Kincaid v. Wells Fargo Securities, LLC et al

Filing 167

OPINION AND ORDER by Judge James H Payne ; denying 127 Motion for Partial Summary Judgment (pll, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
JAMES L. KINCAID, JR.
Plaintiff,
v.
WELLS FARGO SECURITIES, L.L.C.,
et al.
Defendants.

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Case No. 10-CV-808-JHP -TLW

OPINION AND ORDER
Before the Court are Defendants’ Motion for Partial Summary Judgment and Brief in
Support (Motion),1 Plaintiff’s Brief in Response to Defendants’ Motion for Partial Summary
Judgment (Response),2 and Defendants’ Reply to Plaintiff’s Response to Motion for Partial
Summary Judgment (Reply).3 For the reasons set forth below, Defendants’ Motion for Partial
Summary Judgment is DENIED.
BACKGROUND
A. Undisputed Factual Background4
The instant case arises from an employment contract between the Plaintiff Kincaid and

1

Docket No. 127.

2

Docket No. 83.

3

Docket No. 95.

4

The following facts are either not specifically controverted in accordance with Local
Civil Rule 56.1(c), or are described in the light most favorable to the non-moving party.
Immaterial facts are omitted.
1

Wachovia Capital, a subsidiary of Wachovia Corporation, executed by Plaintiff on July 14, 2008.5
On December 31, 2008, Defendant Wells Fargo Securities, L.L.C., a subsidiary of Wells Fargo
Bank, N.A., acquired Wachovia Corporation and assumed Wachovia Capital’s liability under the
contract.6 At the time of the acquisition, part of Defendant Wells Fargo Securities’ operations were
located in Charlotte, North Carolina.7 After the acquisition, Plaintiff acted as the “Commodities
Managing Director of Fixed Income Division” for Wells Fargo Securities in Tulsa, Oklahoma.8 On
October 15, 2010, Plaintiff was terminated for alleged misconduct and violations of the workplace
professionalism policy.9
B. Relevant Procedural Background
On November 23, 2010, Plaintiff filed the instant suit in Tulsa County District Court.10
Plaintiff’s initial Petition alleged two counts of breach of contract, one for specific performance and
one for damages.11 Defendants removed this case to the Northern District of Oklahoma pursuant to
28 U.S.C. §§ 1332, 1441, and 1446, alleging complete diversity and an amount in controversy well
in excess of the $75,000 jurisdictional minimum.12

5

Plaintiff’s Brief in Support of His Motion for Summary Judgment at 2, Docket 73.

6

Id. at 3.

7

Motion at 6, Docket No. 127.

8

Id.

9

Motion at 4, Docket No. 127.

10

See Petition at 8, Docket No. 2-1.

11

Id. at 13.

12

See Notice of Removal 3-4, Docket No. 2.
2

On December 22, 2010, Defendants filed a Motion to Dismiss Plaintiff’s Petition.13 On
January 5, 2011, Plaintiff filed his First Amended Complaint, and on January 21, 2011 the parties
entered a joint stipulation to withdraw Defendants’ Motion to Dismiss.14 Upon entry of the joint
stipulation the Court found Defendant’s Motion to Dismiss moot.15 On November 7, 2011, Plaintiff
filed his Second Amended Complaint (Complaint), adding a claim of constructive fraud as against
Defendant Wells Fargo Bank N.A. and/or Wells Fargo Securities, L.L.C., to his existing breach of
contract claim.16 Defendants’ filed the instant Motion for Partial Summary Judgment on March 15,
2012, seeking summary judgment on Plaintiff’s recently added constructive fraud claim.17 The
Motion is fully briefed and at issue.
DISCUSSION
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) provides the standard courts must use when
determining whether summary judgment is proper. According to the rule, summary judgment
“should be rendered if the pleadings, the discovery and disclosure materials on file, and any

13

See Docket No. 7.

14

See Docket No.’s 14, 20.

15

Docket No. 21.

