HAMLIN v. YOB LLC (2026)

SUBSTITUTE OPINION AFTER THE COURT'S PRIOR OPINION HAVING BEEN WITHDRAWN

¶1 Appellant, Brian Hamlin (Hamlin) appeals the May 6, 2024 Journal Entry of Judgment entered in favor of Appellees, Addicted Outdoors, LLC (Addicted), Steven Yob (Yob), and The Mary O'Reilly Yob Revocable Trust (Trust). After a review of the entire record and pertinent law, we reverse the punitive damages amount awarded to Addicted and remand to the trial court with instruction for the statutory cap, but affirm on all other issues before us.

BACKGROUND

¶2 In March of 2020, Hamlin sold forty (40) percent of his eighty-five (85) percent ownership in Addicted to the Trust and Yob, each acquiring twenty percent for a total of $120,000.00.  ¹ Two checks, each for $60,000, were made payable to Addicted. Two separate purchase agreements were executed between Hamlin and the buyers, one with the Trust and one with Yob. The jury heard testimony from Yob and Ed that Hamlin requested the checks be made payable to Addicted rather than Hamlin for tax purposes. Hamlin testified that when he arrived to sign the contracts at closing, the checks were already made payable to Addicted and that Ed and Mary Yob told him the money was his and he could withdraw it from the Addicted account.

¶3 In April of 2020, Hamlin, Barefield, Yob, and Trust executed an Amended and Restated Operating Agreement (Operating Agreement). The Operating Agreement outlined the members and their respective ownership interests as follows: Hamlin with 45%, Barefield with 15%, Yob with 20%, and the Trust with 20%. Hamlin was identified as the Manager and limitations on his authority to act were outlined in the Operating Agreement. The Manager could be removed by a majority vote of the members, with or without cause. A provision in the Operating Agreement also limited the Manager's liability to the extent the Manager did not breach his duty of loyalty, good faith or perform acts for the Manager's personal benefit. Hamlin managed Addicted without any inquiries or interference from the other members for approximately a year.

¶4 At trial, the jury heard evidence that rather than withdrawing the $120,000.00 purchase price immediately, over the course of roughly a year Hamlin made various withdrawals from the bank accounts associated with Addicted. In February of 2021, Yob received notification that roughly $13,000.00 was charged on the company credit card at a local casino. It is from this notification that Yob and the remaining members secured an attorney and began to investigate the finances of Addicted. Hamlin shared passwords to the company's various accounts so that the members could review Addicted's financials. Very quickly the members concluded that Hamlin was embezzling from Addicted and voted for his removal as Manager. Yob was voted in to replace Hamlin as Manager.

¶5 Hamlin filed suit against Appellees alleging defamation, tortious interference with a contract or business relations, fraud/deceit, conversion, and breach of contract. Appellees counterclaimed alleging breach of fiduciary duty, conversion, and fraud/deceit. The trial spanned five days, and the jury ultimately ruled against Hamlin on all his claims and in favor of Appellees, awarding $80,000.00 to Addicted for breach of fiduciary duty, $77,322.00 ² to Addicted for conversion, $60,000.00 to Yob for fraud/deceit, and $60,000.00 to Trust for fraud/deceit. The jury also awarded punitive damages in the amount of $75,000.00 to Addicted for breach of fiduciary duty, $100,000.00 to Addicted for conversion, and $10.00 for fraud/deceit to each Yob and Trust. It is from these judgments that Hamlin appeals.

STANDARD OF REVIEW

¶6 “[A] jury's verdict is conclusive as to all disputed facts and conflicting statements.” Fox v. Crowgey, 2015 OK CIV APP 23, 29, 346 P.3d 425, 432. When there is competent evidence to reasonably support the jury's verdict and “ ‘there are no prejudicial errors shown in the trial court's jury instructions, neither the verdict nor the judgment based thereon will be disturbed on review.’ ” Id. (quoting Stroud v. Arthur Andersen & Co., 2001 OK 76, 9, 37 P.3d 783, 787-88).  ³

ANALYSIS

¶7 Hamlin raises the following allegations of error: 1) That the trial court should have granted his motions for directed verdict as it pertains to the fraud/deceit counts; 2) The retention of the benefit of the contracts and the award of damages equal to the purchase price of the shares violates Oklahoma law; 3) Breach of fiduciary duty was not a viable claim; 4) Conversion of money was not actionable; 5) The evidence does not support the jury's damage award to Addicted for conversion and breach of fiduciary duty; 6) Punitive damages awarded to Addicted exceed the amount authorized by law; and 7) The cumulative effect of the errors alleged merit a re-trial.  ⁴ We are not persuaded by Hamlin's claims of error.

