TMX Constr. v. Revolution Pipeline, LLC

• Docket Number: 119812
• Decision Date: 07 December 2022
• Parties: TMX CONSTRUCTION, Plaintiff/Appellee, v. REVOLUTION PIPELINE, LLC, Defendant/Appellant.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

2023 OK CIV APP 39

TMX CONSTRUCTION, Plaintiff/Appellee, v. REVOLUTION PIPELINE, LLC, Defendant/Appellant.

No. 119812

Court of Appeals of Oklahoma, Division II

December 7, 2022

Mandate Issued: 10/26/2023

APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, OKLAHOMA HONORABLE RICHARD C. OGDEN, TRIAL JUDGE.

Lambert D. Dunn, Jr., Javier Hernandez, Oklahoma City Oklahoma, for Plaintiff/Appellee.

Justin T. Hiersche, BLANEY TWEEDY TIPTON & HIERSCHE, PLLC Oklahoma City, Oklahoma, for Defendant/Appellant.

JANE P. WISEMAN, PRESIDING JUDGE.

¶1 Defendant Revolution Pipeline, LLC, appeals the trial court's summary judgment granted to Plaintiff TMX Construction. We consider this appeal according to Supreme Court Rule 1.36, 12 O.S.2021, ch. 15, app. 1, without appellate briefing. After review, we reverse the decision of the trial court and remand for further proceedings.

FACTS AND PROCEDURAL BACKGROUND

¶2 Revolution and TMX entered into an agreement for TMX to install a water pipeline for Revolution. On completion of the project, Revolution was to pay TMX the agreed-upon amount. TMX sent invoices to Revolution for payment of the completed projects, some of which were paid. TMX, however, asserts some of the invoices amounting to $158,362.63 remain unpaid and outstanding. TMX brought this action against Revolution to recover the unpaid balance.

¶3 In its motion for summary judgment, TMX argued judgment should be entered in its favor because Revolution admits an outstanding balance is owed to TMX, there are no material disputed fact issues, and Revolution has no available defenses. TMX asserts that "[a]fter inquiring about payment, via email, [Revolution] discovered that it had sent the funds via wire transfer to another party as part of an email scam." TMX states Revolution "fell victim to an advanced email scheme" and "had been the victim of previous technological scams and attacks" and "took no steps or action to recover the funds that were sent to a non-party." (Emphasis omitted.) TMX urges Revolution has failed to satisfy the debt owed to it and has no breach of contract defense. TMX sought judgment under the contract in the amount of $172,700.

¶4 Revolution responded that material disputed facts exist precluding summary judgment, asserting that it was not the victim of the scam but rather TMX was the victim and that judgment in favor of TMX is "improper because [TMX] was in the best position to avoid the fraud but failed to exercise ordinary care, which contributed to the phishing email's success in diverting funds paid by [Revolution]."

¶5 After a hearing and considering the parties' arguments and briefs, the trial court granted TMX's motion for summary judgment against Revolution in the amount of $158,362.63.

¶6 Revolution appeals.

STANDARD OF REVIEW

¶7 "Summary judgment is properly granted when there are no disputed questions of material fact and the moving party is entitled to judgment as a matter of law." Institute for Responsible Alcohol Pol'y v. State ex rel. Alcoholic Beverage Laws Enf't Comm'n, 2020 OK 5, ¶ 10, 457 P.3d 1050. "An appeal on summary judgment comes to this Court as a de novo review, as the matter presents only questions of law, not fact." Id. We assume "'plenary[,] independent and non-deferential authority to reexamine a trial court's legal rulings.'" Id. (quoting Kluver v Weatherford Hosp. Auth., 1993 OK 85, ¶ 14, 859 P.2d 1081).

ANALYSIS

¶8 Revolution argues in part that the trial court erred in granting TMX's motion for summary judgment because "a factual dispute remains regarding which party was in the best position to avoid the [t]ransfer, and therefore which party failed to exercise ordinary care and should bear the loss." We address this issue first.

¶9 Revolution disputes TMX's "undisputed material facts" numbers 4, 6, 7, and 8 which we quote here:

4. That the Defendant Revolution Pipeline failed to compensate and/or pay the Plaintiff TMX the amounts owed (See the Affidavit of Lucas Martinez attached as Exhibit 1).

[RESPONSE] Fact No. 4: Defendant denies that it failed to compensate and/or pay Plaintiff the amounts owed and affirmatively states that it paid Plaintiff pursuant to the instructions it received via email from an email address it reasonably believed to be affiliated with Plaintiff. Plaintiff was aware that Defendant intended to make payment of the outstanding invoices via the instructions in the email and failed to take reasonable steps to prevent the Defendant from doing the same. (See, Exhibit "6" to Plaintiff's Motion for Summary Judgment at pg. 3).

....

