FIMCO Inc v. Wootton New Holland LLC et al
ORDER denying 17 Motion to Dismiss, as more fully set out. Signed by Honorable David L. Russell on 3/21/17. (jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
FIMCO, INC. d/b/a Ag Spray
WOOTTON NEW HOLLAND, LLC,
CAPITAL MACHINERY I CORP.,
JONATHAN CORNELIUS, AND
Case No. CIV-16-1323-R
Before the Court is Defendants’ Motion to Dismiss claims against Capital
Machinery I Corp. and Sean Raimbeault. (Doc. 17). For the reasons that follow, that
Motion is DENIED.
This case concerns farming and agricultural equipment that Defendants bought from
Plaintiff but allegedly never paid for. Plaintiff FIMCO, Inc. consists of two divisions. One
of those divisions is Ag Spray, which offers a variety of lawn, garden, and agricultural
products for wholesale to agricultural equipment dealers. One of those dealers, Defendant
Wootton New Holland, LLC, (Wootton), purchased farm sprayers and other miscellaneous
items from July 2015 to May 2016 for use at its various Oklahoma locations. These
purchases were made on credit from Ag Spray and subject to the agreement that Wootton
would pay Ag Spray for the equipment and parts within a certain amount of time.1
Wootton’s alleged outstanding balance with Ag Spray stands at $237,773.63 today.
With Wootton refusing to pay any portion of the balance, even as the invoices piled
up, its owners decided to yield control of the company’s business operations. To that end,
on December 26, 2015, it executed a Management Services Agreement with Defendant
Capital Machinery, which bestowed on Capital the right to manage Wootton—everything
from dictating operations and accounting to satisfying Wootton’s outstanding obligations.2
The Agreement also appointed Capital and its CEO, Sean Raimbeault, to be Wootton’s
“attorney-in-fact,” thereby giving them the power to manage and sell Wootton’s property.
After the execution of the Management Agreement, Wootton continued to purchase
equipment and parts on credit from Ag Spray, including almost $3,000 in equipment and
$2,300 in parts.
So by January 2016, Capital was running Wootton per the Management Agreement.
Yet Capital—at some unknown time in the summer of 2016—also made an ownership
play, acquiring all issued and outstanding membership interest in Wootton. As of October
7, 2016, Capital, through its CEO Raimbeault, was portraying itself as the owner of
To be precise, invoices offered by Ag Spray detail an accrual of invoices spanning from $34,947.88 for
July 15, 2015 to amounts as small as $7.82 for May 4, 2016. The date payments were due for each invoice
vary, but they range from November 6, 2015, to June 4, 2016. (Doc. 1, Ex. 2). The Court will “consider
documents referred to in the complaint [because] the documents are central to the plaintiff’s claim and the
parties do not dispute the documents’ authenticity.” Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th
Curiously, Capital was apparently not incorporated yet (that would happen two days later) and would not
register to conduct business in Oklahoma until May 9, 2016.
Wootton. This seems to have begun as early as June 8, 2016, when Capital applied for a
line of credit with Ag Spray. (Doc. 1, Ex. 2). Capital listed its address on the Business
Credit Application as 402 N. 16th St. in Chickasha, Oklahoma—which just happens to be
the address of one of Wootton’s dealership locations. Further, Capital’s listed store
locations, bank reference, and trade reference also match those of Wootton’s. Capital also
represented it had been in business for nine years, despite having not been incorporated
until December 28, 2015, and not registered to conduct business in Oklahoma until May 9,
2016. Also of note: the Application included Raimbeault’s signature personally
guaranteeing “the full and prompt payment of all liabilities, obligations, charges and dues
of [Capital] to FIMCO.” (Doc. 1, Ex. 2, at 3).
Ag Spray now demands that Wootton settle its nearly $238,000 account balance, or
in the alternative, return the purchased equipment and parts, including the ten farm
sprayers. Capital and Wootton, though, claim six of the sprayers are missing, possibly
having been sold. In any event, Capital refuses to turn over any of the alleged sales proceeds
or the remaining four sprayers in its possession. Ag Spray thus raises nine claims for relief
against various Defendants. Capital and Raimbeault have moved to dismiss the causes of
action against them.
II. Standard of Review
“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short
and plain statement of the claim showing that the pleader is entitled to relief.’” Ashcroft v.
