Oklahoma bar journal, 03/03/2012, v.83 no.7

              Volume 83 u No. 7 u March 3, 2012
490 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
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Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 491
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492 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
Volume 78 u No. 35 u Dec. 22, 2007
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Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 493
contents March 3, 2012 • Vol. 83 • No. 7
Oklahoma Bar Association
page
table of
491 Events Calendar
494 Index to Court Opinions
495 Supreme Court Opinions
506 Court of Civil Appeals Opinions
531 Disposition of Cases Other Than by Publication
494 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
Index To Opinions Of Supreme Court
2012 OK 16 RE: Suspension of Certificates of Certified Shorthand Reporters. No. SCAD-
2012-5.................................................................................................................................................... 4 9 5
2012 OK 14 DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, Plaintiff/
Appellee, v. THERON MATTHEWS, Defendant/Appellant, and CHRISTINA A.
MATTHEWS; JOHN DOE; JANE DOE; AVB f/k/a ARKANSAS VALLEY STATE
BANK; and CHASE BANK USA, N.A., Additional Defendants. No. 108,427........................... 4 9 5
2012 OK 15 DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE, Plaintiff/
Appellee, v. CORY L. RICHARDSON, Defendant/Appellant, and ERNESTINE
RICHARDSON A/K/A ERNESTINE V. RICHARDSON, JOHN DOE, JANE DOE,
ARGENT MORTGAGE COMPANY, LLC, CITIFINANCIAL SERVICES, INC., Defen-dants.
No. 109,999............................................................................................................................... 5 0 0
Index To Orders of Court of Civil Appeals
2012 OK CIV AP 11 DON HONEYWELL, Plaintiff, vs. GADA BUILDERS, INC., LARRY
BRANNON PLUMBING & MECHANICAL, INC., and HUGHES ELECTRIC, INC.,
Defendants, and LARRY BRANNON PLUMBING & MECHANICAL, INC., and GADA
BUILDERS, INC., Third-Party Plaintiffs/Appellees, vs. GASTITE, a division of TITE-FLEX,
a foreign corporation, Third-Party Defendant/Appellant. Case No. 109,277................ 5 0 6
2012 OK CIV AP 12 CLIFTON GENTRY, Petitioner, vs. BERRY MACHINE & TOOL CO.,
INC. and THE WORKERS’ COMPENSATION COURT, Respondents. Case No.
109,513................................................................................................................................................... 5 1 3
2012 OK CIV AP 10 IN RE THE MARRIAGE OF: JOAN PLUMLEE, Petitioner/Appel-lee,
vs. PHILLIP PLUMLEE, Respondent/Appellant. Case No. 107,922.................................... 5 1 6
2012 OK CIV AP 14 NOEHMI RODRIGUEZ and JESUS MUNIZ, Plaintiffs/Appellees,
vs. MARIA GUTIERREZ-PEREZ, Defendant, and EQUITY INSURANCE COMPANY,
Garnishee/Appellant. Case No. 108,952.......................................................................................... 5 2 1
2012 OK CIV AP 13 NORTHWEST ROOFING SUPLY, INC., an Oklahoma corporation,
Plaintiff/Appellee, vs. ELEGANCE IN WOOD, LLC; ELTON RHOADES, JR. and
MALISSA M. RHOADES, Husband and Wife; and KEVIN JONES, Defendants/
Appellants. Case No. 107,676............................................................................................................. 5 2 3
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 495
2012 OK 16
RE: Suspension of Certificates of Certified
Shorthand Reporters.
No. SCAD-2012-5. February 27, 2012
ORDER
Pursuant to Rules 20(b) and 23(d), the State
Board of Examiners of Certified Shorthand
Reporters submitted the names of certified
shorthand reporters who have failed to pay the
2012 annual certificate renewal fee and/or to
report the 2011 continuing education, as listed
in the attached Exhibit, and recommended the
suspension of each reporter’s certificate by
order of this Court.
THEREFORE, IT IS HEREBY ORDERED that
the certificate of each of the certified shorthand
reporters listed on the attached Exhibit is and
shall remain suspended for failure to pay the
2012 annual certificate renewal fee and/or to
comply with the continuing education require-ments
for calendar year 2011 until further
order of this Court.
DONE BY ORDER OF THE SUPREME
COURT IN CONFERENCE this 27th day of
February, 2012.
/s/ Steven W. Taylor
CHIEF JUSTICE
ALL JUSTICES CONCUR.
EXHIBIT TO ORDER No. SCAD-2012-5
Rules 2 (b) and 23(d) of the State Board of
Examiners of Certified Shorthand Reporters,
20 O.S.2011, ch. 20, app. 1, require certified
shorthand reporters, on or before February
15th of each year, to pay the annual certificate
renewal fee authorized by 20 O.S.2011, § 1506
and to report the continuing education required
by 20 O.S.2011, § 1503.1 and operate to suspend
the certificates of reporters, effective February
16th of each year, who do not timely pay and/
or report.
The following persons have failed to pay the
annual certificate renewal fee for calendar year
2012.
1. Charyse Carmine Crawford, CSR #973
2. Lisa Ann Cromley, CSR #1840
3. Marjorie L. Miller, CSR #299
4. Joseph L. Welch, CSR #398
5. Cynthia Williams, CSR #1682
The following persons have failed to com-plete
and report continuing education for cal-endar
year 2011:
1. Charyse Carmine Crawford, CSR #973
2. Lisa Ann Cromley, CSR #1840
3. Joseph L. Welch, CSR #398
4. Cynthia Williams, CSR #1682
2012 OK 14
DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE, Plaintiff/
Appellee, v. THERON MATTHEWS,
Defendant/Appellant, and CHRISTINA A.
MATTHEWS; JOHN DOE; JANE DOE; AVB
f/k/a ARKANSAS VALLEY STATE BANK;
and CHASE BANK USA, N.A., Additional
Defendants.
No. 108,427. February 28, 2012
ON APPEAL FROM THE DISTRICT
COURT OF CREEK COUNTY
HONORABLE LAWRENCE W. PARISH
DISTRICT JUDGE
¶0 Appeal of a partial summary judgment
granted in Deutsche Bank National Trust Com-pany’s
favor against the Matthewses on August
20, 2009, memorialized by minute order. A Par-tial
Journal Entry of Judgment was filed on
May 26, 2010. The Matthews appeal this sum-mary
judgment arguing Deutsche Bank Nation-al
Trust Company as Trustee for J.P. Morgan
Mortgage Acquisition Trust 2007-CH3 failed to
demonstrate standing.
REVERSED AND REMANDED WITH
INSTRUCTIONS
Supreme Court Opinions
Manner and Form of Opinions in the Appellate Courts;
See Rule 1.200, Rules — Okla. Sup. Ct. R., 12 O.S. Supp. 1996 (1997 T. 12 Special Supplement)
496 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
Theron T. Matthews, Pro Se, Mounds, Oklaho-ma,
for Defendant/Appellant.
Sally E. Garrison, BAER, TIMBERLAKE,
COULSON & CATES, P.C., Oklahoma City,
Oklahoma, for Plaintiff/Appellee.
COMBS, J.
FACTUAL AND PROCEDURAL HISTORY
¶1 In a petition filed on January 14, 2009,
Deutsche Bank National Trust company, as
Trustee for J.P. Morgan Mortgage Acquisition
Trust 2007-CH3 (hereinafter Deutsche Bank)
filed a foreclosure action against Theron Mat-thews
(Matthews). Deutsche Bank claimed at
that time to hold the note and mortgage.
Deutsche Bank claims the note and mortgage
were indorsed in blank. However from the face
of the note attached to the Petition, no such
indorsement is found. Chase Bank USA, N.A.,
was the original lender. Deutsche Bank, filed
on June 18, 2009, a document entitled “Assign-ment
of Real Estate Mortgage,” dated June 9,
2009, with the County Clerk of Creek County.
This was some six months after the filing of the
foreclosure proceeding. A partial summary
judgment granted in Deutsche Bank’s favor
against the Matthews on August 20, 2009, was
memorialized by minute order. A Partial Jour-nal
Entry of Judgment was filed on May 26,
2010. The Matthewses appeal this summary
judgment arguing Deutsche Bank failed to
demonstrate standing.
STANDARD OF REVIEW
¶2 An appeal on summary judgment comes
to this court as a de novo review. Carmichael v.
Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. All
inferences and conclusions are to be drawn from
the underlying facts contained in the record and
are to be considered in the light most favorable
to the party opposing the summary judgment.
Rose v. Sapulpa Rural Water Co., 1981 OK 85, 621
P.2d 752. Summary judgment is improper if,
under the evidentiary materials, reasonable indi-viduals
could reach different factual conclu-sions.
Gaines v. Comanche County Medical Hospi-tal,
2006 OK 39, ¶4, 143 P.3d 203, 205.
ANALYSIS
¶3 Appellant argues Appellee does not have
standing to bring this foreclosure action. The
note attached to Deutsche Bank’s motion for
summary judgment, filed June 25, 2009, con-tained
two allonges. These were not included
with the note that was attached to its petition
filed on January 14, 2009. Both allonges are
dated January 9, 2007. The first allonge is a
special indorsement made by the lender, Chase
Bank USA, N.A., and is payable to Chase
Home Finance, LLC. It is signed by A. Young,
assistant secretary. The second allonge is a
blank indorsement, made by Chase Home
Finance, LLC, and is also signed by A. Young,
assistant secretary. Deutsche Bank states in its
motion for summary judgment that it brings
this action in its capacity as the holder and
owner of the note and mortgage at issue. How-ever,
in the same paragraph Deutsche Bank
states it acquired Chase Bank USA, N.A.’s
interest in the note and mortgage subsequent
to the filing of this action. Deutsche Bank also
attached an affidavit by an officer of Chase
Home Finance, LLC, executed May 6, 2009. The
officer merely states Deutsche Bank is the cur-rent
holder of the note and mortgage.
¶4 The crux of the entire issue presented to
this Court is the issue of standing. This Court
has previously held:
Standing, as a jurisdictional question, may
be correctly raised at any level of the judi-cial
process or by the Court on its own
motion. This Court has consistently held
that standing to raise issues in a proceed-ing
must be predicated on interest that is
“direct, immediate and substantial.” Stand-ing
determines whether the person is the
proper party to request adjudication of a
certain issue and does not decide the issue
itself. The key element is whether the party
whose standing is challenged has sufficient
interest or stake in the outcome.
Matter of the Estate of Doan, 1986 OK 15, ¶7, 727
P.2d 574, 576. In Hendrick v. Walters, 1993 OK
162, ¶ 4, 865 P.2d 1232, 1234, this Court also
held:
Respondent challenges Petitioner’s stand-ing
to bring the tendered issue. Standing
refers to a person’s legal right to seek relief
in a judicial forum. It may be raised as an
issue at any stage of the judicial process by any
party or by the court sua sponte. (emphasis
original)
Furthermore, in Fent v. Contingency Review
Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519,
this Court stated “[s]tanding may be raised at
any stage of the judicial process or by the court
on its own motion.” Additionally in Fent, this
Court stated:
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 497
Standing refers to a person’s legal right to
seek relief in a judicial forum. The three
threshold criteria of standing are (1) a
legally protected interest which must have
been injured in fact- i.e., suffered an injury
which is actual, concrete and not conjec-tural
in nature, (2) a causal nexus between
the injury and the complained-of conduct,
and (3) a likelihood, as opposed to mere
speculation, that the injury is capable of
being redressed by a favorable court deci-sion.
The doctrine of standing ensures a
party has a personal stake in the outcome
of a case and the parties are truly adverse.
Fent v. Contingency Review Board, 2007 OK 27,
¶7, 163 P.3d 512, 519-520. In essence, a plaintiff
who has not suffered an injury attributable to
the defendant lacks standing to bring a suit.
And, thus, “standing [must] be determined as
of the commencement of suit.” Lujan v. Defend-ers
of Wildlife, 504 U.S. 555, 570, n.5, 112 S.Ct.
2130, 2142, 119 L.Ed. 351 (1992).1
¶5 To commence a foreclosure action in Okla-homa,
a plaintiff must demonstrate it has a
right to enforce the note and, absent a showing
of ownership, the plaintiff lacks standing. Gill
v. First Nat. Bank & Trust Co. of Oklahoma City,
1945 OK 181, 159 P.2d 717.2 An Assignment of
the mortgage, however, is of no consequence
because under Oklahoma law, “[p]roof of own-ership
of the note carried with it ownership of
the mortgage security.” Engle v. Federal Nat.
Mortg. Ass’n, 1956 OK 176, ¶7, 300 P.2d 997, 999.
Therefore, in Oklahoma it is not possible to
bifurcate the security interest from the note.
BAC Home Loans Servicing, L.P. v. White, 2011
OK CIV APP 35, ¶ 10, 256 P.3d 1014, 1017.
Because the note is a negotiable instrument, it
is subject to the requirements of the UCC.
Thus, a foreclosing entity has the burden of
proving it is a “person entitled to enforce an
instrument” by showing it was “(i) the holder
of the instrument, (ii) a nonholder in posses-sion
of the instrument who has the rights of a
holder, or (iii) a person not in possession of the
instrument who is entitled to enforce the instru-ment
pursuant to Section 12A-3-309 or subsec-tion
(d) of Section 12A-3-418 of this title.” 12A
O.S. 2001, § 3-301.
¶6 The note, in which the Matthews prom-ised
to pay a sum certain to the order of Lender,
is a negotiable instrument pursuant to 12A O.S.
