Redcorn v. Knox

2014 OK CIV APP 109, 345 P.3d 392, 2014 Okla. Civ. App. LEXIS 105, 2014 WL 8184633
CourtCourt of Civil Appeals of Oklahoma
DecidedJanuary 31, 2014
DocketNo. 110,279
StatusPublished
Cited by6 cases

This text of 2014 OK CIV APP 109 (Redcorn v. Knox) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Redcorn v. Knox, 2014 OK CIV APP 109, 345 P.3d 392, 2014 Okla. Civ. App. LEXIS 105, 2014 WL 8184633 (Okla. Ct. App. 2014).

Opinion

P. THOMAS THORNBRUGH, Judge.

T 1 Plaintiffs/Appellants in this appeal from a consolidated action in the trial court are Wakon Redeorn (Redeorn) and Eduvest, Inc., an Oklahoma corporation (Eduvest), of which Redcorn is sole owner. They seek review of the trial court's decision granting a motion by Oklahoma's Insurance Commissioner as Receiver of Heritage National Insurance Company (Receiver) to substitute itself as the sole real party in interest entitled to prosecute and settle this action against Defendant, Teresa L. Knox.1 For the reasons set forth below, we affirm.

BACKGROUND

12 In 2006, Redcorn was convicted by a federal court jury of health care fraud, wire fraud, and money laundering,2 for criminal acts committed while he was an owner and executive of Heritage National Insurance Company (HNIC). He was sentenced to prison, assessed criminal monetary penalties, and ordered by the federal district court to pay. more than $1,765,000 in restitution to three payees, including $258,788.25 to Receiver.3

T3 In 2007, Redeorn sued Knox in Tulsa County District Court Case No. CJ-2007-3642, claiming default on a $100,000 promissory note. | In 2008, Eduvest sued Knox in [394]*394Tulsa County District Court Case No. CJ-2008-0916, claiming breach of a contract by which Knox had promised to pay $200,000 in exchange for 49% of the outstanding shares of stock in Dental Directions, Inc., an Oklahoma corporation that Plaintiffs allege owns several private vocational schools and is worth millions of dollars. The latter suit sought money damages for Knox's alleged failure to pay for the stock, and both suits sought interest and attorney fees. Knox denied lability and asserted a number of defenses and counterclaims, including the defense that all transactions between the parties were void or voidable because they were based on a "criminal enterprise" conducted by Redcorn and proceeds illegally obtained by Redcorn. On Knox's motion, and over Plaintiffs' objection, the trial court consolidated the two cases in August 2008 under Case No. CJ-2007-8642.4

T 4 The federal criminal case against Red-corn was preceded by several years of investigation by federal authorities and the Oklahoma Insurance Commission (OIC). In 2002, OIC was appointed Receiver of HNIC in Oklahoma County District Court Case No. CJ-2002-1614, and sued Redcorn and Brad Frost, another HNIC principal, for wrongful conversion of HNIC funds. On July 10, 2009 (following Redcorn's conviction), Receiver and Redcorn entered into an "Agreed Journal Entry of Judgment" (Agreed Judgment) in the Oklahoma County case, by which Receiver took judgment against Redeorn for $325,000. The Agreed Judgment further provides that:

3... . Redcorn and Frost forever abandon, release and relinquish any and all rights, claims, defenses, causes of action and/or involvement in or related to Heritage National Insurance Company and these receivership proceedings ..., whether occurring or arising within Oklahoma County Case No. CJ-2002-1614, or otherwise. Redcorn and Frost and/or their counsel of record ... shall not file any further motions, pleadings, objections or other documents, and shall not make any further voluntary appearance, objection or argument related to these receivership proceedings, whether occurring or arising within Case No, CJ-2002-1614 or otherwise.
4. ... Redcorn hereby fully and completely assigns/transfers any and all interests, rights, claims, defenses, causes of action and/or recoveries in the following litigation to the Receiver, for further prosecution by the Receiver:
Wakon Redcorn, Plaintiff, vs. Theresa L. Knox, Defendant, Tulsa County Case No. CJ~2007-8642; and Eduvest, Inc., Plaintiff, vs. Tereso L. Kmox, Defendant; Tulsa County Case No. CJ-2008-916 (Consolidated Under Case No. CJ-2007-3642).
Receiver has previously intervened in said case(s) and, by agreement of the parties and as stipulated in this Agreed Judgment, Redeorn agrees to fully assist the Receiver in the prosecution of the case(s), with any recovery going to satisfy approved claims asserted against the HNIC receivership estate. Any net recovery by the Receiver will be credited towards satisfaction of the Receiver's outstanding judgment against Redcorn as entered herein. If the net recovery exceeds the amount of the judgment and all interest and fees, any excess shall revert to Redcorn.

