 21 of the Rules of Appellate Procedure.

        Respondent United Bank, Inc. (“United”) filed the underlying action on November 13,
2015, seeking an order finding petitioner Kourt Security Partners, LLC (“Kourt”) then-owed
United $737,310.42, together with pre- and post-judgment interest, late fees, costs, expenses, and
attorney’s fees related to the default by MB Security, LLC, on two loans from United totaling
$827,000 in principal amount (“loans”). According to the circuit court, United sued Kourt because
it purchased the collateral that was pledged as security for the loans from Betty Parmer at a private
sale. Per United the assets included the former assets of Secure US, in which United claimed a
perfected first priority security interest. Kourt filed an answer, denying that United’s lien survived
the private sale; extended to any asset of Secure US, including customer contracts, renewals
thereof, or proceeds therefrom; or that United was entitled to any of the collateral.

       United; MB Security; Secure US; and Betty Parmer, individually, and by way of power of
attorney given to her nephew, Mitchell Brozik, under a management agreement, entered into
various agreements regarding the loans and the security pledged to them. The circuit court found
that the agreements include the loan agreements; promissory notes; pledge and security




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agreements; the hypothecation agreement;1 the management agreement between Betty Parmer,
Secure US, and MB Security; and financing statements (“loan documents”). According to the
circuit court, the loan documents have been the subject of several legal actions and proceedings
“and all are of record [with the circuit court]. There has never been alleged or found any ambiguity
in any of the [l]oan [d]ocuments.”

        The circuit court also found that “Kourt admits that United holds a valid, enforceable first-
priority security interest in the [c]ollateral identified in the loan documents. However, Kourt
disputes that United’s right in the [c]ollateral includes the Secure US customer contracts, any post
sale renewals or extensions thereof or proceeds therefrom.” It further found that based upon the
evidence contained in the record, since the private sale, Kourt has received over $4.2 million in
revenue from the contracts at a rate of approximately $140,000 per month. However, Kourt
asserted that paragraph 12.C. of the September 21, 2012, promissory note and security agreement,
which defines property subject to the security agreement, does not include the customer contracts,
renewals, and proceeds therefrom.2 The court found the January 23, 2013, commercial security
agreement relevant because it expressly incorporates the provisions of related documents,
including all promissory notes, security agreements, and the hypothecation agreement executed in
connection with it.

        After the default and United’s demand to Kourt to turn over the collateral or pay the default
indebtedness, Kourt turned over the vehicles owned by Secure US, which were a part of the
collateral to which United’s first priority lien interest attached, and United reduced the outstanding
principal due on the loans accordingly. However, Kourt refused to pay the balance due or owing
or to produce the remaining collateral to United, claiming that United had no legal right to the
balance or the collateral. United filed the underlying action in 2015, and on April 8, 2016, United
filed a motion for summary judgment before the circuit court. By order entered on November 28,
2016, the circuit court granted United’s motion, finding that United had a perfected first priority
security interest in the collateral, which survived the private sale by Betty Parmer to Kourt of all
the assets of Secure US. Kourt appealed that order to this Court, and this Court affirmed that order
in Kourt Security Partners, LLC v. United Bank, Inc., No. 16-1206, 2018 WL 1225516 (W. Va.
Mar. 9, 2018) (memorandum decision) (“Kourt I”).




       1
        Hypothecation is “[t]he pledging of something as security without delivery of title or
possession.” Black’s Law Dictionary 892 (11th ed. 2019).
       2
           The paragraph at issue provides as follows:

       (2) Accounts and Other Rights to Payment. All rights I have now or in the future
       to payments including, but not limited to, payment for property or services sold,
       leased, rented, licensed, or assigned, whether or not I have earned such payment by
       performance. This includes any rights and interests (including all liens and security
       interests) which I may have by law or agreement any Account Debtor or obligor of
       mine.


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         On March 7, 2017, United filed a motion for issuance of a writ of fieri facias.3 Kourt
opposed that motion, asserting that the summary judgment order was not a “judgment for money”
so fieri facias was not appropriate relief. United made additional demands for payment and
satisfaction of the defaulted loans, but Kourt refused to pay. United served discovery on Kourt and
subpoenaed the production of various records regarding the collateral, which Kourt produced.
United also deposed Kourt’s corporate representative, Patrick Egan. Kourt produced and Mr. Egan
testified regarding a confidential list of Secure US contracts acquired by Kourt. However, Kourt
refused United’s demand for the production of the contracts.