16

Docket No 71. In their Motion for Partial Summary Judgment, Defendants argue that
Plaintiff alleges his constructive fraud claim against all three Defendants. Response at 16,
Docket No. 127. However, Plaintiff specifically directs this claim as against “Wells Fargo.” See
Second Amended Complaint at 9, Docket No. 71. Plaintiff further explains that “Wells Fargo” is
used in the pleading where it is unclear whether the action alleged was taken by Wells Fargo
Bank N.A. or Wells Fargo Securities L.L.C. See id. at 1, ¶3. For ease of understanding, the Court
uses the plural “Defendants” throughout this order, noting that it is a question of fact as to which
entity is ultimately responsible.
17

See Docket No.’s 72-74.
3

affidavits show that there is no genuine issue as to any material fact and that the movant is entitled
to judgment as a matter of law.”18 “On a motion for summary judgment, facts must be viewed in the
light most favorable to the nonmoving party only if there is a ‘genuine’ dispute as to those facts.”19
A nonmoving party may not rely merely on the unsupported or conclusory allegations
contained in pleadings to rebut the movant's factual proof in support of the motion for summary
judgment, rather he must respond with specific facts demonstrating genuine issues requiring
resolution at trial.20 “The mere possibility that a factual dispute may exist, without more, is not
sufficient to overcome convincing presentation by the moving party.”21 “The litigant must bring to
the district court's attention some affirmative indication that his version of relevant events is not
fanciful.”22
In an action for fraud under Oklahoma law, a Plaintiff must ultimately prove fraud by “clear
and convincing evidence,” but it is not necessary that each piece of evidence supporting a claim of
fraud be clear and convincing in order to defeat summary judgment.23 “However, there must be some
evidence of each element of fraud presented before the issue may be submitted to the jury.”24 It is

18

See Jennings v. Badget, 2010 OK 7, ¶¶ 4-5, 230 P.3d 861, 864; Fed. R. Civ. P. 56(c).

19

Ricci v. DeStefano, 557 U.S. 557, 129 S.Ct. 2658, 2677, 174 L.Ed.2d 490 (2009).

20

Norton v. Liddel, 620 F.2d 1375, 1381 (10th Cir.1980).

21

Conaway v. Smith, 853 F.2d 789, 794 (10thCir.1988).

22

Id.

23

Specialty Beverages, LLC v. Pabst Brewing Co., 537 F.3d 1165, 1180-1181 (10th Cir.
2008) (“[I]t is not necessary that evidence of fraud be ‘clear and convincing’ to escape a
demurrer to the evidence”) (internal quotation omitted).
24

Id. (internal quotation omitted).
4

important to remember that summary judgment is a drastic remedy, and any relief pursuant to
Fed.R.Civ.P. 56 should be awarded with care.25
B. Plaintiff’s Constructive Fraud Claim
The whole of this litigation is centered on Plaintiff’s allegation that his termination was
planned and pretextual. From what the Court can discern, Plaintiff’s constructive fraud claim
specifically contends (1) that Defendants selectively disclosed facts about a potential move to
Charlotte;26 (2) that from these disclosures Plaintiff was given a false impression that either a move
to Charlotte was not necessarily happening, or, should it happen, Plaintiff would be able to part ways
with the company and still receive the Special Award;27 and (3) that Defendants had formulated a
plan, concealed from Plaintiff, to terminate Plaintiff in a fashion that allowed Defendants to move
the operation to Charlotte without paying Plaintiff the $2.25 million Special Award.28
In Oklahoma, constructive fraud is defined as:
1. In any breach of duty which, without an actual fraudulent intent, gains an
advantage to the person in fault, or anyone claiming under him, by misleading
another to his prejudice, or to the prejudice of anyone claiming under him; or,
2. In any such act or omission as the law specially declares to be fraudulent, without
respect to actual fraud.29

25

Conaway, 853 F.2d at 792.

26

Plaintiff’s Second Amended Complaint at 4-6, Docket No. 71; Response at 25-27,
Docket 139.
27

See id. (Defendants took actions that “plainly communicated” office wasn’t closing;
statements about move suggested to Plaintiff that he was faced with decision to leave company
with bonus in hand or try to make some arrangement leaving him in Tulsa).
28

Id.

29

Okla. Stat. tit. 15, §59.
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To recover under a theory of constructive fraud, Plaintiff must prove:
1. That the defendant owed plaintiff a duty of full disclosure. This duty could be part
of a general fiduciary duty owned by the defendant to the plaintiff. This duty could
also arise, even though it might not exist in the first instance, once a defendant
voluntarily chooses to speak to plaintiff about a particular subject matter;
2. That the defendant misstated a fact or failed to disclose a fact to plaintiff;
3. That the defendant’s misstatement or omission was material;
4. That plaintiff relied on defendant’s material misstatement or omission; and
5. That plaintiff suffered damages as a result of defendant’s material misstatement
or omission.30
1. Duty to Disclose
As noted above, a duty to fully disclose may arise from a general fiduciary duty or, as
announced in the Oklahoma Supreme Court case of Uptegraft v. Dome Petroleum Corporation, may
arise if a party selectively discloses facts that create a false impression.31 Plaintiff’s Complaint states
that Defendants “convey[ed] a false impression by the disclosure of some facts and the concealment
of others” that was “in effect a false representation that what was disclosed was the whole truth.”32
In support of that allegation, Plaintiff’s Complaint sets out that Defendants, specifically Defendants’
employees Roncevich and Kauranen, made a partial disclosure indicating a possible move to
Charlotte, thus undertaking a duty to Plaintiff to tell the whole truth about matters relating to the