2001 §3-104(a). It may be indorsed specially to
be payable to an identified person or it may be
indorsed in blank to be payable to bearer. 12A
O.S. 2001, § 3-205(a) and (b)3.
¶7 To show you are the “holder” of the note
you must prove you are in possession of the
note and the note is either “payable to bearer”
(blank indorsement) or to an identified person
that is the person in possession (special indorse-ment).
4 Therefore, both possession of the note
and an indorsement on the note or attached
allonge are required in order for one to be a
“holder” of the note.
¶8 To be a “nonholder in possession who has
the rights of a holder” you must be in posses-sion
of a note that has not been indorsed either
by special indorsement or blank indorsement.
Basically, no negotiation has occurred because
the person now in possession did not become a
holder by lack of the note being indorsed as
mentioned. Negotiation is the voluntary or
involuntary transfer of an instrument by a per-son
other than the issuer to a person who
thereby becomes its holder. 12A O.S. 2001, § 3-
201. Transfer occurs when the instrument is
delivered by a person other than its issuer for
the purpose of giving to the person receiving
delivery the right to enforce the instrument. 12A
O.S. 2001, § 3-203. Delivery of the note would
still have to occur even though there is no nego-tiation.
Delivery is defined as the voluntary
transfer of possession. 12A O.S. 2001, § 1-
201(b)(15). The transferee would then be vested
with any right of the transferor to enforce the
note. 12A O.S. 2001, § 3-203(b). Some jurisdic-tions
have held without holder status and
therefore the presumption of a right to enforce,
the possessor of the note must demonstrate
both the fact of the delivery and the purpose of
the delivery of the note to the transferee in
order to qualify as the person entitled to
enforce. In re Veal, 450 B.R. 897, 912 (B.A.P. 9th
Cir. 2011). This would include showing the
note was transferred for the purpose of giving
to the person receiving delivery the right to
enforce the instrument. 12A O.S. 2001, § 3-203.
¶9 Here, Deutsche Bank is trying to show it
is a “holder” of the note and not that it is a
“nonholder in possession who has the rights of
a holder.” If Deutsche was trying to establish it
was a “nonholder in possession who has the
rights of a holder” an Assignment of Real
Estate Mortgage, like the one attached to its
motion for summary judgment and which also
expressly purports to transfer the note, might
be evidence of the purpose of a transfer if pos-session
of the note was established. However,
498 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
the Assignment of Real Estate Mortgage
attached to its motion for summary judgment
is executed on June 9, 2009, by a Vice President
of Chase Bank USA, N.A. The note attached to
its motion for summary judgment, however,
shows an allonge from Chase Bank USA, N.A.,
to Chase Home Finance, LLC. Further, this
purported transfer of the note occurred six
months after the action was commenced.
Deutsche Bank also by its own admission
states it acquired its interest in the note and
mortgage subsequent to the filing of this
action.
¶10 A plaintiff must show it became a “per-son
entitled to enforce” the note prior to the
filing of the foreclosure proceeding. There is no
evidence showing Deutsche Bank was a person
entitled to enforce the note prior to the filing of
the foreclosure proceeding. In fact, by its own
admission it acquired its interest subsequent to
the filing of the action. Therefore, we reverse
the granting of summary judgment by the trial
court with instructions to dismiss the case
without prejudice.
CONCLUSION
¶11 It is a fundamental precept of the law to
expect a foreclosing party to actually be in pos-session
of its claimed interest in the note, and
have the proper supporting documentation in
hand when filing suit, showing the history of
the note, so the defendant is duly apprised of
the rights of the plaintiff. This may be accom-plished
by demonstrating the party is a holder
of the instrument or a nonholder in possession
of the instrument who has the rights of a hold-er,
or a person not in possession of the instru-ment
who is entitled to enforce the instrument
pursuant to 12A O.S. 2001, § 3-309, or 12A O.S.
2001, § 3-418. Likewise, for the homeowners,
absent adjudication on the underlying indebt-edness,
the dismissal cannot cancel their obli-gation
arising from an authenticated note, or
insulate them from foreclosure proceedings
based on proven delinquency. See, U.S. Bank
National Association v. Kimball, 27 A.3d 1087, 75
UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and
Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d
895, 912 N.Y.S.2d 239 (2010).
REVERSED AND REMANDED WITH
INSTRUCTIONS
¶12 CONCUR: TAYLOR (This Court’s deci-sion
in no way releases or exonerates the debt
owed by the defendants on this home.), C.J.,
KAUGER (joins Taylor, J.), WATT, EDMOND-SON,
REIF, COMBS, JJ.
¶13 DISSENT: WINCHESTER (joins Gur-ich,
J.), GURICH (by separate writing), JJ.
¶14 RECUSED: COLBERT, V.C.J.
1. The dissenting opinion in this matter relies upon Justice Opala’s
concurring opinion in Toxic Waste Impact Group, Inc. v. Leavitt, 1994 OK
148, 890 P.2d 906, for the proposition that standing is not a jurisdic-tional
question. Justice Opala’s concurring opinion was not the major-ity
opinion of this Court and as such “a minority opinion has no bind-ing,
precedential value.” 20 Am.Jur. 2d Courts §138.
2. This opinion occurred prior to the enactment of the UCC. It is,
however, possible for the owner of the note not to be the person enti-tled
to enforce the note if the owner is not in possession of the note.
(See the REPORT OF THE PERMANENT EDITORIAL BOARD FOR
THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNI-FORM
COMMERCIAL CODE TO SELECTED ISSUES RELATING TO
MORTGAGE NOTES (NOVEMBER 14, 2011)).
3. 12A O.S.2001 §3-205(a) and (b) provide:
(a) If an indorsement is made by the holder of an instrument, whether
payable to an identified person or payable to bearer, and the indorse-ment
identifies a person to whom it makes the instrument payable, it
is a “special indorsement”. When specially indorsed, an instrument
becomes payable to the identified person and may be negotiated only
by the indorsement of that person. The principles stated in Section
12A-3-110 of this title apply to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is
not a special indorsement, it is a “blank indorsement”. When indorsed
in blank, an instrument becomes payable to bearer and may be negoti-ated
by transfer of possession alone until specially indorsed.
4. 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205.
GURICH, J., with whom WINCHESTER, J.
joins, dissenting:
¶1 I respectfully dissent. The majority states
that “[t]o commence a foreclosure action in
Oklahoma, a plaintiff must demonstrate it has
a right to enforce the note, and absent a show-ing
of ownership, the plaintiff lacks standing,”
citing Gill v. First Nat. Bank & Trust Co., 1945
OK 181, 159 P.2d 717.1 See Majority Op. ¶ 5. I
agree that in any foreclosure action a party
must demonstrate it is the proper party to
request adjudication of the issues. However,
the issue of whether a party is the proper party
to request adjudication of the issues is a real-party-
in-interest issue, not an issue of “stand-ing,”
as the majority frames it. See Toxic Waste
Impact Group, Inc. v. Leavitt, 1994 OK 148, 890
P.2d 906 (Opala, J., concurring). Justice Opala
framed the issue correctly in Toxic Waste Impact
Group:
Standing in the federal legal system is
imbued with a constitutional/jurisdiction-al
dimension, while in the body of state law
it fits under the rubric of ordinary procedure.
The U.S. Constitution, Article III, has long
been held to require that a “case” or “con-troversy”
is essential to invoke federal
judicial jurisdiction and that a person’s
competence to bring an action is a core
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 499
component of standing in a case-or-contro-versy
inquiry. It is for this reason that
standing is an integral part of the mecha-nism
for invoking the federal judiciary’s
power.
Oklahoma’s fundamental law places no
restraint on the judiciary’s power analo-gous
to the federal case-or-controversy
requirement. Under the earlier Code of
Civil Procedure the suit had to be brought
by the real party in interest. That require-ment
has always been non-jurisdictional. If
a state court proceeded to adjudicate a
claim pressed by one not in that status, its
decision was not fraught with jurisdiction-al
infirmity but rather regarded as errone-ous
for want of proof to establish an impor-tant
element of the claim. An error in this
category is waivable at the option of the
defendant; and, if not asserted on appeal,
the reviewing court may reach the merits
of the case despite a plaintiff’s apparent
lack of standing at nisi prius.
Toxic Waste Impact Group, Inc. v. Leavitt,
1994 OK 148, 890 P.2d 906 (Opala, J., concur-ring,
¶¶ 2-3) (emphasis added).
¶2 The majority in this case cites Hendrick v.
Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234
and Fent v. Contingency Review Board, 2007
OK 27, n.19, 163 P.3d 512, 519 for the proposi-tion
that “standing may be raised at any stage
of the judicial process or by the court on its
own motion.” See Majority Op. ¶ 4. Those
cases cite Matter of the Estate of Doan, 1986 OK
15, ¶ 7, 7272 P.2d 574, as authority for this
proposition. Arguably, however, Doan mis-states
the law:
Ever since the Code of Civil Procedure was
replaced in 1984 by the Pleading Code, our
nomenclature for identifying the party
entitled to sue, which began to follow that
of federal jurisprudence, has used “stand-ing”
as if it were a functional equivalent of
the earlier procedural terms of art — real
party in interest, one with appealable inter-est,
one occupying the aggrieved-party or
pecuniary-interest status. It was during
this transition that one of our opinions
inadvertently referred to “standing” in
terms of a jurisdictional requirement, thus
creating the misimpression that the term
has a jurisdictional dimension. Oklahoma’s
constitution has no case-or-controversy
clause. Standing is hence to be viewed as
an adjective-law concept. The inadvertent
reference to the contrary should be treated
as ineffective to alter standing’s true char-acter
in the body of our procedural law.
. . . .
I concur in today’s opinion and in the dis-position
of the cause. If I were writing for
the court, I would additionally declare that
Doan’s inadvertent reference to federal law
is to be viewed as withdrawn. Lujan’s tri-partite
standing test, which we adopt today,
must be treated as having been received
sans its federal jurisdictional baggage.
See Toxic Waste Impact Group, 1994 OK 148
(Opala, J., concurring ¶ 4).
¶3 Additionally, both Hendrick and Fent
were original actions in this Court. As such,
“standing” could have been raised at any point
by this Court sua sponte. However, in a pro-ceeding
in District Court, because it is a non-jurisdictional
issue, failure to assert that the
Plaintiff is not the real party in interest may be
waived. See Liddell v. Heavner, 2008 OK 6, n.5,
180 P.3d 1191 (Opala, J., majority Op.); see also
12 O.S. 2012 § 2008(D).
¶4 In this case, the facts demonstrate that the
Defendant argued below that Plaintiff did not
have a stake in the foreclosure and was not the
real party in interest. As such, the issue was
properly appealed. However, the facts also
demonstrate that the Plaintiff was in fact the
real party in interest and was the proper party
to pursue the foreclosure. 12 O.S. 2012 § 2017.
As such, I would affirm the trial court.
¶5 The majority also holds that a foreclosing
party must have the “proper supporting docu-mentation
in hand when filing suit.” See Majority
Op. ¶ 10 (emphasis added). Oklahoma plead-ing
procedure does not require a plaintiff to
have all evidence necessary to prevail on its
claim at the time of the filing. Rather, what is
required is a “short and plain statement of the
claim showing that the pleader is entitled to
relief.” 12 O.S. 2012 § 2008(A) (1). Additionally,
12 O.S.2012 § 2011(B) (3) provides that an attor-ney
filing anything with the court certifies that
to “the best of the person’s knowledge, infor-mation
and belief, formed after an inquiry
reasonable under the circumstances . . . the
allegations and other factual contentions have
evidentiary support or, if specifically so identi-fied,
are likely to have evidentiary support after a
reasonable opportunity for further investigation or
500 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
discovery.” 12 O.S. 2012 § 2011(B)(3) (emphasis
added).2
¶6 Mortgage foreclosures, like other civil
actions, allow the parties to continue to inves-tigate
and discover evidence up until the time
of judgment. In this case, the Plaintiff contin-ued
to investigate its claim up until the time of
summary judgment. At the time of summary
judgment it offered sufficient proof to the trial
court that it had the right to foreclose on the
mortgage.3
¶7 Plaintiff satisfied its burden of proof, the
Defendant failed to file any response, and the
trial court was correct in sustaining the motion
and granting judgment to the Plaintiff. On
appeal where no evidence indicates otherwise,
there is a presumption that the judgment of the
trial court conforms to the proof present at the
trial. Gilkes v. Gilkes, 1964 OK 28, 389 P.2d 503.
I cannot agree with the majority’s holding that
the plaintiff must have the “proper supporting
documentation in hand when filing suit”
because no authority states such and the Okla-homa
pleading code requires otherwise. The
procedure imposed by the majority in this case,
will result in delay, will not affect the inevitable
outcome of foreclosure, and will increase the
homeowner’s debt.4
1. In Gill, the plaintiff brought an action to foreclose a mortgage on
real property. There was no discussion in the case of whether the plain-tiff
had standing to bring the action or whether the plaintiff was the real
party in interest. In fact, the case was tried to the Court, and the appeal
turned on the sufficiency of evidence presented at trial. The Gill decision
stands for the proposition that the assignment of the note carries with it
an assignment of the mortgage. It is not relevant to the standing analysis,
nor does it stand for the proposition that the plaintiff must prove at the
time of filing that it has a right to enforce the note.
2. Likewise, while I agree that the UCC applies in this case because
the note is a negotiable instrument, the UCC does not require that a
foreclosing entity prove at the time of filing that it is the person entitled
to enforce the instrument.
