HORTON v. HAMILTON
2015 OK 6
| Okla. | 2015Background
- In 2007 Horton purchased a Life Fund 5.1 capital appreciation bond for $100,000 after attending a seminar presented by Hamilton and Peck; she later received a call from the Oklahoma Securities Commission that it suspected fraud by the presenters.
- The bond was part of a Ponzi scheme; Life Fund 5.1 filed bankruptcy on September 2, 2009, and Horton filed a proof of claim in that bankruptcy on September 15, 2009.
- Horton sued in Oklahoma state court on December 10, 2009 asserting: securities misrepresentation (Oklahoma Securities Act), securities sold by unregistered agent, fraud (actual and constructive), breach of fiduciary duty, negligence and gross negligence. Two securities counts were previously dismissed under a one-year bar and not appealed.
- Defendants moved for summary judgment arguing the two-year statutes of limitations barred Horton’s remaining claims (misrepresentation under §1-509(B), fraud, fiduciary breach, negligence), asserting accrual occurred when Horton first sought return of her money and learned of the Commission inquiry.
- The district court and Court of Civil Appeals granted/affirmed summary judgment; Oklahoma Supreme Court granted certiorari to decide whether defendants proved accrual/discovery dates as a matter of law.
- The Supreme Court reversed: defendants did not present sufficient evidentiary material to establish when Horton knew or, with reasonable diligence, should have discovered the facts giving rise to each claim, so accrual/discovery remained questions of fact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does limitations period for Securities Act misrepresentation (§1-509(B)/(J)(2)) begin to run? | Horton: limitations tolled until she discovered facts sufficient to plead misrepresentation; discovery occurred later than defendants claim. | Defendants: clock began in Sept. 2007 when Horton first requested return of funds and learned of the Commission inquiry. | Court: §1-509(J)(2) uses a discovery/inquiry-notice standard; defendants failed to show as a matter of law when Horton discovered or should have discovered facts—issue of fact. |
| When does limitations period for common-law fraud accrue? | Horton: had not discovered fraud with requisite particularity in 2007; discovery occurred later. | Defendants: Horton’s concerns and Commission call put her on notice >2 years before suit. | Court: accrual requires discovery of elements with particularity for fraud; defendants did not prove discovery date—issue of fact. |
| Do breach of fiduciary duty, negligence, gross negligence claims accrue earlier than fraud/misrep.? | Horton: discovery dates for these torts are factual and could differ; she did not have sufficient knowledge in 2007. | Defendants: same early discovery facts start limitations for all tort claims. | Court: different claims require different factual detail; defendants failed to prove when Horton discovered elements—questions of fact; summary judgment improper. |
| Did Life Fund 5.1’s bankruptcy toll limitations against individual defendants? | Horton: bankruptcy proceedings tolled limitations (automatic stay) preventing suit on related claims. | Defendants: no evidence connecting debtor and defendants to invoke bankruptcy stay as to non-debtors. | Court: Horton offered no evidentiary support tying stay to claims against non-debtors; argument rejected without prejudice to pursue below. |
Key Cases Cited
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991) (federal securities-era discovery/inquiry-notice standard informs state act limitations interpretation)
- Digital Design Group, Inc. v. Information Builders, Inc., 24 P.3d 834 (Okla. 2001) (discovery rule delays statute of limitations until injured party knows or should have known of injury)
- Redwine v. Baptist Medical Center of Oklahoma, Inc., 679 P.2d 1293 (Okla. 1983) (defendant must prove when plaintiff knew or should have discovered claim to sustain summary judgment on limitations defense)
- Consol. Grain & Barge Co. v. Structural Sys., Inc., 212 P.3d 1168 (Okla. 2009) (accrual occurs when each element of cause of action has materialized)
- Mud Trans, Inc. v. Foster-Dickenson & Co., 856 P.2d 282 (Okla. 1993) (limitations on fiduciary claims begin when plaintiff learns representations were false)