Horton v. Hamilton

• Decision Date: 10 February 2015
• Docket Number: 112,254.
• Citation: 2015 OK 6,345 P.3d 357
• Parties: Peggy HORTON, an individual, Plaintiff/Appellant, v. John J. HAMILTON, an individual, and Robin L. Peck, an individual, Defendants/Appellees, and Firstar Financial Group of Central Oklahoma, L.L.C., f/k/a First Fidelity Financial Group of Oklahoma City, L.L.C., and Allen C. Enegren, an individual, Defendants.
• Court: Oklahoma Supreme Court

345 P.3d 357

2015 OK 6

Peggy HORTON, an individual, Plaintiff/Appellant

v. John J. HAMILTON, an individual, and Robin L. Peck, an individual, Defendants/AppelleesandFirstar Financial Group of Central Oklahoma, L.L.C., f/k/a First Fidelity Financial Group of Oklahoma City, L.L.C., and Allen C. Enegren, an individual, Defendants.

112,254.

Supreme Court of Oklahoma.

Feb. 10, 2015.

Jerry D. Colclazier, Colclazier & Associates, Seminole, Oklahoma, for Plaintiff/Appellant.

P.R. Tirrell, Denton Law Firm, Mustang, Oklahoma, for Defendant/Appellee John J. Hamilton.

Klint A. Cowan, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Oklahoma, for Defendant/Appellee Robin L. Peck.

Opinion

TAYLOR, J.

¶ 1 The question before this Court is whether the district court erred in granting the defendants' motion for summary judgment based on the expiration of the statutory limitations periods on the plaintiff's claims. To answer that question, this Court must determine when the plaintiff's claims accrued and whether the statute of limitations for each claim ran or was tolled from the accrual date based upon the discovery rule. We hold that the defendants did not submit sufficient evidentiary material to support their arguments as to when the statute of limitations began to run on each claim, and we therefore answer the question in the affirmative.

I. FACTUAL ALLEGATIONS

¶ 2 The following facts were alleged by the parties. In April of 2007, Plaintiff, Peggy Horton (Horton), received an unsolicited mailer to attend a retirement seminar sponsored by Firstar Financial Group of Central Oklahoma, L.L.C., (Firstar), a former defendant in the litigation.¹ Firstar owner, John J. Hamilton, and employee Robin L. Peck presented the seminar. The defendants attempted to persuade Horton and others that their savings were not safe in banks; according to the presentation, the only safe investment was the defendants' capital appreciation bonds that yielded a 60% rate of return. The defendants followed up the seminar with private meetings in Horton's home. On September 18, 2007, Horton wrote a $100,000.00 check to purchase a Life Fund 5.1, L.L.C., Capital Appreciation Bond (the bond). Horton made the check out to A & O Life Funds.

¶ 3 Horton had reservations about the bond's riskiness, but Peck came to Horton's home and convinced her of the investment's safety. Relying on Peck's assurances, Horton did not withdraw her offer to purchase the bond. During that time, the Oklahoma Securities Commission (Commission) also called Horton to inform her that it suspected the defendants of fraud. The bond was issued on October 1, 2007. Horton received the bond on November 21, 2007. Despite Peck's initial reassurances, Horton began requesting her initial investment money back. She also worked with the Commission in the months following her purchase of the bond. It is unknown what information she gleaned from the Commission, but in September of 2009, Horton hired an attorney.

¶ 4 The bond was part of a Ponzi scheme. Horton lost her entire investment when Life Fund 5.1, L.L.C. filed for bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois on September 2, 2009. Horton filed a proof-of-claim document with the federal bankruptcy court on September 15, 2009, detailing the fraudulent sale of her bond.

II. PROCEDURAL HISTORY

¶ 5 On December 10, 2009, Horton filed a petition in the district court, asserting claims for the sale of unregistered securities in violation of the Oklahoma Securities Act (count I),² the sale of securities by an unregistered broker-dealer or agent in violation of the Oklahoma Securities Act (count II),³ the sale of securities through misrepresentations or omissions in violation of the Oklahoma Securities Act (count III),⁴ common law fraud (count IV), breach of fiduciary duty (count V), and negligence and gross negligence (count VI).⁵

¶ 6 The defendants jointly filed a motion for summary judgment, contending that Horton's remaining claims (counts III–VI) were barred by their corresponding two-year statutory limitations periods. The defendants presented only six facts they contended were undisputed.⁶ They argued that the statutes of limitations started to run on counts III–VI when Horton actively began trying to get her money back from the defendants, but failed to submit evidentiary material to show when Horton knew of or should have discovered the facts underlying her causes of action. Horton did not dispute any of the defendants' facts, but argued that other facts already in the record failed to establish when the statutes of limitations began to run. The district court agreed with the defendants and granted their motion for summary judgment.

