Davis et al v. Gresham et al

UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
CHRISTOPHER JOHN DAVIS, )
)
Plaintiff/Judgment Creditor, )
)
v. ) Case No. CIV-22-871-G
)
DANIEL ROBERT GRESHAM, )
)
Defendant/Judgment Debtor, )
)
and )
)
THE STANDARD FIRE INSURANCE )
COMPANY, )
)
Garnishee, )
)
and )
)
DOUGLAS N. GOULD, Trustee of the )
Bankruptcy Estate of Daniel Robert )
Gresham, Case No. BK-21-13349 )
(Bankr. W.D. Okla.), )
)
Intervenor Plaintiff, )
)
v. )
)
THE STANDARD FIRE INSURANCE )
COMPANY, )
)
Defendant. )
ORDER
Now before the Court is a Motion to Dismiss (Doc. No. 15) filed by Garnishee The
Standard Fire Insurance Company (“Standard Fire”). Plaintiff/Judgment Creditor
Christopher John Davis (“Plaintiff”) has filed a Response (Doc. No. 16), to which Standard
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Fire has replied (Doc. No. 17). In addition, the Court conducted a status conference and
heard argument on the Motion on October 18, 2024, following which both Standard Fire
and Intervenor Plaintiff Douglas N. Gould, Trustee of the Bankruptcy Estate of Daniel
Robert Gresham (“Trustee”), submitted supplemental briefing. See Doc. No. 34; Tr.’s Br.
(Doc. No. 32); Standard Fire’s Br. (Doc. No. 33).
I. Background
This action stems from a personal injury lawsuit filed in February 2019 in Oklahoma
state court by Plaintiff Christopher John Davis against Defendant/Judgment Debtor Daniel
Robert Gresham (“Gresham”). On September 1, 2021, a jury found Gresham liable for
money damages, and on September 15, 2021, the trial court entered judgment for Plaintiff
in the amount of $3,126,073.32, with postjudgment interest. See J. Entry of J. (Doc. No.
4-1). On January 4, 2022, the trial court ordered that Plaintiff was also entitled to a cost
award of $12,762.59. See J. Entry (Doc. No. 4-2).
On December 30, 2021, Gresham filed for Chapter 7 bankruptcy in the U.S.
Bankruptcy Court for the Western District of Oklahoma (the “Bankruptcy Court”), thereby
triggering the automatic stay on collections. See In re Gresham, No. 21-13349-SAH
(Bankr. W.D. Okla.). On July 22, 2022, the Bankruptcy Court lifted the automatic stay for
the limited purpose of allowing Plaintiff to seek recovery from Gresham’s liability insurer.
On September 13, 2022, Plaintiff initiated a garnishment proceeding in Oklahoma
state court by filing, in the state-court lawsuit, a garnishment affidavit that identified
Gresham as the judgment debtor, Gresham’s insurer Standard Fire as the garnishee, and
the total debt owed as $3,308,302.75. See Garnishment Aff. (Doc. No. 4-4). Standard Fire
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answered, see Garnishee’s Answer (Doc. No. 4-5), and Plaintiff filed a Notice (Doc. No.
4) of his election to take issue with Garnishee’s Answer pursuant to title 12, section 1177
of the Oklahoma Statutes. The record does not reflect that Gresham filed an answer or
otherwise responded to the Garnishment Affidavit.
Trustee Gould, as the trustee for Gresham’s bankruptcy estate, then moved to
intervene to assert claims against Standard Fire. On September 23, 2022, the state court
granted Trustee’s unopposed motion to intervene. Trustee, as Intervenor Plaintiff, asserted
claims under Oklahoma law for breach of contract and breach of the duty of good faith and
fair dealing against Standard Fire. See Tr.’s Pet. (Doc. No. 8-5).
Standard Fire removed the action to this Court on the basis of diversity jurisdiction
on October 3, 2022, and then filed its Motion to Dismiss the garnishment action brought
by Plaintiff. See Doc. Nos. 1, 15, 37, 38. Standard Fire also has separately moved to
dismiss Trustee’s claims. See Doc. No. 7.
