NVZ Capital, LLC v. Gentry et al

Filing 83

MEMORANDUM OPINION & ORDER: 1) The motion for s/j filed by Bryan Wagner, Ashley Wagner, Triton Energy Coal, Inc. Hobert Gentry & Roxanna Transport Inc. 57 is GRANTED IN PART & DENIED IN PART as follows: a. motion is GRANTED w/respect to all claims against Ashley Wagner & Ashley Wagner is DISMISSED as a dft in this action; b. motion is DENIED as to all other claims asserted against all other parties; 2) This matter is SCHEDULED for a telephone status conferen ce on September 9, 2015, at 2:00 PM. Parties are directed to call in using following information: (see order). Please dial in at least a couple of minutes before conference is scheduled to begin. Signed by Judge Karen K. Caldwell on 8/27/2015. (RKT)cc: COR, Lexington CD

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
AT PIKEVILLE
NVZ CAPITAL, LLC,

CIVIL ACTION NO. 7:12-105-KKC

Plaintiff,
V.

MEMORANDUM OPINION AND
ORDER

HOBERT GENTRY, et al.,
Defendants.

*** *** ***
This matter is before the Court on the motion for summary judgment filed by Bryan
Wagner, Ashley Wagner, Triton Energy Coal, Inc. (“Triton Energy”), Hobert Gentry, and
Roxana Transport, Inc. (“Roxana Transport”) (collectively, “the Triton Parties”). (DE 57).
The Triton Parties move for summary judgment on all claims against them as well as for
judgment in favor of Bryan and Triton Energy on their counterclaim against NVZ Capital,
LLC (“NVZ”) and their third-party complaint against Daniel Bunn and KYZ Red Oak
Resources, LLC (“Red Oak”).1 For the following reasons, the Court will grant in part and
deny in part the Triton Parties’ motion for summary judgment.
I.
This case involves a dispute over the wire transfer of $250,000 from NVZ to Triton
Energy on April 16, 2012. NVZ, a Nevada limited liability company managed by Daniel
While the Triton Parties move for judgment in their favor “regarding the counterclaim by Triton
Energy and Bryan against Daniel Bunn, NVZ Capital LLC, and KYZ Red Oak Resources LLC[,]” no
such counterclaim exists in this action. (DE 57-1 at 2.) Triton Energy and Bryan have, however,
asserted a counterclaim against NVZ Capital, LLC (DE 35) and filed a third-party complaint against
Daniel Bunn and KYZ Red Oak Resources, LLC (DE 12). Therefore, the Court will construe the
Triton Parties’ motion for summary judgment as seeking judgment in favor of Triton Energy and
Bryan on their counterclaim and third-party complaint.
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Bunn, invests in coal mining ventures. (DE 34 Am. Compl. at 2-3.) Triton Energy is a
Kentucky corporation owned by Bryan Wagner that provides coal-related services in
eastern Kentucky. (DE 34 Am. Compl. at 2; DE 57-1 Defs.’ Mem. at 2.) Ashley Wagner,
Bryan’s wife, assisted in the general operations of Triton Energy. (DE 34 Am. Compl. at 2;
DE 57-1 Defs.’ Mem. at 2.) When hauling coal, Triton Energy sometimes engages the
services of Roxana Transport, a trucking company owned by Ashley’s father, Hobert
Gentry. (DE 57-1 Defs.’ Mem. at 3.)
In its complaint, NVZ alleges that defendants Gentry, Bryan, Ashley, and Triton
Energy invited NVZ to invest $250,000 in a joint venture involving “a large tract of topquality coal producing property” that could be leased for mining at a substantial profit. (DE
34 Am. Compl. at 3.) NVZ maintains that three meetings were held in early March 2012 to
discuss the potential project. (DE 34 Am. Compl. at 4-5.) NVZ alleges that in two meetings
attended by Bryan, Gentry, and Bunn, they asked NVZ to invest $250,000 in the future
mining project. Bryan and Gentry allegedly proposed that if NVZ advanced $250,000, they
would match that investment with $250,000 of their own assets, and NVZ would be a fifty
percent (50%) owner of the joint venture. (DE 34 Am. Compl. at 4.) NVZ asserts that the
same proposed project and details were discussed at a third meeting attended by Bryan,
Ashley, and Bunn. (DE 34 Am. Compl. at 4-5.)
On April 16, 2012, NVZ wired $250,000 to a bank account held by Triton Energy.