        On December 20, 2018, United filed a motion to secure the loan collateral, and the circuit
court scheduled a hearing on that motion for January 9, 2019. On January 2, 2019, Kourt filed its
Rule 60(b)(6)4 motion to clarify or supplement, more than two years after the entry of the summary
judgment order. United filed an expedited response to which Kourt filed a reply. Following the
January 9, 2019, hearing, the circuit court entered its “Order Granting [Respondent’s] Motion to
Secure Loan Collateral and Denying [Petitioner’s] Motion for Rule 60 Relief.”

        In that order, the circuit court found that United had consistently asserted its right in and to
the collateral, which secured the defaulted loans. It determined that Kourt conceded that it owns
and controls various customer contracts from hundreds of people and businesses as a result of the
Secure US private sale and that the value of those customer contracts and the monthly recurring
revenue exceeds the money owed to United on the defaulted loans. It also found there is a
marketplace of willing buyers for those customer contracts. However, Kourt argued that United’s
interest in the collateral does not extend to the customer contracts, the subsequent renewals and/or
extensions thereof, or the proceeds therefrom, based upon Kourt’s interpretation of the loan
documents. The circuit court determined that United is entitled to the collateral under the express
language of the loan documents and “[n]othing in Kourt’s Rule 60(b)(6) motion alters this
conclusion or supports a different result.” It also found that the only Secure US assets with
significant value are and have always been the customer contracts or accounts. “There is no dispute
about this, nor basis to carve them out of the [c]ollateral for the MB Security Loans.” The circuit
court held that the loan documents specifically incorporate the “Accounts and Rights to
Payments,” including, but not limited to, the promissory notes and security agreements, which
reference “payment intangible” and “proceeds,” all of which refute any such construction or
contrary result.

       With regard to petitioner’s Rule 60(b)(6) motion, the circuit court found that it was not
supported by the facts or record. Because the



       3
         A writ of fieri facias is “[a] writ of execution that directs a marshal or sheriff to seize and
sell a judgment debtor's property to satisfy a money judgment[.]” Black’s Law Dictionary 771
(11th ed. 2019).
       4
         Rule 60(b)(6) of the West Virginia Rules of Civil Procedure provides as follows: “On
motion and upon such terms as are just, the court may relieve a party or a party’s legal
representative from a final judgment, order, or proceeding for the following reasons: . . . . (6) any
other reason justifying relief from the operation of the judgment.”
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       basis of the motion was never previously asserted at any time during the three (3)
       year pendency of [the underlying] action, nor on appeal to [this Court]. It is
       therefore not filed within a reasonable time as required under the Rule. The motion
       also fails to allege “any other reason justifying relief from the operation of the
       judgment” as required under the Rule.

It further found that the motion’s legal argument was flawed and unpersuasive because “Accounts
and Other Rights to Payment” are listed as collateral in the promissory note and security agreement
governing the loans and confirmed by both the hypothecation and management agreements.
According to the circuit court,

       [a]ll parties, including Kourt and Mr. Egan, who managed Secure US for Mrs.
       Parmer for a period after Mr. Brozik and MB Security were removed as managers,
       knew, understood and testified in various legal proceedings surrounding Secure US,
       Mrs. Parmer and Mr. Brozik that MB Security, LLC was a management company.
       It had no customer accounts of its own. The customer accounts it managed, received
       payments on and pledged to United on the Loans were the customer accounts of
       Secure US. [It also found that those are the] very same accounts Kourt purchased
       from Mrs. Parmer at private sale, and renewed, extended or re-signed on which
       Kourt has received $4.2 million since the sale, or an average of approximately
       $140,000.00 per month . . . Throughout this time, the [c]ollateral was subject to
       United’s first priority perfected security interest. These are the same customer
       accounts that MB Security LLC pledged to United under the Promissory Notes and
       Security Agreements, by authority of the Management Agreement and which the
       Hypothecation Agreement ratified and confirmed.

