Allen v. Brandi Larae Neito Irrevocable Trust, The

united States District Court

for the sQorthern Dtstrict of Oklahoma

Case No. 21-cv-345-JDR-MTS

BRANDI LARAE ALLEN,

Plaintiff,

versus

THE BRANDI LARAE NEITO [IRREVOCABLE TRUST; HW ALLEN

Co., LLC; ANDREW S. ALLEN; SHERI L. ALLEN; THE TRUST

ATTORNEYS & COUNSELORS AT LAw, PLC; Topp F. HUDGINS,

Defendants.

OPINION AND ORDER

Plaintiff Brandi Larae Allen alleges that, in May of 2015, Defendants

misappropriated Plaintiff’s ownership interest in the HW Allen Company,

LLC by transferring her shares in the Company to a trust created without her

knowledge or consent. Dkt. 7 at ||P 3, 20-22. Defendants Andrew Allen, Sheri

Allen, and the Brandi Larae Neito Irrevocable Trust have filed a Motion for

Summary Judgment [Dkt. 55] arguing that Plaintiff’s claims are barred by the

statute of limitations. The HW Allen Company has adopted that argument,

and further argues that, as a matter of law, it cannot be held liable for Plain-

tiff’s claims. Dkt. 56.' For the reasons discussed below, the Motion filed by

Andrew Allen, Sheri Allen, and the Trust [Dkt. 55] is DENIED. The Com-

pany’s Motion [Dkt. 56] is GRANTED IN PART and DENIED IN

PART.

'Plaintiff’s claims against Horizon Attorneys & Counselors at Law, PLC, and Todd

F. Hudgins were dismissed by stipulation on December 2, 2022. Dkt. 34.

Case No. 21-cv-345

I.

Over the course of her life, Plaintiff received over 200 shares in the

HW Allen Company from her grandfather, Robert Allen. Dkt. 7 at P 1. On

May 16, 2015, Plaintiff purportedly executed an irrevocable trust agreement

transferring those shares to the Brandi Larae Neito Irrevocable Trust. Dkt.

55-2 at 6, 69.* The agreement identifies Plaintiff’s daughters as the Trust’s

beneficiaries, and names Plaintiff’s parents, Andrew and Sheri Allen, as joint

trustees. /d. at 5, 9. Plaintiff claims that she never executed the agreement and

never authorized the creation of the Trust. Dkt. 7 at |P 33. She maintains that

her parents fraudulently created the Trust in order to misappropriate her in-

terest in the HW Allen Company, and that she did not discover the Trust, the

unauthorized transfer of her ownership interest, or even the fact that she

owned substantial shares in the HW Allen Company until November 2019.

Id. at |PP 20, 30-31, 41-45. After discovering the misappropriation, Plaintiff

brought this action seeking a declaratory judgment regarding her rights in the

trust property as well as relief for unjust enrichment and conversion.

All Defendants argue that Plaintiff’s claims are time-barred. Dkt. 55 at

13-19; Dkt. 56 at 6. Plaintiff, in turn, argues that Oklahoma’s statute of limi-

tations is inapplicable to this case. Dkt. 59 at 15-17. According to Plaintiff, the

fraudulent creation of the Trust renders it void, and the statute of limitations

cannot “give protection to a person in possession under a deed void upon the

face of it.” Jd. at 15, 17 (quoting Mindock v. DuMars, No. 20-1236, 2022 WL

1410017, at *8 (10th Cir. May 4, 2022) (internal citation and quotation marks

omitted).

Although Plaintiff cites several cases in support of her claim that the

statute of limitations should be disregarded, the authority she relies upon is

readily distinguishable. For example, in Mzndock, the question presented was

whether a restrictive condition placed upon an interest in real property con-

stituted an unreasonable—and void—restraint on alienation. Mindock, 2022

* All citations utilize CMECF pagination.

