SFF-Tir, LLC v. Stephenson
| Decision Date | 03 April 2020 |
| Docket Number | No. CIV 14-0369 JB\FHM,CIV 14-0369 JB\FHM |
| Citation | 452 F.Supp.3d 1058 |
| Parties | SFF-TIR, LLC; Stuart Family Foundation, Inc.; Alan Stuart 2012 GST Family Trust; Stuart 2005 GST Family Trust; Celebration, LLC ; Anurag Agarwal ; Peter Buckley ; Vincent Signorello and Rodney M. Reynolds, Plaintiffs, v. Charles C. STEPHENSON, Jr.; Cynthia A. Field; Peter Boylan, III; Lawerence Field; Cypress Energy Partners-TIR, LLC ; CEP Capital Partners, LLC; Cypress Energy Holdings, LLC; and Tulsa Inspection Resources, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Oklahoma |
Jamison A. Diehl, Akin Gump Strauss Hauer & Feld LLP, New York, New York -- and -- Stratton Taylor, Mark H. Ramsey, Clinton Russell, Jacob R. Daniel, The Law Firm of Taylor, Foster, Mallett, Downs, Ramsey, & Russell Claremore, Oklahoma -- and -- Stuart Kagen, Daniel A. Cohen, Joshua C. Gillette, Kyla Janine Grant, Joel M. Taylor, Kagen & Caspersen, New York, New York, Attorneys for Plaintiffs SFF-TIR, LLC, Stuart Family Foundation, Inc., Alan Stuart 2012 GST Family Trust, Stuart 2005 GST Family Trust, Celebration, LLC, Anurag Agarwal, Peter Buckley, Vincent Signorello, and Rodney M. Reynolds.
Frederic Dorwart, Paul DeMuro, Sarah Poston, Nora Rose O'Neill, John D. Clayman, Fredric Dorwart Lawyers PLLC, Tulsa, Oklahoma, Attorneys for the Defendants.
THIS MATTER comes before the Court on: (i) the Defendants’ Motion for Judgment and Statement in Support Thereof, filed September 27, 2017 (Doc. 457)("Motion for Judgment"); (ii) the Defendants’ Motion for Reasonable Attorney Fees and Litigation Costs and Brief in Support, filed October 3, 2017 (Doc. 458)("Defendants’ Original Motion"); (iii) the Defendants’ Corrected Motion for Reasonable Attorney Fees and Litigation Costs and Brief in Support, filed October 3, 2017 (Doc. 459)("Defendants’ Motion"); (iv) the Plaintiffs’ Motion for Attorney's Fees, and Brief in Support, filed October 18, 2017 (Doc. 462)("Plaintiffs’ Motion"); (v) the Defendants’ Choice of Law Opening Brief Pursuant to Court's Request [Doc. 467], filed November 20, 2017 (Doc. 473)("Defendants’ Brief"); (vi) the Plaintiffs’ Brief Regarding Choice of Law Applicable to the Parties’ Motions for Attorney's Fees, filed November 20, 2017 (Doc. 474)("Plaintiffs’ Brief"); and (vii) the Defendants’ Supplemental Brief in Support of their Corrected Motion for Reasonable Attorney Fees and Litigation Costs (Doc. 459), filed August 27, 2018 (Doc. 485)("Defendants’ Supplemental Brief"). The Court held a hearing on August 15, 2018. See Minute Sheet at 1, filed August 15, 2018 (Doc. 484). The primary issues are: (i) whether Defendants Charles C. Stephenson, Jr., Cynthia A. Field, Peter Boylan, III, Lawrence Field, Cypress Energy Partners-TIR, LLC, CEP Capital Partners, LLC, Cypress Energy Holdings, LLC, and Tulsa Inspection Resources, LLC (collectively, "the Defendants") are able to recover their reasonable attorney's fees and litigation costs from the Plaintiffs SFF-TIR, LLC, Stuart Family Foundation, Inc., Alan Stuart 2012 GST Family Trust, Stuart 2005 GST Family Trust, Celebration, LLC, Anurag Agarwal, and Rodney M. Reynolds (collectively, "the Plaintiffs") under Oklahoma's offer-of-judgment statute, 12 Okla. Stat. Ann. § 1101.1, after a federal court jury ruled in the Defendants’ favor on the fair price that they paid the Plaintiffs for their TIR, Inc. shares in the cash-out merger; (ii) whether the Plaintiffs are able to recover their reasonable attorney's fees and costs from the Defendants under Delaware law or Oklahoma law, because the Defendants did not use a fair process to determine the price that they paid the Plaintiffs for their TIR, Inc. shares; (iii) how much either the Plaintiffs or the Defendants are entitled to recover as attorney's fees and costs; and (iv) whether the Court should enter judgment that the Merger was entirely fair, because the jury found that the TIR, Inc. shares’ fair price is $451,000.00. The Court concludes that: (i) the Defendants are entitled to attorney's fees under Oklahoma's offer-of-judgment statute, because Oklahoma law applies and the judgment awarded the Plaintiff is less than the Defendants’ offers of judgment; (ii) the Plaintiffs are not entitled to attorney's fees under either Delaware law or Oklahoma law, because the Defendants’ pre-litigation conduct does not justify awarding and equitable remedy; (iii) the Defendants are entitled to $1,895,800.27 in attorney's fees, $147,748.33 in costs, for a total of $2,043,548.60 in attorney's fees and costs; and (iv) the Court will now enter judgment that the Plaintiffs are entitled to take nothing and that the Defendants are entitled to attorney's fees and costs, but the Court will not indicate that the Merger was entirely fair.
