United States District Court, N.D. Texas, Fort Worth Division
MEMORANDUM OPINION AND ORDER
for consideration the motion of defendant, Legend Bank, N.A.,
for summary judgment. The court, having considered the
motion, the response of plaintiff, Midwestern Cattle
Marketing, LLC, the reply, the record, the summary judgment
evidence,  and applicable authorities, finds that the
motion should be denied in part and granted in part.
operative pleading is plaintiff's first amended complaint
filed March 19, 2018. Doc. 23. In it, plaintiff alleges:
relevant times plaintiff was a cattle broker, matching cattle
producers with cattle buyers. Doc. 23 ¶ H. In July 2
011, plaintiff's president, Jason O'Connell
("Jason") met Tony Lyon ("Tony") at a
sale barn. Shortly thereafter, plaintiff entered into a
business arrangement with Tony, and his parents, Owen
("Owen") and Monna ("Monna") Lyon,
through their business, Lyon Farms, Id. ¶
12• Lyon Farms used a bank account at defendant known as
the Owen and Monna D Lyon Cattle Account (the "Legend
account"). Owen and Monna were the only signatories on
the Legend account. Id. ¶ 13. Owen worked for a
pipeline company and Monna was a retired teacher's
assistant. They were elderly and retired. Id. ¶
over three years, plaintiff purchased cattle from and sold
cattle to Lyon Farms. These transactions were completed using
checks from plaintiff's account at Points West Bank in
Sidney, Nebraska (the "Points West account"), and
the Legend account. Id. ¶ 16. Early in 2014,
plaintiff provided to the Lyons a checkbook and a signature
stamp on the Points West account so that they could sign
checks on its behalf after receiving authorization. Tony also
provided plaintiff with blank checks from the Legend account
signed by Monna, with the amount to be filled in upon
Tony's instructions. Id. ¶ 17.
in late 2014, Tony represented to plaintiff that he had met a
big money cattle buyer named John George with George Cattle
Company. Id. ¶ 18- Unbeknownst to plaintiff,
John George and George Cattle Company did not exist, but was
used as a front for a check-kiting scheme. Id.
¶ 20. Typically, Tony would write a check on
plaintiff's Points West account purportedly for funds to
be used by Tony for cattle he said he was purchasing for
George Cattle Company, Owen would deposit that check to the
Legend account and Tony would provide plaintiff a handwritten
invoice by fax that provided information about the cattle
purportedly being purchased; Tony would request plaintiff to
prepare an invoice for George Cattle Company, which plaintiff
would do and send by fax to Tony; Tony would inform plaintiff
that he had delivered the cattle to George Cattle Company and
that George Cattle Company had paid Lyon Farms for the
cattle; Tony would then inform plaintiff that it was
authorized to fill out one of the checks pre-signed by Monna
on the Legend account, and plaintiff would fill out the
amount specified by Tony on a pre-signed check, and deposit
it into the Points West account. Id. ¶ 19.
arrangement between plaintiff and Tony was that plaintiff
would never take possession of the cattle directly.
Id. ¶ 21. Instead, possession of the cattle
purportedly remained with Tony until the cattle were
transferred to the fictitious buyer, George Cattle Company.
late-2014 and early-2015, the activity in the Legend account
increased, the dollar amounts of the transactions increased
substantially, and overdrafts on the account became frequent.
Id. ¶ 28. Most of the overdrafts were created
by checks drawn on the Legend account payable to plaintiff.
Id. ¶ 32. Defendant, through Brennan Williams
("Brennan"), the president of its Decatur branch,
knew beginning in early 2015 of irregular activity in the
Legend account. Id. ¶ 31-32. The amount of the
overdrafts grew from about $152, 000 in February 2015 to over
$4.4 million in June 2015. Id. ¶ 35. Brennan
approved each of the overdrafts. Id. ¶ 37.
that time period, Brennan and his father, Brent, received
$118, 506, initially by a check written on the Points West
account, that was later replaced by a check drawn on the
Legend account, from an alleged sale of cattle by them to the
Lyons, Id. ¶¶ 42-4 8; and defendant made
sure its loans to the Lyons were repaid before the collapse
of the check-kiting scheme. Id. ¶¶ 49-52,
60-65. The scheme collapsed in late-June 2015 when Brennan,
with the concurrence of Owen, returned for insufficient funds
a check payable to plaintiff, drawn on the Legend account,
for $5, 020, 230.11. Id. ¶ 64.
6, 2015, plaintiff obtained a prejudgment writ of garnishment
against defendant as garnishee for the indebtedness of the
Lyons to plaintiff in the amount of $5, 020, 230.11.
Id. ¶ 96. On August 3, 2015, $81, 381.05 was
deposited to the Legend account on behalf of the Lyons.
Defendant transferred $72, 500 from the Legend account to pay
down the remaining balance on a line of credit despite the
pending writ garnishment. Id. at 98.
asserts causes of action for fraudulent transfer (Count One),
money had and received (Count Two), unjust enrichment (Count
Three), common law fraud (Count Four), aiding and abetting
(Count Five), conspiracy (Counts Six and Seven), violation of
the garnishment statute (Count Eight), negligent
misrepresentation (Count Nine), violations of the Uniform
Commercial Code (Count Ten), and negligence, negligence
per se, and gross negligence (Count Eleven).
Plaintiff also seeks exemplary damages and attorney's
of the Motion
seeks judgment as to each of the claims asserted by
plaintiff, as discussed hereinafter.
Summary Judgment Principles
56(a) of the Federal Rules of Civil Procedure provides that
the court shall grant summary judgment on a claim or defense
if there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247 (1986). The movant bears the initial burden
of pointing out to the court that there is no genuine dispute
as to any material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323, 325 (1986). The movant can discharge this
burden by pointing out the absence of evidence supporting one
or more essential elements of the nonmoving party's
claim, "since a complete failure of proof concerning an
essential element of the nonmoving party's case
necessarily renders all other facts immaterial."
Id. at 323. Once the movant has carried its burden
under Rule 5 6(a), the nonmoving party must identify evidence
in the record that creates a genuine dispute as to each of
the challenged elements of its case. Id. at 324; see
also, Fed.R.Civ.P. 56(c) ("A party asserting that a fact
... is genuinely disputed must support the assertion by . . .
citing to particular parts of materials in the record . . .
."). If the evidence identified could not lead a
rational trier of fact to find in favor of the ...