Estrada v. Kriz

• Decision Date: 29 January 2015
• Docket Number: Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4. ,112,453.
• Citation: 2015 OK CIV APP 19,345 P.3d 403
• Parties: Phillip ESTRADA, Plaintiff/Appellant, v. Dennis KRIZ, Hodges Transport, Mid–America Pallett, LLC, et al., Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

345 P.3d 403

2015 OK CIV APP 19

Phillip ESTRADA, Plaintiff/Appellant

v.Dennis KRIZ, Hodges Transport, Mid–America Pallett, LLC, et al., Defendants/Appellees.

112,453.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.

Court of Civil Appeals of Oklahoma, Division No. 4.

Jan. 29, 2015.

Robert V. Seacat, Seacat Law, Tulsa, Oklahoma, for Plaintiff/Appellant.

Kenneth L. Brune, Brune Law Firm, Tulsa, Oklahoma, for Defendants/Appellees.

Opinion

DEBORAH B. BARNES, Judge.

¶ 1 Plaintiff/Appellant Phillip Estrada (Estrada) appeals the trial court's Order granting the motion to dismiss of Defendants/Appellees Dennis Kriz, Hodges Transport, Mid–America Pallet, LLC, et al. (collectively, Defendants). Defendants moved for dismissal “based upon [Estrada's] failure to plead [fraud] with particularity, the Doctrine of Laches and the Doctrine of Equitable Estoppel.”

Based on our review, we conclude Estrada's veil-piercing theory is not subject to dismissal on the basis of any failure to plead fraud with particularity; Estrada has successfully stated a claim which would entitle him to relief under the Uniform Fraudulent Transfer Act, 24 O.S.2011 §§ 112 –123 ; and the equitable doctrines asserted in the motion to dismiss are inappropriate bases upon which to dismiss the petition. Consequently, we reverse the trial court's Order granting the motion to dismiss, and we remand for further proceedings.

BACKGROUND

¶ 2 Estrada filed a petition in October, 2012, alleging that in April, 2009, a judgment was entered in his favor “and against Port City Properties, d/b/a Hodges Warehouse....” Estrada alleged that the judgment was entered “in the total amount of $127,014.17, plus statutory costs,” but that in 2011, on appeal from that judgment, the Oklahoma Supreme Court affirmed in part and reversed in part, “leaving intact the judgment for actual damages ... and reversing the punitive damages award,” and leaving a “total remaining judgment ... [of] $108,616.17,” plus post-judgment interest.

¶ 3 Estrada asserted in his petition that, during his attempt to collect this judgment from Port City Properties, d/b/a Hodges Warehouse,

Dennis Kriz testified at an asset hearing before this Court [in April, 2010,] that the business entity, Port City Properties, d/b/a Hodges Warehouse, no longer had any assets, accounts or employees, and that Hodges Warehouse was conducting business under the business entities, Hodges Transportation, LL[C] and Mid–America Pallet, LLC.

9. Mr. Kriz also testified at the asset hearing that the business of Port City Properties, d/b/a Hodges Warehouse, was intermingled with the business of Hodges Transportation, LLC.

10. That the assets and former business operations of Hodges Warehouse that were conducted under the business name of Port City Properties, d/b/a Hodges Warehouse, have been transferred either post-petition or post-judgment to other entities, including but not limited to Hodges Transportation, LLC, Mid–America Pallet, LLC and/or other entities in an effort to avoid paying [Estrada's] judgment.

¶ 4 Estrada requested that the court “pierce the corporate veil” of Port City Properties, and hold Dennis Kriz personally liable for the April, 2009 judgment “for his operating other corporate entities as the alter ego of Port City Properties, d/b/a Hodges Warehouse, in order to avoid the judgment.”

¶ 5 Estrada also asserted that Dennis Kriz violated “the Uniform Fraudulent Transfer Act” by “caus[ing] the transfer of the assets of Port City Properties, d/b/a Hodges Warehouse, to other corporate entities that he controls or owns a majority stake in ... with the intent and purpose to hinder, delay and/or defraud [Estrada] as the judgment creditor....”

¶ 6 In their answer, Defendants admitted that Kriz “provided testimony at an asset hearing,” but denied “any inference or interpretation ... to the extent they support [Estrada's] claims.” They requested that Estrada take nothing by way of his petition, and they set forth various affirmative defenses.

¶ 7 In January, 2013, Defendants filed a motion to dismiss claiming Estrada failed to plead fraud with particularity, and also claiming his theories are barred by the doctrines of laches and equitable estoppel. Defendants argue that Estrada's theories of (1) “Pierc[ing] the Corporate Veil,” and (2) “Violati[ng] ... the Fraudulent Transfer Act,” are theories of fraud and, therefore, Estrada was required to state with specificity “the time, place and contents of the fraudulent action,” together with “the identity of the party making the fraudulent action and the consequences arising from the fraudulent conduct,” in order to satisfy the requirements of 12 O.S. Supp.2013 § 2009(B).

