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Date: 06-04-2013

Case Style: Classic Chevrolet, Inc. v. Travis Michael Frizell

Case Number: CJ-2011-944

Judge: Linda G. Morrissey

Court: District Court, Tulsa County, Oklahoma

Plaintiff's Attorney: Thomas Martin Askew, Wm. Gregory James and Richard W. Wassall

Defendant's Attorney: P. Bradley Bendure and David Ryan Cordell

Description: Classic Chevrolet, Inc. sued Travis Michael Frizell and H. Wayne Cline on conversion, misappropriation and/or embezzlement theories.

The specifics of the claims made by Plaintiff are not available.

Travis Michael Frizell appeared and answered as follows:


1. Defendant admits the allegations contained in paragraph 1 of Plaintiff's Verified
Amended Petition.

2. Defendant admits the allegations contained in paragraph 2 of Plaintiffs Verified Amended Petition.

3. Defendant admits the allegations contained in paragraph 3 of Plaintiffs Verified Amended Petition.

4. Defendant admits the allegations contained in paragraph 4 of Plaintiffs Verified Amended Petition.

GENERAL FACTS

5. Defendant admits the allegations contained in paragraph 5 of Plaintiffs Verified Amended Petition.

6. Defendant admits the allegations contained in paragraph 6 of Plaintiffs Verified Amended Petition.

7. Defendant denies the allegations contained in paragraph 7 of Plaintiffs Verified Amended Petition.

8. Defendant denies the allegations contained in paragraph 8 of Plaintiffs Verified Amended Petition.

9. Defendant denies the allegations contained in paragraph 9 of Plaintiffs Verified Amended Petition.

10. Defendant denies the allegations contained in paragraph 10 of Plaintiffs Verified Amended Petition.

11. Defendant denies the allegations contained in paragraph 11 of Plaintiffs Verified Amended Petition.

12. Defendant denies the allegations contained in paragraph 12 of Plaintiffs Verified Amended Petition.

FIRST CAUSE OF ACTION

(ConversionlMisappropriation/Embezzlement)

13. For his response to the allegations contained in paragraph 13 of Plaintiffs Verified Amended Petition, Defendant adopts and restates its responses to paragraphs 1 through 12 above.

14. Defendant denies the allegations contained in paragraph 14 of Plaintiffs Verified Amended Petition.

15. Defendant denies the allegations contained in paragraph 15 of Plaintiffs Verified Amended Petition.

16. Defendant denies the allegations contained in paragraph 16 of Plaintiffs Verified Amended Petition.

17. Defendant denies the allegations contained in paragraph 17 of Plaintiffs Verified Amended Petition.

SECOND CAUSE OF ACTION

(Fraud/Deceit)

18. For his response to the allegations contained in paragraph 18 of Plaintiffs Verified Amended Petition, Defendant adopts and restates its responses to paragraphs 1 through 17 above.

19. Defendant denies the allegations contained in paragraph 19 of Plaintiffs Verified Amended Petition.

20. Defendant denies the allegations contained in paragraph 20 of Plaintiffs Verified Amended Petition.

21. Defendant denies the allegations contained in paragraph 21 of Plaintiffs Verified Amended Petition.

22. Defendant denies the allegations contained in paragraph 22 of Plaintiffs Verified Amended Petition.

23. Defendant denies the allegations contained in paragraph 23 of Plaintiffs Verified Amended Petition.

24. Defendant denies the allegations contained in paragraph 24 of Plaintiff’s Verified Amended Petition.

25. Defendant denies the allegations contained in paragraph 25 of Plaintiffs Verified Amended Petition.

THIRD CAUSE OF ACTION

(Unjust Eurichment)

26. For his response to the allegations contained in paragraph 26 of Plaintiffs Verified Amended Petition, Defendant adopts and restates its responses to paragraphs 1 through 25 above.

27. Defendant denies the allegations contained in paragraph 27 of Plaintiffs Verified Amended Petition.

28. Defendant denies the allegations contained in paragraph 28 of Plaintiffs Verified Amended Petition.

FOURTH CAUSE OF ACTION

(Breach of Fiduciary Duty)

29. For his response to the allegations contained in paragraph 29 of Plaintiffs Verified Amended Petition, Defendant adopts and restates its responses to paragraphs 1 through 28 above.

30. Defendant denies the allegations contained in paragraph 30 of Plaintiffs Verified Amended Petition.

31. Defendant denies the allegations contained in paragraph 31 of Plaintiffs Verified Amended Petition.

32. Defendant denies the allegations contained in paragraph 32 of Plaintiffs Verified Amended Petition.

AFFIRMATIVE DEFENSES

Frizell asserts the following as affirmative defenses, subject to a determination of whether such are in fact affirmative defenses or whether they are part of Plaintiff Classic’s burden of proof in this matter:

1. At all relevant times herein, Classic and its majority shareholder, H. Wayne Cline (“Cline”), were aware of and approved of Frizell’s business expenses which they now allege were “illegitimate.”