        The circuit court determined that the case does not present the “extraordinary
circumstances” necessary to invoke Rule 60(b)(6), as it is a simple case of a borrower pledging all
the assets of a business to secure a bank loan. Here, the borrower defaulted, Kourt purchased the
assets, and the assets are subject to United’s lien. The circuit court further found that

       it would be unfair and unreasonable to permit Kourt [to] attack the [s]ummary
       [j]udgment [o]rder now. The record suggests Kourt has stalled and frustrated for
       Kourt’s sole benefit and to United’s substantial detriment, possession of the
       [c]ollateral for several years and delayed the turnover to United of [c]ollateral to
       which United is entitled. . . . The [c]ourt also finds that the argument put forth in
       Kourt’s Rule 60(b)(6) motion is time barred. It should have been asserted in
       [petitioner’s] [a]nswer to the [c]omplaint, or in Kourt’s appeal of [the circuit
       court’s] ruling that United holds a first-priority security interest in and to all the
       Secure US assets. Kourt never did so.

(Emphasis in original.) Further, the circuit court found that petitioner’s argument that the West
Virginia Uniform Commercial Code supports its theory that an interest in general intangibles does
not include an interest in accounts “has no application here as it ignores and is at direct odds with
the express language of the [l]oan [d]ocuments, which control.”



                                                 4
        The circuit court granted United’s motion to secure loan collateral and denied Kourt’s Rule
60(b)(6) motion. Kourt was ordered to turn over and deliver to United’s counsel all customer
contracts set forth in Exhibit 2 to the 30(b)(7) representative’s deposition and all cash proceeds
therefrom in satisfaction of the defaulted loans. “Upon sale or other satisfaction by United Bank
of the defaulted loan indebtedness, United Bank is required to return to Kourt such of the customer
contracts and proceeds therefrom as are not necessary to satisfy the defaulted loan indebtedness.”
Petitioner appeals from that March 19, 2019, order.

        On appeal, petitioner sets forth three assignments of error: (1)the circuit court’s March 19,
2019, order is erroneous and should be reversed because the court incorrectly analyzed and applied
the law surrounding the incorporation by reference doctrine to incorporate the terms and conditions
of various loan documents into the hypothecation agreement security agreement – pledge and
commercial security agreement executed by Betty Parmer; (2) the circuit court’s March 19, 2019,
order is erroneous and should be reviewed de novo and reversed because the circuit court failed to
ensure a proper record had been developed which would support that order’s legal and factual
conclusions; and (3) the circuit court’s March 19, 2019, order is erroneous and should be reviewed
de novo and reversed because the court failed to set forth adequate findings of fact and conclusions
of law supported by the case record.

        At the outset, we look to our decision in Kourt I, wherein we stated that

        [i]n August and September of 2012, MB Security and Mr. Brozik obtained two
        loans from United Bank, totaling $827,000, that are relevant to the present case.
        First, they refinanced a $150,000 vehicle loan. This loan was secured by vehicles
        already owned or subsequently used in the Secure US business. In the second loan,
        Mr. Brozik and MB Security borrowed $677,000 from United Bank to satisfy
        existing creditors and supply working capital for the business. This latter loan was
        allegedly secured by the Secure US assets, as evidenced by agreements signed by
        Mr. Brozik as Ms. Parmer’s power of attorney.

Id. at *2. Further, we agreed with the circuit court that

        between the time Ms. Parmer bought the assets in May of 2012 and her sale to
        Kourt Security in November of 2014, MB Security borrowed $827,000 from United
        Bank, pledging the assets as collateral; that Kourt Security was aware of United
        Bank’s loans to MB Security; that United Bank had a perfected security interest in
        and to all of the assets at the time of the sale to Kourt Security; and United Bank
        never sold or transferred its interest.

Id. at *4.

        With regard to petitioner’s first assignment of error, which addresses incorporation by
reference, petitioner contends that in its March 19, 2019, order, the circuit court relies almost
entirely on the “incorporation by reference” language in the Parmer documents to support its
holding that United’s security interest covers not just all of the assets set forth therein but also all
of the assets described within MB Security’s loan documents. However, that order fails to set forth

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any legal support for that finding. Further, the circuit court fails to make the necessary findings to
satisfy State ex rel. U-Haul Co. of West Virginia v. Zakaib, 232 W. Va. 432, 752 S.E.2d 586 (2013).
Petitioner contends that not only is the order “entirely lacking any reference to the elements
required for proper incorporation by reference, it fails to state any factual findings or cite any
applicable evidence which would satisfy these elements. . . . This omission justifies reversal of the
March 19, 2019[, o]rder.”

        Petitioner further contends that the language used by United in the Parmer documents tries
to work as a catch-all provision to incorporate every possible loan and loan document that in any
way related to MB Security and/or the loans. It argues that this is “not a legally enforceable
incorporation by reference as it fails to satisfy the ‘make a clear reference to the other documents
so that the parties’ assent to the reference is unmistakable’ and the ‘describe the other document
in such terms that its identity may be ascertained beyond doubt’ requirements.”