Case No. 21-cv-345

WL 1410017, at *1-*2. The defendant in that case argued that the statute of

limitations prevented the court from addressing the dispute, but the Court of

Appeals disagreed, recognizing that, while “other jurisdictions have held that

statutes of limitations apply to void deeds,” Colorado courts had “rejected

that position.” /d. at *8. The Mindock court’s conclusion that facially void

deeds for real property are not subject to a statute of limitations defense un-

der Colorado law has no bearing on the issue presented here. See id. The re-

maining cases cited in Section V(1) of Plaintiff’s brief likewise fail to address

the applicability of Oklahoma’s statute of limitations to claims arising out of

a fraudulent conveyance of stock. See Stafford v. Crane, 382 F.3d 1175 (10th

Cir. 2004) (addressing whether the parties’ stipulation barred the plaintiff’s

claim that a trust was void ab initio, and holding that the designated attorney-

in-fact lacked authority to create a trust).°

Oklahoma authority appears to recognize that the statute of limita-

tions zs a viable defense in cases such as this one. For example, in Brown ».

WM. Acree Trust, 2000 OK CIV APP 40, 999 P.2d 1119, the plaintiffs alleged

that the defendant trust and its trustee had forged a signature on a quit claim

deed for real property. /d. at P 2, 999 P.2d at 1120. The defendant raised the

statute of limitations as an affirmative defense, and the district court granted

summary judgment. Jd. at PP 3, 6, 999 P.2d at 1120-21. The Oklahoma Court

of Civil Appeals reversed, but not because the statute of limitations was inap-

plicable. Instead, the court held that the two-year statute of limitations “did

5 See also Moore v. Brown, 52 U.S. 414 (1850) (addressing deed for real property that

was void upon its face by reference to the authority for making the sale); Easley ». Pettibone

Michigan Corp., 990 F.2d 905, 912 (6th Cir. 1993) (concluding that a complaint filed during

a bankruptcy stay was voided, and the statute of limitations expired when no claim was filed

within thirty days of the termination of the stay); Juda », Nerney, 211 F.3d 1278, 2000 WL

419823 (10th Cir. 2000) (vacating order dismissing action seeking return of forfeited prop-

erty, and instructing the district court to determine whether the government had a valid

argument against the operation of the statute of limitations, which required commencement

of forfeiture proceedings within five years of the discovery of the criminal offense).

Case No. 21-cv-345

not begin to run until [the plaintiffs’] discovery of the fraudulent deed,” and

remanded the case for further proceedings. /d. at |? 10, 999 P.2d at 1121.

Similarly, in Cassity v. Pitts, 1992 OK 139, 839 P.2d 192, the Oklahoma

Supreme Court considered an action seeking the recovery of property that

was purportedly conveyed to a fraudulently created trust. /d. at |P 1, 839 P.2d

at 193. In prior proceedings, the Court of Civil Appeals held that the two-year

statute of limitations barred the action. /d. at |P 6, 839 P.2d at 194. The Okla-

homa Supreme Court resolved the case on other grounds, without addressing

(or refuting) the basis for the appellate court’s decision. Jd. at P|P 6-7, 839 P.2d

at 194.

Based on Brown and Cassity, this Court holds that Plaintiff’s claims

are subject to Oklahoma’s statute of limitations—which, in this case, is two

years. 12 Okla. Stat. § 95(3). See Romer v. Leary, 425 F.2d 186, 188 (2d Cir.

1970) (recognizing the statute of limitations applicable to claims brought un-

der the Declaratory Judgment Act is determined by reference to nature of the

underlying dispute), Czty of Tulsa v. Bank of Oklahoma, N.A., 2011 OK 83, J

20, 280 P.3d 314, 320 (applying two-year statute of limitations to claim for

unjust enrichment); 77//man v. Shofner, 2004 OK CIV APP 40, 2, 90 P.3d

582, 583 (applying two-year statute of limitations to conversion claim). Thus,

the question presented by Defendants’ motions is whether, on or before Au-

gust 23, 2019, Plaintiff knew or, in the exercise of reasonable diligence should

have known, that Defendants had caused the injury at issue. Dkt. 1 (Com-

plaint, filed August 23, 2021). See Williams v. Borden, Inc., 637 F.2d 731, 735

(10th Cir. 1980); Resol. Tr. Corp. ». Grant, 1995 OK 68, 7 8, 901 P.2d 807, 813

(recognizing that Oklahoma “follows the discovery rule allowing limitations

in tort cases to be tolled until the injured party knows or, in the exercise of

reasonable diligence, should have known of the injury”).