The Agreed Judgment was signed by both Redcorn and his counsel, as well as by the district judge assigned to the case.

15 As stated in the Agreed Judgment, prior to the Judgment Receiver had moved to intervene in Tulsa County Case No. 2007-3642, asserting rights to any proceeds recovered from Knox in Redcorn's promissory note claim. Following the 2009 Agreed Judgment, Receiver moved to substitute itself as "real party in interest" in the consolidated Tulsa County. cases, citing its status as HNIC's receiver under the rehabilitation and liquidation provisions of the Oklahoma Insur[395]*395ance Code, 36 O.S.1901 et seq., and asserting, inter alia, that

-because Knox claimed the proceeds involved in Redcorn and Eduvest's transactions with Knox were "stolen HNIC assets" she recognized that Receiver "is the proper party to pursue these matters"; and
-Redcorn's assignment of his rights in both actions to Receiver entitled Receiver to pursue the contract elaims in the consolidated case.

T 6 Plaintiffs initially objected to Receiver's motion. In August 2009, however, Plaintiffs joined with Receiver in Receiver's substitution motion in both cases, subject only to Plaintiffs' denial of Receiver's contention "that the source of the funds 'loaned to Defendant Knox were embezzled HNIC funds, "5 and that as such Plaintiffs should each remain as a party in interest. The only reason listed by Plaintiffs for their denial of Receiver's embezzling allegation was that Redcorn's criminal convictions were on appeal to the Tenth Cirenit Court of Appeals, and that Plaintiffs anticipated reversal of same.6

1 7 In April 2010, the trial court entered an order leaving Redcorn and Eduvest in plice as Plaintiffs but also designating Receiver as "a real party-in-interest Plaintiff in both cases, with the court to address issues concerning "authority of counsel, discovery, procedure and other litigation issues" as they arose. Counsel for all parties approved the order.

T8 Shortly thereafter, in July 2010 Edu-vest moved on its own, in the consolidated case, to amend its petition to assert a plethora of additional theories of recovery against Knox, including a shareholder derivative action on behalf of DDI, fraud, breach of fidu-clary duty, abuse of process, perjury, an accounting, declaratory judgment, injunction, and actual and punitive damages. Attached to the proposed amended petition were numerous exhibits, which included, inter alia, a "Stock Purchase Agreement" dated March 15, 2000, whereby Eduvest purchased "100 percent of the capital stock of DDI" for $250,000, signed by Redcorn as Eduvest's president; a January 2001 "Stock Purchase Agreement Addendum," which Redeorn characterized as a "fake," by which the sale to Eduvest purportedly was "amended" to sell only 49% of DDI stock; and a corporate minute that identifies Redcorn as a DDI director and company president. Knox objected to the motion. '

Free access — add to your briefcase to read the full text and ask questions with AI

Related

RUSHMORE LOAN MANAGEMENT SERVICES v. SOLORIO
2022 OK CIV APP 33 (Court of Civil Appeals of Oklahoma, 2022)
Rebein v. Cornerstone Creek Partners, LLC
842 F.3d 1293 (Tenth Circuit, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
2014 OK CIV APP 109, 345 P.3d 392, 2014 Okla. Civ. App. LEXIS 105, 2014 WL 8184633, Counsel Stack Legal Research, https://law.counselstack.com/opinion/redcorn-v-knox-oklacivapp-2014.