Beard v. Love

• Decision Date: 28 August 2007
• Docket Number: No. 103,721. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.,103,721. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.
• Citation: 173 P.3d 796,2007 OK CIV APP 118
• Parties: Julie BEARD, Plaintiff/Appellant, v. Barry LOVE and 77 Corporation, an Oklahoma Corporation, Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

173 P.3d 796

2007 OK CIV APP 118

Julie BEARD, Plaintiff/Appellant, v. Barry LOVE and 77 Corporation, an Oklahoma Corporation, Defendants/Appellees.

No. 103,721. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.

Court of Civil Appeals of Oklahoma, Division No. 2.

August 28, 2007.

Certiorari Denied November 13, 2007.

Appeal from the District Court of Muskogee County, Oklahoma; Honorable A. Carl Robinson, Trial Judge

REVERSED AND REMANDED FOR FURTHER PROCEEDINGS

Robert S. Glass, R. Charles Wilkin, Brian L. Mitchell, Glass Law Firm, Tulsa, OK, and C. Bart Fite, Wright, Stout, Fite & Wilburn, PLLC, Muskogee, OK, for Plaintiff/Appellant.

R. Forney Sandlin, Muskogee, OK, for Defendants/Appellees.

JOHN F. FISCHER, Presiding Judge.

¶ 1 Appellant Julie Beard appeals from the Trial Court's August 8, 2006, grant of summary judgment against her and in favor of Appellees 77 Corporation and Barry Love. This appeal is assigned to the accelerated docket pursuant to Oklahoma Supreme Court Rule 1.36, 12 O.S. Supp.2002, ch. 15, app. 1.

BACKGROUND FACTS

¶ 2 K.C. Love, Sr., grandfather of siblings Beard and Love, incorporated 77 Corporation on March 30, 1977. Its principal asset is real property and a building located in Muskogee, Oklahoma. In 1987, Beard purchased her current 48% ownership of the corporation's stock from her grandfather for $12,000. Love, as majority shareholder of the corporation, owns the other 52% of the corporation's stock. How or when he acquired his stock is not apparent from the record. The corporation's records indicate that Beard was president and a director of the corporation from December 1, 1987 until July 23, 1991, and that Love replaced her as president and was a director throughout the time relevant to this case.

¶ 3 Beard asserts that she was generally unaware of her official position with the company, however, and that any position she held was not substantive because Love controlled the management and actions of the corporation and that, after her removal from office in 1991, she was not welcome at the company offices, was excluded from company decisions and was denied information regarding operations of the company to which she was entitled as a shareholder. The record reflects a long and contentious relationship between Beard and Love, at least from 1991.

¶ 4 On July 15, 2002, Beard filed a verified petition generally asserting that Love had breached his fiduciary duty to manage 77 Corporation for the benefit of all shareholders. She complained that as the company's controlling officer, director and shareholder, Love had refused to declare dividends and operated the company for his personal benefit. Beard specifically alleged that Love: (1) failed to renegotiate or repay a promissory note that the corporation owed to Love Bottling, Inc., a company now wholly owned by Love; (2) failed to renegotiate Love Bottling's lease with the corporation based on market rental rates; (3) authorized the corporation to pay expenses related to the leased property that should have been paid by Love Bottling pursuant to the terms of the lease; (4) failed to declare dividends for the corporation despite excessive retained earnings; and (5) failed to restructure the corporation's tax structure to the detriment of the corporation.

¶ 5 On June 27, 2006, with leave of court, Beard filed an amended petition which incorporated her original petition and further alleged that Love had breached his fiduciary duty to 77 Corporation and Beard in the following manner: (6) Love caused the corporation to pay the ad valorem taxes of third parties; (7) Love had made personal loans to himself from corporate funds; (8) despite provisions in the lease to the contrary, Love had sublet a portion of the leased premises to Love Beverages, L.L.C., a company wholly owned by Love; and (9) Love had failed to provide Beard information regarding the operations of 77 Corporation, which she had requested and was entitled to receive. Beard's amended petition sought, in the alternative, dissolution of the corporation, the forced purchase of Beard's minority interest by Love, and a money judgment against Love and in favor of 77 Corporation to recover the damages resulting from Love's alleged breach of his fiduciary duty as an officer, director and majority shareholder of the corporation.¹

¶ 6 Love and the corporation filed a motion for summary judgment attacking Beard's original petition and renewed that motion in response to Beard's amended petition. These motions argue that Beard lacked standing to bring claims for individual damages against the corporation in a derivative suit, the Trial Court lacked the authority to order Beard's requested relief of corporate dissolution and forced stock buy-out, and Beard's claims were barred by the statute of limitations. On August 8, 2006, the Trial Court sustained the motions and granted judgment in favor of Love and the corporation, incorporating, by reference, an Amended Court Minute filed on August 1, 2006. Beard appeals.

