https://ecf.utd.uscourts.gov/doc1/183122867264825-3819-3422.R....

https://ecf.utd.uscourts.gov/doc1/18312286726


4825-3819-3422.R. Willis Orton (Bar No. 2484)
Shawn T. Richards (Bar No. 11949)
KIRTON |MCCONKIE
Kirton McConkie Building, Fourth Floor
50 East South Temple Street
P.O. Box 45120
Salt Lake City, Utah 84145-0120
Telephone: 801.328.3600
Facsimile: 801.321.4893
[email protected]
[email protected]
Attorneys for Plaintiff
Iowa Tanklines, Inc.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
IOWA TANKLINES, INC., a Nevada
corporation,
Plaintiff,
v.
OEL OPERATING (USA), INC., a Texas
corporation, and MARION ENERGY, INC., a
Texas corporation,
Defendants.
COMPLAINT
Civil No. 2:12-cv-00006 DS
Judge David Sam
Plaintiff Iowa Tanklines, Inc. (“Plaintiff” or “ITL”), by and through its counsel,
complains of defendants OEL Operating (USA), Inc. (“OEL”) and Marion Energy, Inc.
(“Marion,” and together with OEL, “Defendants”) as follows:
PARTIES, JURISDICTION, AND VENUE
1. Plaintiff is a Nevada corporation with its principal place of business located in
Ankeny, Iowa.
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2. OEL is a Texas corporation with its principal place of business, on information
and belief, in McKinney, Texas. OEL is a registered to do business in Utah, has a registered
agent in Utah, and owns a 30% working interest in oil and gas leases situated over 7,188 gross
acres of land in Carbon County, Utah. Furthermore, the injury resulting from OEL’s conduct, as
described below, was directed at Utah and felt by Plaintiff in Utah.
3. Marion is a Texas corporation with a principal place of business, upon
information and belief, in McKinney, Texas.
4. The amount in controversy exceeds the sum of $75,000.00, exclusive of interest
and costs, and is among citizens of different states. The Court has jurisdiction over Plaintiff’s
claims pursuant to 28 U.S.C. § 1332.
5. Venue is proper in this Court pursuant to 28 U.S.C. § 1391.
GENERAL ALLEGATIONS
Judgment Awarded in Favor of ITL and Against Marion, and Marion’s Failure to Pay.
6. On or about April 10, 2009, Plaintiff filed a lawsuit against Marion in the United
States District Court for the District of Utah, Central Division, Civil No. 2:09-cv-319, for breach
of contract, account stated, unjust enrichment and lien foreclosure (the “Lawsuit”).
7. On or about January 5, 2011, a Stipulated Judgment (the “Judgment”) was entered
in favor of Plaintiff and against Marion in the amount of $900,000.00 pursuant to the terms of a
January 4, 2011, Settlement Agreement (the “Agreement”) entered between the parties. A true
and correct copy of the Agreement is attached hereto as Exhibit “A”.
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8. Pursuant to the Agreement, Marion agreed to satisfy the Judgment by making a
series of monthly instalment payments of not less than $100,000.00 per month to Plaintiff, with
the balance of the Judgment to be fully paid no later than September 30, 2011. (Ex. A ¶ 4.)
9. As of May 15, 2011, Marion had defaulted under the Agreement by failing to
make its monthly instalment payments when due.
10. In total, as of May 15, 2011, Marion had paid Plaintiff $300,000.00, some of
which was paid late, in breach of the Agreement, thereby entitling Plaintiff to accelerate the
Judgment and require Marion to immediately pay the remaining balance of the Judgment, plus
default interest and attorneys’ fees. (Ex. A ¶¶ 5, 9.)
11. To induce Plaintiff to forebear from accelerating the Judgment and from declaring
Marion in default of the Agreement, Marion proposed that it and Plaintiff enter into an Amended
Settlement Agreement (“Amended Agreement”) in which Marion would be given additional time
to fully satisfy the Judgment in consideration for an additional cash payment to Plaintiff of
$25,000.00.
12. In addition, Marion agreed that if it elected to make its final payment under the
Amended Agreement in instalment payments, with the total balance to be paid by December 31,
2011, then it would pay Plaintiff an additional $75,000.00.
13. Plaintiff and Marion entered into an Amended Agreement on or about May 20,
2011. A true and correct copy of the Amended Agreement is attached hereto as Exhibit “B”.
14. Marion made one instalment payment to Plaintiff of $50,000.00 on or about May
20, 2011 under the Amended Agreement; however, Marion has failed to make any payments
since that time.
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15. Marion is therefore in default of the Amended Agreement, and pursuant to
paragraph five (5) thereof, the total outstanding balance owed by Marion to ITL was accelerated
as a matter of law, and is immediately due and payable. (Ex. B ¶ 5.)