30

Pabst, 537 F.3d at 1180-1181.

31

See id. at 1181 (citing Uptegraft v. Dome Petroleum Corp., 1988 OK 129, ¶12, 764
P.2d 1350, 1353.
32

Second Amended Complaint at 9, Docket No. 71.
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relocation.33 This allegation indicates a duty arising under the Uptegraft standard.34
Plaintiff alleges that the limited disclosures regarding the move gave him the false
impression that he would have the decision to “either (i) leave the company with bonus in hand
(because Wells Fargo could not force a move) or (ii) to try and make some other arrangement with
the company that would leave him in Tulsa while the rest of the office personnel moved or were
terminated.”35 Plaintiff further alleges that while he was operating under this false impression,
Defendants, knowing Plaintiff would not move to Charlotte, were concealing the fact that (1) the
move to Charlotte was definite and (2) Defendants had devised a plan to terminate him “for cause”
in order to effect the transfer to Charlotte without paying Plaintiff the $2.25 million Special Award.36
Defendants contend that Plaintiff offers no direct evidence indicating that there was a plan
in place either to move operations or to terminate Plaintiff.37 However, Plaintiff offers that the
following undisputed evidence, when taken together, supports a reasonable inference that such a
plan was in place: (1) Plaintiff was “encouraged,” or it was “suggested,” that Plaintiff move to
Charlotte by supervisor Roncevich, and was later asked if he would consider working 50% of his

33

Id. at 5, 9.

34

Plaintiff’s Response also alleges Defendants had a positive duty to speak based on “ a
special relationship” established by the parties’ positions relative to the employment contract,
and that Defendants’ silence may even constitute actual fraud. See Response at 22-23, Docket
No. 139. These allegations and arguments were not raised in Plaintiff’s Second Amended
Complaint, therefore are not properly before this Court. See Borum v. Coffeyville State Bank,
6 Fed.Appx. 709, 712 (10th Cir.2011) (citing Lawmaster v. Ward, 125 F.3d 1341, 1346 n. 2
(10th Cir.1997).
35

Response at 26, docket No. 139.

36

Id.

37

Motion at 16-17, Docket No. 127.
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time in Charlotte;38 (2) September 2010 emails between Kauranen, Roncevich, and Kincaid in which
Kauranen indicates a communication breakdown between the Tulsa and Charlotte offices and a
suggestion that the physical operation be moved to Charlotte, “where it probably belongs;”39 (3) the
fact that the investigation into Plaintiff’s misconduct followed this email suggestion by less than two
weeks;40 (4) references in handwritten notes by Wells Fargo employee Lisa Engstrom, to “ongoing
discussions” about moving the Tulsa operation to Charlotte, as well as Engstrom’s deposition
testimony recounting discussions about potential repercussions from terminating Plaintiff;41 and (5)
the ultimate office relocation roughly 60 days after Plaintiff’s termination.42
The email evidence and Plaintiff’s conversations with Roncevich establishes that facts were
disclosed regarding a possible move. If there was a definite plan in place (1) to transfer Wells Fargo
operations to Charlotte and/or (2) to terminate Plaintiff in order to avoid paying the special award,
of which Plaintiff was kept unaware, a reasonable jury would likely find that Defendants had a duty
to disclose the plan. Defendants argue that in order to find that a question of material fact as to the
plan’s existence arises from this evidence, the Court must unacceptably stack inference upon

38

Motion at 17, Docket No. 127; Response at 16, Docket No. 139.

39

See Response at 16, Docket No. 139.

40

Id.

