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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. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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