Transp. Alliance Bank Inc. v. Arrow Trucking Co.

• Decision Date: 21 January 2011
• Docket Number: Case No. 10–CV–16–GKF–PJC.
• Citation: 766 F.Supp.2d 1188
• Parties: TRANSPORTATION ALLIANCE BANK, INC., Plaintiff,v.ARROW TRUCKING CO., Piel Corp., Megan Corp., Arrow Truck Real Estate Co., Carol Pielsticker, James Douglas Pielsticker, Jonathan Moore, and Joseph Mowry, Defendants.
• Court: U.S. District Court — Northern District of Oklahoma

766 F.Supp.2d 1188

TRANSPORTATION ALLIANCE BANK, INC., Plaintiff,

v.ARROW TRUCKING CO., Piel Corp., Megan Corp., Arrow Truck Real Estate Co., Carol Pielsticker, James Douglas Pielsticker, Jonathan Moore, and Joseph Mowry, Defendants.

Case No. 10–CV–16–GKF–PJC.

United States District Court, N.D. Oklahoma.

Jan. 21, 2011.

Andrew G. Deiss, Billie Jean Siddoway, Jeffery Weston Shields, Rick L. Knuth, Brock N. Worthen, Troy J. Aramburu, Jones Waldo Holbrook & McDonough, P.C., Salt Lake City, UT, Patrick Ryan Busby, Randall Gene Vaughan, Robert J. Winter, Pray Walker P.C., Tulsa, OK, for Plaintiff.Joel L. Wohlgemuth, Ryan A. Ray, Norman Wohlgemuth Chandler & Dowdell, Stanley Dwight Monroe, Trevor Lee Reynolds, Stanley D. Monroe & Assoc., Tulsa, OK, G. Calvin Sharpe, Phillips Murrah P.C., Oklahoma City, OK, Joseph J. Aronica, Duane Morris LLP, Washington, DC, for Defendant.Joseph Mowry, Tulsa, OK, pro se.

OPINION AND ORDER

GREGORY K. FRIZZELL, District Judge.

Before the court is defendant Carol Pielsticker Bump's Motion to Dismiss Claims 12, 13, 14 and 16 for Lack of Subject Matter Jurisdiction [Doc. No. 82].

This lawsuit arises from the financial collapse of Arrow Trucking Co. (“Arrow”). Arrow and plaintiff, Transportation Alliance Bank, Inc. (“TAB”), a Utah industrial bank, entered into an Accounts Receivable Purchase and Security Agreement (the “Agreement”) effective November 10, 2008. Pursuant to the Agreement, TAB agreed to purchase from Arrow accounts receivable owed by third parties to Arrow. In the summer of 2009, TAB began to discover irregularities in the account documents Arrow submitted and discrepancies between invoices provided to TAB and amounts remitted by Arrow customers. An investigation ensued. On December 11, 2009, Arrow admitted to TAB that it had been providing TAB with fraudulent invoices. Arrow also informed TAB that, in order to stay in business, it needed a cash infusion of $749,000 in order to meet payroll and cover fuel costs. TAB agreed to make an emergency advance by purchasing additional invoices in that amount. Between December 14–18, 2009, TAB advanced an additional $971,000 to cover driver payroll, fuel and other operating expenses.

In a conference call with TAB and other secured creditors on December 21, 2009, officers of Arrow disclosed that over the preceding year, Arrow had failed to pay payroll tax trust fund obligations in excess of $9 million. The same day, TAB advised Arrow that no further purchases of invoices would be made. On December 22, 2009, Arrow ceased operations and terminated its employees. The same day, TAB's remote connection to Arrow's accounts receivable computer was suddenly terminated, allegedly leaving TAB unable to respond to customer inquiries and continue collection of customer accounts.

On January 8, 2010, TAB filed this lawsuit, naming as defendants Arrow; affiliates Piel Corp., Megan Corp. and Arrow Truck Real Estate Co.; Carol Pielsticker (an owner and former Director and Chairman of the Board of Arrow); Doug Pielsticker (Arrow's former President, Chief Executive Officer and Director); Jonathan Moore (former Treasurer and Chief Financial Officer of Arrow); and Joseph Mowry (Arrow's former Secretary and General Counsel). TAB asserted sixteen claims for relief, including breach of the Agreement, breach of various guaranty agreements, fraud, conspiracy, RICO conspiracy, breach of fiduciary duty and fraudulent transfer. Carol Pielsticker was named in the Fourth Claim for Relief for breach of a guaranty agreement she is alleged to have signed December 11, 2009; the Twelfth Claim for Relief for breach of fiduciary duty and good faith; the Thirteenth Claim for Relief for breach of fiduciary duty to Arrow's creditors; the Fourteenth Claim for Relief for fraudulent transfer; and the Sixteenth Claim for Relief for recovery of unlawful dividends.

Later that same day, January 8, 2010, Arrow filed for Chapter 7 bankruptcy protection in the United States Bankruptcy Court for the Northern District of Oklahoma (Case No. 10–10041–R). Subsequently, the bankruptcy court substantively consolidated the Arrow affiliates Megan Corporation, Arrow Truck Real Estate Company and Arrow Truck Leasing Company into Arrow's Chapter 7 proceeding.