16. In total, Marion has paid Plaintiff $350,000.00 toward the Judgment. Therefore,
under the Judgment and the Amended Agreement, Marion still owes Plaintiff $575,000.00, plus
accruing interest and attorneys fees and costs.
Marion’s Fraudulent Transfers to OEL.
17. On October 11, 2011, Plaintiff took the oral deposition of Karel Louman
(“Louman”) in connection with general supplemental proceedings to collect on the Judgment in
the Lawsuit. Attached hereto as Exhibit “C” are relevant portions of Louman’s deposition
transcript.
18. Louman was employed by Marion as its Chief Operating Officer until September
2011. (Ex. C at 11:5-13.)
19. Louman testified that Marion and OEL are sister companies and are both whollyowned
by Marion Energy, Ltd. (“MEL”). (See id. at 13:3-7, 43:7-14.)
20. MEL is an Australian company and is publicly listed on the Sidney Stock
Exchange. (Id. at 12: 9-13.) Louman is currently an officer and director of MEL. (Id. at 12:3-
5.)
21. Immediately prior to his deposition, Louman produced to Plaintiff’s counsel a
Marion balance sheet dated March 31, 2011. A true and correct copy of the March 31, 2011
balance sheet is attached hereto as Exhibit “D”.
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22. The balance sheet lists as an asset an account receivable (labelled as “Accounts
Receivable – JIB”) in the amount of $1,857,848.68. (See Ex. D.)
23. Louman testified this account receivable depicts amounts owed by OEL to
Marion though various intercompany loans that Marion made to OEL. (Ex. C at 58:5-11.)
24. The balance sheet also lists as an asset “Unbilled JIB” in the amount of $5,334.42,
which represents additional amounts owed by OEL to Marion though intercompany loans. (See
Ex. D, see also Ex. C at 58:12-14.)
25. Louman further testified that OEL has never made any payments toward its
obligation owed to Marion. (Ex. C at 62:25-63:3.) In fact, there is no loan agreement,
promissory note, security agreement, or other formal documentation between OEL and Marion to
memorialize any obligation of OEL to repay these alleged intercompany loans. (See id. at 43:15-
17 (Q: “So there’s no formal documents?” A: “No. I just said I haven’t kept track of it because
it hasn’t been important.”) (emphasis added.)
26. On information and belief, OEL knew of Marion’s obligation under the Judgment;
yet, Marion never received any value from OEL in exchange for the alleged intercompany loans
that it was making to OEL. Instead, OEL was using Marion as its personal piggy-bank to
finance its own operations without regard to Marion or its creditors, and without any intent to
repay the alleged loans.
27. After Louman’s deposition, Plaintiff subpoenaed Marion’s bank statements from
JP Morgan Chase, N.A. (“Chase”).
28. The bank statements show that from January 1, 2011 through October 3, 2011,
OEL siphoned $1,003,526.25 from Marion’s Chase checking account.
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29. Attached hereto as Exhibit “E” are Marion’s bank statements for the months
January, May, June, July, September, and October 2011. These bank statements demonstrate
that on the following dates, OEL swept Marion’s Chase account and caused large sums of money
to be transferred to it:
Date Amount of Transfer
January 3, 2011 $41,376.25
May 13, 2011 $795,000.00
May 27, 2011 $90,000.00
June 1, 2011 $65,000.00
July 5, 2011 $700.00
September 7, 2011 $650.00
October 3, 2011 $10,800.00
30. With the exception of the January 3, 2011 transfer, each cash transfer was made
subsequent to the entry of the Judgment (which was entered on January 4, 2011).
31. Marion and OEL knew and understood that by Marion making these cash
transfers to OEL, without any reasonable expectation that these loans would be repaid, Marion
would be rendered insolvent and/or unable to make its required payments to Plaintiff.
32. Thus, Marion’s cash transfers to OEL were fraudulent and the impact of these
fraudulent transfers was directed at and felt by Plaintiff in Utah, where the Judgment was
entered, where the Agreement and the Amended Agreement were entered, and where Marion’s
underlying obligation to Plaintiff was incurred.
FIRST CLAIM FOR RELIEF
(Fraudulent Transfer)
33. Plaintiff incorporates herein all preceding paragraphs.
34. On January 4, 2011, the Judgment was entered against Marion for $900,000.00
pursuant to the terms of the Agreement (as amended by the Amended Agreement).
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35. Marion has failed to satisfy the Judgment and in so doing, has breached the
Agreement and the Amended Agreement. In total, Marion owes Plaintiff $575,000.00, plus postjudgment
interest, costs and attorneys’ fees.
36. The day before the Judgment was entered, on January 3, 2011, Marion transferred
$41,376.25 to OEL, and subsequent to January 3, 2011, Marion has transferred at least
$962,150.00 to OEL.