(DE 62-3). NVZ alleges that afterward, Defendants refused to provide NVZ with any
information regarding its investment. (DE 34 Am. Compl. at 6-7.) Accordingly, on
September 5, 2012, NVZ brought this diversity action against Gentry, Bryan, Ashley, and
Triton Energy asserting state law claims of fraud, misrepresentation, conversion, and civil
conspiracy relating to the $250,000 wire transfer. (DE 34 Am. Compl. at 7-11.) Defendants
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answered, and Bryan and Triton Energy filed a counterclaim against NVZ alleging state
law abuse of process. (DE 35). Bryan and Triton Energy contend that intermittently
throughout 2012, Bunn offered to terminate NVZ’s lawsuit against Defendants in exchange
for a fifty-one percent (51%) share of Triton Energy. (DE 35 Defs.’ Answer at 11-12.)
Bryan and Triton Energy then filed a third-party complaint alleging breach of
contract, quantum meruit, and unjust enrichment against Bunn and Red Oak—another
company owned and operated by Bunn. (DE 12). Bryan and Triton Energy contend that the
$250,000 NVZ wired to Triton Energy in April 2012 was not an investment, but was in
reality a payment for services Triton Energy had previously performed for Red Oak
pursuant to a contract. (DE 12 Third-Party Compl. at 3.)
In or around November 2011, Red Oak and Triton Energy entered into a business
relationship in which Triton Energy performed coal-related services at the Red Oak mining
site. (DE 12 Third-Party Compl. at 3; DE 20 Fourth-Party Compl. at 3.) Triton Energy
utilized the services of Roxana Transport to haul coal from the Red Oak site. (DE 20
Fourth-Party Compl. at 3; DE 57-1 Defs.’ Mem. at 4.) According to Bryan and Triton
Energy, in early April 2012, Bryan advised Bunn that Red Oak was late in payment on
three invoices due for work performed by Triton Energy. (DE 12 Third-Party Compl. at 3.)
The three invoices allegedly totaled $250,000.60. (DE 12 Third-Party Compl. at 3.) Based on
prior business dealings between the parties, Bryan and Triton Energy contend that when
they received the $250,000 wire transfer from NVZ on April 16, 2012, they believed it was
payment for the three late invoices for services rendered to Red Oak. (DE 12 Third-Party
Compl. at 4.) Finally, Bryan and Triton Energy claim that Triton Energy continued to
perform additional services for Red Oak, totaling $391,633.75, for which payment was
never received. (DE 12 Third-Party Compl. at 4.)
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In response to the third-party complaint, Red Oak filed a counterclaim against
Bryan and Triton Energy asserting six state law causes of action: (1) fraud, (2)
misrepresentation, (3) conversion, (4) civil conspiracy, (5) breach of contract, and (6) unjust
enrichment. (DE 17). Red Oak contends that Bryan and Triton Energy unlawfully removed
seventy-five (75) truckloads of coal from the Red Oak mining site. (DE 17 Countercl. at 8).
Red Oak contends that Bryan and Triton Energy had access to the coal as contractors on
the site and were able to take truckloads from the facility without detection. (DE 17
Countercl. at 8.)
Lastly, Red Oak filed a fourth-party complaint against Gentry and Roxana
Transport asserting state law claims of conversion, civil conspiracy, and unjust enrichment.
(DE 20). Red Oak claims that Gentry and Roxana Transport conspired with Bryan and
Triton Energy to unlawfully remove the seventy-five (75) truckloads of coal from the Red
Oak site. (DE 20 Fourth-Party Compl. at 3-4.)
The Triton Parties then moved for summary judgment on all claims against them as
well as for judgment in favor of Bryan and Triton Energy on their counterclaim against
NVZ and their third-party complaint against Red Oak and Bunn. (DE 57). Before resolving
the motion for summary judgment, the Court ordered the parties to show cause as to why
the third-party complaint, its corresponding counterclaim, and the fourth-party complaint
should not be dismissed for failure to comply with Federal Rule of Civil Procedure 14(a).