3. Rule 13 of the Rules for District Courts permits a party to file
evidentiary material with a motion for summary judgment. The Rule
sets out a procedure for challenging affidavits that are attached to the
motion. In this case, the Plaintiff included an affidavit of an officer,
verifying that Plaintiff was the holder of the mortgage and the Note in
question, and no challenge was made to that affidavit. Further, the
Plaintiff presented a copy of the endorsed Note as an exhibit to its
Motion for Summary Judgment. Defendant/Appellant failed to chal-lenge
the authenticity of the original document and pursuant to 12 O.S.
§ 3003 and 12A O.S. §3-308(a), a copy is admissible.
4. Rather than dismiss the petition, on remand, the trial court may
allow the Plaintiff to amend its petition. HSBC Bank USA v. Lyon, 2012
OK 10, ¶ 1, __ P.3d __.
2012 OK 15
DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE, Plaintiff/
Appellee, v. CORY L. RICHARDSON,
Defendant/Appellant, and ERNESTINE
RICHARDSON A/K/A ERNESTINE V.
RICHARDSON, JOHN DOE, JANE DOE,
ARGENT MORTGAGE COMPANY, LLC,
CITIFINANCIAL SERVICES, INC.,
Defendants.
No. 109,999. February 28, 2012
ON APPEAL FROM THE DISTRICT
COURT OF OKLAHOMA COUNTY
HONORABLE DANIEL OWENS,
DISTRICT JUDGE
¶0 Appeal of a summary judgment granted
to Deutsche Bank National Trust Company, as
trustee, against Cory L. Richardson on June 13,
2011. This Court retained the matter on Sep-tember
19, 2011. Richardson appeals the grant-ing
of Summary Judgment asserting Deutsche
Bank National Trust Company, as trustee, did
not have standing to bring the action.
REVERSED AND REMANDED WITH
INSTRUCTIONS
Steve A. Heath, Matthew Hudspeth, BAER,
TIMBERLAKE, COULSON & CATES, P.C.,
Tulsa, Oklahoma, for Plaintiff/Appellee
Jon H. Patterson, BRADLEY ARANT BOULT
CUMMINGS LLP, Birmingham Alabama, for
Plaintiff/Appellee.
Steven W. Crow, Daniel Delluomo, DELLUO-MO
& CROW, Oklahoma City, Oklahoma, for
Defendant/Appellants.
COMBS, J.
FACTUAL AND PROCEDURAL HISTORY
¶1 In a petition filed on October 15, 2010,
Deutsche Bank National Trust Company, as
trustee, (hereinafter Deutsche Bank), alleging
to be the “present holder” of the note and
mortgage, initiated a foreclosure action against
Cory L. Richardson (hereinafter Richardson). A
review of the note, filed as an exhibit to the
Motion for Summary Judgment, filed May 26,
2011, reveals an undated blank indorsement.
This blank indorsement was filed with the
lower court for the first time in the Motion for
Summary Judgment. Nowhere in the original
petition did Deutsche Bank reference the
undated blank indorsement.
¶2 WMC Mortgage Corporation (hereinafter
WMC) was the original lender. Deutsche Bank
filed with the County Clerk of Oklahoma
County, a document entitled “Assignment of
Real Estate Mortgage” on February 22, 2011.
This document, which was dated February 15,
2011, claimed the assignment to be effective as
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 501
of December 28, 2010. This was four months
after the filing of the petition to foreclose.1
Additionally, this Assignment of Mortgage
executed by Mortgage Electronic Registration
Systems, Inc. (MERS), as nominee for WMC and
its successors and assigns, purportedly trans-ferred
the grantor’s interest to Deutsche Bank as
the trustee of WMC and was signed by a Vice
President of MERS, Inc. There was only a mini-mal
reference to the “note, debts and claims
thereby secured. . .” in this assignment of mort-gage.
A summary judgment was granted in
Deustche Bank’s favor against Richardson,
dated July 1, 2011, signed by the trial judge on
September 19, 2011, and filed on September 21,
2011. All were memorialized by a final journal
entry of judgment order. Richardson appealed
this summary judgment asserting Deutsche
Bank failed to demonstrate standing.
STANDARD OF REVIEW
¶3 An appeal on summary judgment comes to
this court as a de novo review. Carmichael v. Beller,
1996 OK 48, ¶2, 914 P.2d 1051, 1053. All infer-ences
and conclusions are to be drawn from the
underlying facts contained in the record and are
to be considered in the light most favorable to
the party opposing the summary judgment. Rose
v. Sapulpa Rural Water Co., 1981 OK 85, 621 P.2d
752. Summary judgment is improper if, under
the evidentiary materials, reasonable individu-als
could reach different factual conclusions.
Gaines v. Comanche County Medical Hospital, 2006
OK 39, ¶4, 143 P.3d 203, 205.
ANALYSIS
¶4 Appellant argues Appellee does not have
standing to bring this foreclosure action.
Although Appellee has argued it holds the
note, the record demonstrates conflicting evi-dence
as to when Appellee became entitled to
enforce the note. Appellee has presented evi-dence
of an indorsement in blank, not at the
time of filing the original petition (October 15,
2010), but attached as an exhibit to the motion
for summary judgment filed May 26, 2011. The
purported “assignment of mortgage” was filed
on February 15, 2011, claiming to be effective
December 28, 2010, four months after the filing
of the original petition to foreclose.
¶5 The issue presented to this Court is stand-ing.
This Court has previously held:
Standing, as a jurisdictional question, may
be correctly raised at any level of the judi-cial
process or by the Court on its own
motion. This Court has consistently held
that standing to raise issues in a proceed-ing
must be predicated on interest that is
“direct, immediate and substantial.” Stand-ing
determines whether the person is the
proper party to request adjudication of a
certain issue and does not decide the issue
itself. The key element is whether the party
whose standing is challenged has sufficient
interest or stake in the outcome.
Matter of the Estate of Doan, 1986 OK 15, ¶7, 727
P.2d 574, 576. In Hendrick v. Walters, 1993 OK
162, ¶ 4, 865 P.2d 1232, 1234, this Court also
held:
Respondent challenges Petitioner’s stand-ing
to bring the tendered issue. Standing
refers to a person’s legal right to seek relief
in a judicial forum. It may be raised as an
issue at any stage of the judicial process by any
party or by the court sua sponte. (emphasis
original)
Furthermore, in Fent v. Contingency Review
Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519,
this Court stated “[s]tanding may be raised at
any stage of the judicial process or by the court
on its own motion.” Additionally in Fent, this
Court stated:
Standing refers to a person’s legal right to
seek relief in a judicial forum. The three
threshold criteria of standing are (1) a
legally protected interest which must have
been injured in fact- i.e., suffered an injury
which is actual, concrete and not conjec-tural
in nature, (2) a causal nexus between
the injury and the complained-of conduct,
and (3) a likelihood, as opposed to mere
speculation, that the injury is capable of
being redressed by a favorable court deci-sion.
The doctrine of standing ensures a
party has a personal stake in the outcome
of a case and the parties are truly adverse.
Fent v. Contingency Review Board, 2007 OK 27,
¶7, 163 P.3d 512, 519-520. In essence, a plaintiff
who has not suffered an injury attributable to
the defendant lacks standing to bring a suit.
And, thus, “standing [must] be determined as
of the commencement of suit; . . .” Lujan v.
Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112
S.Ct. 2130, 2142, 119 L.Ed. 351 (1992).2
¶6 To commence a foreclosure action in Okla-homa,
a plaintiff must demonstrate it has a
right to enforce the note and, absent a showing
of ownership, the plaintiff lacks standing. Gill v.
First Nat. Bank & Trust Co. of Oklahoma City, 1945
502 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
OK 181, 159 P.2d 717.3 An assignment of the
mortgage, however, is of no consequence because
under Oklahoma law, “[p]roof of ownership of
the note carried with it ownership of the mort-gage
security.” Engle v. Federal Nat. Mortg. Ass’n,
1956 OK 176, ¶7, 300 P.2d 997, 999. Therefore, in
Oklahoma it is not possible to bifurcate the secu-rity
interest from the note. BAC Home Loans Ser-vicing,
L.P. v. White, 2011 OK CIV APP 35, ¶ 10,
256 P.3d 1014, 1017. Because the note is a nego-tiable
instrument, it is subject to the require-ments
of the UCC. A foreclosing entity has the
burden of proving it is a “person entitled to
enforce an instrument” by showing it was “(i)
the holder of the instrument, (ii) a nonholder in
possession of the instrument who has the rights
of a holder, or (iii) a person not in possession of
the instrument who is entitled to enforce the
instrument pursuant to Section 12A-3-309 or
subsection (d) of Section 12A-3-418 of this title.”
12A O.S. 2001 §3-301.
¶7 To demonstrate you are the “holder” of
the note you must establish you are in posses-sion
of the note and the note is either “payable
to bearer” (blank indorsement) or to an identi-fied
person that is the person in possession
(special indorsement).4 Therefore, both posses-sion
of the note and an indorsement on the
note or attached allonge5 are required in order
for one to be a “holder” of the note.
¶8 To be a “nonholder in possession who has
the rights of a holder” you must be in posses-sion
of a note that has not been indorsed either
by special indorsement or blank indorsement.
Negotiation is the voluntary or involuntary
transfer of an instrument by a person other
than the issuer to a person who thereby becomes
its holder. 12A O.S. 2001, § 3-201. Transfer
occurs when the instrument is delivered by a
person other than its issuer for the purpose of
giving to the person receiving delivery the
right to enforce the instrument. 12A O.S. 2001,
§ 3-203. Delivery of the note would still have to
occur even though there is no negotiation.
Delivery is defined as the voluntary transfer of
possession. 12A O.S. 2001, § 1-201(b)(15). The
transferee would then be vested with any right
of the transferor to enforce the note. 12A O.S.
2001, 3-203(b). Some jurisdictions have held
that without holder status and therefore the
presumption of a right to enforce, the pos-sessor
of the note must demonstrate both the
fact of the delivery and the purpose of the
delivery of the note to the transferee in order
to qualify as the person entitled to enforce. In
re Veal, 450 B.R. 897, 912 (B.A.P. 9th Cir. 2011).
See also, 12A O.S. 2001, § 3-203.
¶9 In the present case, Appellee has present-ed
evidence in support of the motion for sum-mary
judgment of an indorsed-in-blank note,
and an “Assignment of Mortgage” both argu-ably
obtained after the filing of the petition.
Appellee must prove it is the holder of the note
or the nonholder in possession who has the
rights of a holder prior to the filing of the fore-closure
proceeding. In the present matter the
timeliness of the transfer is a disputed fact
issue. Since Deutsche Bank did not file the
blank indorsement until it filed its motion for
summary judgment it is impossible to deter-mine
from the record when Deutsche Bank
acquired its interest in the underlying note.
¶10 The assignment of a mortgage is not the
same as an assignment of the note. If a person
is trying to establish they are a nonholder in
possession who has the rights of a holder, they
must bear the burden of establishing their sta-tus
as a nonholder in possession with the rights
of a holder. Appellee must establish delivery of
the note as well as the purpose of that delivery.
In the present case, it appears Appellee is try-ing
to use the assignment of mortgage in order
to establish the purpose of delivery. The assign-ment
of mortgage purports to transfer “For
value received, the undersigned, Mortgage
Electronic Registration Systems, Inc., as nomi-nee
for WMC and its successors and assigns
does hereby assign, transfer and set over unto
Deutsche Bank National Trust Company, as
Trustee of MASTR 2007-02, that certain real
estate mortgage dated August 3, 2006, granted
by Cory L. Richardson and Ernestine Richard-son,
a/k/a Ernestine V. Richardson, husband
and wife “together with the note, debts and
claims thereby secured, covering the following
described real estate. . .” We do not address the
issue of whether MERS, as nominee of WMC
had the authority to assign the note in question
as the date of the assignment is well after the
filing of the petition.
¶11 Appellee must show it became a “person
entitled to enforce” prior to the filing of the
foreclosure proceeding. There is a question of
fact as to when and if this occurred, and thus
summary judgment is not appropriate. There-fore,
we reverse the granting of summary judg-ment
by the trial court and remand back for
further determinations. If it is determined
Deutsche Bank became a person entitled to
enforce the note as either a holder or nonholder
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 503
in possession who has the rights of a holder
after the foreclosure action was filed, then the
case may be dismissed without prejudice and
the action may be re-filed in the name of the
proper party.
CONCLUSION
¶12 It is a fundamental precept of the law to
expect a foreclosing party to actually be in pos-session
of its claimed interest in the note, and
to have the proper supporting documentation
in hand when filing suit, showing the history
of the note, so that the defendant is duly
apprised of the rights of the plaintiff. This is
accomplished by showing the party is a holder
of the instrument or a nonholder in possession
of the instrument who has the rights of a hold-er,
or a person not in possession of the instru-ment
who is entitled to enforce the instrument
pursuant to 12A O.S. 2001, § 3-309 or 12A O.S.
2001, § 3-418. Likewise, for the homeowners,
absent adjudication on the underlying indebted-ness,
the dismissal cannot cancel their obligation
arising from an authenticated note, or insulate
them from foreclosure proceedings based on
proven delinquency and therefore, this Court’s
decision in no way releases or exonerates the
debt owed by the defendants on this home. See,
U.S. Bank National Association v. Kimball 27 A.3d
1087, 75 UCC Rep.Serv.2d 100, 2011 VT 81 (VT
2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78
A.D.3d 895, 912 N.Y.S.2d 239 (2010).
REVERSED AND REMANDED WITH
INSTRUCTIONS
¶13 CONCUR: TAYLOR, C.J., KAUGER,
WATT, EDMONDSON, REIF, COMBS, JJ.