6. The Defendant became the victim of a phishing email and rerouted the money owed to TMX to a third-party. (See Emails from Revolution Pipeline to TMX attached as Exhibit 6); (See Funds Transfer sheet attached as Exhibit 7) and (See Deposition of Joshua Richardson P. 18-19 attached as Exhibit 8).

[RESPONSE] Fact No. 6: Defendant denies that it was the victim of a computer hack or hacked email. (See, Exhibit "1" - Unsworn Declaration of Josh Richardson at Paragraph 2). Plaintiff, not Defendant, was the victim of a phishing email attack as described in Plaintiff's emails to Defendant. (See, Exhibit "6" to Plaintiff's Motion for Summary Judgment at pgs. 3, 8-9). It was based on Plaintiff's failure to act after having knowledge of the phishing email that the funds intended for Plaintiff were intercepted by a third party.

(Emphasis omitted.) TMX's fact number 7 states that Revolution had previously been a victim of a scam "in the same manner and failed to prevent it. (See Deposition of Joshua Richardson P. 18-19, 23 attached as Exhibit 8)." (Emphasis omitted.) Although Revolution admitted it had previously been the victim of "an email phishing scam," it denies that scam is relevant to this summary judgment proceeding. Revolution states, "In the prior phishing scam, the fraudulent emails were sent from Defendant's email. (See, Exhibit "1" at Paragraph 3)." (Emphasis added.) But in contrast in this case, Revolution argues that third-party hackers infiltrated TMX's system enabling them to receive emails from TMX's customers. Revolution asserts that "Plaintiff's representatives unequivocally admitted in its emails to Defendant that Plaintiff (not Defendant) was the victim of the hack (See, Proposition A, page 4 below; See also, Exhibit "6" to Plaintiff's Motion for Summary Judgment at pgs. 3, 8-9), thus making Plaintiff the clear victim of the phishing scam." (Emphasis omitted). Because TMX's email system was hacked, Revolution denies having the duty to prevent the scam and criticizes TMX for knowing about the scam prior to Revolution's payment and failing to "act reasonably to avoid being defrauded."

¶10 In its fact number 8, TMX states Revolution failed to mitigate its damages by attempting to recover the stolen monies by contacting the bank receiving the monies. Revolution denies it had any obligation to recover the monies it believed were properly paid to TMX and also denies it had any further duty to cancel or investigate the issue. Revolution further contends:

Plaintiff admitted in email to Defendant on November 7, 2019 at 2:34 p.m. that Plaintiff was aware of the issue of the phishing email. This email never reached Defendant as it was intercepted as part of the same email attack. (See, Exhibit "6" to Plaintiff's Motion for Summary Judgment at pgs. 3, 8-9). Defendant did not make the wire transfers until eight (8) days later, giving Plaintiff plenty of time to take reasonable steps to ensure that Defendant received the message regarding the email attack, such as making a phone call to the Defendant.

(Emphasis omitted.)

¶11 "Where the movant presents evidence in a summary judgment motion showing no controversy as to material facts, the burden of proof shifts to the opposing party to present evidence justifying trial on the issue." Gurley- Rodgers v. Brookhaven West Condo. Owners' Ass'n, Inc., 2011 OK CIV APP 64, ¶ 8, 258 P.3d 1190. "'A party resisting a motion for summary judgment may not rely on allegations of its pleadings or bald contentions that facts exist to defeat the motion for summary judgment.'" West v. Jane Phillips Mem'l Med. Ctr., 2017 OK CIV APP 52, ¶ 9, 404 P.3d 898 (quoting Roberson v. Waltner, 2005 OK CIV APP 15, ¶ 8, 108 P.3d 567).

A party opposing a motion for summary judgment must show "the reasonable probability, something beyond a mere contention, that the opposing party will be able to produce competent, admissible evidence at the time of trial which might reasonably persuade the trier of fact in his [or her] favor on the issue in dispute."

Keeler v. GMAC Glob. Relocation Servs., 2009 OK CIV APP 88, ¶ 11, 223 P.3d 1024 (quoting Davis v. Leitner, 1989 OK 146, ¶ 15, 782 P.2d 924).

¶12 In considering whether a motion for summary judgment should be denied, the Supreme Court in Residential Funding Real Estate Holdings, LLC v. Adams, 2012 OK 49, ¶ 17, 279 P.3d 788, held:

A motion for summary judgment should be denied if the facts concerning any issue raised by the pleadings, as set forth in the depositions, admissions, answers to interrogatories, and affidavits on file in the case when such motion is filed, and as set forth in affidavits thereafter filed in opposition to such motion and meeting the requirements of said Rule 13, are conflicting, or if reasonable [people], in the exercise of a fair and impartial judgment, might reach different conclusions, from undisputed facts concerning any issue as set forth in such instruments.

(Emphasis added.) The Supreme Court further explained that "[t]he focus in summary process is not on the facts which might be proven at trial (i.e., the legal sufficiency of evidence that could be adduced), but rather on whether the tendered material in the record...