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Nolfi v. Ohio Ky. Oil Corp.

United States Court of Appeals for the Sixth Circuit

March 4, 2011, Argued; April 4, 2012, Decided; April 4, 2012, Filed

File Name: 12a0090p.06

Nos. 09-4315/4316/4323


 [*541]   [***2]  JULIA SMITH GIBBONS, Circuit Judge. This case involves allegations of fraud and misrepresentation in the issuance of securities related to oil and gas interests. Following a jury verdict for plaintiffs, defendants-appellants/cross-appellees Ohio Kentucky Oil Corporation ("OKO") and Carol L. Campbell, both individually and as executrix of the Estate of William M. Griffith, appeal numerous rulings of the district court. Plaintiffs-appellees/cross-appellants Gregory M. Nolfi, as successor trustee under the Frederick E. Nonneman declaration; Anita C. Nonneman, as executrix of the Estate of Frederick  [**2] E. Nonneman;  [*542]  and Rena Nonneman1 (together the "Nonneman plaintiffs") cross-appeal two additional issues. For the reasons that follow, we affirm in full the decisions of the district court.

This case stems from a series of investments made by Frederick E. Nonneman with OKO. Nonneman invested money both personally and through Fencorp, a family investment corporation he formed in 1986. Many of his investments were in domestic oil and gas, but he did not have any experience in drilling wells or running an oil and gas company.

Between 1986 and 2000, Nonneman personally invested a total of $6,520,995 with OKO in oil and gas partnerships and joint ventures. Then, between 2001 and 2003, he substantially increased his rate of investment, investing an additional $8,383,046 with  [***3]  OKO in his individual capacity.2 Evidence showed that Nonneman expected to receive favorable tax treatment for his investments.

During the period in question—2000 to 2003—Nonneman was in his early eighties and was showing signs of dementia and suffering from disabilities. Eventually, Nonneman's family and advisors—concerned that he was incapable of managing his business affairs—arranged, with his consent, for Gregory Nolfi, a trusted business advisor, to assume management of Nonneman's affairs as successor trustee on November 5, 2003.

By this time it had become apparent that the OKO investments were not yielding returns. Nonneman had invested in thirty-three joint ventures and ten limited partnerships. The programs all involved oil and gas exploration—mainly drilling holes to find oil and gas—in the states of Kentucky, Tennessee, and Pennsylvania. Of the one hundred twenty-eight wells drilled, all but eleven were completely dry. The eleven that produced  [**4] oil did not produce enough to recoup the investment, let alone return a profit to Nonneman.

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675 F.3d 538 *; 2012 U.S. App. LEXIS 6745 **; 2012 FED App. 0090P (6th Cir.) ***

GREGORY M. NOLFI, as Successor Trustee under the Frederick E. Nonneman Declaration of Trust Dated August 19, 1994, as Amended; ANITA C. NONNEMAN, as Executrix of the Estate of Deceased Frederick E. Nonneman; RENA NONNEMAN, Plaintiffs-Appellees/Cross-Appellants, v. OHIO KENTUCKY OIL CORPORATION; CAROL L. CAMPBELL, individually and as Executrix of the Estate of Deceased William M. Griffith, Defendants-Appellants/Cross-Appellees.

Subsequent History: Companion case at Fencorp v. Ohio Ky. Oil Corp., 675 F.3d 933, 2012 U.S. App. LEXIS 6693 (6th Cir.), 2012 FED App. 91P (6th Cir.) (6th Cir. Ohio, 2012)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of Ohio at Akron. No. 06-00506; 06-00260—John R. Adams, District Judge.

Nolfi v. Ohio Ky. Oil Corp., 2008 U.S. Dist. LEXIS 39284 (N.D. Ohio, May 12, 2008)


district court, oil, damages, discovery, drilling, defendants', rescission, misrepresentations, rescissory, matter of law, fiduciary duty, plaintiffs', fractional, undivided interest, summary judgment, omission, stock, statute of limitations, one year, lease, summary judgment motion, jury instructions, oil and gas, partnerships, measure of damages, tax benefit, state law, invested, equitable tolling, intent to deceive

Civil Procedure, Appeals, Summary Judgment Review, Appealability, Appellate Jurisdiction, Final Judgment Rule, Interlocutory Orders, Standards of Review, De Novo Review, Standards of Review, Trials, Judgment as Matter of Law, General Overview, Securities Law, Initial Offerings of Securities, Securities Act Actions, Definitions, Elements of Proof, Scienter, Reliance, Jury Trials, Jury Instructions, Implied Private Rights of Action, Duty to Disclose, Business & Corporate Law, Management Duties & Liabilities, Fiduciary Duties, Securities Exchange Act of 1934 Actions, Deceptive & Manipulative Devices, Causation, Civil Liability Considerations, Securities Litigation Reform & Standards, Remedies, Damages, Compensatory Damages, Methods of Discovery, Interrogatories, Purpose & Use of Interrogatories, Judgments, Relief From Judgments, Altering & Amending Judgments, Abuse of Discretion, Verdicts, General Verdicts, Inconsistent Verdicts, Statute of Limitations, Initial Offerings, Criminal Law & Procedure, Habeas Corpus, Review, Antiterrorism & Effective Death Penalty Act