II. Summary of the Pleadings
Because Plaintiff filed a Notice that he “elects to take issue with” Standard Fire’s
Answer, “the issue shall stand for trial as a civil action in which the affidavit on the part of
the judgment creditor shall be deemed the petition and the garnishee’s answer the answer
thereto.” Okla. Stat. tit. 12, § 1177; see also Fed. R. Civ. P. 69(a)(1); Strong v. Laubach,
371 F.3d 1242, 1246-47 (10th Cir. 2004).
Plaintiff’s Garnishment Affidavit avers as follows:
• Daniel Gresham, as the defendant in the state-court civil case, is indebted to
Christopher John Davis, as the plaintiff in the state-court civil case, in the total
sum of $3,308,302.75 as of September 13, 2022;
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• Plaintiff’s counsel believes
“that Garnishee, The Standard Fire Insurance Company, is
indebted to [Gresham] or has property within [Standard Fire’s]
possession or control[] belonging to [Gresham] or in which
[Gresham] has an interest, which is not by law exempt from
seizure or sale upon execution, including without limitation
coverage available under any insurance policy under which
[Gresham] was insured on or around December 4, 2018”;
and
• Plaintiff is not seeking a continuing garnishment.
Garnishment Aff. ¶¶ 2-4; see Okla. Stat. tit. 12, §§ 1171(B)(2)(d), 1172, 1173.3.
Standard Fire’s Answer alleges that Standard Fire “was not indebted to” Gresham
and did not “have possession or control of any property” belonging to Gresham because:
[Standard Fire] asserts Daniel Robert Gresham is not covered for indemnity
and/or Plaintiff is unable to produce sufficient evidence that [Gresham] is
covered for indemnity under the policy; therefore there is no insurance
coverage applicable to satisfy the judgment creditor’s judgment and,
therefore, [Standard Fire] does not possess any money or property of
Gresham[’s] to satisfy the judgment referenced in the Garnishment Affidavit;
Plaintiff lacks standing.
Garnishee Answer at 1; see Okla. Stat. tit. 12, § 1173.3(E).
III. Relevant Standards
Standard Fire argues that dismissal is required because Plaintiff is not the “real party
in interest” and therefore may not prosecute this action. Fed. R. Civ. P. 17(a)(1); see
Standard Fire’s Mot. to Dismiss at 2-6. As Standard Fire does not challenge the Court’s
subject-matter jurisdiction, the Court considers the Motion to Dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6). See Standard Fire’s Mot. to Dismiss at 6 n.4; VR
Acquisitions, LLC v. Wasatch Cnty., 853 F.3d 1142, 1146 n.4 (10th Cir. 2017).
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In analyzing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the court “accept[s] as true all well-pleaded factual allegations in the complaint
and view[s] them in the light most favorable to the plaintiff.” Burnett v. Mortg. Elec.
Registration Sys., Inc., 706 F.3d 1231, 1235 (10th Cir. 2013). “[T]o withstand a Rule
12(b)(6) motion to dismiss, a complaint must contain enough allegations of fact, taken as
true, ‘to state a claim to relief that is plausible on its face.’” Khalik v. United Air Lines,
671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A complaint fails to state a claim on which relief may be granted when it
lacks factual allegations sufficient “to raise a right to relief above the speculative level on
the assumption that all the allegations in the complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555 (footnote and citation omitted).
IV. Standard Fire’s Motion to Dismiss
Standard Fire presents a complicated argument as to why Plaintiff is not the person
“who possesses the substantive right being asserted under the applicable law” in this action.
Esposito v. United States, 368 F.3d 1271, 1273 (10th Cir. 2004) (internal quotation marks
omitted). In essence, Standard Fire argues that: (1) Plaintiff’s garnishment attempt is in
reality a “contract claim” of Gresham’s for proceeds on an insurance policy between
Gresham and Standard Fire; (2) this contract claim belongs to Gresham’s bankruptcy
estate; (3) such a claim is assignable; but (4) Plaintiff has not been assigned the claim and
(5) Plaintiff may not pursue the claim absent an assignment from Trustee. See Standard
Fire’s Mot. to Dismiss at 2-6 (citing 11 U.S.C. § 541(a)(1); In re Vitek, 51 F.3d 530 (5th
Cir. 1995)); see also Standard Fire’s Reply at 2-5; Standard Fire’s Suppl. Br. at 13-15.
