State ex rel. Henricksen v. State ex rel. Corporation Commission

2001 OK 89, 37 P.3d 835, 72 O.B.A.J. 3068, 2001 Okla. LEXIS 104, 2001 WL 1246490
CourtSupreme Court of Oklahoma
DecidedOctober 16, 2001
DocketNo. 96,164
StatusPublished
Cited by17 cases

This text of 2001 OK 89 (State ex rel. Henricksen v. State ex rel. Corporation Commission) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Henricksen v. State ex rel. Corporation Commission, 2001 OK 89, 37 P.3d 835, 72 O.B.A.J. 3068, 2001 Okla. LEXIS 104, 2001 WL 1246490 (Okla. 2001).

Opinion

OPINION

WATT, Vice Chief Justice,

FACTS AND PROCEDURAL BACKGROUND

T1 In 1999, Plaintiffs, ten Oklahoma taxpayers, filed suit in Oklahoma County under the Oklahoma gui tam statutes, 62 0.9.1991 §§ 3721 and 3732. Plaintiffs challenged a settlement agreement involving Southwestern Bell Telephone Company, the Oklahoma Attorney General, and the Oklahoma Corporation Commission, as well as others, all of whom were parties to appeals from several rate cases before the Corporation Commission. The Corporation Commission formally approved the settlement agreement in an order dated October 80, 1995 and a subsequent supplemental order.

{2 Under the terms of the settlement agreement Southwestern Bell agreed to give cash rebates and discounted or free services to those of its customers and ex-customers who met certain conditions. In return, the State of Oklahoma released to Southwestern Bell $500,000.00, which the state had held in escrow pending the appeals. The state also exonerated Southwestern Bell's pledge of unencumbered corporate assets worth $500,000,000.00.

3 The potential value of the refunds and services that Southwestern Bell agreed to furnish under the settlement agreement was $638,000,000.00. Plaintiffs claimed that Southwestern Bell failed either to make all of the cash payments or to provide all of the services as agreed. Plaintiffs also claimed that Southwestern Bell had fraudulently concealed that it had breached the settlement agreement. Plaintiffs sought judgment in an amount equal to the value of the rebates, free services, and discounted services, which [838]*838Southwestern Bell had agreed to pay but had not actually paid out to its customers.

T4 Southwestern Bell moved to dismiss plaintiffs' petition, which the trial court granted but gave plaintiffs leave to file an amended petition. Plaintiffs then filed their amended petition in which they added the allegation that Southwestern Bell had been guilty of fraudulently concealing that they had payed less than they owed under the settlement agreement.

T5 Southwestern Bell moved to dismiss plaintiffs' amended petition. After the parties had briefed the issues and following oral argument, the trial court entered an. order granting Southwestern Bell's motion to dismiss plaintiffs' amended petition. The trial court's order of dismissal was based on three grounds: (1) there was no transfer of state property or public money sufficient to invoke the gui tom statutes; (2) plaintiff failed to comply with the gui tam statute of limitations, 62 O.S. Supp.1994 § 374, which requires than any gust tam action be filed within two years of the alleged transfer of any property; and (8) the fraud plaintiffs alleged was fraud in the inducement of the settlement agreement, which should have been raised in the Corporation Commission. Plaintiffs then filed a motion to reconsider, which the trial court denied. For the reasons set forth in the balance of this opinion we hold that the trial court correctly dismissed plaintiffs' amended petition and denied their motion to reconsider.

DISCUSSION

I.

The qui tam statutes do not apply because there was no transfer of state property or public money here.

16 In order for a gut tam action to lie, there must have been a transfer of money or property that "involves a change of ownership and possession." State ex rel. Twist v. Bailey, 1956 OK 108 ¶ 4, 295 P.2d 763, 765. The settlement agreement replaced the Corporation Commission's rate orders and, under the terms of the agreement, the appeal bonds were exonerated. At most, the state's agreement on this seore represented a failure to collect what this Court might have found it to be entitled. Thus, there was no "payment of any money or transfer of any property belonging to the state." 62 0.S8.1991 $ 372 (note 1).

T7 The gui tam statutes are penal in nature. In order for those statutes to apply, "There must have been a paying out of [state] funds or a transfer of [state] property." Twist, 1956 OK 108 at ¶ 1, 295 P.2d at 763. As indicated, no such transfer took place here. Indeed, plaintiffs did not allege that there was a transfer. Instead, in their amended petition they claimed a right to judgment because of money or property "which were to be transferred" and "which was supposed to have been transferred." The money or property at issue here was money collected by Southwestern Bell from its customers. None of that money was ever in the hands of any state agency.

T 8 Plaintiffs claim that State ex rel. Hettel v. Security National Bank & Trust Co. in Duncan, 1996 OK 53, 922 P.2d 600 and State ex rel. Higgs v. Muskogee Iron Works, 1940 OK 264, 103 P.2d 101, support their claim that there was, indeed a change in ownership or possession sufficient to support their gui tom claim. Our analysis of Hettel and Higgs, however, convinces us that neither opinion supports plaintiffs position. In Hettel we held that there was an issue of fact presented but there, unlike the situation that exists here, the transfer complained of was a loan of the proceeds of a general obligation bond issue to an industry. Plaintiffs claim that Higgs stands for the proposition that "dispositions" of property are different from "transfers." We hold that Higgs clearly does not stand for such a proposition. There we relied on the rule that the gut tam statutes, "like all penal statutes must be strictly construed."

19 Plaintiffs seek to distinguish State ex rel. Twist v. Bailey, 1956 OK 1083, 295 P.2d 763, as well as others of our opinions, in which we have held that, because the qui tam statutes must be strictly construed, an actual transfer of money or property is a prerequisite to the prosecution of a gut tam [839]*839actions.3 We find plaintiffs' attempts to distinguish these clear requirements of the law unconvincing. We have carefully reviewed our jurisprudence on this issue and have found nothing in it to support plaintiffs' claim that there was a "transfer" here sufficient to support plaintiffs' gut tam claim.

IL.

Plaintiffs' qui tam action, even if viable, is barred by the applicable statute of limitations, 62 0.8. Supp.1994 § 874.

110 In 1994 the Legislature enacted a statute of limitations governing gui fam actions, 62 O.S. Supp.1994 § 374. Section 874 provides,

Civil actions filed by taxpayers for the recovery of real or personal property can only be brought if the written demand upon the proper officers is made by the required resident taxpayers within two (2) years of the transfer of the property, and the civil suit is filed within six (6) months following the refusal, failure, or neglect of the proper officers to act upon the written demand.

We have not previously interpreted this statute. That is the reason we granted appellants' motion to retain this appeal.

{11 Section 374 requires that written demand be made on the appropriate officers "within two (2) years of the transfer of the property." It is undisputed that the property alluded to in plaintiffs' amended petition was transferred, at the latest, in 1995 or 1996 and that plaintiffs never gave a written notice and filed their suit in September 1999. Thus, § 374's two year limitations period has run.

{12 Plaintiffs argued that the statute of limitations cannot apply here because they seek to vindicate public rights. Plaintiffs rely on State ex rel. Schones v.

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Bluebook (online)
2001 OK 89, 37 P.3d 835, 72 O.B.A.J. 3068, 2001 Okla. LEXIS 104, 2001 WL 1246490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-henricksen-v-state-ex-rel-corporation-commission-okla-2001.