Carol Pielsticker (“Carol”) seeks dismissal of the Twelfth, Thirteenth, Fourteenth and Sixteenth Claims for Relief. She asserts that, as a result of the bankruptcy filing by Arrow, the claims are now the exclusive property of Arrow's bankruptcy estate, TAB lacks standing to assert them and therefore, this court lacks subject matter jurisdiction. TAB concedes the fraudulent transfer claim should be dismissed, but contends it is entitled to pursue the breach of fiduciary duty and unlawful dividend claims.

I. Standard of Review

A Rule 12(b)(1) motion is appropriate where the standing of a plaintiff to assert a claim is challenged. See Colorado Environmental Coalition v. Wenker, 353 F.3d 1221, 1227 (10th Cir.2004). “Article III of the United States Constitution restricts the judicial authority to deciding ‘Cases' and ‘Controversies',” and “[t]he case-or-controversy requirement is satisfied only where a plaintiff has standing.” Protocols, LLC v. Leavitt, 549 F.3d 1294, 1298 (10th Cir.2008). Whether a plaintiff has standing is a legal question. Lippoldt v. Cole, 468 F.3d 1204, 1216 (10th Cir.2006). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. Montoya v. Chao, 296 F.3d 952, 955 (10th Cir.2002).

Rule 12(b)(1) motions may (1) facially attack the complaint's allegations as to the existence of subject matter jurisdiction, or (2) go beyond allegations contained in the complaint by presenting evidence to challenge the factual basis upon which subject matter jurisdiction rests. Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10th Cir.2004). Here, defendant has appended to her motion filings in the United States Bankruptcy Court for the Northern District of Oklahoma. When a defendant challenges the facts upon which subject matter jurisdiction depends, the court must look beyond the complaint and has wide discretion to allow documentary evidence without converting the motion into a Rule 12(b)(6) or Rule 56 motion. Paper, Allied–Industrial, Chemical & Energy Workers Int'l Union v. Continental Carbon Co., 428 F.3d 1285, 1292 (10th Cir.2005). The court takes judicial notice of the bankruptcy court filings.

II. Allegations of Complaint

TAB is a Utah industrial bank with its principal place of business in Ogden, Utah. [Doc. No. 2, Complaint, ¶ 1]. Arrow is an Oklahoma corporation with its principal place of business in Tulsa. [ Id., ¶ 2]. Carol is an Oklahoma resident and a direct or indirect owner of Arrow Trucking and was formerly a director and chairman of Arrow. [ Id., ¶ 6]. TAB and Arrow entered into an Accounts Receivable Purchase and Security Agreement (the “Agreement”) effective as of November 10, 2008. [ Id., ¶ 13]. Pursuant to the Agreement, TAB agreed to purchase from Arrow certain accounts receivable owed to Arrow by third parties. [ Id., ¶ 14]. TAB and Arrow entered into an Addendum to the Agreement, also effective as of November 10, 2008. [ Id., ¶ 17]. Under the terms of the Agreement and Addendum, Arrow warranted, among other things: that each account receivable was a bona fide obligation of the account debtor for the face amount of the invoice evidencing the account receivable; that before it submitted the account receivable to TAB, it would ensure that there were “no defenses or setoffs to payment of the account which could be asserted by way of defense or counterclaim against Arrow or TAB”; and that there would be no extensions, modifications or other agreements relating to the payment of such accounts except as shown on the face of the invoice. [ Id., ¶ 18]. Doug Pielsticker, as President and CEO of Arrow, signed the Agreement and the Addendum. [ Id., ¶ 19].

Some or all of the representations made by Arrow were false at the time they were made and, “[u]pon information and belief,” the financial statements presented to TAB by Arrow were materially inaccurate and false. [ Id., ¶¶ 20–21]. “Upon information and belief,” Arrow was insolvent or on the verge of being insolvent at the time the Agreement and Addendum were signed. [ Id., ¶ 22].

As originally intended and implemented, Arrow presented invoices to TAB with the letter “A” at the end of a six-digit invoice number. If Arrow needed to make an adjustment to an invoice, it created a second invoice with the same six-digit number, but containing the letter “B” at the end of the number. In such circumstances, TAB alleges, the Arrow customer was supposed to pay both the “A” and the “B” invoices. [ Id., ¶ 27]. Beginning in July 2009, TAB noticed some irregularities in the documents Arrow submitted in support of its requests for payment. TAB also began to notice that some customers were remitting an amount less than the amount shown on the “A” invoices submitted by Arrow to TAB. [ Id., ¶ 28]. In a conference call between TAB and Moore about the irregularities, Moore assured TAB that the “A” invoices were legitimate. [ Id., ¶ 29]. On or about September 1, 2009, TAB's A/R Financing Manager made a personal call on Arrow at its office in Tulsa to discuss invoice-billing discrepancies identified through account monitoring activities. During the meeting, Moore and Mowry represented that a number of billing errors were made by a billing clerk which resulted in approximately $1.9 million in “over-billed receivables” being sent to TAB for funding. They further represented that the billing clerk had been terminated, the problem was rectified, and new system controls were put into place to prevent future problems. [ Id., ¶ 31]. Arrow agreed to pay the over-billed amount back to TAB over a period of 20 business days. [ Id.]. On September 3, 2009, TAB sent a notice of default to Arrow, and on September 14, 2009, Arrow...