In addressing this question, the Court views the evidence in the light

most favorable to Plaintiff, the non-moving party, and draws all reasonable

inferences in her favor. Tabor v. Hilti, Inc., 703 F.3d 1206, 1215 (10th Cir.

Case No. 21-cv-345

2013). Summary judgment will only be granted if, when the evidence is

viewed in this way, the Court finds there are no genuine issues of material

facts—or, in other words, there are no outcome-determinative issues that

could be resolved in favor of Plaintiff. Fed. R. Civ. P. 56. See Anderson v. Lib-

erty Lobby, Inc., 477 U.S. 242, 248 (1986) (indicating that a material fact is one

that might reasonably impact the outcome of a dispute); Matsushita Electric

Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (recog-

nizing that a genuine dispute is one that can be resolved in favor of either

party).

After reviewing the record, the Court finds that there are disputed

questions of fact as to whether Plaintiff had learned or could have learned of

the alleged misappropriation by August 23, 2019. Plaintiff has presented evi-

dence that the Trust was created at the instruction of her parents, that she

did not discuss the Trust with the attorney who created it, that she did not

sign the agreement creating the Trust, and that the signature on the instru-

ment creating the trust was forged. See Dkt. 59-2 at 12-13; Dkt. 59-6 at 3; Dkt.

59-11; Dkt. 60-5 at 4-5. She has introduced testimony that the notary listed at

the bottom of the trust document did not witness all the signatures to the

trust agreement. Dkt. 60-6 at 7. And she has introduced testimony that she

did not learn of the Trust’s existence —or her ownership of the shares trans-

ferred to the Trust—until November 2019. Dkt. 59-6 at 5-7.

Defendants argue that this evidence should be disregarded because tax

documents prepared on Plaintiff’s behalf prior to 2019 reference the Trust.*

But the evidence of record does not compel the conclusion that Plaintiff was

aware of those documents. For example, Plaintiff has presented testimony

that Chris Conine, the accountant who prepared her tax returns (and who was

also the accountant for Defendant Andrew Allen and the HW Allen

*Dkt. 55 at 14-15.

wi

Case No. 21-cv-345

Company), did not ordinarily communicate directly with Plaintiff. She has

presented evidence that she only saw portions of the tax documents prepared

on her behalf. Dkt. 59-6 at 10-11. And she has presented evidence that she

may not have received the K-1 forms used in preparing of her tax returns. See

Dkt. 59-2 at 13, 16 (indicating that Mr. Conine, who prepared the K-1 forms

for the HW Allen Company’s shareholders and sent them to the Company

for distribution, could have obtained Plaintiff’s K-1 forms without receiving

them from Plaintiff). This evidence is sufficient to create a genuine dispute

as to whether Plaintiff knew of the Trust’s creation prior to 2019.

Defendants further argue that, even if Plaintiff lacked actual

knowledge of the contents of the tax returns and the K-1 forms supporting

those returns, she is legally precluded from taking a position in this lawsuit

that contradicts the position taken in those documents. Dkt. 55 at 16. The

Court is not persuaded that Plaintiff can be bound by the contents of her tax

returns when there is a factual dispute as to whether she was aware of those

contents. See Smith v. Baptist Found. of Oklahoma, 2002 OK 57, J¥ 20-21, 50

P.3d 1132, 1143 (concluding summary judgment was inappropriate where

there was a question of fact as to whether an individual had received the tax

returns suggesting he had been harmed, as well as whether the returns would

have alerted him of wrongdoing). Nor is the Court convinced that the doc-

trine of tax estoppel would be applicable under the circumstances presented

here: The doctrine of tax estoppel is intended to “prevent parties from taking

inconsistent and situationally expedient positions on matters on which they

are required to be truthful.” Platt as co-trustees of Platt Fam. Artwork Tr. v.

Michaan, 695 F. Supp. 3d 420, 444 (S.D.N.Y. 2023) (preventing the plaintiffs

from disclaiming a representation that was “made to avoid costly and lengthy

estate tax proceedings”). Defendants have cited no authority suggesting this

5 See Dkt. 59-2 at 3-4 (indicating Mr. Conine discussed Plaintiff’s tax matters with

Defendant Andrew Allen); éd. at 5, 13 (indicating that Mr. Conine communicated solely

with Plaintiff’s husband regarding their joint returns and communicated solely with An-

drew Allen regarding Trust issues).