The Court adopts the factual background it previously stated in its Memorandum Opinion and Order, 250 F. Supp. 3d 856, 869-89, filed April 25, 2017 (Doc. 274)(" April 25 MOO"), and its Memorandum Opinion and Order, 264 F. Supp. 3d 1148, 1152-71, filed August 29, 2017 (Doc. 375)(" Reconsideration MOO"). Defendant "Charles Stephenson is the owner of Regent Private Capital." Defendants’ Motion for Summary Judgment on Acquiescence Defense and Brief in Support ¶ 1, at 7, filed April 3, 2015 (Doc. 83)("Defendants’ Acquiescence MSJ")( this fact).1 See Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion for Summary Judgment on Acquiescence Defense ¶ 1, at 8, filed April 20, 2015 (Doc. 84)("Response to Defendants’ Acquiescence MSJ")(not disputing this fact). "Defendant Cynthia Field is the daughter of Defendant Charles Stephenson." Plaintiffs’ Memorandum of Law in Support of Motion for Partial Summary Judgment on Breach of Fiduciary Claims ¶ 1, at 3, filed September 14, 2015 (Doc. 157)("Plaintiffs’ MSJ")( this fact). See Defendants’ Response in Opposition to Plaintiffs’ Motion for Partial Summary Judgment on Breach of Fiduciary Duty Claims (Doc. 157), at 2, filed October 5, 2015 (Doc. 170)("Response to Plaintiffs’ MSJ")(not disputing this fact). "Defendant Lawrence Field is the husband of Defendant Cynthia Field and the son-in-law of Defendant Charles Stephenson." Plaintiffs’ MSJ ¶ 2, at 3 ( this fact). See Response to Plaintiff's MSJ at 2 (). "Defendant CEP-TIR, LLC[’s] ... principals are Defendants Stephenson, Cynthia Field and Peter Boylan, [sic] III." Plaintiffs’ MSJ ¶ 3, at 3 ( this fact).2 "In 2009, Regent and Mr. Stephenson individually became together TIR Inc.’s largest shareholder owning approximately 40% of the TIR Inc. shares." Defendants’ Acquiescence MSJ ¶ 1, at 7 ( this fact).3 "At the same time a number of the Plaintiffs associated with Alan Stuart acquired a minority interest in TIR Inc." Defendants’ Acquiescence MSJ ¶ 3, at 7 ( this fact).4 "Alan Stuart is a ‘seasoned, successful, long-term investor with more than 40 years’ experience in business development, investment management, and corporate governance.’ " Defendants’ Acquiescence MSJ ¶ 4, at 7 ( this fact).5 "The Defendant Lawrence Field, the son-in-law of Mr. Stephenson and an officer of Regent, became the chairman, and Alan Stuart became a member of the board of directors of TIR Inc." Defendants’ Acquiescence MSJ ¶ 5, at 7 ( this fact). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (). "In February 2013, Alan Stuart prepared a proposal for Mr. Field, which he named ‘Project Poirot’ to acquire control of TIR, Inc. at $369,507 per share which he later increased to $385,175." Defendants’ Acquiescence MSJ ¶ 6, at 7 ( this fact).6 "On February 11, 2013, Stuart purchased individual shareholder J.W. Lorett's TIR Inc. shares for $275,000 per share." Defendants’ Acquiescence MSJ ¶ 7, at 7 ( this fact).7 "On March 21, 2013, Stuart presented an offer to the TIR board for TIR Inc. shares of $380,382 per share." Defendants’ Acquiescence MSJ ¶ 8, at 7 ( this fact).8 "On May 16, 2013, Alan Stuart revised his offer to the board, increasing the repurchase price to $413,143 per share." Defendants’ Acquiescence MSJ ¶ 9, at 8 ( this fact).9 "The Defendants Stephenson, Boylan, and Field were principals in Cypress Energy Partners-TIR, LLC" ("Cypress Energy Partners"). Defendants’ Acquiescence MSJ ¶ 10, at 8 ( this fact)(brackets added). See Response to Defendants’ Acquiescence MSJ ¶ 1, at 8 (). "In 2013, two TIR Inc. directors (Alan Stuart on the one hand and Lawrence Field on the other hand) [sought] to acquire control of TIR Inc." Defendants’ Acquiescence MSJ ¶ 11, at 8 ( this fact)(relying on Videotape Deposition of Rodney Reynolds Taken on Behalf of the Defendants (taken November 17, 2014), filed April 3, 2015 (Doc. 83-11)("Reynolds Depo.").10 "In June 2013, the Defendants [completed] the bidding process to acquire control of TIR Inc." Defendants’ Acquiescence MSJ ¶ 13, at 8 ( this fact)(relying on Affidavit of Randall Lorett, filed April 3, 2015 (Doc. 83-2)("Lorett Aff.").11
"On June 26, 2013, Defendant CEP-TIR, LLC acquired 26.45 shares of TIR from certain other shareholders, known as the Pooled Shareholders, in voluntary sales transactions." Plaintiffs’ MSJ ¶ 4, at 3 (emphasis omitted)( this fact). See Response to Plaintiffs’ MSJ at 2 (). "Defendants subsequently referred to this share acquisition as the ‘Control Acquisition.’ " Plaintiffs’ MSJ ¶ 5, at 3 ( this fact). See Response to Plaintiff's MSJ at 2 (). "Between June 2013 and October 2013, CEP-TIR LLC also [acquired] certain other outstanding shares of TIR." Plaintiffs’ MSJ ¶ 6, at 3 ( this fact).12 "As a result of these transactions, Defendants ...
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