2. At all relevant times herein, Classic was aware of and approved of Cline’s reimbursement of business expenses similar to those of Frizell which Classic now asserts are “illegitimate,” including, but not limited to: i) payment of a monthly salary of $9,000 without performing any work whatsoever for Classic; ii) payment of all personal membership dues, fees, assessments and other charges at Cedar Ridge Country Club and Golf Club of Oklahoma; iii) payment for repairs to his personal boats, as well as boat slip rental and fees at Arrowhead Yacht Club on Grand Lake; iv) unlimited use of Classic-paid American Express, Mastercard and gasoline credit cards; v) free use of Classic-owned demonstrator vehicles (“demos”) for himself, his wife (Judith Cline), his daughter (Denise Bodily), and his good friend (Bill Ramsey), none of whom perform any work for Classic; vi) free use of demo for Betsy Arnold, the daughter of Frank Broyles, former Head Football Coach and Athletic Director at the University of Arkansas, in exchange for Broyles providing rounds of golf at the Augusta National Golf Club in Augusta, Georgia, where, upon information and belief, Mr. Broyles is a member.

3. Failure to state a claim upon which relief may be granted.

4. Unclean hands.

5. Lachcs.

6. Estoppel.

7. Waiver.

8. Release.

Frizell reserves the right to assert further affirmative defenses upon discovery into the matters alleged in Plaintiffs Verified Petition.

COUNTERCLAIMS AND THIRD-PARTY CLAIMS

COMES NOW the Defendant, Travis Michael Frizell (“Frizell” or “Defendant”), and for his Counterclaims against Classic and his Third-Party Claims against Cline alleges and states as
follows:

FACTS

1. Third-Party Defendant Cline is, and at all pertinent times was, a resident of Tulsa County, Oklahoma.

2. The Court has jurisdiction over Cline and the subject matter of this action and venue is proper in this Court.

3. Frizell was employed by Classic as the General Manager on or about January 2,
1995.

4. In 2001, Frizell and Cline entered into a Stock Purchase Agreement (the “Agreement”) in which Frizell ultimately purchased from Cline a total of 12,000 shares of the stock of Plaintiff Classic such that post-acquisition Frizell was the owner of 24% of the issued and outstanding stock of Classic.

5. Pursuant to the Agreement, upon Frizell’s termination of employment, Cline was required to repurchase Frizell’s stock in Classic “based upon the price per share under any ‘bona tide offer.”

6. In November, 2009, Frizell resigned his employment with Classic.

7. After contentious negotiations, Cline ultimately repurchased Frizell’s 24% interest in Classic on or about February 8, 2010.

8. Upon information and belief, Cline now owns 100% of Plaintiff Classic.

9. Frizell is now employed as the General Manager at another Chevrolet dealership in the metropolitan Tulsa area which
is a direct competitor of Classic.

10. In conjunction with the negotiations for Cline’s repurchase of Frizell’s stock in Classic, Cline raised and Frizell expressly denied, the allegations made by Classic in this lawsuit.

11. At all times during Frizell’s employment by Classic, Frizell made all of Classics’ books and records open and available to Cline for his inspection and review.

12. At all times during Frizell’s employment by Classic, both Classic and Cline were fully aware of all perquisites being made available to Frizell and to Cline.

13. Examples of the perquisites Classic has made available to Cline, at his direction and at the complete expense of Classic, include, but are not limited to: i) payment of a monthly salary of $9,000 without performing any work whatsoever for Classic; ii) payment of all personal membership dues, fees, assessments and charges at Cedar Ridge Country Club and Golf Club of Oklahoma; iii) payment for repairs to his personal boats, as well as boat slip rental and fees at Arrowhead Yacht Club on Grand Lake; iv) unlimited use of Classic-paid American Express, Mastercard and gasoline credit cards; v) free use of Classic-owned demonstrator vehicles (“demos”) for himself, his wife (Judith Cline), his daughter (Denise Bodily), and his good friend (Bill Ramsey), none of whom perform any work for Classic; vi) free use of demo for Betsy Arnold, the daughter of Frank Broyles, former Head Football Coach and Athletic Director at the University of Arkansas, in exchange for Broyles providing rounds of golf at the Augusta
National Golf Club in Augusta, Georgia, where, upon information and belief, Mr. Broyles is a member.