Case No. 21-cv-345

doctrine should be used to bind unsuspecting parties to fraudulent transac-

tions orchestrated without their knowledge or participation.

Furthermore, even if the evidence did establish that Plaintiff was

aware of the Trust’s existence, that is not, by itself, sufficient to establish that

Plaintiff was aware of the specific harm done to her. The harm alleged in this

case is not the mere existence of a trust created for the benefit of Plaintiff’s

children; it is the fraudulent creation of the particular Trust at issue in this

case, combined with the fraudulent transfer of shares from Plaintiff to the

Trust without Plaintiff’s knowledge or consent. Defendants have not pre-

sented any evidence that, if Plaintiff knew that a trust existed by referencing

her tax returns, she necessarily would have been on notice of the fraudulent

misconduct and misappropriation that caused her harm.° See Smith, 2002 OK

57, FJ 20-21, 50 P.3d at 1143 (reversing grant of summary judgment where

the tax returns may not have alerted the plaintiff of defendant’s conduct). A

question of fact remains as to what Plaintiff knew and when, and summary

judgment is therefore inappropriate.

Ina final bid to defeat Plaintiff’s allegations, Defendants argue that the

doctrine of judicial estoppel precludes Plaintiff from claiming that she was

unaware of either her ownership interest in the HW Allen Company or the

subsequent transfer of that interest. Defendants claim that, because Plaintiff

acknowledged her ownership of stock in the Company as her “separate prop-

erty” during divorce proceedings held in July of 2018, she cannot now claim

that she was unaware of the full extent of her ownership in the Company at

that time. Dkt. 55 at 17-19. But there are two categories of stock at issue here:

two shares of stock gifted to Plaintiff by her grandmother (which Plaintiff was

° In fact, the record suggests that the Parties were involved in the creation of other

trusts, the legitimacy of which does not appear to be in dispute. See Dkt. 59-7 at 3-4 (indi-

cating that Plaintiff had been gifted stock in publicly traded companies, and that the stock

had been placed in a trust for Plaintiff’s benefit). Thus, even if Plaintiff was aware of the

references to a trust within the tax returns, a question of fact remains as to whether she was

on notice of the existence of the fraudulently created Trust. .

Case No. 21-cv-345

aware of in 2018); and over two hundred shares gifted to her from her grand-

father (which Plaintiff was allegedly not aware of prior to 2019). Dkt. 59-6 at

5-13.’ Plaintiff has presented evidence that her statements during the Texas

proceedings referred to the two shares she received from her grandmother,

not the 200-plus shares that were ultimately transferred to the Trust. Jd. De-

fendants have not pointed to any evidence demonstrating that the statements

made during the divorce proceedings referred to the shares gifted by Plain-

tiff’s grandfather, nor have they pointed to any legal authority requiring this

Court to assume that Plaintiff was aware of the full scope of her ownership

interest in 2018. Absent such evidence or authority, the Court must decline

Defendants’ invitation to treat the representations made in the 2018 divorce

proceedings as conclusive proof that Plaintiff knew and understood that she

owned more than two shares in the Company at the time of her divorce.

In sum, Plaintiff has presented sufficient evidence to create a question

of fact as to when she learned of the creation of the Trust and the fraudulent

transfer of her stock. Although Defendants challenge this evidence, their ar-

guments do little more than emphasize that questions of the credibility of tes-

timony and the weight that should be afforded to evidence remain at issue

here. These questions are for the jury, not this Court, to determine. Because

the date when Plaintiff first learned, or should have learned, of her injury re-

mains a disputed question of fact, Defendants’ Motion for Summary Judg-

ment [Dkt. 55] is DENIED.

In.

Defendant HW Allen Company argues that, even if Plaintiff’s claims

are not time-barred, judgment should nevertheless be entered in its favor be-

cause it is not responsible for the misappropriation of Plaintiff’s shares, the

creation of the Trust, or the damages that resulted from that misconduct.