¶8 In proposition one, Hamlin states his motion for directed verdict should have been granted by the trial court on the basis that the evidence did not support the allegations of fraud. However, Hamlin failed to include this argument in his motion for new trial. Because a motion for new trial limits the issues reviewed on appeal to those raised by that motion, this claim will not be considered as it is not properly before the Court. City of Broken Arrow v. Bass Pro Outdoor World, L.L.C., 2011 OK 1, 11, 250 P.3d 305, 311; 12 O.S.2021, § 991(b); see also Okla. Sup. Ct. R. 1.22(c)(1), 12 O.S.Supp.2023, Ch. 15, App. 1.

¶9 In proposition two, Hamlin argues that the jury's award of damages on the two fraud claims is not compliant with Oklahoma law. His argument is two-fold. First, he argues that because Yob and Trust did not seek recission of the contract and the jury awarded damages to Yob and Trust equal to the purchase price of the shares, the damages, in essence, created a recission of the contract without restoring the 40% of Addicted shares to Hamlin. Second, he argues Yob and Trust did not present evidence of damages, other than the purchase price of the shares, to support a claim involving affirmation of the contracts. Relying on Holcomb & Hoke Mfg. Co. v. Jones, 1924 OK 672, 102 Okla. 175, 228 P. 968, Hamlin argues no evidence was presented to establish the difference between the value of the shares as represented and the value as it truly existed. This Court rejects both of Hamlin's arguments.

¶10 Oklahoma recognizes that when a party is induced by fraud to enter into a contract, the harmed party has two remedies. The party may seek recission of the contract, or, when recission fails to compensate the loss of the party, the party may affirm the contract and seek damages arising from the fraud. Holcomb & Hoke, 1924 OK 672, at 5, 102 Okla. 175, 228 P. 968. Once a party seeks recission, the party must return anything gained as a result of the contract and cannot enforce any part of the contract itself. However, if the party affirms the contract, the party may seek damages and also seek to enforce parts of the contract. The damages sought for fraud when a party affirms the contract must be distinct from rights connected to a provision of the contract. Id. at 33. There is no question in this case that Yob and Trust did not seek recission of the contracts. Instead, as acknowledged by both parties, Yob and Trust affirmed the contracts and sought damages.

¶11 Hamlin relies on Viking Refrigerators v. McMeachin, 1930 OK 418, 145 Okla. 76, 291 P. 521 for the proposition that the jury's award, which was equal to the purchase price of shares, in effect acted to rescind the contract but allowed Yob and Trust to retain the shares of Addicted. This case affords him no relief. In Viking Refrigerators, the buyer did not seek recission of the contract and sought damages. Viking Refrigerators, 1930 OK 418, at 16, 145 Okla. 76, 291 P. 521. However, although the jury found in favor of the buyer, the jury, by its verdict, ordered buyer to return the merchandise purchased and found buyer was entitled to the purchase price of the merchandise. Id. The Court found the verdict was not sustained by the pleadings or the evidence. Id. at 17. Although the jury awarded Yob and the Trust the amount of the purchase price of the shares, the jury did not transform Yob's and Trust's fraud claims into that of recission, but instead awarded damages based on evidence presented.

¶12 This Court is not persuaded by Hamlin's challenge to the lack of evidence to support the jury award. At trial, evidence adduced by both sides was that Addicted was a defunct business. Ed's testimony established that the debts of the company far exceeded any value of the company.  ⁵ Hamlin also testified that he did not believe there was any value left in the 45% of the shares he still owned. As such, the jury had evidence of the value of shares in the company. As the evidence presented by both parties established the shares were worth nothing, the jury's verdict of the purchase price is based on the evidence. A jury's award of damages must stand absent contradicting evidence. See e.g., Cleveland v. Dyn--A--Mite Pest Control, Inc., 2002 OK CIV APP 95, 49, 57 P.3d 119, 130. Hamlin's second proposition is denied.