¶14 CONCUR IN PART; DISSENT IN
PART: GURICH (by separate writing), WIN-CHESTER
(joins Gurich, J.), JJ.
¶15 RECUSED: COLBERT, V.C.J.
1. Appellee filed an amended petition on January 28, 2011, which
added additional defendants but made no change in the allegations as
between the Appellant and Appellee.
2. The concurring in part; dissenting in part opinion in this matter
relies upon Justice Opala’s concurring opinion in Toxic Waste Impact
Group, Inc. v. Leavitt, 1994 OK 148, 890 P.2d 906, for the proposition that
standing is not a jurisdictional question. Justice Opala’s concurring
opinion was not the majority opinion of this Court and as such “a
minority opinion has no binding, precedential value.” 20 Am.Jur. 2d
Courts §138.
3. This opinion was rendered prior to the enactment of the UCC. It
is, however, possible for the owner of the note not to be the person
entitled to enforce the note if the owner is not in possession of the note.
(See the REPORT OF THE PERMANENT EDITORIAL BOARD FOR
THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNI-FORM
COMMERCIAL CODE TO SELECTED ISSUES RELATING TO
MORTGAGE NOTES (NOVEMBER 14, 2011)).
4. 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205.
5. According to Black’s Law Dictionary (9th ed. 2009) an allonge is
“[a] slip of paper sometimes attached to a negotiable instrument for
the purpose of receiving further indorsements when the original paper
is filled with indorsements.” See, 12A O.S. 2001, § 3-204(a).
GURICH, J., with whom WINCHESTER, J.
joins, concurring in part and dissenting in
part:
¶1 I concur that there are fact issues present
and summary judgment, under the evidentiary
materials, is improper in this case.1
¶2 However, I respectfully dissent to the
majority’s statement that “[t]o commence a
foreclosure action in Oklahoma, a plaintiff
must demonstrate it has a right to enforce the
note, and absent a showing of ownership, the
plaintiff lacks standing.” See Majority Op. ¶ 5.
Gill v. First Nat. Bank & Trust Co., 1945 OK 181,
159 P.2d 717.2 I agree that in any foreclosure
action a party must demonstrate it is the prop-er
party to request adjudication of the issues.
However, the issue of whether a party is the
proper party to request adjudication of the
issues is a real-party-in-interest issue, not an
issue of “standing,” as the majority frames it.
See Toxic Waste Impact Group, Inc. v. Leavitt,
1994 OK 148, 890 P.2d 906 (Opala, J., concur-ring).
Justice Opala framed the issue correctly
in Toxic Waste Impact Group:
Standing in the federal legal system is
imbued with a constitutional/jurisdiction-al
dimension, while in the body of state law
it fits under the rubric of ordinary procedure.
The U.S. Constitution, Article III, has long
been held to require that a “case” or “con-troversy”
is essential to invoke federal
judicial jurisdiction and that a person’s
competence to bring an action is a core
component of standing in a case-or-contro-versy
inquiry. It is for this reason that
standing is an integral part of the mecha-nism
for invoking the federal judiciary’s
power.
Oklahoma’s fundamental law places no
restraint on the judiciary’s power analo-gous
to the federal case-or-controversy
requirement. Under the earlier Code of
Civil Procedure the suit had to be brought
by the real party in interest. That require-ment
has always been non-jurisdictional. If
a state court proceeded to adjudicate a
claim pressed by one not in that status, its
decision was not fraught with jurisdiction-al
infirmity but rather regarded as errone-ous
for want of proof to establish an impor-tant
element of the claim. An error in this
category is waivable at the option of the
defendant; and, if not asserted on appeal,
504 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
the reviewing court may reach the merits
of the case despite a plaintiff’s apparent
lack of standing at nisi prius.
Toxic Waste Impact Group, Inc. v. Leavitt,
1994 OK 148, 890 P.2d 906 (Opala, J., concur-ring,
¶¶ 2-3) (emphasis added).
¶3 The majority in this case cites Hendrick v.
Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234
and Fent v. Contingency Review Board, 2007 OK
27, n.19, 163 P.3d 512, 519 for the proposition
that “standing may be raised at any stage of the
judicial process or by the court on its own
motion.” See Majority Op. ¶ 4. Those cases cite
Matter of the Estate of Doan, 1986 OK 15, ¶ 7,
727 P.2d 574, as authority for this proposition.
Arguably, however, Doan misstates the law:
Ever since the Code of Civil Procedure was
replaced in 1984 by the Pleading Code, our
nomenclature for identifying the party
entitled to sue, which began to follow that
of federal jurisprudence, has used “stand-ing”
as if it were a functional equivalent of
the earlier procedural terms of art — real
party in interest, one with appealable inter-est,
one occupying the aggrieved-party or
pecuniary-interest status. It was during
this transition that one of our opinions
inadvertently referred to “standing” in
terms of a jurisdictional requirement, thus
creating the misimpression that the term
has a jurisdictional dimension. Oklahoma’s
constitution has no case-or-controversy
clause. Standing is hence to be viewed as
an adjective-law concept. The inadvertent
reference to the contrary should be treated
as ineffective to alter standing’s true char-acter
in the body of our procedural law.
. . . .
I concur in today’s opinion and in the dis-position
of the cause. If I were writing for
the court, I would additionally declare that
Doan’s inadvertent reference to federal law
is to be viewed as withdrawn. Lujan’s tri-partite
standing test, which we adopt today,
must be treated as having been received
sans its federal jurisdictional baggage.
See Toxic Waste Impact Group, 1994 OK 148
(Opala, J., concurring ¶ 4).
¶4 Additionally, both Hendrick and Fent
were original actions in this Court. As such,
“standing” could have been raised at any point
by this Court sua sponte. However, in a pro-ceeding
in District Court, because it is a non-jurisdictional
issue, failure to assert that the
Plaintiff is not the real party in interest may be
waived. See Liddell v. Heavner, 2008 OK 6, n.5,
180 P.3d 1191 (Opala, J., majority Op.); see also
12 O.S. 2012 § 2008(D).
¶5 In this case, the facts demonstrate that
Defendant raised this issue in the Answer as
well as in the Response to Motion for Summary
Judgment. As such, the issue was properly
appealed.
¶6 The majority also holds that a foreclosing
party must have the “proper supporting docu-mentation
in hand when filing suit.” See Majority
Op. ¶ 10 (emphasis added). Oklahoma plead-ing
procedure does not require a plaintiff to
have all evidence necessary to prevail on its
claim at the time of the filing. Rather, what is
required is a “short and plain statement of the
claim showing that the pleader is entitled to
relief.” 12 O.S. 2012 § 2008(A)(1). Additionally,
12 O.S.2012 § 2011(B)(3) provides that an attor-ney
filing anything with the court certifies that
to “the best of the person’s knowledge, infor-mation
and belief, formed after an inquiry
reasonable under the circumstances . . . the
allegations and other factual contentions have
evidentiary support or, if specifically so identi-fied,
are likely to have evidentiary support after a
reasonable opportunity for further investigation or
discovery.” 12 O.S. 2012 § 2011(B)(3) (emphasis
added).3 Mortgage foreclosures, like other civil
actions, allow the parties to continue to inves-tigate
and discover evidence up until the time
of judgment.
¶7 While I agree that questions of fact exist so
that summary judgment was improper in this
case, I cannot agree with the majority’s holding
that the plaintiff must have the “proper support-ing
documentation in hand when filing suit”
because no authority states such and the Okla-homa
pleading code requires otherwise.
1. The record indicates that the note presented at summary judg-ment
was not indorsed. As such, a question of fact remains as to
whether Plaintiff was the holder of the note, summary judgment was
improper in this case. However, on remand, the trial court, rather than
dismiss the petition, may allow the Plaintiff to amend its petition.
HSBC Bank USA v. Lyon, 2012 OK 10, ¶ 1, __P.3d__.
2. In Gill, the plaintiff brought an action to foreclose a mortgage on
real property. There was no discussion in the case of whether the plain-tiff
had standing to bring the action or whether the plaintiff was the
real party in interest. In fact, the case was tried to the Court, and the
appeal turned on the sufficiency of evidence presented at trial. The Gill
decision stands for the proposition that the assignment of the note car-ries
with it an assignment of the mortgage. It is not relevant to the
standing analysis, nor does it stand for the proposition that the plain-tiff
must prove at the time of filing that it has a right to enforce the
note.
3. Likewise, while I agree that the UCC applies in this case because
the note is a negotiable instrument, the UCC does not require that a
foreclosing entity prove at the time of filing that it is the person entitled
to enforce the instrument.
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 505
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506 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
Court of Civil Appeals Opinions
2012 OK CIV APP 11
DON HONEYWELL, Plaintiff, vs. GADA
BUILDERS, INC., LARRY BRANNON
PLUMBING & MECHANICAL, INC., and
HUGHES ELECTRIC, INC., Defendants, and
LARRY BRANNON PLUMBING &
MECHANICAL, INC., and GADA
BUILDERS, INC., Third-Party Plaintiffs/
Appellees, vs. GASTITE, a division of
TITEFLEX, a foreign corporation, Third-
Party Defendant/Appellant.
Case No. 109,277. October 27, 2011
APEAL FROM THE DISTRICT COURT OF
TULSA COUNTY, OKLAHOMA
HONORABLE P. THOMAS THORNBRUGH,
JUDGE
AFFIRMED IN PART, REVERSED IN PART
AND REMANDED
Truman B. Rucker, WILSON, CAIN & ACQUA-VIVA,
Tulsa, Oklahoma,
Michael G. McAtee, MCATEE & WOODS, P.C.,
Oklahoma City, Oklahoma, for Third-Party
Plaintiffs/Appellees,
Joseph R. Farris, Jeremy K. Ward, FELDMAN,
FRANDEN, WOODARD, FARRIS, Tulsa, Okla-homa,
for Third-Party Defendant/Appellant.
Kenneth L. Buettner, Judge:
¶1 Plaintiff Don Honeywell’s house was
struck by lightning and destroyed by fire.
Plaintiff sued GADA Builders, Inc. (Builder),
the homebuilder, and Larry Brannon Plumbing
& Mechanical, Inc. (Plumber), the subcontrac-tor
hired to install the gas distribution system,
for negligence and breach of contract. Plumber
filed a third party petition against Gastite, the
manufacturer of the corrugated stainless steel
tubing (CSST) used in the distribution system.
Counsel for Gastite entered an appearance in
the case. Plaintiff then filed an Amended Peti-tion
adding Gastite as a Defendant and alleg-ing
damages caused by the defective CSST
against Gastite, Builder, and Plumber. Plaintiff
later filed a Second Amended Petition, aban-doning
his negligence theory and alleging
strict products liability claims against Gastite,
Builder, Plumber. Plaintiff settled with the
Defendants. Based on 12 O.S. Supp. 2004 §
832.1, Builder and Plumber sought indemnifi-cation
from Gastite, the manufacturer, for attor-ney
fees and costs incurred in defending the
product liability action. The trial court granted
summary judgment to Builder and Plumber
and ordered Gastite to indemnify them for
attorney fees and costs incurred between March
27, 2007, the date Gastite’s counsel entered an
appearance, and the conclusion of the indem-nification
proceedings. As a matter of first
impression, Gastite asks this court to interpret
12 O.S. § 832.1. After de novo review, we hold
that Gastite’s duty to indemnify was triggered
May 31, 2007, when Plaintiff filed his Amended
Petition. Therefore, we affirm in part, reverse
in part and remand for the limited purpose of
calculating reasonable attorney fees and costs
incurred between May 31, 2007 and the conclu-sion
of the indemnification proceedings.
¶2 Plaintiff contracted with Builder to build
his home in Broken Arrow, Oklahoma. Plumb-er
was the subcontractor hired by Builder to
install the gas distribution system throughout
the house. Plumber installed the system using
corrugated stainless steel tubing (CSST). The
CSST was manufactured by Gastite. After
Plaintiff’s house was struck by lightning and
destroyed, he filed the underlying lawsuit.
¶3 Plaintiff’s original Petition, filed Decem-ber
19, 2006, named Builder and Plumber as
defendants.1 Plaintiff alleged the following as
his first cause of action:
V. The fire and the resulting damage were
caused by the improper installation of the
electrical and gas distribution systems in
the house.
VI. Builder was negligent in failing to
supervise the work of Hughes and Plumb-er.
Builder failed to warn the plaintiff of the
fire hazard caused by the improper instal-lation
of the electrical and gas distribution
systems in the house.
. . .
VII. Plumber was negligent in the installa-tion
of the gas distribution system. Plumb-er
failed to warn the Plaintiff of the fire
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 507
hazard caused by the improper installation
of the gas distribution system.
IX. As a result of the negligence of the
Defendants and each of them and the
resulting fire, Plaintiff sustained damages
in excess of $10,000.00.
Plaintiff alleged in his second cause of action
that Builder was liable for breach of contract
for failing to construct the home in a good and
workmanlike manner.
¶4 Plumber filed a third party petition against
Gastite February 21, 2007. Plumber alleged that
the fire and damages claimed by the Plaintiff
were caused by the failure of the CSST, that the
defective CSST was manufactured by Gastite,
that at the time the CSST left Gastite’s control it
was defective and unreasonably dangerous,
and that Plaintiff was a reasonably anticipated
consumer. Counsel for Gastite entered an
appearance in the case March 27, 2007. Builder
filed a third-party petition against Gastite April
9, 2007.
¶5 On May 31, 2007, Plaintiff filed an Amend-ed
Petition. Plaintiff named Builder, Plumber,
and Gastite as Defendants and made the fol-lowing
allegations:
VII. The fire and the resulting damage were
caused by the improper installation of the
electrical and gas distribution systems in
the house.
