Taylor v. Trevino

• Decision Date: 29 October 2021
• Docket Number: Civil Action No. 3:20-CV-0393-D
• Citation: 569 F.Supp.3d 414
• Parties: Thomas L. TAYLOR III, Plaintiff, v. Reymond TREVINO, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

569 F.Supp.3d 414

Thomas L. TAYLOR III, Plaintiff,

v.Reymond TREVINO, et al., Defendants.

Civil Action No. 3:20-CV-0393-D

United States District Court, N.D. Texas, Dallas Division.

Signed October 29, 2021

Andrew M. Goforth, Goforth Law, PLLC, Thomas L. Taylor, III, The Taylor Law Offices PC, Houston, TX, for Plaintiff.

Robert A. Simon, Whitaker Chalk Swindle & Schwartz, Fort Worth, TX, for Defendants Reymond Trevino, Eagle Rio Energy Companies Inc., Okoto Okpo.

Benjamin L. Riemer, Bell Nunnally & Martin LLP, Dallas, TX, for Defendants Derek Taylor, Alden Adams LLC.

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER, SENIOR JUDGE

In this equity receivership established in connection with a U.S. Securities and Exchange Commission ("SEC") civil enforcement action ("Enforcement Action"), the court-appointed temporary receiver brings this ancillary lawsuit against several defendants—including Reymundo Trevino, III ("Trevino"), Eagle Rio Energy Companies, Inc. ("Eagle Rio"), and Okoto Okpo ("Okpo")—seeking to recover on claims for avoidance of fraudulent transfers under the Texas Uniform Fraudulent Transfer Act ("TUFTA"), Tex. Bus. & Com. Code Ann. §§ 24.001 - 24.013 (West 2018), and for money had and received under Texas common law. The lawsuit is based on defendants’ alleged participation in the fraudulent scheme of Christopher A. Faulkner ("Faulkner"), the key defendant in the Enforcement Action.¹ Three of the defendants—Trevino, Eagle Rio, and Okpo (collectively, "defendants") now move for summary judgment dismissing the Receiver's claims and for an award of attorney's fees under TUFTA. For the reasons that follow, the court grants the motion in part as to the Receiver's TUFTA claim, and it otherwise denies the motion.

I

On June 24, 2016 the SEC filed the Enforcement Action against Faulkner, Breitling Energy Corporation ("BECC"), Breitling Oil & Gas Corporation ("BOG"), Crude Energy, LLC ("Crude"), Patriot Energy, Inc. ("Patriot"), and several individuals. The SEC alleges that Faulkner and his codefendants orchestrated a massive fraudulent scheme, defrauding investors of millions of dollars through the offer and sale of oil and gas-related securities.²

On August 14, 2017 the court entered an order in the Enforcement Action ("Receivership Order") appointing Thomas L. Taylor III as temporary receiver ("Receiver") for the assets of Faulkner, BOG, and BECC. Relevant to the instant ancillary action, the Receivership Order states, in pertinent part:

All Ancillary Proceedings are stayed in their entirety, and all Courts having any jurisdiction thereof are enjoined from taking or permitting any action until further Order of this Court. Further, as to a cause of action accrued or accruing in favor of one or more of the Receivership Defendants against a third person or party, any applicable statute of limitation is tolled during the period in which this injunction against commencement of legal proceedings is in effect as to that cause of action.

Receivership Order at ¶ 22.

On September 12, 2018 the court amended the Receivership Order to include, inter alia , the assets of Patriot, a defendant in the Enforcement Action. And on March 26, 2019 the court again amended the Receivership Order to include, inter alia , Crude (a defendant in the Enforcement Action) and Breitling Royalties Corporation ("BRC") (a non-party).

In this ancillary lawsuit, the Receiver sues Trevino, Eagle Rio, Okpo, Derek Taylor ("Taylor"), Alden Adams LLC ("Alden"), and Nathan Madu ("Madu")³ on behalf of receivership entities BOG, BRC, Crude, and Patriot (collectively, the "Receivership Entities"). In his first amended complaint ("amended complaint"),⁴ the Receiver alleges claims for avoidance of fraudulent transfers under TUFTA and for money had and received under Texas common law, seeking to recover over $833,500 in salary and commissions that the Receivership Entities allegedly paid defendants.