37. Marion did not receive any value, and certainly not a reasonably equivalent value,
in exchange for its cash transfers to OEL. In fact, the transfers are not subject to any loan
agreement, promissory note, or repayment obligation.
38. As a result of these cash transfers, Marion was left with assets unreasonably small
in relation to its business and was rendered unable to make its required payments to Plaintiff.
39. Marion knew that its cash transfers to OEL would render it unable to pay its debts
when they came due, and in particular, Marion knew, or reasonably should have known, that it
had incurred a debt to Plaintiff that it would be unable to repay because of its substantial cash
transfers to OEL.
40. In fact, on May 13, 2011, while Marion was in default of the Agreement and a
mere seven (7) days before Marion induced Plaintiff to execute the Amended Agreement,
Marion covertly transferred $795,000.00 to OEL and received no value in exchange. (See Ex.
D.)
41. Marion only made one $50,000.00 payment to Plaintiff after May 13, 2011 (on or
about May 20, 2011) and has not made any payments to Plaintiff since that time.
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42. Marion made these transfers to OEL with actual intent to hinder, delay and/or
defraud Plaintiff based on, among other things, the following:
a. OEL, as an affiliate and sister company, is an insider;
b. The transfers were concealed by Marion and OEL and even after Plaintiff
had defaulted on the Judgment and the Agreement and the Amended
Agreement, it stealthily transferred $962,150.00 to OEL without receiving
any value in exchange;
c. Before any of the transfers in 2011 were made, Marion had been sued by
Plaintiff;
d. Marion was insolvent or became insolvent shortly after the transfers were
made; and
e. The transfers occurred shortly before and shortly after the Judgment was
entered and the Agreement and Amended Agreement were entered into.
43. As testified to by Louman, in September 2011, Marion laid off all of its
employees because they had not been paid for three (3) to three and one-half (3 ½) months (or
since mid May 2011). (Ex. C at 11: 11-18 (“there was just no money left and all activities were
ceased.”).)
44. Yet in that same time frame, from mid May 2011 to September 2011, Marion
transferred $962,150.00 to OEL without receiving any consideration in return.
45. All of Marion’s 2011 cash transfers to OEL, in the amount of $1,003,526.25, were
fraudulent as to Plaintiff. Moreover, any cash transfers made by Marion to OEL prior to January
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3, 2011 were also fraudulent as to Plaintiff because Marion knew that owed money to Plaintiff
and it also knew that a judgment would soon be entered against it.
46. As a direct and proximate result of Marion’s fraudulent transfers to OEL and
OEL’s fraudulent receipt of those monies, Plaintiff has been damaged in that Marion failed to
satisfy the Judgment pursuant to the terms of the Agreement and the Amended Agreement.
Marion’s transfers to OEL should therefore be avoided in at least the amount of $575,000.00,
plus interest, costs and attorneys’ fees, and those funds immediately paid over to Plaintiff.
Furthermore, Plaintiff is entitled to a pre-judgment writ of attachment over the monies
transferred by Plaintiff to OEL, an addition to an injunction enjoining any additional transfers by
Marion to OEL.
SECOND CLAIM FOR RELIEF
(Alter Ego)
47. Plaintiff incorporates all preceding paragraphs.
48. OEL has used Marion as its personal piggy bank by siphoning money from
Marion’s account to finance its own operations.
49. None of these alleged “intercompany loans” have been memorialized by an
agreement or other written document that would require repayment. In fact, on information and
belief, not one payment has ever been made by OEL to repay any portion of the alleged loan.
50. As a result, there is no functional difference between Marion and OEL and the
corporate shield is being used as a façade to facilitate a continuous and ongoing fraud.
51. Therefore, OEL is Marion’s alter ego.
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52. Plaintiff is entitled to enforce the Judgment against OEL as Marion’s alter ego in
the amount of $575,000.00 plus interest, costs and attorneys’ fees, which represents the unpaid
balance of the Judgment owed by Marion to Plaintiff.
PRAYER FOR RELIEF
Based on the foregoing, Plaintiff prays for relief as follows:
1. A judgment (a) avoiding Marion’s transfers to OEL in the amount of $575,000.00
plus interest, costs, and attorneys’ fees; and (b) ordering that those funds be immediately paid
over to Plaintiff.
2. A pre-judgment writ of attachment on the proceeds of all transfers made by
Marion to OEL.
3. As Marion’s alter ego, a judgment against OEL for $575,000.00, plus interest,
costs and attorneys’ fees, which represents the unpaid balance owed by Marion to Plaintiff under
the Judgment.
4. Such further and other relief as the Court deems appropriate.
DATED this 4th day of January, 2012.
KIRTON | McCONKIE
By /s R. Willis Orton
R. Willis Orton
Shawn T. Richards
Attorneys for Plaintiff
Plaintiff’s address:
210 S.W. Linden Street
Ankeny, IA 50023-2413