VIII. Builder was negligent in failing to
supervise the work of Hughes and Plumb-er.
Builder failed to warn the plaintiff of the
fire hazard caused by the improper instal-lation
of the electrical and gas distribution
systems in the house.
. . .
X. Plumber was negligent in the installa-tion
of the gas distribution system. Plumb-er
failed to warn the Plaintiff of the fire
hazard caused by the improper installation
of the gas distribution system.
XI. The fire and resulting damage were
caused by the failure of the corrugated stain-less
steal tubing (CSST). The CSST was
manufactured and placed in the stream of
commerce by Gastite, a division of Titeflex.
XII. The CSST was installed by the Defen-dant,
Plumber, at the direction and under
the supervision of Builder.
XIII. The CSST was defective at the time it
left the control of Gastite. The defect made
the product unreasonably dangerous. The
Plaintiff was a reasonably anticipated con-sumer
of CSST.
XIV. As a result of the negligence of the
Defendants, Builder, Plumber and Hughes
Electric, the failure of the Gastite CSST and
the resulting fire, Plaintiff sustained dam-ages
in excess of $10,000.00.
Plaintiff also recited his second cause of
action against Builder for breach of contract for
failing to construct the home in a good and
workmanlike manner.
¶6 The parties engaged in discovery for eigh-teen
months and filed cross-claims seeking
indemnification and/or contribution. Plaintiff
filed a Second Amended Petition December 18,
2008. Plaintiff abandoned his negligence theory
against Builder and Plumber and alleged strict
products liability claims against Gastite, Build-er,
and Plumber:2
VII. The fire and resulting damage were
caused by a defective product, corrugated
stainless steel tubing (CSST) sic was
designed and manufactured by the Defen-dant,
Gastite. The CSST was defective at
the time it left the control of Gastite. The
defect made the product unreasonably
dangerous. The Plaintiff was a reasonably
anticipated consumer of CSST.
VIII. Defendants, Builder, Plumber, and
Gastite, a division of Titeflex, sold and/or
distributed the defective product and are
liable to Plaintiff under Oklahoma’s manu-facturers
products liability.
Plaintiff maintained his breach of contract
action against Builder, but changed the theory
of liability:
X. Pursuant to the terms of the contract, the
Defendant was to construct a home free of
defective material and products.
XI. The Defendant, Builder, breached its
contract by failing to provide the home to
the Plaintiff free of defective materials and
products. As a result of the breach of con-tract,
a fire occurred which destroyed
Plaintiff’s home and personal property.
¶7 Shortly after Plaintiff filed his Second
Amended Complaint, Gastite defended the
lawsuit on behalf of Builder and Plumber.
508 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
Builder and Plumber claimed they were sellers
of CSST and, based on 12 O.S. § 832.1, sought
indemnification from Gastite, the product
manufacturer, for attorney fees and costs
incurred in defending the product liability
action. All parties filed motions for summary
judgment. In the meantime, Gastite settled the
underlying lawsuit, and Plaintiff dismissed all
claims against all Defendants November 30,
2009. Therefore, only the issue of indemnifica-tion
remained for the trial court.
¶8 According to 12 O.S. § 832.1, “[a] manufac-turer
shall indemnify and hold harmless a seller
against loss arising out of a product liability action,
except for any loss caused by the seller’s negli-gence,
intentional misconduct, or other act or
omission, such as negligently modifying or
altering the product, for which the seller is inde-pendently
liable.” 12 O.S. Supp. 2004 § 832.1.A
(emphasis added). “For purposes of this section,
‘loss’ includes court costs and other reasonable
expenses, reasonable attorney fees, and any rea-sonable
damages.” Id., § 832.1.B.
¶9 Builder and Plumber argued that the case
became a “product liability action” no later
than March 27, 2007, the date Gastite’s attorney
entered an appearance in the case. Therefore,
Gastite’s statutory duty to indemnify sellers
for attorney fees and costs was triggered March
27, 2007. Builder and Plumber explained that
Gastite was notified of the product liability
action and their demands for indemnification
through their third party petitions. Builder and
Plumber argued that Gastite’s duty to indem-nify
was triggered before Plaintiff abandoned
his negligence theory in the Second Amended
Petition filed December 18, 2008. Builder and
Plumber argued that Gastite could only negate
its indemnity duty by showing that Builder
and Plumber’s independent negligence caused
the loss.
¶10 Gastite argued that Builder was not a
“seller” as contemplated by the statute and,
therefore, Gastite had no duty to indemnify
Builder. Gastite argued that even if Builder was
a seller, there was not a “product liability
action” until Plaintiff filed his Second Amend-ed
Petition December 18, 2008. Gastite argued
that Plaintiff’s Second Amended Petition, for
the first time, asserted product liability claims
against Builder and Plumber. Gastite argued
that between March 27, 2007 and December 18,
2008, Builder and Plumber only generated
attorney fees and costs by defending claims
against them for active and independent negli-gence
and breach of contract, not products lia-bility.
Gastite argued that § 832.1 does not
require manufacturers to indemnify sellers for
fees and costs in defending Plaintiff’s claims of
independent negligence.
¶11 The trial court granted summary judg-ment
to Builder and Plumber for attorney fees
incurred between March 27, 2007, when counsel
for Gastite entered an appearance in the case,
and the conclusion of indemnification proceed-ings.
Several months later, the trial court heard
evidence on the amount of reasonable attorney
fees. The trial court awarded $242,494.18 to
Builder and $152,500.00 to Plumber for reason-able
attorney fees, expenses, and costs arising
out of the product liability action.
¶12 Gastite raises nine issues on appeal, but
several are duplicates. Gastite asks this court to
interpret 12 O.S. § 832.13 and determine wheth-er
the attorney fees and costs awarded to
Builder and Plumber were reasonable. No
reported Oklahoma decisions have interpreted
12 O.S. § 832.1.
¶13 Summary judgment proceedings are
governed by Rule 13, Rules for District Courts,
42 O.S. 2001, Ch. 2, App.1. Summary judgment
is appropriate where the record establishes no
substantial controversy of material fact and the
prevailing party is entitled to judgment as a
matter of law. Brown v. Alliance Real Estate
Group, 1999 OK 7, ¶7, 976 P.2d 1043, 1045. The
parties agree on the facts material to this dis-pute.
Where the facts are not disputed, an
appeal presents only a question of law. Jones v.
Purcell Investments, LLC, 2010 OK CIV AP 15,
¶2, 231 P.3d 706, 708. In its Petition in Error,
Gastite has alleged the question of law is the
interpretation of 12 O.S. § 832.1. Issues of statu-tory
construction are questions of law to be
reviewed de novo, and appellate courts exercise
plenary, independent, and non-deferential
authority. Welch v. Crow, 2009 OK 20, ¶10, 206
P.3d 599, 603. In cases requiring statutory con-struction,
the cardinal rule is to ascertain and
give effect to the intent of the Legislature. Id.
The words of a statute will be given a plain and
ordinary meaning, unless it is contrary to the
purpose and intent of the statute considered as
a whole. Naylor v. Petuskey, 1992 OK 88, ¶4, 834
P.2d 439, 440. Legislative purpose and intent
may be ascertained from the language in the
title to a legislative enactment. Id.
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 509
BUILDER WAS A SELLER OF CSST
¶14 According to 12 O.S. § 832.1, manufac-turers
are required to indemnify sellers for loss
arising out of a product liability action. 12 O.S.
Supp. 2004 § 832.1.A. “[A] wholesale distribu-tor
or retail seller who completely or partially
assembles a product in accordance with the
manufacturer’s instructions shall be consid-ered
a seller.” Id., § 832.1.D.
¶15 Builder filed a motion for summary
judgment arguing it was entitled to indemnity
for attorney fees and costs incurred while
defending Plaintiff’s claims. Builder included
in its statement of material facts not in dispute:
“6. [Builder] was a seller of the CSST as con-templated
by Title 12 O.S. § 832.1.” Gastite’s
response admitted was: “6. Not disputed, but
not material to the determination of [the indem-nification
issue].”
¶16 Gastite did not dispute Builder’s status
as a seller of CSST until it filed its own motion
for summary judgment October 15, 2009.
Despite its previous admission, Gastite claimed
it was undisputed that Builder was not a retail
seller or distributor of CSST.4 In response,
Builder cited Gastite’s previous admission that
Builder was a seller of CSST within the mean-ing
of § 832.1 and argued that Gastite should
be estopped from claiming otherwise.5
¶17 We hold that Builder was a seller as con-templated
by 12 O.S. § 832.1. Middlemen in the
chain of distribution are subject to strict prod-ucts
liability.6 The policy reasons for imposing
strict products liability on non-manufacturer
sellers provide guidance in determining wheth-er
Builder should be classified as a seller. The
rationale for imposing strict liability on retail-ers
and distributors is founded upon the public
interests in human safety and protecting the
ultimate consumer. Retailers and distributors,
like manufacturers, are engaged in the busi-ness
of distributing goods to the public.
“[Retailers] are an integral part of the overall
producing and marketing enterprise that
should bear the cost of injuries resulting from
defective products.” Moss v. Polyco, Inc., 1974
OK 53, ¶13, 522 P.2d 622, 626 (citing Vander-mark
v. Ford Motor Co., 391 P.2d 168, 171 (Cal.
1964)). “Strict liability on the manufacturer and
retailer alike affords maximum protection to
the injured plaintiff and works no injustice to
the defendants, for they can adjust the costs of
such protection between them in the course of
their continuing business relationships.” Id.
(citing Vandermark, 391 P.2d at 172). The same
policy reasons justify imposing strict liability
on distributors. A distributor, for the purpose
of strict products liability, is defined as “one
who engages in the activity of making the
defective product available for the use of oth-ers.”
Potter v. Paccar Co., 519 F. Supp. 487, 489
(W.D. Okla. 1981).
¶18 Plaintiff contracted with Builder to build
a home, which inherently included purchasing
all of the building materials. Builder subcon-tracted
with Plumber to install the gas distribu-tion
system, which included purchasing the
CSST and other materials used in the system.
Plumber purchased the CSST from Gastite, the
manufacturer. Plumber was certified by Gastite
to install the CSST. The purpose of § 832.1 is to
require the manufacturer to indemnify those in
the distribution chain against expenses and
damages in product liability actions. For pur-poses
of this statute, the builder of a house is a
“seller” of the products used in the construc-tion
of the house.
GASTITE’S DUTY TO INDEMNIFY BUILDER
AND PLUMBER WAS TRIGERED BY
PLAINTIFF’S AMENDED PETITION
¶19 We must determine when the underly-ing
lawsuit became a “product liability action”
and Gastite’s statutory duty to indemnify
Builder and Plumber for their attorney fees
and costs was triggered. Title 12 O.S. § 832.1.A.
states: “A manufacturer shall indemnify and
hold harmless a seller against loss arising out of
a product liability action . . .” (emphasis added).
¶20 A manufacturer’s duty to indemnify a
seller for attorney fees and costs arising out of
a product liability action is triggered by the
plaintiff’s pleadings.7 The Legislature intended
to provide indemnity to sellers regardless of
the outcome of the case.8 The Legislature also
intended that the indemnity duty was to be
based on the plaintiff’s pleadings.9 The general
philosophy of the Oklahoma Pleading Code is
that pleadings should give fair notice of the
plaintiff’s claim and be subject to liberal amend-ment.
Wilson v. Webb, 2009 OK 56, ¶9, 221 P.3d
730, 734. Pleadings should be liberally con-strued
so as to do substantial justice. Id. Accord-ingly,
we liberally construe Plaintiff’s petitions
to determine when the lawsuit became a prod-uct
liability action and the manufacturer’s
statutory duty was triggered. A “product liabil-ity
action” is based on injuries caused by a
defective product. In order for there to be a
510 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
“product liability action,” the plaintiff must
plead that a product was defective.
¶21 Gastite argues that between March 27,
2007 (when Gastite’s counsel entered an appear-ance)
and December 18, 2008 (when Plaintiff
filed his Second Amended Petition) no product
liability claim was asserted against Builder or
Plumber; therefore, there was no “product lia-bility
action.” Gastite argues it did not have a
duty to indemnify Builder and Plumber before
December 18, 2008, because Builder and Plumb-er
were only defending independent negli-gence
claims.
¶22 We agree with Gastite with respect to the
period of time between March 27, 2007 and
May 30, 2007. Plaintiff’s original Petition did
not allege damages caused by a defective prod-uct;
therefore, there was no product liability
action. The trial court erred in finding the duty
to indemnify was triggered when Gastite’s
counsel entered an appearance in the case.
Plaintiff’s pleadings triggered Gastite’s duty to
indemnify, not Plumber’s third-party petition.
A seller cannot transform a negligence action
into a “product liability action” via a third-party
petition. Only the plaintiff’s pleadings
can create a “product liability action.” Gastite
did not have a duty to indemnify Builder or
Plumber between March 27, 2007 and May 30,
2007. Therefore, we reverse the trial court’s
order that Gastite had a duty to indemnify
Builder and Plumber for attorney fees and
costs generated between March 27, 2007 and
May 30, 2007.
¶23 Plaintiff filed an Amended Petition May
31, 2007. Gastite argues that the Amended Peti-tion
merely repeated the claims in Plaintiff’s
original Petition that Builder and Plumber
were negligent, independent of any allegations
that the CSST was defective. Gastite suggests
that Plaintiff amended his petition to name
Gastite as a defendant and assert a products
liability claim against Gastite only. We dis-agree.