         We agree with United that petitioner seeks to improperly stand in the shoes of Betty Parmer
to alter her intent. This Court previously considered the loans underlying this matter in Brozik v.
Parmer, Case Nos. 16-0292, 16-0400, and 16-0238, 2017 WL 65475 (W. Va. Jan. 16, 2017)
(memorandum decision). As we set forth in that decision, in the underlying action in Case No. 16-
0238, Ms. Parmer

       alleged that, without her knowledge, United Bank loaned an additional $827,000 to
       MB Security pursuant to the management agreement and took as collateral the
       former Secure US assets she owned. However, Ms. Parmer admitted that she signed
       the management agreement [and] that she contacted United Bank to originate the
       loan; . . . By order entered on February 12, 2016, the circuit court granted United
       Bank’s motion for summary judgment.

Id. at *5-6.5 After considering all of the loan documents and arguments regarding those loans
presented to this Court, we affirmed the grant of summary judgment to United. Id. at *18. Both
the circuit court and this Court clearly recognized that the collateral to secure United’s loan were
the “former Secure US assets” Ms. Parmer owned. It is disingenuous for petitioner to now attempt
to argue what is clearly the most valuable assets it possesses, the customer contracts, were not
included in the collateral for that loan.



       5
           We are also mindful of our previous finding that

       [t]he evidence revealed that Mr. Brozik caused his aunt to become the owner of his
       company’s assets as part of a scheme to avoid paying a lawful judgment obtained
       by a competing security company, SAFE. He formed another company, MB
       Security, in order to use the former Secure US assets and to continue doing business
       as usual, without any regard for the duty owed to his aunt who assisted him.

Brozik v. Parmer, Nos. 16–0292, 16–0400, and 16–0238, 2017 WL 65475 at *9 (W. Va. Jan. 16,
2017) (memorandum decision).


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               In the law of contracts, parties may incorporate by reference separate
       writings together into one agreement. However, a general reference in one writing
       to another document is not sufficient to incorporate that other document into a final
       agreement. To uphold the validity of terms in a document incorporated by
       reference, (1) the writing must make a clear reference to the other document so that
       the parties' assent to the reference is unmistakable; (2) the writing must describe
       the other document in such terms that its identity may be ascertained beyond doubt;
       and (3) it must be certain that the parties to the agreement had knowledge of and
       assented to the incorporated document so that the incorporation will not result in
       surprise or hardship.

Syl. Pt. 2, State ex rel. U-Haul Co. of West Virginia at 434, 752 S.E.2d at 589. In addressing our
holding in U-Haul, this Court summarized the following relevant facts:

       U-Haul’s customers would be presented with a one-page, pre-printed rental
       contract, which the customers would sign below a line that provided: “I
       acknowledge that I have received and agree to the terms and conditions of this
       Rental Contract and the Rental Contract Addendum.” [U-Haul] at 436, 752
       S.E.2d at 590. For those customers using interactive electronic terminals for the
       rental transaction, after proceeding through a series of screens that required the
       customer to click “Accept” before the next screen with rental terms would appear,
       the customer would reach a final screen that said, “By clicking Accept, I agree to
       the terms and conditions of this Rental Contract and Rental Contract
       Addendum.” Id. at 437, 752 S.E.2d at 591. Regardless of whether a customer
       received the pre-printed or electronic rental agreement, the customer was not
       presented with the addendum containing the arbitration provision prior to signing
       the rental agreement.

G&G Builders, Inc. v. Lawson, 238 W. Va. 280, 284, 794 S.E.2d 1, 5 (2016) (emphasis in original).

         In the instant case, the hypothecation agreement incorporates by reference “all promissory
notes, security agreements, mortgages, deeds of trust, business loan agreements, construction loan
agreements, resolutions, guaranties, environmental agreements, subordination agreements,
assignments, and any other documents or agreements executed in connection with either the
[l]oans or this [h]ypothecation [a]greement, or both, whether now or hereafter existing.” As the
circuit court noted in its order, the Commercial Security Agreement, dated January 23, 2013,
expressly incorporates the provisions of related documents, including all promissory notes and
security agreements executed in connection with it. Unlike the arbitration agreement in U-Haul,
there is no question that Ms. Parmer, or any other borrower, was presented with and signed the
promissory notes and additional loan documents at issue. Under the facts of this case, it is clear
that the borrowers, whose shoes petitioner stands in now, knew or should have known the terms
of the loan documents at issue. Therefore, we find no merit in petitioner’s first assignment of error.

