Western Oil & Gas JV, Inc. v. Griffiths , 91 F. App'x 901 ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
December 11, 2003
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
No. 03-10157
WESTERN OIL & GAS JV, INC.,
Plaintiff-Appellant,
versus
JOHN L. GRIFFITHS, JR., an Individual; ET AL.,
Defendants,
CASTLEROCK OIL COMPANY, INC., a Texas
Corporation; DAVID C. TYRRELL, JR., also
known as David C. Tyrell, Jr., an Individual;
TURTLE CREEK RESOURCES, INC., a
Louisiana Corporation; ASM EXPLORATION, INC.,
a Louisiana Corporation.
Defendants-Appellees.
Appeal from the United States District Court for
the Northern District of Texas
(USDC No. 3:00-CV-2770-N)
_______________________________________________________
Before REAVLEY, HIGGINBOTHAM and BENAVIDES, Circuit Judges.
PER CURIAM:*
The judgment of the district court is affirmed for the following reasons:
1. Appellees demonstrated that Griffiths did not actually own any valid unexpired
leasehold interests that were transferred to the Tyrrell Defendants (Tyrrell) or Castlerock
during the relevant period. A person cannot fraudulently transfer an asset that he does
not own. To the extent Western claims that Tyrrell transferred a back-end interest in the
Shinn well to Griffiths, such a transfer will not by itself support a fraudulent transfer
claim, which is premised on a transfer of property owned by the judgment debtor,
Griffiths, to a third party, not the other way around. If Griffiths received assets from
appellees, Western’s remedy is to execute on its judgment against Griffiths and seize the
assets from him. Insofar as Western argues that Griffiths received an interest in the Shinn
well and then transferred this interest to Tyrrell Defendant ASM, the record does not
support this argument. Western cites a chart listing ASM as a working interest owner in
the well, but this chart is entirely consistent with the evidence submitted by Tyrrell that
Griffiths had no interest to convey to ASM or any other party.
2. The turnover order is not a proper vehicle for determining what rights, if any,
Griffiths had in the Shinn well. This is a substantive disputed legal matter that was not
litigated in the turnover proceeding. The Tyrrell Defendants were not parties to the
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
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underlying litigation, and the turnover order was an agreed order where no legal or
factual issues were actually litigated. In RTC v. Smith, 53 F.3d 72 (5th Cir. 1999), we
explained:
A proceeding to determine whether a transaction is fraudulent or otherwise
to determine property rights of the parties is improper under the turnover
statute, for the statute does not allow for a determination of the substantive
rights of involved parties. It is even more clear that a party not even before
the court cannot have its rights determined via a turnover proceeding.
Id. at 80 (citations and internal quotation marks omitted).
3. Western claims that Griffiths earned consulting fees from Castlerock but
arranged with Castlerock to be designated an employee to avoid the turnover order.
Under the Texas turnover statute, wages for personal services are exempt from turnover
orders, TEX. CIV. PRAC. & REM. CODE § 31.0025 (Vernon 1997), and there is some Texas
authority distinguishing between fees paid to an independent contractor, which are not
exempt from turnover orders, and wages paid to an employee, which are exempt. See
DeVore v. Cent. Bank & Trust, 908 S.W.2d 605, 610 (Tex. App.–Fort Worth 1995, no
writ). Castlerock offered deposition testimony supporting its position that the payments
were wages, including testimony from its president that Griffiths became an employee
when “the scope of the operation had grown to a point where it needed a full-time
engineer.” Whether the fees paid to Griffiths were wages or consulting fees is a
substantive disputed legal matter that is not properly decided via a turnover proceeding,
or in this case an agreed turnover order to which Castlerock was not even a party.
Castlerock had no opportunity to litigate this issue in the underlying suit and is not even
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named in the turnover order. “The turnover procedure contemplates the presence of third
parties where their interest may be involved.” Roebuck v. Horn, 74 S.W.3d 160, 164
(Tex. App.–Beaumont 2002, no pet.).
4. The claim that Tyrrell and Castlerock were alter egos of Griffiths and/or
Griffiths’ company Lloyds is not supported by any evidence. Western offered evidence
that for a period Mr. Tyrrell shared offices and certain office equipment and expenses
with Griffiths or one of his companies. Similar evidence was offered as to Griffiths and
Castlerock. This evidence is insufficient to pierce the corporate veil. The summary
judgment record indicates that Griffiths was a business associate of some sort with both
Tyrrell and Castlerock, and was involved in oil and gas related business ventures with
both. Castlerock offered evidence that Griffiths was a consultant and later an employee
of Castlerock. The fact that he worked in the same offices with appellees and shared
expenses and equipment is insufficient grounds for piercing the corporate veil.
5. Western also claims that the Tyrrell Defendants and Castlerock are liable under
a single business enterprise theory. This doctrine provides that “when corporations are
not operated as separate entities, but integrate their resources to achieve a common
business purpose, each constituent corporation may be held liable for the debts incurred
in pursuit of that business purpose.” Gardemal v. Westin Hotel Co., 186 F.3d 588, 94
(5th Cir. 1999). Like the alter-ego doctrine, the single business enterprise doctrine is an
equitable remedy which applies when the corporate form is “used as part of an unfair
device to achieve an inequitable result.” Old Republic Ins. Co. v. EX-IM Servs. Corp.,
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920 S.W.2d 393, 395 (Tex. App.–Houston[1st Dist.] 1996, no writ). This doctrine is no
more viable for Western than the alter ego doctrine. Like alter ego, the single business
enterprise doctrine is an equitable remedy and not a cause of action. Gardemal, 186 F.3d
at 94. Absent a cognizable cause of action this remedy is unavailable.
6. Western argues that it has a valid unjust enrichment claim because “Griffiths
fraudulently transferred his oil and gas interests to [appellees] instead of holding those
assets in his own name, where Western could reach these assets to satisfy its judgments
from the Earlier Lawsuit.” Western also asserted a civil conspiracy claim against the
Tyrrell and Castlerock, and claims that fraudulent transfer was the underlying unlawful
act. These claims fail because the evidence does not support a fraudulent transfer claim.
AFFIRMED.
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