Opinion ID: 543813
Heading Depth: 3
Heading Rank: 1

Heading: Wrongdoing

Text: 12 The district court found a constructive trust here because it concluded that Seneca's illegal overcharging clearly and unequivocally shows wrongdoing. In re Seneca Oil Co., 76 B.R. at 813. Appellants argue that Seneca's overcharging was not sufficient wrongdoing to warrant a constructive trust. Because this is an issue of law, we apply a de novo standard of review. In re Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir.1988). 13 The parties agree that Oklahoma law governs the issue of whether a constructive trust exists in this case. The Supreme Court of Oklahoma has explained the conditions for imposing a constructive trust as follows: 14 The primary reason for imposing a constructive trust is to avoid unjust enrichment. It is imposed against one who by fraud, actual or constructive, by [duress] or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either [has] obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. 15 Easterling v. Ferris, 651 P.2d 677, 680 (Okla.1982) (quoting Cacy v. Cacy, 619 P.2d at 202) (bracketed words added). Mere unfairness in allowing the holder of the property to retain the property is not sufficient to justify imposition of a constructive trust. Easterling, 651 P.2d at 680. There must also be active wrongdoing by the person holding the property. Id. The evidence of wrongdoing must be clear, unequivocal, and decisive beyond a reasonable doubt.... A mere preponderance of the evidence is not sufficient to establish a constructive trust but it must be established by evidence which is clear, definite, unequivocal and satisfactory, or such as to leave but one conclusion, or as to leave no reasonable doubt as to the existence of the trust. Id. at 681; see also Ohio v. Four Seasons Nursing Centers of America, Inc., 465 F.2d 25, 28 (10th Cir.1972) (observing that the standard for imposing a constructive trust in Oklahoma is rigorous). 16 Although it is a close issue, we believe that there was sufficient wrongdoing here. The Temporary Emergency Court of Appeals has determined that Seneca overcharged customers for crude oil in violation of federal pricing regulations. Seneca's overcharging resulted in unjust enrichment to Seneca and its creditors. As noted above, the primary purpose of a constructive trust in Oklahoma is to avoid unjust enrichment. Easterling, 651 P.2d at 680; Cacy, 619 P.2d at 202; see also G & M Motor Co. v. Thompson, 567 P.2d 80, 83 (Okla.1977). Moreover, Seneca was at all relevant times aware of the pricing regulations. Its creation of a contingency fund is evidence that it was on clear notice that it might be violating those regulations. Therefore, we conclude that Seneca's behavior constituted sufficient active wrongdoing. 9 17 Appellants argue that the existence of actual fraud or a fiduciary relationship is necessary for the imposition of a constructive trust under Oklahoma law. (Appellants' Consolidated Reply Br. at 6.) We disagree. Although most Oklahoma cases imposing a constructive trust have involved either fraud or a fiduciary relationship, the Oklahoma Supreme Court repeatedly has stated that a constructive trust is proper under other circumstances. See, e.g., Easterling, 651 P.2d at 680 (noting that a commission of wrong can be sufficient); Peyton v. McCaslin, 417 P.2d 316, 320 (Okla.1966) (Constructive trusts are such as are raised by equity in respect of property which has been acquired by fraud, or where, though acquired without fraud, it is against equity that it should be retained by him who holds it. (emphasis added)); Goldsby v. Juricek, 403 P.2d 454, 458 (Okla.1965) (A constructive trust ... [is imposed] against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.); Phillips v. Ball, 358 P.2d 193, 197 (Okla.1960) ([W]here a party obtains legal title to property by fraud, violation of confidence, or in any other unconscientious manner, equity will impress a constructive trust on property so obtained for one who in good conscience is entitled to it.). 18 Appellants also contend that Seneca's overcharging is the equivalent of the mere nonpayment of a debt to a creditor, which appellants argue is not the sort of conduct that warrants imposing a constructive trust. We disagree that Seneca's behavior amounted only to nonpayment of a debt. Seneca violated federal law by overcharging for oil, which is more wrongdoing than the typical creditor-debtor situation.