Gastite has mis-characterized the allega-tions
made against Builder and Plumber in
Plaintiff’s Amended Petition. We hold that
Plaintiff’s Amended Petition alleged a product
liability action against Builder and Plumber
and triggered Gastite’s duty to indemnify
Builder and Plumber.
¶24 Reading the Amended Petition liberally,
Plaintiff alleged product liability claims against
not only Gastite, but also Builder and Plumber.
A product liability action is based on an injury
caused by a defective product. A plaintiff
injured by a defective product can utilize vari-ous
theories to recover for injuries caused by the
product. A product liability action may be based
on a theory of negligence liability or strict prod-ucts
liability. The Oklahoma Supreme Court in
the seminal products liability case, Kirkland v.
General Motors Corp., noted that a plaintiff is not
required to elect one theory of liability. 1974 OK
52, ¶40, 521 P.2d 1353, 1365. Even with the
advent of strict products liability, the negligence
cause of action remains available to a plaintiff
injured by a defective product.
¶25 Plaintiff alleged in his Amended Petition
that the CSST was a defective product, that
Plumber negligently installed a defective prod-uct,
that Builder negligently directed and super-vised
the installation of the defective product,
and that he was injured by the defective prod-uct.
The negligence claims against Builder and
Plumber were not claims of negligence indepen-dent
of the defective product. Rather, Plaintiff
claimed negligent installation of the defective
product and negligent supervision of its installa-tion.
Therefore, based on the allegations made in
Plaintiff’s Amended Petition, a product liability
action commenced and Gastite’s statutory duty
to indemnify Builder and Plumber was triggered
May 31, 2007. We affirm the trial court’s order
that Gastite had a duty to indemnify Builder and
Plumber for defense costs sustained between
May 31, 2007 and the conclusion of the indemni-fication
proceedings.10
¶26 A manufacturer’s statutory duty to
indemnify a seller for attorney fees and costs is
analogous with an insurer’s duty to defend the
insured.11 The insurer and the manufacturer are
obligated to finance the insured and seller’s
defense, respectively. The insurer defends on
behalf of the insured12 and the manufacturer
indemnifies the seller for its defense costs. Just
as the insurer’s duty is triggered by facts
gleaned from the plaintiff’s pleadings against
the insured, the manufacturer’s duty is trig-gered
by the plaintiff’s pleadings against the
seller. If the plaintiff states a claim against the
insured that is potentially covered by the insur-ance
contract, the insurer’s duty is triggered.
However, if the plaintiff makes allegations that
are not potentially covered by the insurance
contract, the insurer has no duty. If the plaintiff
asserts a product liability action against the
seller, the manufacturer’s duty is triggered. But
if the plaintiff asserts a non-product liability
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 511
action against the seller, the manufacturer has
no duty.
¶27 Builder and Plumber relied heavily on
Texas case law. Texas has a nearly identical
products liability indemnification statute.13 We
recognize that the outcome in this case aligns
with the outcome of the Texas Supreme Court’s
decision in Meritor Automotive, Inc. v. Ruan
Leasing Co., 44 S.W.3d 86 (Tex. 2001).14 However,
the facts of this case, including the allegations
made in Plaintiff’s pleadings, do not mirror the
facts and allegations in Meritor. Therefore, our
holding is limited to the facts before this court,
not the facts of Meritor.
¶28 The Texas Supreme Court held that “the
seller’s reasonable cost to defend an unsuccess-ful
negligence claim, asserted independently of
the products liability claim, is properly includ-ed
as part of the ‘loss arising out of a products
liability action,’ so that it is within the manu-facturer’s
indemnity duty.” Meritor, 44 S.W.3d
at 87 (disapproving Hurst v. Amer. Racing
Equip., Inc., 981 S.W.2d 458 (Tex. App. 1998)). In
the case before this court, Plaintiff’s Amended
Petition did not contain a “negligence claim,
asserted independently of the products liability
claim.” The issue on appeal is not whether a
claim of truly independent negligence against
a seller joined to a strict products liability claim
against a manufacturer is part of a “product
liability action” for purposes of 12 O.S. § 832.1.
For the reasons discussed above, Plaintiff’s
Amended Petition asserted product liability
claims against Builder and Plumber, not negli-gence
claims unrelated to a defective product.
Where a negligence claim is based on a defec-tive
product, the reasonable cost of defending
that claim is a “loss arising out of a product
liability action.”
EXCEPTION TO INDEMNITY DUTY
¶29 Title 12 O.S. § 832.1.A. includes an excep-tion
to the manufacturer’s indemnity duty: “A
manufacturer shall indemnify and hold harm-less
a seller against loss arising out of a product
liability action, except for any loss caused by the
seller’s negligence, intentional misconduct, or other
act or omission, such as negligently modifying or
altering the product, for which the seller is indepen-dently
liable.” 12 O.S. Supp.2004 § 832.1.A
(emphasis added).
¶30 On appeal, Gastite asks this court to
determine “[w]hether the trial court erred in
interpreting 12 O.S. § 832.1 as requiring the
manufacturer to prove its seller committed
active and independent negligence to defend a
claim for indemnification-even though the
Plaintiff specifically pled active and indepen-dent
negligence causes of action against the
seller.” We previously discussed Gastite’s mis-characterization
of the claims asserted against
Builder and Plumber in Plaintiff’s Amended
Petition. Plaintiff alleged active and indepen-dent
negligence against Builder and Plumber
in his original Petition. However, in his Amend-ed
Petition, Plaintiff asserted claims against
Builder and Plumber for damages arising out
of property damage caused by a defective
product. Plaintiff based his product liability
claims against Builder and Plumber on a negli-gence
theory of liability and abandoned his
claims of independent negligence. Thus, the
lawsuit became a “product liability action,”
free of independent negligence claims against
Builder and Plumber.
¶31 While a manufacturer’s indemnity duty
is triggered by the plaintiff’s pleadings, the
exception to the duty is not. The exception only
applies if the manufacturer proves that the
seller’s independent conduct caused the plain-tiff’s
injuries. The statute requires a manufac-turer
to indemnify an innocent seller for certain
damages and litigation expenses arising out of a
product liability action but requires the seller to
bear the damages and expenses they cause. See
Meritor, 44 S.W.3d at 88; Fitzgerald, 996 S.W.2d at
867. While we do not expressly adopt the Texas
Supreme Court’s decision with respect to what
“product liability action” means, we do find
Meritor persuasive in determining when the
indemnification exception is invoked. The Meri-tor
court rejected the manufacturer’s argument
that it should be permitted to establish the
exception to the indemnity duty through the
plaintiff’s pleadings. 44 S.W.3d at 91. The Texas
Supreme Court held that the “statute’s plain
language indicates that the plaintiff’s pleadings
are not sufficient to invoke the exception” and
that “while the manufacturer’s duty to indem-nify
the seller is invoked by the plaintiff’s
pleadings and joinder of the seller as defen-dant,
the exception to that duty is established
by a finding that the seller’s independent con-duct
was the cause of the plaintiff’s injury.” Id.
¶32 The allegations made in Plaintiff’s peti-tions
were insufficient to invoke the exception
under § 832.1. Plaintiff abandoned his claims
against Builder and Plumber based on negli-gence
in his Second Amended Petition. Prior to
trial, Plaintiff and Gastite settled the underly-
512 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
ing lawsuit, and Plaintiff dismissed all claims
against all Defendants. The case concluded
without a determination that Builder or Plumb-er’s
independent conduct caused the fire. Sec-tion
832.1.E.1. suggests the Legislature antici-pated
situations when the parties settle the
product liability action. Sellers are entitled to
indemnity regardless of “the manner in which
the action is concluded.” 12 O.S. § 832.1.E.1. In
this summary judgment appeal, the record
does not contain evidence that either Builder or
Plumber’s independent negligence caused
Plaintiff’s injury. We hold that the exception
does not apply and affirm the trial court’s
order with regard to that issue.
§ 832.1 AND BOOKER v.
SEARS ROEBUCK & CO.
¶33 Gastite asks this court to reconcile 12
O.S. § 832.1 and Booker v. Sears Roebuck & Co.,
1989 OK 156, 785 P.2d 297. The decision in
Booker was based on the manufacturer’s com-mon
law duty to indemnify a seller for attor-ney
fees and costs.15 By enacting § 832.1, the
Legislature established the manufacturer’s
statutory duty to indemnify a seller for attor-ney
fees and costs. Booker was decided in 1989,
and § 832.1 was enacted in 2004. To the extent
Gastite relies on Booker and § 832.1 modifies
Booker, the statute controls.16
REASONABLENESS OF ATTORNEY FEES
¶34 A trial court’s award of attorney fees is
reviewed for abuse of discretion. Spencer v.
Okla. Gas & Elec. Co., 2007 OK 76, ¶13, 171 P.3d
890, 895. An abuse of discretion occurs when a
decision is based on an erroneous conclusion of
law or where there is no rational basis in evi-dence
for the ruling. Id. Generally, the correct
formula for calculating a reasonable fee is to: 1)
determine the lodestar fee by multiplying the
attorney’s hourly rate by the hours expended;
and 2) modify the fee through consideration of
the Burk factors.17 Id., ¶¶13-14, 171 P.3d at 895.
¶35 Builder and Plumber incurred signifi-cant
attorney fees and costs while defending
Plaintiff’s product liability action and Gastite’s
cross-claims. Gastite asks this court to deter-mine
whether the trial court abused its discre-tion
by using an attorney’s hourly rate for del-egable
work, permitting fees for duplicate
effort, allowing vague time entries and block
billing, and including unnecessary expert wit-ness
fees in the award. After reviewing the
evidence in the record, we are not persuaded
that the trial court abused its discretion.18
¶36 However, the trial court included in its
award attorney fees, costs, and expenses gener-ated
between March 27, 2007 and May 30, 2007,
when the case was not a product liability
action. It was an abuse of discretion to award
attorney fees, costs, and expenses for that
period of time. Therefore, we reverse and
remand the case for the limited purpose of cal-culating
and awarding attorney fees, costs, and
expenses generated between May 31, 2007 and
the conclusion of the indemnification proceed-ings.
19 Attorney fees, costs, and expenses
incurred prior to May 31, 2007 should be
excluded from the trial court’s calculation.
¶37 AFFIRMED IN PART, REVERSED IN
PART AND REMANDED.
MITCHELL, P.J., and JOPLIN, J., concur.
1. Hughes Electric, Inc. was also named as a Defendant, but
Hughes is not a party to this appeal.
2. Strict products liability is commonly referred to as Manufactur-ers’
Products Liability in Oklahoma. See Kirkland v. Gen. Motors Corp.,
1974 OK 52, ¶20, 521 P.2d 1353, 1361.
3. Gastite asks this court to determine (1) whether Builder was a
“seller” as contemplated by 12 O.S. § 832.1; (2) when a “product liabil-ity
action” was asserted against Builder and Plumber, triggering Gas-tite’s
duty to indemnify; (3) whether the exception to the duty to
indemnify is invoked by the plaintiff’s pleadings or a manufacturer
must prove the seller’s independent negligence in order to invoke the
exception; and (4) whether the trial court’s order erred ruling 12 O.S.
§ 832.1 overruled the Oklahoma Supreme Court’s decision in Booker v.
Sears Roebuck & Co., 1989 OK 156, 785 P.2d 297.
4. However, Gastite attached to its motion a letter, dated February
6, 2009, in which Gastite stated: “Effective immediately [Gastite] agrees
to defend, indemnify and hold harmless GADA Builders based upon
[Gastite’s] statutory obligation set forth in 12 O.S. § 832.1 (requiring a
manufacturer of a product to indemnify a seller of its product for dam-ages
caused by the manufacturer’s product).”
5. Builder also noted that it was a distributor of the CSST because
it purchased CSST by paying Plumber for the CSST and paying
Plumber to install it in Plaintiff’s house. Builder argued it was a dis-tributor
because it was involved in the stream of commerce connecting
the CSST to Plaintiff, the ultimate consumer. Builder also noted that
the court’s interpretation of § 832.1 was needed to determine if Builder
was a retail seller.
6. Each member of the distributive chain is liable if they sold the
defective product that injured the plaintiff and if the product left the
seller’s control in a defective condition. See Kirkland v. Gen. Motors
Corp., 1974 OK 52, ¶21, 521 P.2d 1353, 1361; Restatement 2d of Torts
§ 402A(1)(b) (1965). The manufacturer, retailer, wholesaler, and dis-tributor
each owes “a separate and nondelegable duty to market a safe
product.” Braden v. Don Hendricks, 1985 OK 14, ¶19, 695 P.2d 1343.
7. See Meritor Automotive, Inc. v. Ruan Leasing Co., 44 S.W.3d 86 (Tex.
2001) (citing Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d
864, 867 (Tex. 1999)) (“In Fitzgerald, we concluded that pleadings join-ing
a seller as defendant in a products liability action were sufficient to
invoke the manufacturer’s indemnity duty under the Act.”).
8. “The duty to indemnify under this section . . . [a]pplies without
regard to the manner in which the action is concluded . . .” 12 O.S.
§ 832.1.E.1.
9. See 12 O.S. § 832.1.F.: “A seller eligible for indemnification under
this section shall give reasonable notice to the manufacturer of a prod-uct
claimed in a petition or complaint to be defective, unless the manufac-turer
has been served as a party or otherwise has actual notice of the
action.” (emphasis added).
10. “A seller is entitled to recover from the manufacturer court
costs and other reasonable expenses, reasonable attorney fees, and any
reasonable damages incurred by the seller to enforce the seller’s right
to indemnification under this section.” 12 O.S. § 832.1.G.
