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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. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  2. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  3. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

  4. The fee increase would be livable except for the 11% increase in spending at the Disciplinary Commission. The Commission should be focused on true public harm rather than going on witch hunts against lawyers who dare to criticize judges.

  5. Marijuana is safer than alcohol. AT the time the 1937 Marijuana Tax Act was enacted all major pharmaceutical companies in the US sold marijuana products. 11 Presidents of the US have smoked marijuana. Smoking it does not increase the likelihood that you will get lung cancer. There are numerous reports of canabis oil killing many kinds of incurable cancer. (See Rick Simpson's Oil on the internet or facebook).

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