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As noted by Plaintiff, however, Standard Fire’s argument “completely ignores
Oklahoma garnishment law.” Pl.’s Resp. at 4. Under Oklahoma law, “[a] post-judgment
garnishment proceeding is a special and extraordinary remedy given only by statute.” Sisk
v. Gaines, 144 P.3d 204, 207 (Okla. Civ. App. 2006) (internal quotation marks omitted).
That statute provides:
Any creditor shall be entitled to proceed by garnishment in any court having
jurisdiction against any person whom the creditor, in good faith, believes to
be indebted to the creditor’s debtor or has possession or control of any
property belonging to such creditor’s debtor, in the cases, upon the
conditions, and in the manner described by law.
Okla. Stat. tit. 12, § 1771; see Colony Ins. Co. v. Burke, 698 F.3d 1222, 1237 (10th Cir.
2012). “[W]here the evidence discloses property, not exempt by law, in the hands of the
garnishee which is nakedly and admittedly the property of the judgment debtor, the court
is authorized to direct its application to the creditor’s claim.” Ray v. Paramore, 41 P.2d
73, 76 (Okla. 1935).
“Garnishment after judgment is an equitable execution and equitable princip[les]
should apply.” Willhite v. Willhite, 546 P.2d 612, 615 (Okla. 1976). Although “the
judgment creditor stands in the shoes of the judgment debtor to enforce a liability owed to
the latter by a third party—the garnishee,” “[a]s against an insurer,” the garnishment
remedy “is ‘in aid of and ancillary to the main action’ against the insured and has nothing
to do with the merits.” Culie v. Arnett, 765 P.2d 1203, 1205 (Okla. 1988); Sisk, 144 P.3d
at 207 (quoting Spears v. Preble, 661 P.2d 1337, 1343 (Okla. 1983)). The Oklahoma
Supreme Court has explained that the statutory scheme “contemplat[es] . . . the possibility
of a denial of liability on the part of a garnishee” but reflects “the legislative intent that
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such claims should be subject to garnishment, even though they should be in dispute.” Sec.
Bldg. & Loan Ass’n of Okla. City v. Ward, 50 P.2d 651, 655-56 (Okla. 1935); see Okla.
Stat. tit. 12, §§ 1173.3, 1177, 1182.
Standard Fire’s cited authority, while correct as to federal bankruptcy principles
generally, does not establish that either Gresham’s Chapter 7 filing, or the fact that the
Court may have to consider the underlying insurance policy when the garnishment “stands
for trial,” transforms Plaintiff’s claim for equitable execution of the civil judgment against
Gresham into Gresham’s own claim for breach of contract against Standard Fire. Okla.
Stat. tit. 12, § 1177; cf. Ward, 50 P.2d at 655 (“[O]ur garnishment statutes provide the
procedure to be followed in case disputed or unadjusted claims are involved, thus clearly
indicating that such claims are subject to garnishment.”); Sisk, 144 P.3d at 208-10
(determining coverage under the debtor’s insurance policy in a garnishment proceeding).
The Court therefore rejects Standard Fire’s novel proposition that, under Oklahoma law,
the judgment debtor’s own bankruptcy estate must assign a judgment creditor the right to
garnish money owed by the judgment debtor. Standard Fire has not shown that Plaintiff’s
garnishment action fails to state a claim upon which relief can be granted under Rule
12(b)(6) or that Plaintiff is not the real party in interest on his postjudgment garnishment
under Rule 17(a)(1).
CONCLUSION
The Motion to Dismiss (Doc. No. 15) filed by Garnishee The Standard Fire
Insurance Company therefore is DENIED.
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IT IS SO ORDERED this 25th day of March, 2026.
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