¶ 7 Horton appealed the order granting summary judgment. The Oklahoma Court of Civil Appeals affirmed the district court, ruling that no factual disputes existed in the evidentiary materials as to when the limitations periods ran and that Horton was aware of the defendants' tortious conduct more than two years before she filed her petition. We granted the petition for writ of certiorari.

III. STANDARD OF REVIEW

¶ 8 Summary judgment settles only questions of law. See Pickens v. Tulsa Metro. Ministry, 1997 OK 152, ¶ 7, 951 P.2d 1079, 1082. The standard of review of questions of law is de novo. Id. Summary judgment will be affirmed only if the appellate court determines that there is no dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Id. Summary judgment will be reversed if reasonable people might reach different conclusions from the undisputed material facts or a party is not entitled to judgment as a matter of law. See Runyon v. Reid, 1973 OK 25, ¶ 15, 510 P.2d 943, 946. All reasonable inferences are taken in favor of the nonmovant. Jennings v. Badgett, 2010 OK 7 ¶ 4, 230 P.3d 861, 864.

IV. ANALYSIS

¶ 9 The primary issue before this Court is whether the defendants submitted sufficient evidentiary material to establish when each of Horton's claims accrued and when the statute of limitations for each of those claims began to run. Our jurisprudence has recognized general rules in this area that govern all civil causes of action. Consol. Grain & Barge Co. v. Structural Sys., Inc., 2009 OK 14, ¶ 9, 212 P.3d 1168, 1171. We begin with the accrual date: “Civil actions can only be commenced ... after the cause of action shall have accrued....” 12 O.S.2011, § 92. The accrual date may be identified by statute, but it can only be present when each element of the cause of action has materialized. Consol. Grain, 2009 OK 14, ¶ 9, 212 P.3d at 1171. Generally, the statute of limitations begins to run from the accrual date. Id. However, the discovery rule may delay the start of the statute of limitations. Digital Design Grp., Inc. v. Info. Builders, Inc., 2001 OK 21, ¶ 17, 24 P.3d 834, 839 (holding that the discovery rule delays the running of the statute of limitations “until the injured party knows or, in the exercise of reasonable diligence, should have known of the injury”).

¶ 10 To grant summary judgment on the affirmative defense that a statute of limitations ran on a claim, the evidentiary material must show when the plaintiff knew or in the exercise of reasonable diligence would have discovered the act which gave rise to the claim. Redwine v. Baptist Med. Ctr. of Okla., Inc., 1983 OK 55, ¶ 9, 679 P.2d 1293, 1295. Otherwise, when the statute of limitations begins to run is a question of fact if reasonable people would reach “conflicting opinions thereon.” Id. Similarly, whether the plaintiff was diligent in ascertaining his or her cause of action is a question of fact for the jury. Id. ¶ 8, 679 P.2d at 1295. We now apply these general rules to each of Horton's causes of action to determine if her claims were untimely filed.

A. The Oklahoma Securities Act

¶ 11 The Oklahoma Uniform Securities Act of 2004 (Securities Act) created mechanisms for private enforcement of civil liability in the sale of securities. 71 O.S.Supp.2003, §§ 1–101 to 1–701. Horton sought relief under the Securities Act by alleging that the defendants made an “untrue statement of a material fact or an omission to state a material fact” in their offer to sell her the bond she purchased in 2007. See id. § 1–509(B).⁷ The Securities Act identifies the accrual date for its causes of action. For a misrepresentation in Section 1–509(B), a plaintiff's cause of action accrues at the point “a person sells a security ... by means of an untrue statement of a material fact.” Id. The Securities Act also sets a statute of limitations for its causes of action. For misrepresentations in the sale of securities, Section 1–509(J)(2) lays out a two-year statute of limitations that only begins to run upon the “discovery of the facts constituting the violation.” Id. § 1–509(J)(2).⁸

¶ 12 We have not before construed the language of Section 1–509(J)(2). We must begin with the plain language of the statute, W.R. Allison Enterprises, Inc. v. CompSource Oklahoma, 2013 OK 24, ¶ 15, 301 P.3d 407, 411, but we also may examine the official comments that accompany the uniform act upon which the Securities Act is based.⁹ The plain language of Section 1–509(J)(2) creates only a subjective-knowledge standard—the statute of limitations does not begin to run until a person has discovered the facts constituting the violation. But that is not the intention of the uniform act; the uniform act sought to adopt its statute of limitations with that of federal securities law. Unif. Sec. Act § 509 official cmt. 14. Oklahoma sought to do the same.¹⁰ Courts have construed that time limitation in federal securities law not just to require actual subjective knowledge of the facts of the violation, but also to adopt an inquiry notice standard. See Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 363, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991) ; Law v. Medco Research, Inc., 113 F.3d 781, 785 (7th Cir.19...