Iqbal, 556 U.S. 662, 677–78 (2009). “The pleading standard Rule 8 announces does not
require ‘detailed factual allegations,’ but it demands more than an unadorned, the3
defendant-unlawfully-harmed-me accusation.” Id. at 678 (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a pleading must offer
more than “labels and conclusions” and “a formulaic recitation of the elements of a cause
of action.” Twombly, 550 U.S. at 555. There must be “sufficient factual matter, [which if]
accepted as true . . . state[s] a claim to relief that is plausible on its face.” Iqbal, 556 U.S.
at 678 (quoting Twombly, 550 U.S. at 570). A plausible claim is one that “pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. A plaintiff must “nudge his claims across the line from
conceivable to plausible . . . .” Twombly, 550 U.S. at 570. Further, the Court “must accept
all the well-pleaded allegations of the complaint . . . and must construe them in the light
most favorable to the [non-moving party].” Thomas v. Kaven, 765 F.3d 1183, 1190 (10th
A. The Claims for Unjust Enrichment and Conversion against Capital
Ag Spray’s first cause of action against Capital is for unjust enrichment on the basis
that Capital has yet to pay any portion of Wootton’s $237,773.63 balance on the Ag Spray
account, continues to retain possession of four of the farm sprayers sold to Wootton, and
has failed to account for the other six. These allegations are enough to state a claim for
unjust enrichment, a claim for relief that arises where a “party has money in its hands that,
in equity and good conscience, it should not be allowed to retain.” Harvell v. Goodyear
Tire and Rubber Co., 167 P.3d 1028, 1035 (Okla. 2006). Why Ag Spray has stated a
plausible claim against Capital is straightforward: Capital, as the sole owner and operator
of Wootton, will not turn over equipment and proceeds allegedly owed to Ag Spray.
Capital counters that because corporations are distinct legal entities, they are
generally not responsible for the acts of another. Yet if Capital truly owns and manages
Wootton—as Ag Spray alleges—then Wootton’s obligations may be Capital’s, thus giving
rise to a plausible claim for unjust enrichment. And as for Capital’s argument that it has
not been unjustly enriched because it is not in control of any profits from the possible sale
of the farm sprayers or other parts, that misstates the law: if the equipment purchased by
Wootton is still in its possession without having been paid for, that alone bestows a benefit
on Capital that is sufficient to state a plausible claim for unjust enrichment. See, e.g.,
Branch v. Mobil Oil Corp., 778 F.Supp. 35, 36 (W.D. Okla. 1991) (denying motion to
dismiss unjust enrichment claim because it could be inferred that defendants’ use of
plaintiffs’ property to dispose of pollutants [thus] saved the expenses” that Defendant
otherwise would have incurred).
Further, these same facts and allegations serve as the basis—and state a plausible
claim—against Capital for Ag Spray’s third cause of action: conversion, simply the
interference of another person’s right to possess the property in question. White v. WebberWorkman Co., 591 P.2d 348, 350 (Okla. Civ. App. 1979). If Capital is currently in control
of the equipment allegedly owed to Ag Spray, that gives rise to a plausible claim.
B. The Claim for Fraudulent Transfer against Capital
Capital has also moved to dismiss Ag Spray’s claim for fraudulent transfer.
Oklahoma’s Fraudulent Transfer Act 3 “allow[s] a creditor the opportunity to invalidate the
transfer of assets made by a debtor if the transfer has the effect of placing assets out of
reach of present and future creditors.” Burrows v. Burrows, 886 P.2d 984, 988 (Okla.
1994). Ag Spray alleges that Capital was in control of Wootton when it sold six of
Wootton’s ten sprayers and that Wootton neither paid for the sprayers nor remitted any of
the proceeds to Ag Spray after the alleged sales. Capital, relying on the heightened pleading
standard for fraud under Federal Rule of Civil Procedure 9(b)4, argues that Ag Spray’s
claim fails because it has not “state[d] with particularity the circumstances constituting
fraud or mistake,” particularly details explaining when the sprayers were sold to determine
if Capital was in control of Wootton at that time.
The Court disagrees; the claim is at least plausible. Ag Spray has alleged that
Wootton purchased its last sprayer on March 17, 2015. Payment was due on April 17, 2016.
Capital gained management control over Capital before this, on December 26, 2015. There
was thus a substantial period following the Management Agreement when Capital could
have orchestrated the sale of the sprayers, making this enough to state a plausible claim for
fraudulent transfer. That Ag Spray, who is no longer in control of the sprayers, does not
know when they were transferred out of Wootton’s and Capital’s possession seems
excusable: “In determining whether a plaintiff has satisfied 9(b), courts may consider
Okla. Stat. Ann. tit. 24, § 112.