¶13 In proposition three Hamlin argues that the Operating Agreement forecloses any claim of breach of fiduciary duty to Addicted. Thus, he claims the trial court erred when it denied his motion for directed verdict. This Court reviews a trial court's denial of a motion for directed verdict de novo. Computer Publications, Inc. v. Welton, 2002 OK 50, 6, 49 P.3d 732, 735. “ ‘A motion for a directed verdict should be denied when there is a controverted question of fact as to which reasonable minds could differ. The motion should be granted, however, if the party opposing the motion has failed to demonstrate a prima facie case for recovery.’ ” Key Finance, Inc. v. Koon, 2016 OK CIV APP 27, 7, 371 P.3d 1133, 1136 (quoting Guthrie Independent School District No. I-30 of Adair County, 1998 OK CIV APP 47, 10, 958 P.2d 802, 804). “ ‘Only if all the inferences to be drawn from the evidence are in favor of the moving party will a directed verdict withstand appellate scrutiny.’ ” Bird Const. Co., Inc., v. Oklahoma City Housing Authority, 2005 OK CIV APP 12, 6, 110 P.3d 560, 564 (quoting Harder v. F.C. Clinton, Inc., 1997 OK 137, 6, 948 P.2d 298, 302).

¶14 Hamlin's argument that Oklahoma law imposes no fiduciary duty on managers of limited liability companies is erroneous. Pursuant to 18 O.S.2021, § 2016(1), “[a] manager shall discharge the duties as a manager in good faith, with the care an ordinary prudent person in a like position could exercise under similar circumstances, and in the manner the manager reasonably believes to be in the best interests of the limited liability company.” This statute clearly imposes a fiduciary duty on managers of limited liability companies. See also Osage Energy Resources, LLC v. Pemco, LLC, 2016 OK CIV APP 70, 18-27, 394 P.3d 265, 269-271 (evidence sufficient to find fiduciary duties breached by the LLC's Chief Operating Officer).

¶15 Although Section 2016 imposes a general fiduciary duty on managers of limited liability companies, Section 2017 also acknowledges that the parties can limit or eliminate those fiduciary duties, barring the duty of loyalty, good faith, and refraining from improper personal benefits. 18 O.S.2021, § 2017(A)(1) and (B). The Operating Agreement between the parties likewise does the same and reads as follows:

Limitation of Liability. The Manager shall not be liable to the Company for monetary damages for breach of fiduciary duty or an act or omission in his or her capacity as Manager; provided however, that nothing contained herein shall eliminate or limit the liability of a Manager, (i) for any breach of the Manager's duty of loyalty to the Company or its Members, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or (iii) for any transaction from which the Manager derived an improper personal benefit.

(Emphasis added).

¶16 This limitation clause tracks the language of 18 O.S.2021, § 2017(A)(1) and (B). Although the Operating Agreement did in fact limit monetary damages for breach of fiduciary duty or other acts within the manager's duties, it expressly provided an exception for the three enumerated duties. Hamlin himself recognizes a broad definition of fiduciary would naturally include these duties. As evidence was introduced related to the fiduciary relationship between Hamlin and Addicted, the question of fact as to whether Hamlin breached these duties was properly submitted to the jury. Hamlin's third proposition of error is denied.

¶17 In Hamlin's fourth proposition of error, he claims the trial court should have granted his directed verdict related to Addicted's conversion claim. “Conversion is any act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein.” Steenbergen v. First Fed. Sav. & Loan of Chickasha, 1987 OK 122, 9, 753 P.2d 1330, 1332.

