White Oak Global Advisors LLC v. Weder

Filing 12

ORDER denying 8 Defendant Tommy W. Weder, Sr.'s Motion to Dismiss. Signed by Honorable Robin J. Cauthron on 10/16/17. (lg)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
WHITE OAK GLOBAL ADVISORS,
)
LLC, a Delaware limited liability company, )
)
Plaintiff,
)
)
vs.
)
)
TOMMY W. WEDER, SR.,
)
)
Defendant.
)

No. CIV-17-756-C

MEMORANDUM OPINION AND ORDER
In August of 2011, Plaintiff entered into a loan agreement with Pistol Drilling, LLC
(“Pistol”). Pistol defaulted on the loan and Plaintiff obtained a judgment against Pistol.
The assets owned by Pistol related to the loan were sold and a deficiency resulted.
Plaintiff filed the present action against Defendant, arguing that he was the alter ego of
Pistol and therefore it should be allowed to collect the deficiency from him.
Defendant filed a Motion to Dismiss, raising claims under Fed. R. Civ. P. 12(b)(1)
and 12(b)(6). The 12(b)(1) Motion argues that the Court lacks subject matter jurisdiction
because Plaintiff has failed to identify the citizenship of each of its members. The 12(b)(6)
Motion is premised on arguments that Plaintiff has failed to plead sufficient facts to support
its claim for piercing the corporate veil and that Plaintiff’s claims were not filed within the
appropriate statute of limitations. Plaintiff filed a Response to the Motion to Dismiss and
Defendant filed a Reply.

The Rule 12(b)(1) Motion is easily resolved. Plaintiff has now disclosed the
citizenship of each of its members and Defendant concedes in his Reply that the Court has
subject matter jurisdiction. Accordingly, that portion of Defendant’s Motion will be
denied.
As for the claim for piercing the corporate veil, Defendant argues that Plaintiff has
failed to plead facts sufficient to state a cause of action under Oklahoma law. In its
Complaint, Plaintiff argued that Pistol was organized and conducted in such a manner that
it was simply an alter ego of Defendant. Plaintiff argues Oklahoma has recognized a
disjunctive standard in veil-piercing claims, permitting a plaintiff to recover if it shows
either that the separate corporate existence is a design or scheme to perpetrate a fraud, or
that the corporation is organized and controlled its its affairs so that it is a mere
instrumentality or alter ego of the shareholder. See King v. Modern Music Co., 2001 OK
CIV APP 126, ¶ 16, 33 P.3d 947, 952. Defendant argues that this alternative option is
available only when the underlying entity is a corporation. He argues that Oklahoma has
never applied the alter ego portion of the veil-piercing theory when the underlying entity
is an individual.
The Court is not persuaded that the distinction offered by Defendant is supported in
Oklahoma law. Certainly, the cases cited by Defendant discuss only the “fraud” theory in
support of piercing the corporate veil; however, the facts of those cases make clear that
was the argument presented by the parties or relied upon by the lower court. No Oklahoma
appellate court has ever relied on the analysis suggested by Defendant. Indeed, on many
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occasions Oklahoma courts have permitted use of the alter ego theory in piercing the
corporate veil when an individual was the alternative entity. See King, supra; Atkinson,
Haskins, Nellis, Holeman, Phipps, Brittingham & Gladd v. Vector Sec., 2011 OK CIV APP
42, ¶ 24, 255 P.3d 453, 459; Okla. Oil & Gas Exploration Drilling Program 1983-A v.
W.M.A. Corp., 1994 OK CIV APP 11, 877 P.2d 605, 609. Accordingly, this portion of
Defendant’s Motion to Dismiss will be denied.
Defendant argues that Plaintiff’s claim is untimely because the date of breach was
June 21, 2012, and that triggered the running of the statute of limitations. According to
Defendant, because this action was filed more than five years after that date, it is barred by
the limitations period. In response, Plaintiff asserts that under Oklahoma law a cause of
action for breach of an installment payment agreement does not begin until either the lender
declares its right to accelerate the whole debt due or the lender takes an affirmative act
towards enforcing its right. Union Cent. Life Ins. Co. v. Adam, 1934 OK 693, 38 P.2d 26.
In its Reply, Defendant does not dispute this law, but argues that the doctrine of judicial
estoppel prevents Plaintiff from arguing that the default occurred on any date other than
June 21, 2012.
The Court is not persuaded by Defendant’s reliance upon judicial estoppel. The
Tenth Circuit has provided a three-part analysis for application of the doctrine.
First, a party's subsequent position must be “‘clearly inconsistent’” with its
former position. Id. Next, a court should inquire whether the suspect party
succeeded in persuading a court to accept that party's former position, “so
that judicial acceptance of an inconsistent position in a later proceeding
would create the perception that either the first or the second court was
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misled[.]” Id. (emphasis added) (internal quotations omitted). Finally, the
court should inquire whether the party seeking to assert an inconsistent
position would gain an unfair advantage in the litigation if not estopped. Id.
Eastman v. Union Pac. R. Co., 493 F.3d 1151, 1156 (10th Cir. 2007) (quoting New
Hampshire v. Maine, 532 U.S. 742, 749-51 (2001)). Even assuming that Plaintiff made
representations in the earlier case that are “clearly inconsistent” with its current position,
Defendant cannot demonstrate the second two factors weigh in his favor. The date of the
breach was not a decisive factor in the earlier litigation. Plaintiff’s Second Amended
Complaint asserted:
20.
Each of the Pistol Companies has breached its obligations under the
Agreement and the related documents, and, as a result, an event of default
has occurred and continues under the Loan Agreement.
(CIV-13-280, Dkt. No. 144). The Defendants in the underlying case did not deny the
breach, only that White Oak was the lender. See CIV-13-280, Dkt. No. 145. ¶ 20. Thus,
any determination about the date of the breach in this litigation would not create the
perception that the Court has been misled. Finally, permitting Plaintiff to, in this case,
litigate the timing of the breach would not give it an unfair advantage. Accordingly, the
Court declines to apply the doctrine of judicial estoppel. Therefore, the limitations period
did not begin on June 21, 2012, as suggested by Defendant, but at the time the underlying
action was filed, March 21, 2013. Because the present action was filed within five years
of that date, it was timely commenced.

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For the reasons set forth herein, Defendant Tommy W. Weder, Sr.’s Motion to
Dismiss the Complaint (Dkt. No. 8) is DENIED.
IT IS SO ORDERED this 16th day of October, 2017.

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