(DE 81). The Triton Parties responded and asked this Court not to dismiss those filings as
improper because they would be severely prejudiced at this stage of the litigation. (DE 82).
Specifically, they argued that the third-party defendants have not filed a motion to dismiss
and that the parties have completed discovery on those claims. (DE 82). While the Court
recognizes the odd alignment of the claims in this case, it will not dismiss any of the
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impleaded parties at this time. All parties necessary to resolve the instant disputes are
currently before the Court, and the facts and parties in all of the asserted claims are
inextricably intertwined. Therefore, to avoid inconsistent results, the Court will permit the
third-party complaint, its corresponding counterclaim, and the fourth-party complaint to
remain a part of this action. Accordingly, the Court will resolve the pending motion for
summary judgment as to all claims asserted in this case.
II.
A. Standard of Review
Under Federal Rule of Civil Procedure 56, summary judgment is appropriate where
the moving party “shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The main inquiry
is “whether the evidence presents a sufficient disagreement to require submission to a jury
or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 251–52 (1986). Rule 56(c) mandates summary judgment
against a party who fails to establish the existence of an element essential to the party's
case and on which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477
U.S. 317, 322–23 (1986).
The moving party bears the initial responsibility of “informing the district court of
the basis for its motion, and identifying those portions of ‘the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,’
which it believes demonstrates the absence of a genuine issue of material fact.” Celotex, 477
U.S. at 323. The movant may meet this burden by demonstrating the lack of evidence
supporting one or more essential elements of the non-movant’s claim. Id. at 322–25. Once
the movant meets this burden, the burden shifts to the non-moving party to “set forth
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specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250
(internal quotation marks omitted). However, “the mere existence of a scintilla of evidence
in support of the non-moving party's position will not be sufficient; there must be evidence
on which the jury could reasonably find for the non-moving party.” Hopson v.
DaimlerChrysler Corp., 306 F.3d 427, 432 (6th Cir. 2002).
The court cannot “weigh the evidence or determine the truth of any manner in
dispute,” Stratienko v. Cordis Corp., 429 F.3d 592, 597 (6th Cir. 2005), and must draw all
reasonable inferences in favor of the non-moving party, Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986). “[T]he court should give credence to the
evidence favoring the nonmovant as well as that ‘evidence supporting the moving party
that is uncontradicted and unimpeached, at least to the extent that the evidence comes
from disinterested witnesses.’ ” Stratienko, 429 F.3d at 597 (quoting Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 151 (2000)) (alteration in original). However, courts
may consider the affidavits or testimony of interested witnesses where that witness’s
testimony is uncontradicted. See id. at 597–98.
B. NVZ’s Wire Transfer of $250,000 to Triton Energy
The primary dispute in the original complaint and the third-party complaint boils
down to the factual issue of why, exactly, NVZ wired $250,000 to Triton Energy on April 16,
2012. In their motion for summary judgment, the Triton Parties argue that the affidavits of
Bryan, Ashley, and Gentry show that the funds were wired to Triton Energy in payment for
services performed for Red Oak and that the Triton Parties never solicited Bunn or NVZ for
any joint venture. (DE 57-1 Defs.’ Mem. at 2-4.) In response, Bunn, NVZ, and Red Oak
(collectively, “the Bunn Parties”) argue that their evidence shows that the $250,000 was