¶18 Hamlin argues that Addicted's claim gave rise to a debt and recovery of money only, and therefore was insufficient to state a claim for relief pursuant to Oklahoma law. However, the action here arose from claims that Hamlin embezzled funds owned by Addicted.  ⁶ It is undisputed that Hamlin sold shares for $120,000.00 to Yob and Trust. Those funds were placed into Addicted's general account. Hamlin then started withdrawing funds and all parties agreed that until Hamlin reached the $120,000.00, those funds were rightfully his. However, the evidence showed that Hamlin did in fact withdraw funds in excess of $120,000.00. Addicted offered evidence, through a forensic accountant, of several cash withdrawals indicating that Hamlin possessed the currency in its physical form and used the funds for personal use. Hamlin does not contend that the amount was incorrect or that he did not withdraw the excess funds. Hamlin does not demonstrate that anything within the Operating Agreement gave him the authority to use Addicted funds for personal use. As such, the facts here fit squarely within the definition of conversion.  ⁷ As evidence was introduced that Hamlin withdrew money from Addicted's bank account in excess of what he was owed, the question of fact as to whether Hamlin converted Addicted's funds to that of his own personal property was properly submitted to the jury. Hamlin's fourth proposition of error is denied.

¶19 In his fifth proposition of error, Hamlin argues that the jury's awards of damages for breach of fiduciary duty and conversion are not supported by the evidence. “Broad discretion is given to the jury to determine the amount of damages.” Fowler v. Lincoln County Conservation Dist., 2000 OK 96, 18, 15 P.3d 502, 508. If the “amount of the verdict is within the limits of the evidence, we will not invade the jury's province and substitute our judgment as a fact-finding tribunal.” Id.

¶20 An exorbitant amount of evidence was presented to the jury concerning the parties’ causes of actions. Evidence included bank records, some of which included copies of checks written by Hamlin, text messages, emails, and Addicted loan documents. Likewise, Hamlin, Yob, Ed, and Barefield, as members of Addicted, supplied evidence of the monetary damages requested from the parties. Appellees presented a forensic accountant who testified about the damages and specifically outlined amounts considered by him to be improperly taken by Hamlin. Contrary to Hamlin's claim that the jury was a runaway jury who awarded damages not supported by the evidence, this Court finds there was competent evidence presented on which the jury could find for Addicted in the amounts awarded. Hamlin's fifth proposition of error is denied.

¶21 In his sixth proposition of error, Hamlin argues the punitive damages awarded in connection with breach of fiduciary duty and conversion exceed the amount allowed by law. The jury awarded Addicted $100,000.00 in punitive damages for the conversion claim and $75,000.00 in punitive damages for the breach of fiduciary duty claim, for a total of $175,000. Hamlin argues the amount of punitive damages cannot exceed $100,000.00 under 23 O.S.2021, § 9.1(B)(2)(a), or in the alternative $157,322.00 under Subsection B(2)(b).  ⁸ Thus, Hamlin's argument is that Section 9.1(B)(2)(a) applies on a per party rather than per claim basis. We agree.

¶22 Pursuant to 23 O.S.2021, § 9.1(B)(1), where the jury finds by clear and convincing evidence a defendant is guilty of reckless disregard for the rights of others, punitive damages may be awarded. When awarding damages under this provision, the jury may award punitive damages in an amount not to exceed the greater of $100,000.00, or the amount of actual damages awarded. 23 O.S.2021, § 9.1(B)(2)(a)-(b).  ⁹

¶23 Because the actual damages awarded exceeded the statutory cap of $100,000.00, the $157,322.00 in actual damages awarded established the punitive damages cap for Addicted. However, the jury awarded $175,000.00 in punitive damages which exceeded the $157,322.00 cap for Addicted. Thus, we must reverse the punitive damages award of $175,000.00 to Addicted, and find it must be reduced to $157,322.00 to comply with Section 9.1. We remand to the trial court to enter a corrected order reflecting the corrected punitive damages amount.

¶24 Finally, Hamlin argues in proposition seven that the above alleged errors in their cumulative form merit a re-trial. As this court has found no error, aside from correcting the punitive damages amount in proposition six, Hamlin's proposition seven is denied. See Maddox v. Bridal, 1958 OK 136, 9, 329 P.2d 1049, 1054 (“This proposition merely presents a recapitulation of the assignments presented in the propositions heretofore discussed. Naturally our disposition of those propositions disposes of this one too.”).