11. A liability insurance policy generally contains two basic duties:
the insurer has a duty to defend its insured and a duty to indemnify its
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 513
insured for damages. First Bank of Turley v. Fidelity & Deposit Ins. Co. of
Maryland, 1996 OK 105, ¶13, 928 P.2d 298, 302. The duty to defend is
separate from, and broader than, the duty to indemnify, but the
insurer’s obligation is not unlimited. Id., ¶13 at 303. The duty to defend
is measured by the nature and kinds of risks covered by the policy as
well as by the reasonable expectations of the insured. Id. An insurer has
a duty to defend an insured whenever it ascertains the presence of
facts that give rise to the potential of liability under the policy. Id. “The
insurer’s defense duty is determined on the basis of information
gleaned from the petition (and other pleadings), from the insured and
from other sources available to the insurer at the time the defense is
demanded (or tendered) rather than by the outcome of the third-party
action.” Id., ¶13 at 303-04. After the insurer receives notice of a third
party’s claim against the insured, it must determine whether a poten-tial
for coverage exists under the policy. Id., ¶14 at 304.
12. If the insurer owes the insured a duty to defend under the
insurance contract and the insurer refuses to defend, the insurer is
liable “for all reasonable expenses incurred by an insured in defense of
the third-party action.” Id., ¶17 at 304.
13. TEX. CIV. PRAC. & REM. CODE § 82.002 (West):
(a) A manufacturer shall indemnify and hold harmless a seller
against loss arising out of a products liability action, except for
any loss caused by the seller’s negligence, intentional misconduct,
or other act or omission, such as negligently modifying or altering
the product, for which the seller is independently liable.
(b) For purposes of this section, “loss” includes court costs and
other reasonable expenses, reasonable attorney fees, and any
reasonable damages.
(c) Damages awarded by the trier of fact shall, on final judgment,
be deemed reasonable for purposes of this section.
(d) For purposes of this section, a wholesale distributor or retail
seller who completely or partially assembles a product in accor-dance
with the manufacturer’s instructions shall be considered a
seller.
(e) The duty to indemnify under this section:
(1) applies without regard to the manner in which the action is
concluded; and
(2) is in addition to any duty to indemnify established by law,
contract, or otherwise.
(f) A seller eligible for indemnification under this section shall
give reasonable notice to the manufacturer of a product claimed
in a petition or complaint to be defective, unless the manufac-turer
has been served as a party or otherwise has actual notice of
the action.
(g) A seller is entitled to recover from the manufacturer court
costs and other reasonable expenses, reasonable attorney fees,
and any reasonable damages incurred by the seller to enforce the
seller’s right to indemnification under this section.
14. Recently, the Texas Supreme Court returned to the products
liability indemnity statute in Toyota Industrial Equip. Mfg. v. Carruth-
Doggett, Inc., 325 S.W.3d 683 (2010). The outcome in this case also
aligns with that in Toyota. The plaintiff’s negligence claim against the
seller in Toyota was based on a defective product and the court held:
[I]t is still clear from [the plaintiff’s] pleadings that the basis of
the claims against [the Manufacturer were] that the [product]
was defective and caused his injury. His second amended peti-tion
alleges specific products liability claims against [the Manu-facturer]
regarding specific defective components, and it alleges
that [the Seller] was negligent in maintaining the [product] and
in “failing to use . . . due care to test and/or inspect [the product]
or the component parts in question.” . . . Because [the plaintiff]
alleges that a defect in the [product] manufactured by the Manu-facturer
caused him harm, his pleadings implicate the indemnity
provision in Section 82.002 covering “loss arising out of a prod-ucts
liability action.”
Toyota, 325 S.W.3d at 690-91.
15. “Oklahoma has previously recognized that a manufacturer
may be found to have a duty to indemnify its dealer against claims for
loss caused by the manufacturer’s defective product. Booker, 785 P.2d
at 298 (citing Braden v. Hendricks, 1985 OK 14, 695 P.2d 1343). “Reason-able
attorney fees have been allowed, as part of damages, to an indem-nitee
so long as the fees were incurred in defense of the claim indemni-fied
against.” Id. at 298-99 (citing United Gen. Ins. v. Crane Carrier Co.,
1984 OK 47, 695 P.2d 1334). “However, indemnification of legal costs is
not permissible where an adverse position has been taken by the
claimant against the party from whom indemnity is sought. This is due
to the necessity of a benefit being conferred on the indemnitor before
the law will impose an obligation.” Id. at 299 (citing Berry v. Barbour,
1955 OK 358, 279 P.2d 335).
16. “The duty to indemnify under this section . . . [i]s in addition to
any duty to indemnify established by law, contract, or otherwise.” 12
O.S. § 832.1.E.2.
17. The factors set out in Burk v. Oklahoma City, 1979 OK 115, ¶8,
598 P.2d 659, 661, are: time and labor required; novelty and difficulty
of the questions; skill requisite to perform the legal service; preclusion
of other employment; customary fee; whether the fee is fixed or contin-gent;
time limitations; amount involved and results obtained; experi-ence,
reputation and ability of the attorneys involved; risk of recovery;
nature and length of relationship with the client; and awards in similar
causes.
18. Builder requested $242,494.18 and was awarded $242,494.18.
Plumber requested $152,500.00 and was awarded $152,500.00. At the
October 27, 2010 hearing on attorney fees, Gastite stipulated that coun-sel
for Builder and Plumber accurately recorded their time and worked
the hours listed on their billing records.
19. “A seller is entitled to recover from the manufacturer court
costs and other reasonable expenses, reasonable attorney fees, and any
reasonable damages incurred by the seller to enforce the seller’s right
to indemnification under this section.” 12 O.S. Supp.2004 § 832.1.G.
2012 OK CIV APP 12
CLIFTON GENTRY, Petitioner, vs. BERRY
MACHINE & TOOL CO., INC. and THE
WORKERS’ COMPENSATION COURT,
Respondents.
Case No. 109,513. January 11, 2012
PROCEEDING TO REVIEW AN ORDER OF
THE WORKERS’ COMPENSATION COURT
HONORABLE GENE PRIGMORE,
TRIAL JUDGE
SUSTAINED
Richard A. Bell, Heather A. Lehman, THE
BELL LAW FIRM, Norman, Oklahoma, for
Petitioner
Donald A. Bullard, BULLARD & ASSOCI-ATES,
P.C., Oklahoma City, Oklahoma, for
Respondents
KEITH RAP, JUDGE:
¶1 Claimant, Clifton Gentry, appeals an Order
of the workers’ compensation court denying his
request to commute a portion of his permanent
total disability award to a lump-sum payment
pursuant to Title 85 O.S.2001, § 41(B).
BACKGROUND
¶2 Claimant sustained an injury to his back,
tailbone, both hips, and both legs on December
8, 2004, when a co-worker pulled a chair from
under Claimant while he was at work for
Employer, Berry Machine & Tool Co., Inc.
Claimant was relegated to a wheelchair due to
his physical injuries.
¶3 Claimant filed a Form 3 on January 21,
2005, alleging the single event injury. Claimant
subsequently amended the Form 3, addition-
514 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
ally alleging psychological overlay and sexual
dysfunction.
¶4 By various orders, the workers’ compen-sation
court awarded Claimant home renova-tions,
a memory foam bed, a carport, and suit-able
transportation commensurate with his
physical abilities.
¶5 The workers’ compensation trial court
entered an Order, filed on January 18, 2011,
finding Claimant sustained a work-related
injury to his left shoulder and back, sexual dys-function,
and psychological overlay. The court
found Employer paid Claimant temporary
total disability benefits from February 16, 2005,
to November 16, 2010. The court further found
Claimant permanently and totally disabled
and that “it would not be practical to require
the claimant to participate in vocational re-training
services.” The workers’ compensation
court found Claimant’s rate of permanent total
disability was $210.00 a week, which allowed
for an accrued portion of his award at the time
of the Order of $1,764.92. The court also award-ed
continuing medical treatment and attendant
home care.
¶6 On March 3, 2011, Claimant filed a Form
13, motion to commute pursuant to Title 85
O.S.2001, § 41(B). The workers’ compensation
court entered an Order, filed on May 11, 2011,
denying Claimant’s request to commute a por-tion
of his permanent total disability award to
a lump-sum amount.
¶7 Claimant appeals.
STANDARD OF REVIEW
¶8 This appeal involves a question of statu-tory
interpretation, which presents a question
of law. Samman v. Multiple Injury Trust Fund,
2001 OK 71, ¶ 8, 33 P.3d 302, 305. This Court
reviews a question of law de novo. Id. The appel-late
court has the plenary, independent, and
non-deferential authority to reexamine a trial
court’s legal rulings. K & H Well Serv., Inc. v.
Tcina, Inc., 2002 OK 62, ¶ 9, 51 P.3d 1219, 1223.
ANALYSIS
¶9 The issue presented on appeal is whether
the workers’ compensation trial court erred in
applying Title 85 O.S.2001, § 41(B) rather than
Section 41(A) and, therefore, denying Claim-ant’s
request to commute a portion of his per-manent
total disability award. Claimant argues
the workers’ compensation court incorrectly
applied Section 41(B), which precludes the
commutation of a permanent total disability
award, and should have allowed Claimant to
commute his permanent total disability award
pursuant to Section 41(A).
¶10 These two subsections of Section 41 are
in direct conflict concerning whether a claimant
is entitled to have an award of permanent total
disability commuted to a lump-sum payment.
Section 41(A) appears to allow the workers’
compensation court to commute a permanent
total disability award, while Section 41(B) spe-cifically
prohibits the permanent total disability
award to be commuted.
¶11 Section 41(A) provides:
A. Awards for permanent partial disability
under Section 22 of this title shall be made
for the total number of weeks of compensa-tion
which the Court shall find the claim-ant
will be entitled to receive, less any
sums previously paid which the Court may
find to be a proper credit thereon. When
the award becomes final, the whole sum or
any unpaid portion thereof shall operate as
a final adjudicated obligation and payment
thereof may be enforced by the claimant or
in case of his death, by the surviving ben-eficiary
entitled to the proceeds as provid-ed
in Section 48 of this title. All awards
shall be paid by periodic installments as
determined by the Court. Whenever an
injured person receives an award for permanent
partial disability, permanent total disability or
death benefits, the injured employee or claim-ant,
for good cause shown, may have the award
commuted to a lump-sum payment by permis-sion
of the Court. This authorization for
commutation shall not be applicable to
attorney fees in permanent total disability
cases. The lump-sum payment shall not
exceed Four Thousand Dollars ($4,000.00)
or twenty-five percent (25%) of the total
award, whichever is the larger sum.
(Emphasis added.)
In contrast, Section 41(B) specifically precludes
commutation of a permanent total disability
award:
B. Awards for permanent total disability
shall be made by the Court under Section
22 of this title. The Court shall make a
determination that the claimant will be
entitled to receive the weekly income ben-efits
provided in this title as long as his
permanent total disability continues to
exist. When an award for total permanent
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 515
disability becomes final, the accrued por-tion
thereof shall operate as a final adjudi-cated
obligation and payment thereof may
be enforced by the claimant. In proceed-ings
to enforce claims for total permanent
disability, the compensation under the pro-visions
of the Workers’ Compensation Act
shall be payable periodically and shall be
so provided in any award made thereon.
Total permanent disability awards shall not be
commuted to a lump-sum payment. (Empha-sis
added.)
¶12 The Oklahoma Court of Civil Appeals
has addressed the issue of whether a perma-nent
total disability award may be commuted
and has reached different conclusions. In Cun-ningham
v. Rupp Drilling, Inc., 1989 OK CIV
AP 77, 783 P.2d 985, the Court of Civil Appeals
held that a permanent total disability award
may be commuted to a lump-sum payment
pursuant to Section 41(A). The Court found
that a careful reading of the statute revealed
that the subsections were not in conflict, but
could be harmonized. The Court distinguished
between the different procedural phases men-tioned
in Section 41(A) — the hearing resulting
in an award of benefits — and Section 41(B)
—proceedings to enforce claims. Id. at ¶ 4, 783
P.2d at 986. The Court determined that, under
Section 41(A), the workers’ compensation trial
court had the discretion to commute a part of
the award to a lump sum at the time the origi-nal
award was made, if the claimant could
show good cause. Id. at ¶ 8, 783 P.2d at 986.
¶13 The Court of Civil Appeals reached a dif-ferent
result in Rea v. Big Chief Drilling Co., 1983
OK CIV AP 61, 673 P.2d 515. The Court recog-nized
the conflict between Subsections (A) and
(B) and held that the conflict could not be har-monized.
Applying rules of statutory construc-tion,
the Court concluded that “[i]n the absence
of legislative intent to the contrary, we find that
the specific prohibition on commutation found
in 85 O.S. 1981 § 41(B), concerning awards for
permanent total disability must control over
the discretion to allow such awards in subsec-tion
41(A) concerning awards for permanent
partial disability.” Id. at ¶ 18, 673 P.2d at 519.
¶14 The Legislature recently enacted legisla-tion
changing the wording of Section 41(A)
and (B) and resolving the conflict between the
two subsections. Title 85 O.S.2011, § 345 [previ-ously
Section 41(A) and (B)] now provides:
A. Awards for permanent partial impair-ment
shall be made for the total number of
weeks of compensation which the Work-ers’
Compensation Court shall find the
claimant will be entitled to receive, less any
sums previously paid which the Court may
find to be a proper credit thereon. When
the award becomes final, the whole sum or
any unpaid portion thereof shall operate as
a final adjudicated obligation and payment
thereof may be enforced by the claimant or
in case of the claimant’s death, by the sur-viving
beneficiary entitled to the proceeds
as provided in Section 49 of this act. All
awards shall be paid by periodic install-ments
as determined by the Court. When-ever
an injured person receives an award for
permanent partial impairment, the injured
employee or claimant, for good cause shown,
may have the award commuted to a lump-sum
payment by permission of the Court. The
lump-sum payment shall not exceed twen-ty-
five percent (25%) of the total award.