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transferred because the Triton Parties asked Bunn and NVZ to invest in a nonexistent
mining project.
The affidavits of Bryan, Ashley, and Gentry contain identical statements, and each
party avers that “[t]here was no joint venture or mining project either offered or entered
into between Triton Energy Coal, Inc. and Daniel Bunn or NVZ Capital, LLC.” (DE 57-2
Bryan Aff. at ¶ 4; DE 57-3 Ashley Aff. at ¶ 4; DE 57-4 Gentry Aff. at ¶4). The affidavits of
Bryan and Ashley further state that
8. In early April 2012, [Bryan] advised Bunn that Red Oak was
late in payment on three invoices due for work performed by
Triton Energy. These late invoices totaled $250,000.60, but
Triton Energy was owed a total of $641,633.75 for the work it
had performed at Red Oak’s request.
9. On April 16, 2012, Triton Energy received a wire transfer of
$250,000 from NVZ in payment of the late invoices owing to
Triton from Red Oak. Red Oak previously paid Triton Energy
for Services rendered on behalf of other entities owned and
operated by Daniel Bunn.
10. For example, on February 1, 2012, Triton Energy accepted
payment from Red Oak for Services rendered to Carbon
Solutions, another company owned and operated by Bunn.
Thus, based on prior practice, and the knowledge that [Red
Oak] and NVZ are both instrumentalities of Bunn, this wire
transfer was believed to be payment from Red Oak to Triton
Energy for services performed corresponding to the three late
invoices.
(DE 57-2 Bryan Aff. at ¶¶ 8-10; DE 57-3 Ashley Aff. at ¶¶ 8-10).
In opposition, the Bunn Parties rely on several documents to support their argument
that the $250,000 was wired because the Triton Parties invited Bunn and NVZ to invest in
a nonexistent joint venture. First, the Bunn Parties submit the affidavit of Suzie New, an
employee of KYZ Energy Services who works directly for Bunn. (DE 62-1). New attests that
she was “present at a meeting between Daniel Bunn, Bryan Wagner, and Hobert Gentry in
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2012 in which Wagner and Gentry discussed with Daniel Bunn the plans to invest in
another mine project” and that Bryan presented Bunn with a “License Agreement”
concerning the proposed project. (DE 62-1 New Aff. at ¶¶ 11-12.) Additionally, New’s
affidavit references billing records between Triton Energy and Red Oak and states that
from February 1, 2012 to May 16, 2012, Red Oak paid Triton Energy $157,034.69 for
services rendered and that Red Oak did not receive any additional invoices from Triton
Energy for work performed in or before April 2012. (DE 62-1 New Aff. at ¶¶ 6-9.)
The Bunn Parties also present the “License Agreement” and billing records
referenced in New’s affidavit. (DE 62-4; 62-5). The seven-page “License Agreement” is
between Triton Energy and Timberlands, LLC and is dated April 20, 2012. (DE 62-4). It
states that Triton Energy would be licensed to mine coal on property known as
“Timberland’s (sic) First Creek 590.82 Acre Surface Tract” in Perry County, Kentucky. (DE
62-4 License Agree. at 1.) The Bunn Parties point out that the “License Agreement” is
signed by Bryan Wagner and Hobert Gentry on behalf of Triton Energy, but the document
is not signed by Timberlands, LLC. (DE 62-4 License Agree. at 5.) They have also submitted
documents reflecting the billing and payment history between Triton Energy and Red Oak
from January to May 2012. (DE 62-5). The Bunn Parties argue that the billing records show
that Triton Energy was paid every two weeks from February 1, 2012 to the middle of May
2012, and that the invoiced amount and payment amount always matches. Thus, the Bunn
Parties contend that there is no documentation of the three invoices Bryan allegedly gave to
Bunn in early April 2012 that totaled $250,000.60. Finally, the Bunn Parties offer a
“Remote Wire Transfer Request” form signed by Daniel Bunn which authorizes $250,000 to
be transferred from NVZ to Triton Energy. (DE 62-3). They contend that this document
shows that the money was wired by NVZ and not another company.
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After reviewing the parties’ evidence, the Court finds that a reasonable juror could
conclude that NVZ wired the $250,000 to Triton Energy because Bryan, Gentry, and Triton
Energy solicited NVZ to invest in a joint venture. It is for a jury to determine why NVZ
wired the funds, and, therefore, summary judgment in favor of Bryan, Gentry, and Triton
Energy is inappropriate.
However, the Court finds that summary judgment is proper as to all claims asserted
against Ashley. The Triton Parties have submitted Ashley’s affidavit, and the Bunn Parties
have not presented any evidence to rebut her statements. Accordingly, because Ashley’s
affidavit is uncontradicted, summary judgment in her favor is appropriate.
C. Abuse of Process and Breach of Contract
In their counterclaim to the original complaint, Bryan and Triton Energy assert a
single claim against NVZ for state law abuse of process, and, in their third-party complaint,
Bryan and Triton Energy assert claims of breach of contract, quantum meruit, and unjust
enrichment against Red Oak and Bunn. (DE 12; DE 35). In moving for summary judgment
on their on these claims, however, Bryan and Triton Energy summarily argue that they are
entitled to judgment as a matter of law and do not meaningfully develop any argument for
this Court’s review. They have not explained the elements of any of these claims under
Kentucky law or cited any case law in support of their position. See United States v. Lara,
590 F. App’x 574, 586–87 (6th Cir. 2014); McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir.
1997). “[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at
developed argumentation, are deemed waived. It is not sufficient for a party to mention a
possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones.”
McPherson, 125 F.3d at 995–96 (alterations in original) (quoting Citizens Awareness
Network, Inc. v. U.S. Nuclear Regulatory Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995)).
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Accordingly, because Bryan and Triton Energy have offered “no real analysis” of their state
law claims against NVZ, Red Oak, and Bunn, summary judgment is inappropriate.
McPherson, 125 F.3d at 995.
D. Theft of Seventy-Five (75) Truckloads of Coal from Red Oak
In its counterclaim to the third-party complaint, Red Oak alleges that Bryan and
Triton Energy unlawfully removed seventy-five (75) truckloads of coal from the Red Oak
mining site, and, in its fourth-party complaint, Red Oak asserts that Gentry and Roxana
Transport conspired with Bryan and Triton Energy to steal the coal.