41

Id. at 17-18; Motion at 17, Docket No. 127. Due to poor copy quality, the Court cannot
read the Engstrom notes. However, the parties do not dispute that the notes contain the reference
to “ongoing discussions.”
42

Response at 18, Docket No. 139. There is also a dispute as to whether or not Plaintiff
was “demoted” prior to his termination, and what, if any, evidence that provides in support of
Plaintiff’s allegations of a plan to terminate him. See Response at 12, Docket No. 139; Reply at
7, Docket No. 154. The resolution of this dispute and a decision as to whether or not that
resolution supports that the alleged plan was in place is a matter for jury consideration.
8

inference.43 The Court disagrees.
Although Plaintiff’s evidence as to the plan’s existence is largely circumstantial, direct
evidence in cases similar to this is often impossible to find. In fact, Oklahoma courts have noted that
fraud “is more often shown by circumstances than in any other way.”44 Here, the temporal proximity
of both the email discussion regarding transfer of operations to the misconduct investigation, and
of Plaintiff’s termination to the actual transfer of operations, permit a reasonable inference that the
alleged plan existed. Further support for such an inference comes from the Engstrom testimony
regarding pre-termination discussions as to the anticipated difficulties associated with terminating
Plaintiff. Taken together, these coincidences indicate that Plaintiff’s version of events is not
necessarily fanciful.
It is important to note that the real dispute here centers not on the veracity of the facts
presented. The parties generally agree as to the substantive facts. The parties disagree as to what
those facts mean. Plaintiff argues that, taken together, the facts reasonably indicate a conspiracy
against him. Defendants posit that the facts demonstrate a logical chain of business decisions.45 The
actual dispute lies in what is not on the face of the evidence. Consequently, the question of whether
or not the alleged plan existed will turn on a determination of the motives of Defendants’ employees.
This determination will ultimately hinge on assessments of witness credibility. At a minimum, these

43

Motion at 19, Docket No. 127; Reply at 7, Docket No. 154.

44

Sellers v. Sellers, 1967 OK 34, ¶35, 428 P.2d 230, 238-39 (internal quotation omitted).

45

See Motion at 19, Docket No. 127 (arguing practical hardship of moving the office
indicates there was no plan); see also Reply at 9, Docket No. 154 (arguing Engstrom’s testimony
about termination discussion speaks to Plaintiff’s litigiousness rather than a plan).
9

necessary assessments of witness credibility require jury consideration.46
Contrary to Defendants’ assertions, Plaintiff need not present “clear and convincing
evidence” of each element of the alleged fraud to defeat summary judgment.47 The proffered
evidence, combined with the anticipated trial testimony, is sufficient to create material questions
of fact upon which the jury can make reasonable inferences as to whether or not the alleged plan
existed and therefore whether or not Defendants owed Plaintiff a duty to disclose it. Consequently,
the Court finds that Plaintiff has presented sufficient evidence to create a material question of fact,
suitable for jury consideration, as to this element.
2.Failure to Disclose, Materiality, Reliance, and Damages
Because there remain material questions of fact regarding Defendants’ duty to disclose,
whether or not Defendants failed to disclose in light of that alleged duty is a question for the finder
of fact. Plaintiff has presented sufficient evidence to support a reasonable inference that, if there was
a duty to disclose, then Defendants failed to disclose the complete facts of their plan. Furthermore,
this silence, if true, is certainly material.
Plaintiff contends that had he known about the definite plans to close the Tulsa Office or
the hidden plot to terminate him, he would have declared the contract repudiated by Wells Fargo.48
Plaintiff further contends that such a repudiation would entitle him to the $2.25 million Special

46

Seamons v. Snow, 206 F.3d 1021, 1026 (10th Cir.2000) (“It is axiomatic that a judge
may not evaluate the credibility of witnesses in deciding a motion for summary judgment”)
47

Pabst, 537 F.3d at 1181 (internal quotation omitted). See, e.g., Motion at 14, Docket
127 (“Timing does not present the clear and convincing evidence necessary for a constructive
fraud claim”).
48

Response at 11, Docket No. 139.
10

Award due under his employment contract.49 These claims speak both to Plaintiff’s reliance on
Defendants’ half-truth, and to the extent of Plaintiff’s damages based on this reliance. Disputes as
to the veracity of Plaintiff’s claims of reliance and actual damages are questions of credibility
properly adjudged by the jury. Considering all the evidence, the Court finds Plaintiff has provided
sufficient evidence supporting each of the remaining elements of his constructive fraud claim to
submit this claim to a jury.
CONCLUSION
Considering all of the abovementioned reasons, summary judgment is improper,
Defendants’ Motion for Partial Summary Judgment is DENIED.50

49

Id.

50

Docket No. 127.
11