MALICIOUS PROSECUTION/ABUSE OF PROCESS

(As to Classic and Cline)

14. Frizell adopts and restates the allegations contained in paragraphs 1-13 of its Counterclaims and Third-Party Claims above.

15. Classic and Cline (through Classic) brought this action against Frizell without probable cause to believe Frizell may be held liable for any of Classic’s causes of action.

16. Classic and Cline (through Classic) brought this action against Frizell with malice. Their true motive in bringing this suit is not to seek redress for any allegedly “illegitimate” business expenses, but rather to annoy, harass, embarrass, oppress, burden and cause great expense to their former employee, Frizell, and to their direct competitor, another metropolitan Tulsa area Chevrolet dealer. The actions of Classic and Cline (through Classic) in filing this suit are borne out of spite and ill will, and are willful, wanton and in conscious disregard for Frizell’s rights.

17. As a direct result of the conduct of Classic and Cline (through Classic) in bringing this meritless action, Frizell has and continues to sustain damages, including, but not limited to, damage to his reputation as well as severe mental and emotional distress, pain and suffering.

18. Classic and Cline are liable for actual and exemplary damages since they have acted intentionally and willfully, with malice and reckless disregard for the rights of Frizell.

INTENTIONAL INFLICATION OF EMOTIONAL DISTRESS

(As to Classic and Cline)

19. Frizell adopts and restates the allegations contained in paragraphs 1-18 of its Counterclaims and Third-Party Claims above.

20. The actions of Classic and Cline (through Classic) in bringing this action against Frizell and leveling the numerous false and defamatory allegations against him therein, are so extreme and outrageous as to go beyond all possible bounds of deceny and are atrocious and utterly intolerable in a civilized society.

21 - As a direct result of the intentional or reckless conduct of Classic and Cline (through Classic), Frizell has and continues to sustain damages, including, but not limited to, damage to his reputation as well as severe mental and emotional distress, pain and suffering.

22. Classic and Cline are liable for actual and exemplary damages since they have acted intentionally and willfully, with malice and reckless disregard for the rights of Frizell.

LIBEL

(As to Classic and Sine)

23. Frizell adopts and restates the allegations contained in paragraphs 1-22 of its Counterclaims and Third-Party
Claims above.

24. The meritless allegations leveled against Frizell by Classic and Cline (through Classic) in Classic’s Verified Petition are false, malicious and unprivileged; these allegations have been published by filing the Verified Petition in the public record.

25. The meritless allegations leveled against Frizell by Classic and Cline (through Classic) in Classic’s Verified Petition have exposed Frizell to public hatred, contempt, ridicule, and/or obloquy.

26. The meritless allegations leveled against Frizell by Classic and Cline (through Classic) in Classic’s Verified Petition tend to deprive Frizell of public confidence, or to injury him in his occupation.

27. As a direct result of the intentional or reckless conduct of Classic and Cline (through Classic), Frizell has and continues to sustain damages, including, but not limited to, damage to his reputation as well as severe mental and emotional distress, pain and suffering.

28. Classic and Cline are liable for actual and exemplary damages since they have acted intentionally and willfully, with malice and reckless disregard for the rights of Frizell.

CONVERSION/MISAPPROPRIATION/EMBEZZELMENT

(As to dine)

29. Frizell adopts and restates the allegations contained in paragraphs 1-28 of its Counterclaims and Third-Party Claims above.

30. By the actions complained of herein, during the time in which Frizell was a shareholder in Classic, Cline wrongfully exercised dominion and control over assets belonging to Classic.

31. During the time in which Frizell was a shareholder in Classic, Cline converted the assets of Classic to his own use and benefit and/or misappropriated or embezzled funds from Classic.

32. Frizell has been damaged by the conversionlmisappropriationlembezzlement of Classic’s assets by Cline.

33. Cline is liable for actual and exemplary damages since he has acted intentionally and willfully, with malice and reckless disregard for the rights of Frizell.

FRAUD

(As to dine)

34. Frizell adopts and restates the allegations contained in paragraphs 1-33 of its Counterclaims and Third-Party Claims above.

35. On a monthly basis between 2001 and February 2010, dine took a salary from Classic for as much as $9,000 each month without performing any work for Classic, which Classic, to its detriment, paid without knowing it was illegitimate.

36. On a monthly basis between 2001 and February 2010, Cline routinely and systematically used his company credit cards for personal, non-business related purposes which Classic, to its detriment, paid without knowing they were illegitimate.

37. On a monthly basis between 2001 and February 2010, Cline routinely and systematically used his accounts at Cedar Ridge Country Club and Golf Club of Oklahoma for personal, non-business related expenses which Classic, to its detriment, paid without knowing they were illegitimate.