Dkt. 56 at 4-6. Plaintiff disagrees, arguing that the Company’s officers were

responsible for the wrongdoing that gave rise to this action, and that the

” Defendant Andrew Allen recognizes the two groups of shares. See Dkt. 59-7 at 4.

Case No. 21-cv-345

officers of the Company had a duty to ensure the propriety of all stock trans-

fers. Dkt. 60 at 7.

To the extent the Company seeks summary judgment on Plaintiff’s

claims of conversion and unjust enrichment, the Court agrees with the Com-

pany. The Amended Complaint contains only sparse allegations regarding the

Company’s involvement in the alleged misconduct. Dkt. 7. Plaintiff does not

allege that the Company itself was enriched by the misappropriation of Plain-

tiff’s shares or the creation of the Trust, nor has she presented evidence that

the Company benefitted from the wrongdoing; accordingly, her claims for un-

just enrichment must fail. Cf Burlington N. & Santa Fe Ry. Co. ». Grant, 505

F.3d 1013, 1030 (10th Cir. 2007) (reversing dismissal of unjust enrichment

claim where the plaintiff argued the defendant was saved an expense as a re-

sult of its wrongdoing).°* Similarly, Plaintiff’s conversion claim cannot survive

because Plaintiff has not presented evidence that the Company itself diverted

Plaintiff’s shares for its own benefit. Emcasco Ins. Co. v. CE Design, Ltd., 784

F.3d 1371, 1379 (10th Cir. 2015) (recognizing that, under Oklahoma law, a

plaintiff must show that the defendant intentionally diverted property for its

own benefit to establish a claim for conversion). And, although there are cir-

cumstances where a company can be held liable for the tortious actions of its

agents,’ Plaintiff has presented no evidence that would permit the Court to

hold the Company liable for the torts of the remaining Defendants. Judgment

in the Company’s favor is therefore GRANTED with respect to Plaintiff’s

unjust enrichment and conversion claims.

The Court reaches a different conclusion with respect to the Plain-

tiff’s claim for declaratory judgment. Plaintiff seeks, among other things, an

8 Cf also City of Tulsa v. Bank of Oklahoma, N.A., 2011 OK 83, 719, 280 P.3d 314,

319 (recognizing that a plaintiff cannot recover for unjust enrichment without showing the

unfair enrichment of another).

° E.g., Hitch Enterprises, Inc. ». Cimarex Energy Co., 859 F. Supp. 2d 1249, 1265

(W.D. Okla. 2012) (recognizing that a principal may be held liable for acts performed by an

agent within the scope of the agency relationship).

Case No. 21-cv-345

inspection of the Company’s books and an injunction precluding the Com-

pany from taking any further action with respect to the ownership interests

allegedly misappropriated. Dkt. 7 at 13-14. Although the precise contours of

the relief Plaintiff seeks are unclear, Oklahoma law generally recognizes that

corporations are proper parties in cases seeking relief of the type sought here.

E.g., Egleston v. Chesapeake Energy Corp., 2015 OK CIV APP 66, 412, 377 P.3d

1274, 1278 (recognizing that a shareholder may bring an action to compel in-

spection of corporate records); Hoover ». Fox Rig & Lumber Co., 1948 OK 1, J

15, 199 Okla. 672, 675, 189 P.2d 929, 932 (addressing claim seeking writ of

mandamus to permit plaintiff to examine defendant corporation’s books and

records). Indeed, it is not clear how the Court could afford the relief Plaintiff

is requesting without the Company’s participation. The Court therefore DE-

NIES Defendant’s motion with respect to Plaintiff’s claim for declaratory

judgment.

LIT,

For the reasons set forth above, a question of fact exists as to whether

Plaintiff’s claims for unjust enrichment, conversion, and declaratory judg-

ment are time-barred. Defendant HW Allen Company, however, has estab-

lished that it is entitled to judgment in its favor with respect to Plaintiff’s

claims for unjust enrichment and conversion. Accordingly, Defendants’ joint

Motion for Summary Judgment is [Dkt. 55] is DENIED, and Defendant

HW Allen Company’s Motion for Summary Judgment [Dkt. 56] is

GRANTED IN PART AND DENIED IN PART.

DATED this 25th day of September 2024.

wd Morn —

JounD.RussEIL

United States District Judge

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