Bank ordered to repay $7M to Tulsa

OKLAHOMA CITY (Legal Newsline) - The Oklahoma Supreme Court ruled Tuesday that the Bank of Oklahoma must repay more than $7 million to the city of Tulsa.

A qui tam action was brought against the city alleging a settlement with Great Plains Airlines Inc. was improper.

In 2008, the city's mayor agreed to have the city pay the bank $7.1 million out of a fund to settle a lawsuit related to the loan default by the airline, which is no longer.

If the city agreed to pay $7.1 million, the bank said it would drop its lawsuit against the trust.

Soon after the settlement was approved, a group of taxpayers filed a demand with the city. They argued the agreement and payment wasn't authorized by law.

However, a trial court found the taxpayers had no right to recover a qui tam penalty and granted the city's motion for partial summary judgment.

In granting the city's motion, the trial court found the agreement was a lawful settlement of a colorable claim against the city and the payment was a lawful expenditure of funds.

It also found that the city properly responded to the taxpayers' qui tam demands by initiating a declaratory judgment action and presenting the taxpayers' challenges.

The trial court denied the taxpayers' counter-motion for summary judgment and denied their request to reconsider an order granting partial summary judgment.

The taxpayers appealed to the state's high court.

The Court said it found the unjust enrichment claim to be "unviable." It also noted that the statute of limitations would bar the unjust enrichment claim against the city.

Justice Douglas L. Combs authored the opinion.

"In the present matter, the settlement was not based on a contract, but rather under the equitable theory of unjust enrichment to the city of Tulsa. The city of Tulsa, at all times, presented the settlement issues to the District Court of Tulsa County. The Judgments Against Municipalities Act does not apply. Therefore, the sinking funds requirement also does not apply," Combs wrote.

"However, since we find the unjust enrichment claim to be unviable and the statute of limitations would bar the unjust enrichment claim against the city, we remand the instant matter back to the District Court of Tulsa County to direct the repayment of the settlement funds from (Bank of Oklahoma) back to the city of Tulsa."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.