38. On a monthly basis between 2001 and February 2010, Cline routinely and systematically charged Classic for personal, non-business related expenses in the form of repairs to his personal boats, as well as boat slip rental and fees at Arrowhead Yacht Club on Grand Lake which Classic, to its detriment, paid without knowing they were illegitimate.

39. On a monthly basis between 2001 and February 2010, Cline routinely and systematically charged Classic for personal, non-business related expenses in the form of free use of Classic-owned demonstrator vehicles for himself, his wife (Judith Cline), his daughter (Denise Bodily), and his good friend (Bill Ramsey), which Classic, to its detriment, paid without knowing they were illegitimate.

40. On a monthly basis between 2001 and February 2010, Cline routinely and systematically charged Classic for personal, non-business related expenses in the form of free use of Classic-owned demonstrator vehicles for Betsy Arnold, the daughter of Frank Broyles,
former Head Football Coach and Athletic Director at the University of Arkansas, which Classic, to its detriment, paid without knowing they were illegitimate.

41. Cline either submitted these personal expenses as being business-related or allowed Classic to pay them as business-related knowing they were not.

42. Cline wrongfully concealed his misconduct to prevent its discovery.

43. Cline’s conduct constitutes fraud and/or deceit.

44. Cline is liable for actual and exemplary damages since he has acted intentionally and willfully, with malice and
reckless disregard for the rights of Frizell.

UNJUST ENRICHMENT

(As to dine)

45. Frizell adopts and restates the allegations contained in paragraphs 1-44 of its Counterclaims and Third-Party Claims above.

46. Cline benefited from the funds he diverted, misappropriated, embezzled or converted from Classic, specifically including, but not limited to, those funds relating to improperly charged expenses or improper requested reimbursements and/or the provision of uncompensated maintenance, service and/or repairs.

47. To allow Cline to retain those funds would cause him unjust enrichment.

BREACH OF FIDUCIARY DUTY

(As to dine)

48. Frizell adopts and restates the allegations contained in paragraphs 1-47 of its Counterclaims and Third-Party Claims above.

49. Cline’s conduct has failed to satisfy the business judgment rule.

50. Upon information and belief, Cline breached fiduciary duties owed by him to Classic and to Frizell when he: i) paid himself a monthly salary of up to $9,000 without performing any work whatsoever for Classic; ii) charged Classic for personal membership dues, fees, assessments and charges at Cedar Ridge Country Club and Golf Club of Oklahoma; iii) charged Classic for repairs to his personal boats, as well as boat slip rental and fees at Arrowhead Yacht Club on Grand Lake; iv) charged unauthorized expenses to his Classic-paid American Express, Mastercard and gasoline credit cards; v) provided free use of Classic-owned demonstrator vehicles (“demos”) for himself, his wife (Judith Cline), his daughter (Denise Bodily), and his good friend (Bill Ramsey), none of whom perform any work for Classic; and vi) provided free use of Classic-owned demos for Betsy Arnold, the daughter of Frank Broyles, former Head Football Coach and Athletic Director at the University of Arkansas, in exchange for Broyles providing rounds of golf at the Augusta National Golf Club in Augusta, Georgia, where, upon information and belief, Mr. Broyles is a member.

51. These breaches of duty by Cline have caused actionable harm to Frizell.

PRAYER FOR RELIEF

WHEREFORE, premises considered, Defendant and Third-Party Plaintiff Mike Frizell respectfully requests that the Court issue an order denying Plaintiff Classic’s prayer for relief and enter a judgment in favor of Defendant Frizell and against Plaintiff Classic Chevrolet, Inc. and Third-Party Defendant 1-1. Wayne Cline for Frizell’s damages, in an amount to be determined at trial, but in any event in an amount in excess of the amount required for diversity jurisdiction pursuant to 28 U.S.C. § 1332, together with his reasonable attorneys’ fees and cost and such other and further relief as the Court deems just and proper.

Outcome: COME NOW Plaintiff/Counter-Defendant Classic Chevrolet, Inc (“Classic”), Defendant-Counter-P1aintiff-Third-Party Plaintiff Travis Michael Frizell (“Frizell”) and Third- Party DefendantL H. Wayne Cline (“Cime”) and respectfully submit this Joint Stipulation of Dismissal with Prejudice of all claims, counterclaims and third-party claims asserted in this action. Pursuant to the terms of a settlement agreement between the parties, Classic, Frizell and Cline have agreed to dismiss all of their claims, counterclaims and third-party claims in the above styled and numbered lawsuit with prejudice to the re-filing of same. Each party will bear its own attorneys’ fees and costs arising from this lawsuit.

Plaintiff's Experts:

Defendant's Experts:

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