“In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or
mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.”
whether any pleading deficiencies resulted from the plaintiff’s inability to obtain
information in the defendant’s exclusive control.” George v. Urban Settlement Services,
833 F. 3d 1242, 1255 (10th Cir. 2016). Only Wootton and Capital can know if and when
the sprayers were sold. Ag Spray’s failure to plead as much with certainty is not fatal.
Defendants’ motion to dismiss the fraudulent transfer claim is therefore denied.
C. Claims Against Capital Seeking to Pierce Wootton’s Corporate Veil
Ag Spray’s fifth and sixth causes of action seek to pierce Wootton’s corporate veil
and hold Capital liable for Wootton’s obligations, albeit on slightly different theories.
Though courts are typically loath to pierce the corporate veil because corporations are
distinct legal entities, “[c]ourts may disregard the corporate entity and hold stockholders
personally liable for corporate obligations or corporate conduct under the legal doctrines
of fraud, alter ego and when necessary to protect the rights of third persons and accomplish
justice.” Estrada v. Kriz, 345 P.3d 403, 409 (Okla. Civ. App. 2015).
Ag Spray’s first theory seeks to pierce Wootton’s corporate veil and hold Capital,
Wootton’s controlling shareholder, liable for the alleged fraudulent statements made by
Wootton that it would later pay Ag Spray for the equipment and parts. The initial question
is whether there was fraud. Elements of fraud include a “1) false material representation,
2) made as a positive assertion which is either known to be false or is made recklessly
without knowledge of the truth, 3) with the intention that it be acted upon, and 4) which is
relied on by the other party to his or her own detriment.” Id. at 408. As previously
explained, Ag Spray alleges that Capital, while in control of Wootton, made representations
to Ag Spray that Wootton would pay Ag Spray the remaining account balance; that these
statements were made knowing that Wootton, and by extension Capital, never intended to
pay the account balance and were made with the intention that Ag Spray would wait to
settle the account balance; and that Capital actually intended to sell the purchased farm
sprayers and pocket the proceeds. Given the allegation that Capital was firmly in control
of Wootton during many of its representations that it would eventually settle the account
balance, Ag Spray’s complaint at least gives rise to a plausible claim seeking to pierce
Wootton’s corporate veil based on fraud.
Ag Spray’s sixth cause of action is slightly different. Invoking an alter ego theory,
Ag Spray attempts to piece the corporate veil to hold Capital liable for obligations and
conduct of Wootton. Unlike its fifth cause of action, this claim does not require Ag Spray
to prove fraudulent intent. See id. at 409 (“It is not necessary for fraudulent intent to be
present for the alter ego theory to be applied to pierce the corporate veil.”) (citing Pennmark
Res. Co. v. Okla. Corp. Comm’n, 6 P.3d 1076, 1081 (Okla Civ. App. 2015)). Rather, “[t]he
question [of] whether an allegedly dominant corporation may be held liable for a
subservient entity's tort hinges primarily on control.” Frazier v. Bryan Mem'l Hosp. Auth.,
775 P.2d 281, 288 (Okla. 1989) (emphasis in original). Under Oklahoma law, courts may
evaluate the Frazier factors in assessing the level of control.5 Ag Spray’s Complaint
“Factors which may be considered at trial include whether 1) the parent corporation owns all or most of
the subsidiary's stock, 2) the corporations have common directors or officers, 3) the parent provides
financing to its subsidiary, 4) the dominant corporation subscribes to all the other's stock, 5) the subordinate
corporation is grossly undercapitalized, 6) the parent pays the salaries, expenses or losses of the subsidiary,
7) almost all of the subsidiary's business is with the parent or the assets of the former were conveyed from
the latter, 8) the parent refers to its subsidiary as a division or department, 9) the subsidiary's officers or
directors follow directions from the parent corporation and 10) legal formalities for keeping the entities
separate and independent are observed.” Id.
suggests many of those factors are present here. Applying the Frazier factors, the
allegations suggest that “[Capital] owns all . . . of [Wootton’s] stock;” that “[Capital]
subscribes to all [Wootton’s] stock;” that “[Wootton and Capital] have common directors
or officers;” that “[Wootton] is grossly undercapitalized;” and that “[Wootton’s] officers
or directors follow directions from [Capital].” Id. In brief, these allegations are enough to
state a claim under an alter ego theory.