CONCLUSION

¶25 We reverse the punitive damages award of $175,000.00 to Addicted, and remand to the trial court to enter the corrected order setting punitive damages at $157,322.00 to comply with Section 9.1. Regarding the remaining propositions, we find competent evidence reasonably supported the jury's verdicts. A review of the law and the entire record on appeal demonstrate that there were no other prejudicial errors shown in either the trial court's jury instructions or the verdicts.

¶26 The Journal Entry of Judgment reflecting the Jury's verdict is AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTION.

FOOTNOTES

1.   Edward Henry Yob (Ed) was the trustee of the Trust and George Kyler Barefield, Jr. (Barefield) owned fifteen (15) percent of Addicted at the time of the purchase.

2.   Throughout the briefs the parties incorrectly state the jury awarded damages in the amount of $77,382.00 for conversion. The verdict form states the amount of $77,322.00 and this Court will rely on the verdict form for the proper amount of damages awarded.

3.   Hamlin raises several claims of error, each with different standards of review. The relevant standards of review will be addressed within each proposition of error.

4.   Hamlin raised additional claims in his Petition in Error that he did not raise in his Brief in Chief. Therefore, these additional claims are waived and will not be addressed by this Court. See Okla. Sup. Ct. R. 1.11(k)(1), 12 O.S.2021, Ch. 15, App. 1.

5.   Ed testified that Hamlin did not disclose to him or Yob that Addicted was indebted to various creditors and on the verge of bankruptcy prior to their purchase of the shares. Yob testified that during negotiations Hamlin's CV was given to them, which claimed he had grown the business by $4 million in sales. It was not until Hamlin filed suit against them that they, through discovery, realized that Addicted's financial position was not as portrayed when they purchased their shares.

6.   Hamlin's cited cases afford him no relief. In Welty v. Martinaire of Okla., Inc., 1994 OK 10, 867 P.2d 1273, a truck driver sued her employer for withholding funds on her paycheck to cover insurance premiums. The Court found that if the employer did not pay Welty all she had coming when it was due, then a debt came into existence under the contract. Welty, 1994 OK 10, at 7, 867 P.2d 1273. In Tarrant v. Capstone Oil & Gas Co., 2008 OK CIV APP 17, 178 P.3d 866, the suit was based on unpaid royalty interests. The Court found that failure to pay royalties created a debt. Tarrant, 2008 OK CIV APP 17, at 22, 178 P.3d 866. The instant case is not one of a debt. Rather, Addicted claimed Hamlin withdrew company funds and converted them to his own funds.

7.   Hamlin also argues that only tangible personal property may be subject to conversion. When Hamlin withdrew money from Addicted's general fund, Hamlin had possession of Addicted's tangible personal property. For example, Hamlin's use of Addicted's company card to withdraw cash from an ATM at a casino and use of that money to gamble amounted to Hamlin having physical possession of money.

8.   Addicted received $77,322.00 in actual damages for the conversion claim and $80,000.00 in actual damages for the breach of fiduciary duty claim, totaling $157,322.00. In each claim the jury found Hamlin acted in reckless disregard of the rights of others, thus enabling the jury to award punitive damages.

9.   The Legislature in Section 9.1 did not specify a per claim application. Rather than using language like “per claim”, the Legislature simply adopted language that specifies the jury may make an award indicating a single punitive phase after the actual damages are determined regardless of the number of claims. Accordingly, the statute sets one $100,000.00 cap for the party being awarded punitive damages. Likewise, the second part of the cap, Section 9.1(B)(2)(b), states it is based on the “amount of the actual damages awarded.” This cap is tethered to the very conduct supporting the punitive damages, where there was the additional finding of “reckless disregard for the rights of others.” Accordingly, here the cap as applied to Addicted does not include other claims in the lawsuit, like the claim of fraud/deceit as to Yob and Trust. Instead, the punitive damages cap is directly connected both to the party receiving it as well as to the conduct for which it is awarded.

TIMOTHY J. DOWNING, PRESIDING JUDGE:

PRINCE, V.C.J., and MITCHELL, J., concur.