The balance of the total award shall be paid
in periodic installments.
B. Awards for permanent total disability
shall entitle the claimant to receive weekly
income benefits for the period prescribed
in Section 36 of this act. When an award for
permanent total disability becomes final,
the accrued portion thereof shall operate as
a final adjudicated obligation and payment
thereof may be enforced by the claimant or
in case of the claimant’s death, by the sur-viving
beneficiary entitled to the proceeds
as provided in Section 49 of this act. Perma-nent
total disability awards shall not be com-muted
to a lump-sum payment. (Emphasis
added.)
¶15 Generally, this Court may examine a
subsequent amendment to a statute to ascer-tain
the meaning of the prior statute. Quail
Creek Golf and Country Club v. Oklahoma Tax
Comm’n, 1996 OK 35, ¶ 10, 913 P.2d 302, 304.
When the Legislature amends a statute it may
be changing the existing law or clarifying the
law. American Airlines v. Hickman, 2007 OK 59,
¶ 11, 164 P.3d 146, 149. The Oklahoma Supreme
Court in Samman v. Multiple Injury Trust Fund,
2001 OK 71, ¶ 13, 33 P.3d 302, 307 (citations
omitted) explained:
The exact intent is ascertained by looking to
the circumstances surrounding the amend-ment.
If the earlier version of a statute defi-nitely
expresses a clear and unambiguous
516 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
intent or has been judicially interpreted, a
legislative amendment is presumed to
change the existing law. Nonetheless, if the
earlier statute’s meaning is in doubt or
uncertain, a presumption arises that the
amendment is designed to clarify, i.e., more
clearly convey, legislative intent which was
left indefinite by the earlier statute’s text.
In determining the legislative intent, the
courts may properly consider whether the stat-ute
before amendment was clear or ambigu-ous.
Board of Educ., Vici Public Schools, Indep.
School Dist. No. I-5, Dewey County v. Morris, 1982
OK 142, ¶ 9, 656 P.2d 258, 261. “A subsequent
statute clarifying a prior statute can be used to
determine the meaning of the prior statute even
if the interpretation affects alleged vested rights.”
Quail Creek Golf and Country Club v. Oklahoma Tax
Comm’n, 1996 OK 35 at ¶ 10, 913 P.2d at 304.
¶16 Here, the previous language of Section
41(A) and (B) concerning whether a permanent
total disability award could be commuted to a
lump-sum payment was ambiguous and had
not been judicially determined by the Oklaho-ma
Supreme Court. The Oklahoma Court of
Civil Appeals had reached different conclu-sions
regarding the propriety of commutation
under Section 41. The Legislature’s amend-ment
of the statute, 85 O.S.2011 § 345, clarified
the legislative intent of the previous subsec-tions
and provides guidance to this Court in
interpreting the statute.
¶17 This Court finds the workers’ compensa-tion
trial court did not err in denying Claim-ant’s
request to commute a portion of his per-manent
total disability award. The workers’
compensation court’s Order is sustained.
¶18 SUSTAINED.
GOODMAN, P.J., and THORNBRUGH, J., concur.
2012 OK CIV APP 10
IN RE THE MARRIAGE OF: JOAN PLUM-LEE,
Petitioner/Appellee, vs. PHILLIP
PLUMLEE, Respondent/Appellant.
Case No. 107,922. December 30, 2011
APEAL FROM THE DISTRICT COURT OF
OKLAHOMA COUNTY, OKLAHOMA
HONORABLE DONALD L. DEASON,
TRIAL JUDGE
AFFIRMED
Joan M. Blood (f/k/a Plumlee), Jefferson City,
Missouri, Pro Se
Jay F. McCown, Tamra A. Spradlin, QUICK,
MCCOWN & SPRADLIN, Oklahoma City,
Oklahoma, for Respondent/Appellant
JOHN F. FISCHER, VICE-CHIEF JUDGE:
¶1 Phillip Plumlee (Father), appeals the dis-trict
court’s order granting Joan Plumlee’s
(Mother), motion to dismiss his objection to her
notice of relocation of their child. Father’s
objection was filed out of time. Therefore, the
district court did not err in granting Mother’s
motion and we affirm.
BACKGROUND
¶2 On August 8, 2008, the district court
granted the parties a divorce and awarded
Mother custody of their minor child. On August
20, 2008, Mother filed her first notice of reloca-tion
and mailed a copy to Father pursuant to 43
O.S.2011 § 112.3.1 The district court sustained
Father’s timely objection after a hearing con-ducted
on October 8, 2008. On April 10, 2009,
Mother mailed a second notice of relocation,
properly addressed to Father, by certified mail.
After a second attempt to deliver the letter on
April 17, 2009, the United States Postal Service
(USPS) returned the letter to Mother marked
“Refused.” Mother filed a third notice on June
14, 2009, notifying Father that she was delay-ing
the date of her move by approximately one
month. After a second delivery attempt on
June 15, 2009, the USPS returned this certified
letter, also marked “Refused,” to Mother.
¶3 Mother relocated in July. On August 4,
2009, Father filed an objection to Mother’s relo-cation.
He also sought a permanent order pre-venting
Mother’s relocation or in the alternative,
modification of custody to award him primary
custody. Mother filed a motion to dismiss
Father’s objection, and following a hearing on
August 20, 2009, the district court granted
Mother’s motion and dismissed Father’s objec-tion
to Mother’s relocation. Father appeals.2
STANDARD OF REVIEW
¶4 This appeal requires review of the district
court’s application of 43 O.S.2011 § 112.3. “A
legal question involving statutory interpretation
is subject to de novo review, i.e., a non-deferen-tial,
plenary and independent review of the trial
court’s legal ruling.” Heffron v. Dist. Ct. of Okla.
County, 2003 OK 75, ¶ 15, 77 P.3d 1069, 1076 (cit-
Vol. 83 — No. 7 — 3/3/2012 The Oklahoma Bar Journal 517
ing Samman v. Multiple Injury Trust Fund, 2001
OK 71, ¶ 8, n.5, 33 P.3d 302, 305 n.5).
ANALYSIS
¶5 Father argues that the district court erred
in permitting Mother to relocate. This argu-ment
takes two forms. First, Father argues that
his objection was timely and, therefore, the
district court was required by section 112.3 to
hold an evidentiary hearing. Second, he con-tends
that the district court’s denial of Mother’s
first attempt to relocate is determinative of her
second notice based on the doctrine of claim
preclusion.
¶6 Two statutes govern the relocation of a
minor child by a custodial parent. Mahmoodjan-loo
v. Mahmoodjanloo, 2007 OK 32, ¶ 2, 160 P.3d
951, 952. The first statute provides:
A parent entitled to the custody of a child
has a right to change his residence, subject
to the power of the district court to restrain
a removal which would prejudice the rights
or welfare of the child.
10 O.S.2001 § 19 (renumbered as 43 O.S.2011
§ 112.2A). The second, 43 O.S. 2011 § 112.3,
provides in pertinent part:
B. 1. Except as otherwise provided by this
section, a person who has the right to
establish the principal residence of the
child shall notify every other person enti-tled
to visitation with the child of a pro-posed
relocation of the child’s principal
residence as required by this section.
. . . .
C. 1. Except as provided by this section,
notice of a proposed relocation of the prin-cipal
residence of a child or notice of an
intended change of the primary residence
address of an adult must be given:
a. by mail to the last-known address of the
person to be notified,
. . . .
G. 1. The person entitled to custody of a
child may relocate the principal residence
of a child after providing notice as provid-ed
by this section unless a parent entitled
to notice files a proceeding seeking a tem-porary
or permanent order to prevent the
relocation within thirty (30) days after
receipt of the notice.
. . . .
2. A parent entitled by court order or writ-ten
agreement to visitation with a child
may file a proceeding objecting to a pro-posed
relocation of the principal residence
of a child and seek a temporary or perma-nent
order to prevent the relocation.
. . . .
4. A proceeding filed pursuant to this subsec-tion
must be filed within thirty (30) days of
receipt of notice of a proposed relocation.
. . . .
K. The relocating person has the burden of
proof that the proposed relocation is made
in good faith. If that burden of proof is met,
the burden shifts to the nonrelocating per-son
to show that the proposed relocation is
not in the best interest of the child.
¶7 The first statute gives the custodial parent
a “presumptive right” to relocate. Kaiser v. Kai-ser,
2001 OK 30, ¶ 18, 23 P.3d 278, 282. The
second statute requires notice of intent to relo-cate
and provides for a hearing procedure if
the non-custodial parent objects to relocation.
Other than in Harrison v. Morgan, 2008 OK CIV
AP 68, ¶ 15, 191 P.3d 617, 621 (holding that
section 112.3 did not repeal 10 O.S.2011 § 19),
there has been no effort to construe the effect of
or to reconcile the two statutes. See Mahmood-janloo,
2007 OK 32, ¶ 12, 160 P.3d at 955 (declin-ing
to resolve the issue of potential conflict
because it had not been addressed by the trial
court). And, it is unnecessary to do so in this
case, except to the extent that we find a parent’s
right to relocate a child provided in section
112.2A is limited by the notice and hearing
requirements of section 112.3, if the child is to
be moved more than seventy-five miles from
the child’s principal residence for a period of
time exceeding sixty days. See Galarza v. Galar-za,
2010 OK CIV AP 19, ¶ 13, 231 P.3d 694, 698.
It is necessary, however, to decide whether
Mother’s certified mailing satisfies the notice
provision of section 112.3.3
¶8 Section 112.3 does not specifically require
certified mail, as used by Mother in this case,
nor does it address how the requirement of
notification may be satisfied beyond the speci-fication
that notice must be given “by mail to
the last-known address of the person to be
notified.” Section112.3 (C)(1)(a). The most
stringent form of notice required in this State
is for service of process. Title 12 O.S. Supp.
518 The Oklahoma Bar Journal Vol. 83 — No. 7 — 3/3/2012
2009 § 2004(C)(2) authorizes service by mail
and provides, in part:
a. At the election of the plaintiff, a sum-mons
and petition may be served by mail.
. . . Service by mail shall be effective on the
date of receipt or if refused, on the date of
refusal of the summons and petition by the
defendant.
b. Service by mail shall be accomplished by
mailing a copy of the summons and peti-tion
by certified mail, return receipt request-ed
and delivery restricted to the addressee.
. . .
¶9 Because of the fundamental family and due
process issues involved in relocating a child, we
find that a party required to satisfy the notifica-tion
by mail provision of section 112.3 must meet
the requirements of section 2004(C)(2) of the
Oklahoma Pleading Code. See In re Adoption of
D.T.H., 1980 OK 119, ¶ 19, 615 P.2d 287, 290
(holding that a parent’s right “to the care, cus-tody,
companionship and management of his or
her child is a fundamental right protected by the
federal and state constitutions”)(overruled on
other grounds); In re C.S., 1978 OK 94, ¶ 12, 580
P.2d 983, 985 (“The fundamental nature of
parental rights requires that the full panoply of
procedural safeguards must be applied to child
deprivation hearings.”). Although this is not a
termination proceeding, relocation may sub-stantially
affect Father’s visitation with his
child.
¶10 Father argues Mother’s mailing was
insufficient for two reasons. First, he contends
that Mother was required by the parties’
divorce decree to use email. Second, he argues
that, even if mailing were permitted, he was
not provided the notice prior to relocation
required by section 112.3, because he claims he
did not personally receive the mailing sent by
Mother.
I. Father’s Email Argument
¶11 We find Father’s argument that Mother
was required by the parties’ divorce decree to
communicate her notice of relocation by email
unpersuasive and disingenuous. First, absent a
finding of unconstitutionality, courts are
required to apply and enforce clear and unam-biguous
legislative enactments like the mailing
requirement of section 112.3. See In re City of
Durant, 2002 OK 52, ¶ 13, 50 P.3d 218, 221.
¶12 Second, the provision in the divorce
decree Father relies on is not, as Father argues,
conclusive on the issue. That provision states
that “the parties shall further use e-mail as the
primary mode of communication unless the
particular circumstances of the need for com-munication
make use of e-mail unreasonable
or impracticable.” (Emphasis added). Here, the
particular circumstances and the directives of
section 112.3 required a form of communica-tion
other than email. Further, the divorce
decree cannot be construed in a manner that
would excuse compliance with mandatory
statutory requirements. “[T]he general rule is
that nothing may be read into a statute which
was not within the manifest intention of the
legislature as gathered from the language of
the act.” Stemmons, Inc. v. Universal C.I.T. Credit
Corp., 1956 OK 221 ¶ 19, 301 P.2d 212, 216.
¶13 Finally, this Court notes that the divorce
decree specifically addresses this issue, a fact
not called to our attention by Father or his
counsel, even though that fact is included in
findings by the district court set forth in the
order from which Father appeals. Exhibit C to
the divorce decree addresses relocation by
either party after November 1, 2008. Those pro-visions
state that relocation is governed by sec-tion
112.3 and further provide: “The relocating
party shall mail (or serve in the manner pro-vided
for service of summons)” any notice of
intent to relocate. This is consistent with our
conclu