       The second and third assignments of error center on the substance of the circuit court’s
order, particularly the record before the circuit court and the court’s findings of fact and
conclusions of law. Petitioner argues that the most material omission within the circuit court’s

                                                  7
order is the “complete lack of factual and/or legal analysis” regarding the contracts at issue and
how the West Virginia UCC would categorize them. It contends that the lack of analysis is
compounded by the fact that there are no customer contracts or even sample contracts contained
in the record. According to petitioner, the “deficient record constitutes reversible error and
warrants reversal” of the circuit court’s order. Petitioner further asserts that the circuit court order
does not contain appropriate findings of fact and conclusions of law as mandated by Rule 52(a) of
the West Virginia Rules of Civil Procedure. In support of that contention, petitioner argues that
that order sets forth numerous conclusory statements with no citation to the record or applicable
law.

       Rule 52(a) of the West Virginia Rules of Civil Procedure provides, in relevant part, as
follows:

       In all actions tried upon the facts without a jury or with an advisory jury, the court
       shall find the facts specially and state separately its conclusions of law thereon, and
       judgment shall be entered pursuant to Rule 58; . . . Findings of fact, whether based
       on oral or documentary evidence, shall not be set aside unless clearly erroneous,
       and due regard shall be given to the opportunity of the trial court to judge the
       credibility of the witnesses.

        West Virginia Code § 46-9-607(a) allows a secured party, such as United, to take certain
actions, including:

       (a) Collection and enforcement generally. -- If so agreed, and in any event after
       default, a secured party:
       (1) May notify an account debtor or other person obligated on collateral to make
       payment or otherwise render performance to or for the benefit of the secured party;
       (2) May take any proceeds to which the secured party is entitled under section 9-
       315;
       (3) May enforce the obligations of an account debtor or other person obligated on
       collateral and exercise the rights of the debtor with respect to the obligation of the
       account debtor or other person obligated on collateral to make payment or
       otherwise render performance to the debtor, and with respect to any property that
       secures the obligations of the account debtor or other person obligated on the
       collateral; . . . .

In addition,

       (b) When commingled proceeds identifiable. Proceeds that are commingled with
       other property are identifiable proceeds:
       (1) If the proceeds are goods, to the extent provided by section 9-336; and
       (2) If the proceeds are not goods, to the extent that the secured party identifies the
       proceeds by a method of tracing, including application of equitable principles, that
       is permitted under law other than this article with respect to commingled property
       of the type involved.



                                                   8
W. Va. Code § 46-9-315(b).

         In its prior summary judgment order, which was affirmed by this Court, the circuit court
found that “United [] had a perfected security interest in and to all Secure US assets at the time
Ms. Parmer sold the assets to Kourt [].” In its motion to secure loan collateral, United argued that
there is “no doubt Kourt owes United these amounts immediately and that failing payment, United
is entitled to the assets securing the obligations to United may be paid in full.” Contrary to Kourt’s
argument, the circuit court’s eleven-page order addresses multiple cases, statutes, and rules,
including discussing this Court’s earlier findings in Brozik v. Parmer. It also relied upon numerous
documents; those documents included exhibits to the deposition of Kourt’s corporate
representative, the loan documents, an exhibit to a motion, and the breadth of materials considered
by the circuit court in reaching its earlier findings, including its summary judgment order. This
Court has long held that “[t]he purpose of [] Rule [52] is to enable an appellate court to apply the
law to the facts upon the review of such a case, and it has been held that a case may be remanded
where the rule has not been complied with.” Blevins v. May, 158 W. Va. 531, 533, 212 S.E.2d 85,
86 (1975) (citations omitted). Based upon the circuit court’s order and the long history of this
dispute, which includes numerous findings of fact and conclusions of law by federal courts, the
circuit court, and this Court, the circuit court’s order satisfied Rule 52.

       For the foregoing reasons, we affirm.

                                                                                           Affirmed.

ISSUED: May 26, 2020

CONCURRED IN BY:

Chief Justice Tim Armstead
Justice Elizabeth D. Walker
Justice Evan H. Jenkins
Justice John A. Hutchison


NOT PARTICIPATING:

Justice Margaret L. Workman




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