A Case of Stolen
In a decision rendered in
January of this year, the Federal District Court for the Western District of
Kentucky considered a dispute that included an effort to in effect steal the
identity of a business corporation. Burkesville
Hardwoods, LLC v. Coomer, Civil Act. No. 1:18-CV-00018-GNS-HEB, 2020 WL
353232 (W.D. Ky Jan. 17, 2020).
It requires a careful review of
the opinion, including its footnotes, to put together what seem to be predicates
of the dispute. Essentially, the estate of R. T. Baker leased certain lands in
Cumberland County to Travis Coomer Drilling Company, a corporation (“TCD”), for
oil and gas extraction. TCD was administratively dissolved on September 30,
2014, for failure to file its annual report. In the meantime, the property
subject to the lease with TCD was conveyed to Burkesville Hardwoods, LLC
(“Burkesville”). After TCD was dissolved, Burkesville caused there to be
incorporated a new corporation under the name Travis Coomer Drilling Company
(“TCD2”). Ergo, Burkesville, the property owner, created a new corporation with
the exact same name of its administratively dissolved lessee. The nature of the
back story of the relationship between Burkesville and TCD is not reviewed in
the decision, but clearly there was something going on.
A point not addressed in the
opinion is why TCD was never reinstated from its administrative dissolution
under either its original name (if done before the incorporation of TCD 2 on
April 10, 2017), or thereafter under a different name.
As an aside, in reviewing the
records of the Kentucky Secretary of State, several notices from that office
relating to the annual report and subsequent administrative dissolution were
returned to the Secretary of State as undeliverable, presumably because the
company had moved from that address and not updated its records with the
Secretary of State. This decision is yet further admonition in making sure that
those addresses are kept current.
Regardless, Burkesville filed
this action against Travis Coomer individually, asserting he had no right to
extract oil and gas from the leased property. Coomer brought counterclaims in
order to enforce that lease, alleging as well that Burkesville had
misappropriated the identity of TCD by incorporating TCD2. This decision was
rendered in response to Burkesville’s application for a preliminary injunction and
for summary judgment.
With respect to the requested
preliminary injunction, it was rejected because the only claimed injuries could
be fully compensated with monetary damages. In addition, notwithstanding an
assertion to the contrary, Burkesville had made no showing that the continued
extraction of the oil and gas by Coomer would have a negative impact upon its
goodwill or reputation. In addition, the court found that the equities did not
balance in favor of Burkesville, noting that it had interfered with Coomer’s
rights under the lease (here it would seem the court conflated Travis Coomer
and his dissolved corporation) and that it had acted “unscrupulously” by having
“incorporated a company using Coomer’s name for no discernible reason other
than disrupting Coomer’s business operations.” 2020 WL 353232, *3. As to that
last point, in a footnote, the court explained and rejected the assertion that
the incorporation of TCD 2 constituted a “squeeze out”, going on to explain
what is an actual squeeze out transaction.
Turning to Burkesville’s motion
for summary judgment with respect to the validity of the lease, the motion was
resoundingly rejected. With respect to business organization law, there was
rejected the assertion that TCD could not enforce the lease because it had been
administratively dissolved. This assertion was rejected on the basis of KRS §
271B.14-050(2)(f), which provides that the dissolution of a corporation does
not prevent the corporation from commencing a legal proceeding in its own name,
and as well citing Robert W. Keats et al.,
Kentucky Practice Series: Methods of Practice
§ 14.82. Rather:
incorrect when it asserts that simply because TCD was administratively
dissolved that entity cannot maintain an action to enforce the Lease. Nor does
administrative dissolution transfer title of the Lease in any way. KRS
271B.14-050(2)(a) (“Dissolution of the corporation shall not [t]ransfer title
to the corporation’s property ….”). Because title to TCD’s interest in the Lease
was not destroyed by the corporation’s administrative dissolution, Hardwoods is
incorrect when it asserts that the Lease should be rendered void for
The court went on to reject the
notion that Coomer no longer owned TCD subsequent to its administrative
dissolution and Burkesville’s incorporation of TCD2.
Hardwoods, however, points to no authority supporting the assertion that filing
Articles of Incorporation in an administratively dissolved entity’s former name
gives the new corporation ownership over the previous entity itself. Coomer did
not lose ownership of TCD simply because Burkesville Hardwoods incorporated
TCD2 after TCD’s administrative dissolution. Neither does Burkesville Hardwoods
point to any authority supporting its claim that a business owner loses ownership
of an entity that is been administratively dissolved, nor the proposition that Burkesville
Hardwoods somehow acquired an interest in the lease because it now operates
under the name matching the lessee under the Lease. Id.
In addition to allowing Coomer’s
counterclaim for Burkesville’s interference with contract (these being the
contracts between Coomer and third parties) to proceed, the court as well
allowed a claim for misappropriation of name and identity theft to proceed.
Writing as to this topic, the court wrote:
Coomer’s misappropriation claim against Hardwoods for filing
Articles of Incorporation under the name “Travis Coomer Drilling Company” also
survives. The Kentucky Supreme Court in Montgomery
v. Montgomery, 60 S.W.3d 524 (Ky. 2001), explained that the “right of
publicity protects the right to control the commercial value of one’s
identity.” Id. at 528. “[I]t is clearly the commercial interests in one’s
identity that the appropriation prong of tort serves to protect the most.” Id. (citing Restatement (Second) of
Torts § 652C cmt. a). As this Court has recognized before, the Kentucky
Supreme Court adopted the principles of the invasion of privacy tort from the Restatement
(Second) of Torts. Thornton v. W. & S. Fin. Grp. Beneflex
Plan, 797 F. Supp. 2d 796, 813 (W.D. Ky. 2011) (citing McCall
v. Courier-Journal & Louisville Times Co., 623 S.W.2d 882, 887 (Ky.
1981)). A branch of this tort is a cause of action for the appropriation of
one’s name or likeness, which the Restatement (Second) for Torts defines as a
claim arising when “[one appropriates to his own use or benefit the name or
likeness of another....” Restatements (Second) of Torts § 652C.
Hardwoods cannot refute that Coomer’s given name is the primary
component of the corporate name used by Hardwoods in incorporating the new
entity. Although Hardwoods asserts Coomer is currently not legally entitled to
use of the name “Travis Coomer Drilling Company,” Hardwoods cannot refute the
potential commercial benefit to Hardwoods by appropriating Coomer’s name.
Whether Hardwoods obtained a benefit with its use of Coomer’s name is a factual
issue precluding summary judgment on Coomer’s misappropriation claim.
In sum, Coomer’s counterclaim for interference with the Lease is
dismissed with prejudice, while Coomer’s misappropriation and interference with
other contracts claims survive. Id.