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COA reverses piercing of corporate veil, but upholds slander of title finding

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A Hendricks County storage facility’s claims of breach of contract and slander of title were affirmed on appeal against a contractor hired by the facility to provide excavation services. The Indiana Court of Appeals reversed the piercing of Country Contractors Inc.’s corporate veil to find its two shareholders personally liable.

A Westside Storage of Indianapolis Inc. hired Country Contractors in August 2007 and work began in summer of 2008. Country shareholders Jahn and Stephen Songer were not involved in the contract negotiations as another employee worked with Westside. Country then subcontracted out most of the work. It left the worksite without completing the job and didn’t pay several subcontractors.

Those subcontractors filed mechanic’s liens, which Westside paid. It had to hire another company to complete the job. Complicating the matter is that Country filed a notice of intent to hold a mechanic’s lien on Westside’s property in the amount of the total owed to the subcontractors.

Westside sued, alleging breach of contract and slander of title, and it requested piercing of the corporate veil to hold the Songers personally liable.

The trial court ruled in favor of Westside and against Country and the Songers personally, awarding $117,000 in damages, which consisted of costs to complete the project, prejudgment interest, attorney fees and damages for delay of the project caused by Country’s breach.

In Country Contractors, Inc., Stephen Songer, and Jahn Songer v. A Westside Storage of Indianapolis, Inc., 32A01-1304-CC-155, the Court of Appeals reversed the piercing of the corporate veil, finding that the Songers did not use the corporation to engage in misconduct to their own benefit. Westside also failed to establish that Country’s dwindling capital was due to anything other than a general downturn in the economy or construction industry, Judge Terry Crone wrote.

Crone also noted that lack of recourse because Country is now bankrupt is “simply not a proper basis for piercing the corporate veil.”

The judges affirmed the slander of title finding with respect to Country, however. When Country filed its lien claim, both the subcontractors’ lien claims and the release of lien based on Westside’s direct payment to the subcontractors were on file in the county records. As such, Country had constructive notice of those entries, and its filing of an invalid lien claim constitutes evidence sufficient to support the finding that it slandered Westside’s title.

The $17,500 in attorney fees award is reasonable, but the COA remanded for further proceedings regarding delay damages and prejudgment interest because the nearly $34,000 amount adopted by the trial court was speculative.
 

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  1. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

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