D. The Claim for Civil Conspiracy Against Capital and Raimbeault
Ag Spray’s seventh cause of action for civil conspiracy alleges that Raimbeault and
Capital, along with Wootton, developed a scheme in which Wootton and Capital used false
representations to induce Ag Spray to continue selling equipment and parts on credit to
Wootton—all with the intention that Wootton and Capital would never pay for the
“A civil conspiracy consists of a combination of two or more persons to do an
unlawful act, or to do a lawful act by unlawful means.” Brock v. Thompson, 948 P.2d 279,
294 (Okla. 1997). For Capital and Raimbeault to be liable, they must have “pursue[d] an
independently unlawful purpose or [have] use[d] an independently unlawful means.” Id. In
other words, “[t]here can be no civil conspiracy where the act complained of and the means
employed are lawful.” Id.
Capital’s and Raimbeault’s argument for dismissal is essentially that because civil
conspiracies cannot arise on the basis of contract—and Ag Spray does not have a viable
tort claim—the claim must be dismissed. But as explained, Ag Spray has stated a plausible
claim for the torts of conversion and fraudulent transfer. Defendants’ motion to dismiss is
E. The Claim for Breach of Guaranty against Raimbeault
Lastly, Raimbeault has moved to dismiss the claim for breach of guaranty against
him. The claim stems from Raimbeault’s execution of a guaranty in favor of Ag Spray on
Capital’s application for business credit with Ag Spray. On that application, Raimbeault
stated that he
[H]ereby guarant[ees], absolutely and unconditionally, jointly
and severally, to FIMCO the full and prompt payment of all
liabilities, obligations, charges and dues of Applicant to
FIMCO (the “Guaranty”). This Guaranty is an absolute,
continuing and unconditional guaranty of payment (and not of
collection and of performance of Applicant’s obligations, and
shall remain in full force and effect until the obligations and
expenses in connection therewith shall be fully paid and
(Doc. 1, Ex. 2, at 2).
Ag Spray’s theory is admittedly attenuated: as attorney in fact of Wootton,
Raimbeault would have plausibly been aware of Wootton’s debts to Ag Spray when he
guaranteed Capital’s application for credit with Ag Spray on June 8, 2016; Capital, though,
is allegedly Wootton, as evidenced by Capital’s holding itself out as Wootton on the credit
application6 and its owning all Wootton stock. Wootton’s and Capital’s obligations might
therefore be one in the same, meaning that when Raimbeault guaranteed “absolutely and
The application filled out by Capital for a line of credit with Ag Spray included several details that
suggested that Capital and Wootton were one in the same. Capital’s listed address is also the address of
Wootton’s dealership in Chickasha, Oklahoma. Capital’s listed store locations, bank reference, and trade
reference also match those of Wootton. Capital also represented on the June 2016 application that it had
been in business for nine years, despite allegedly not having been incorporated until December 28, 2015,
and not having been registered to conduct business in Oklahoma until May 9, 2016. (Doc. 1, Ex. 2).
unconditionally . . . the full and prompt payment of all liabilities, obligations, charges and
dues of [Capital] to FIMCO,” he was thereby guaranteeing Wootton’s obligations as well.
(Doc. 1, Ex. 2, at 2).
The relevant question, though, is whether Raimbeault intended to guarantee the
debts of Wootton, many of which appear to have arisen before Capital took over
management and ownership control. “The parties' intent in executing a guaranty contract
is gathered from the entire instrument.” JPMorgan Chase Bank, N.A. v. Specialty
Restaurants, Inc. 243 P.3d 8, 12–13 (Okla. 2010). Though “extrinsic evidence need not be
introduced when the language is clear and explicit,” that does not seem to be the case here.
Id. at 13. Raimbeault’s guarantee reads broadly, but it also includes a possible restriction—
that the guarantee “shall remain in force and effect until the obligations and expenses in
connection therewith shall be fully paid and performed . . .” (Doc. 1, Ex. 2, at 2).
Considering that the Court must take as true Ag Spray’s allegation that Raimbeault was
fully aware of Wootton’s obligations to Ag Spray when he signed the guarantee, the
question of the guarantee’s scope and whether it bars this claim is better left for summary
judgment or trial.
Defendants’ Motion to Dismiss is therefore denied.
IT IS SO ORDERED this 21st day of March 2017.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?