The Receivership Entities hired defendant Trevino in July 2011.⁵ During Trevino's employment, he worked as a salesman, cold-calling potential investors and asking whether they would be interested in the Receivership Entities’ offering materials. According to defendants, if a person indicated potential interest, Trevino turned over the potential investor's name and contact information to a supervisor to follow up with the prospect. Trevino did not have an ownership interest in any of the Receivership Entities, but was instead paid a fixed, biweekly salary plus a 5% commission on any amounts invested by prospects whom he had contacted. Between July 22, 2011 and June 2, 2014, the Receivership Entities paid $237,868.50 to Trevino and Eagle Rio,⁶ a Texas corporation that Trevino formed for his own business and tax reasons.

The Receivership Entities hired defendant Okpo in December 2012. Like Trevino, Okpo worked as a salesman, marketing the Receivership Entities’ securities by cold-calling potential investors and referring any potentially interested persons to his supervisor. Okpo was also paid a fixed, biweekly salary plus a 5% commission on any amounts invested by prospects whom he contacted. Between January 2, 2013 and February 8, 2016, the Receivership Entities paid Okpo a total of $204,158.25. From February 18, 2016 to March 31, 2016, the Receivership Entities paid Okpo a total of $10,200. Between August 10, 2015 and February 8, 2016, Okpo received a total of $33,415.00 in compensation from the Receivership Entities. During the period from April 21, 2015 through February 8, 2016, Okpo's compensation was paid by an entity called Simple Solutions, Inc.⁷

On February 7, 2018 the Receiver sent a demand letter to Trevino and Eagle Rio, stating that Eagle Rio and Trevino had received fraudulent transfers in the combined amount of $237,868.50 and demanding that the funds be returned. The Receiver sent a substantially similar demand letter to Okpo, also dated February 7, 2018, demanding that fraudulent transfers in the amount of $204,158.25 be returned. On February 18, 2020, after obtaining court approval, the Receiver filed the instant lawsuit.

Trevino, Eagle Rio, and Okpo now jointly move for summary judgment.⁸ They maintain that the Receiver's TUFTA claim is barred under the statute of repose set out in Tex. Bus. & Com. Code Ann. § 24.010(a)(1) and that they are entitled to summary judgment on the Receiver's claim for money had and received based on several affirmative defenses. The Receiver opposes the motion. The court is deciding the motion on the briefs, without oral argument.

II

When parties move for summary judgment on a claim on which the opposing party will bear the burden of proof at trial, the moving parties can meet their summary judgment obligation by pointing the court to the absence of admissible evidence to support the nonmovant's claims. See Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving parties do so, the nonmovant must go beyond the pleadings and designate specific facts showing there is a genuine issue for trial. See id. at 324, 106 S.Ct. 2548 ; Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable jury could return a verdict in the nonmovant's favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The nonmovant's failure to produce proof as to any essential element of a claim renders all other facts immaterial. See TruGreen Landcare, L.L.C. v. Scott , 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory if the nonmovant fails to meet this burden. Little , 37 F.3d at 1076.

For claims or defenses on which the moving parties will bear the burden of proof at trial, to be entitled to summary judgment the movants "must establish ‘beyond peradventure all of the essential elements of the claim or defense.’ " Bank One, Tex., N.A. v. Prudential Ins. Co. of Am. , 878 F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986) ). This means that the movants must demonstrate that there are no genuine and material fact disputes and that they are entitled to summary judgment as a matter of law. See Martin v. Alamo Cmty. Coll. Dist. , 353 F.3d 409, 412 (5th Cir. 2003). "The court has noted that the ‘beyond peradventure’ standard is ‘heavy.’ " Carolina Cas. Ins. Co. v. Sowell , 603 F.Supp.2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont'l Cas. Co. v. St. Paul Fire & Marine Ins. Co. , 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).

III

The court begins with defendants’ contention that the Receiver's fraudulent conveyance claim is extinguished under the TUFTA statute of repose.

A

TUFTA provides, in pertinent part:

[e]xcept as provided by Subsection (b) of this section, a cause of action with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought: (1) under Section 24.005(a)(1) of this code, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant[.]

Tex. Bus. & Com. Code Ann. § 24.010(a)(1).⁹ Section 24.010 of TUFTA "is a statute of repose, rather than a statute of limitations." Nathan v. Whittington , 408 S.W.3d 870, 874 (Tex. 2013). Unlike a statute of limitations, a statute of repose not only "procedurally bar[s] an untimely claim, it substantively ‘extinguishes’ the cause of action." Id. "A statute of repose provides an absolute affirmative defense, and the defendant bears the burden of proving all factual requisites to the statute's application." Salgado v. Great Dane Trailers , 2012 WL 401484, at *3 (S.D. Tex. Feb. 6, 2012) (citing Ryland Grp., Inc. v. Hood , 924 S.W.2d 120, 121 (Tex. 1996) (holding that defendant bore burden on statute of repose defense at...