¶ 8 Defendants also argue Estrada's action is barred by the doctrines of laches and equitable estoppel because, “[a]t a minimum, Estrada was aware that he intended to claim fraudulent transfer of assets as of the time of the asset hearing on April 28, 2010,” but allegedly took “no further action to enforce his Judgment against Port City Properties or to assert claims against [Defendants]” until the filing of the petition in this case in October, 2012.

¶ 9 Defendants did not attach any evidentiary materials to their motion to dismiss or otherwise seek to convert it to a summary judgment motion. Nevertheless, after Estrada filed his response and objection to the motion to dismiss, Defendants filed a reply in which they argue that Estrada failed to “dispute a single Statement of Fact as set forth in the Motion to Dismiss....” They further state that “Estrada offers NO evidence or arguments to dispute the facts set forth in the Motion to Dismiss....”

¶ 10 In its Order filed in December, 2013, the trial court granted the motion to dismiss without oral argument, and without setting forth the basis of its decision. From the Order, Estrada appeals.

STANDARD OF REVIEW

¶ 11 Motions to dismiss are generally viewed with disfavor, and the burden of demonstrating a petition's insufficiency—placed on the party moving for dismissal—is not a light one. Fanning v. Brown, 2004 OK 7, ¶ 4, 85 P.3d 841. When reviewing a motion to dismiss, this Court exercises de novo review. Wilson v. State ex rel. State Election Bd., 2012 OK 2, ¶ 4, 270 P.3d 155.¹ When reviewing a motion to dismiss, this Court examines only the controlling law, not the facts, and, thus, this Court must take as true all of the challenged pleading's allegations together with all reasonable inferences which may be drawn from them. Id. “A pleading must not be dismissed for failure to state a legally cognizable claim unless the allegations indicate beyond any doubt that the litigant can prove no set of facts which would entitle him to relief.” Fanning, ¶ 4 (citation omitted). In addition, “interpretation of statutory law presents a question of law and statutes are construed to determine legislative intent in light of the general policy and purpose that underlie them.” Troxell v. Okla. Dep't of Human Servs., 2013 OK 100, ¶ 4, 318 P.3d 206 (citation omitted).

ANALYSIS

I. The Requirement of Particularity

¶ 12 Title 12 O.S.2011 § 2009(B) provides that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally.”² The Oklahoma Supreme Court has explained that “allegations of fraud must be stated with sufficient particularity to enable the opposing party to prepare his/her responsive pleadings and defenses. Particularity does not mean the plaintiff has to plead detailed evidentiary matters.” A–Plus Janitorial & Carpet Cleaning v. Employers' Workers' Comp. Ass'n, 1997 OK 37, ¶ 35, 936 P.2d 916 (citation omitted) (footnotes omitted). Section 2009(B) “requires specification of the time, place and content of an alleged false representation, but not the circumstances or evidence from which fraudulent intent could be inferred.” Gianfillippo v. Northland Cas. Co., 1993 OK 125, ¶ 11, 861 P.2d 308 (citation omitted).

¶ 13 “[T]he particularity requirement extends to all averments of fraud, regardless of the theory of legal duty—statutory, tort, contract or fiduciary.” Gay v. Akin, 1988 OK 150, ¶ 8, 766 P.2d 985 (footnote omitted). For example, in Akin the plaintiff filed suit against members of a board of directors of a financial institution. She alleged they misrepresented the financial institution as a public banking corporation (with, inter alia, deposit insurance) and that, through advertisements, they lured her into depositing her savings at the bank. Plaintiff sought recovery for these misrepresentations based on theories of common-law fraud, and also based on a statutory provision authorizing an action for fraud and deceit upon the public. Although one of her theories was derived from the common law, and the other from statutory law, because both theories were based on fraud or contained fraud as a necessary element, the requirements of 2009(B) applied to each theory.

¶ 14 However, an averment of fraud does not exist merely because the modifier “fraudulent” is used. Black's Law Dictionary (9th ed.2009), defines fraud, in pertinent part, as

[a] knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.... 2. A misrepresentation made recklessly without belief in its truth to induce another person to act. 3. A tort arising from a knowing misrepresentation, concealment of material fact, or reckless misrepresentation made to induce another to act to his or her detriment.

In Oklahoma,

[t]he elements of fraud are: 1) a false material misrepresentation, 2) made as a positive assertion which is either known to be false or is made recklessly without knowledge of the truth, 3) with the intention that it be acted upon, and 4) which is relied on by the other party to his or her own detriment.

Lopez v. Rollins, 2013 OK CIV APP 43, ¶ 12, 303 P.3d 911 (...