¶ 7 On September 19, 2006, Beard filed a Motion For Leave To Submit Appellate Briefs. Oklahoma Supreme Court Rule 1.36(g), 12 O.S.2001, ch. 15, app. 1, provides, "Unless otherwise ordered by the appellate court, no briefs will be allowed on review." Motions for leave to submit appellate briefs are deemed denied unless affirmatively granted by this Court. Id. Because further briefing is unnecessary, Beard's motion is denied.

STANDARD OF REVIEW

¶ 8 We review a trial court's grant of summary judgment de novo. Carmichael v Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. On review, we examine the pleadings and evidentiary materials submitted by the parties to determine whether there exists a genuine issue of material fact. Id. We view all evidentiary materials in the light most favorable to the nonmoving party. Id.

¶ 9 This Court bears "an affirmative duty to test all evidentiary material tendered in summary process for its legal sufficiency to support the relief sought by the movant." Copeland v. The Lodge Enters., Inc., 2000 OK 36, ¶ 8, 4 P.3d 695, 699. The summary process requires that we determine whether the record reveals only undisputed material facts supporting a single inference that favors the movant's motion for summary judgment. Id. "Only if the court should conclude that there is no material fact in dispute and the law favors the movant's claim or liability-defeating defense is the moving party entitled to summary judgment in its favor." Id. We will reverse a grant of summary judgment where it appears from the record that material facts concerning issues raised are conflicting or, even if the material facts are undisputed, that reasonable persons in the exercise of fair and impartial judgment might reach different conclusions from those facts. Buck's Sporting Goods, Inc. of Tulsa v. First Nat'l Bank & Trust Co. of Tulsa, 1994 OK 14, ¶ 11, 868 P.2d 693, 697-98. Finally, when considering a motion for summary judgment, the inferences to be drawn from the evidence must be viewed in the light most favorable to the party opposing the motion. Hargrave v. Canadian Valley Elec. Co-op., Inc., 1990 OK 43, ¶ 14, 792 P.2d 50, 55.

DISCUSSION

¶ 10 Although the allegations in Beard's petition and amended petition could have been more artfully stated,² it is apparent that Beard asserts three claims. She seeks: (1) to recover damages suffered by 77 Corporation as a result of the alleged breach of fiduciary duty, mismanagement and self-dealing of Love as the corporation's president, director and controlling shareholder; (2) to recover damages personally suffered as a result of Love's breach of fiduciary duty to her as a minority shareholder; and (3) liquidation of 77 Corporation or, in the alternative, that the Court require Love to purchase her interest in the corporation.

¶ 11 The Trial Court's Amended Court Minute granting the Appellees' motions for summary judgment contains a thorough recitation of the material facts and legal positions of the parties. The Trial Court granted judgment, holding that Beard had no personal cause of action by which to recover any damages she suffered as a result of the conduct she alleged. The Trial Court also held that any derivative action she was pursuing on behalf of 77 Corporation was barred by the statute of limitations because all acts about which she complained either did not result in any damage to the corporation or were outside the applicable limitations period. Further, the Trial Court concluded that the statute of limitations was not tolled until Beard discovered the alleged damage because a derivative action is brought on behalf of the corporation and all acts about which Beard complained would have been known to the corporation at the time they occurred even if not discovered by Beard until later. The Trial Court found that it had no authority to dissolve the corporation at the request of a minority shareholder or to require the majority shareholder to purchase the interest of a minority shareholder. The Trial Court also found that some of the conduct about which Beard complained was, in fact, proper or if improper, it did not result in any damage to 77 Corporation. Finally, the Trial Court found that Beard's evidentiary response to Appellees' statement of undisputed material facts failed, in some respects, to satisfy the requirements of Oklahoma District Court Rule 13, 12 O.S. Supp.2002, ch. 2, app. For the following reasons, we find summary disposition of Beard's claims inappropriate on the basis of this record.

A. Issues of Material Fact

¶ 12 The Trial Court criticized Beard's response to Love's summary judgment motion with reason. Beard's initial response did not separately state and number the facts she claimed were in dispute as required by Rule 13(b). Beard's response to Love's second motion contained numbered paragraphs and some reference to evidentiary material that Beard...