(DE 17; DE 20). In

their motion for summary judgment, Bryan, Triton Energy, Gentry, and Roxana Transport
argue that the affidavits of Bryan and Gentry demonstrate that no coal was wrongfully
diverted from the Red Oak mine. (DE 57-1 Defs.’ Mem. at 4-5). Although Bryan and
Gentry’s affidavits acknowledge that Roxana Transport was employed by Triton Energy to
haul coal from the Red Oak mine, both affidavits contain identical statements denying
engaging in a conspiracy with “any other entity or individual to commit any tortious act,
including . . . the theft of money or coal from Daniel Bunn, NVZ Capital, LLC, KYZ Red
Oak Resources, LLC, or any other entity owned by or affiliated with Daniel Bunn.” (DE 572 Bryan Aff. at ¶¶ 5, 7; DE 57-4 Gentry Aff. at ¶¶ 5, 8.)
In response, Red Oak submits the affidavit of Randall Robertson, an employee of
Bryan and Triton Energy who worked at the Red Oak mine from January to May of 2012.
(DE 62-2 Robertson Aff. at ¶¶ 3-4.) Robertson’s affidavit states that he “personally observed
my employer, Triton Energy Coal, under the direction of Bryan Wagner, remove over 75
truckloads of coal from the KYZ Red Oak resources mine, which was not reported to KYZ
Red Oak in order to conceal the taking of this coal by Triton Energy Coal without paying for
it.” (DE 62-2 Robertson Aff. at ¶ 6.)
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Drawing all reasonable inferences in favor of Red Oak, the Court finds that the
record contains sufficient evidence from which a reasonable juror could conclude that Bryan
and Triton Energy unlawfully removed coal from the Red Oak mining site and that Gentry
and Roxana Transport conspired with Bryan and Triton Energy to steal the coal.
Significantly, the sole evidence presented by the movants is their own affidavits, which is
contradicted by the affidavit of Randall Robertson. Robertson’s affidavit expressly states
that he witnessed Triton Energy, at the direction of Bryan, unlawfully divert coal from the
Red Oak mine. (DE 62-2 Robertson Aff. at ¶ 6.) Further, because Bryan and Gentry’s
affidavits acknowledge that Roxana Transport was employed by Triton Energy to haul coal
from the Red Oak mine, it is reasonable to infer that Roxana Transport was the actual
entity Robertson observed remove the coal. (DE 57-2 Bryan Aff. at ¶ 7; DE 57-4 Gentry Aff.
at ¶ 8.) Therefore, on this record, summary judgment on Red Oak’s counterclaim to the
third-party complaint and fourth-party complaint is inappropriate.
III.
Accordingly, for the reasons stated above, IT IS ORDERED as follows:
1. The motion for summary judgment filed by Bryan Wagner; Ashley Wagner;
Triton Energy Coal, Inc.; Hobert Gentry; and Roxana Transport, Inc. (DE 57) is
GRANTED IN PART and DENIED IN PART as follows:
a.

The motion is GRANTED with respect to all claims against Ashley

Wagner, and Ashley Wagner is DISMISSED as a defendant in this action;
b.

The motion is DENIED as to all other claims asserted against all

other parties; and

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2.

This matter is SCHEDULED for a telephonic status conference on September
9, 2015 at 2:00 p.m. The parties are directed to call in using the following
information:
Toll Free Number:

888-684-8852

Access Code:

6823688

Please dial in at least a couple of minutes before the conference is scheduled to
begin.
Dated August 27, 2015.

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