ILNews

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

Back to TopCommentsE-mailPrintBookmark and Share

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.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. The sad thing is that no fish were thrown overboard The "greenhorn" who had never fished before those 5 days was interrogated for over 4 hours by 5 officers until his statement was illicited, "I don't want to go to prison....." The truth is that these fish were measured frozen off shore and thawed on shore. The FWC (state) officer did not know fish shrink, so the only reason that these fish could be bigger was a swap. There is no difference between a 19 1/2 fish or 19 3/4 fish, short fish is short fish, the ticket was written. In addition the FWC officer testified at trial, he does not measure fish in accordance with federal law. There was a document prepared by the FWC expert that said yes, fish shrink and if these had been measured correctly they averaged over 20 inches (offshore frozen). This was a smoke and mirror prosecution.

  2. I love this, Dave! Many congrats to you! We've come a long way from studying for the bar together! :)

  3. This outbreak illustrates the absurdity of the extreme positions taken by today's liberalism, specifically individualism and the modern cult of endless personal "freedom." Ebola reminds us that at some point the person's own "freedom" to do this and that comes into contact with the needs of the common good and "freedom" must be curtailed. This is not rocket science, except, today there is nonstop propaganda elevating individual preferences over the common good, so some pundits have a hard time fathoming the obvious necessity of quarantine in some situations....or even NATIONAL BORDERS...propagandists have also amazingly used this as another chance to accuse Western nations of "racism" which is preposterous and offensive. So one the one hand the idolatry of individualism has to stop and on the other hand facts people don't like that intersect with race-- remain facts nonetheless. People who respond to facts over propaganda do better in the long run. We call it Truth. Sometimes it seems hard to find.

  4. It would be hard not to feel the Kramers' anguish. But Catholic Charities, by definition, performed due diligence and held to the statutory standard of care. No good can come from punishing them for doing their duty. Should Indiana wish to change its laws regarding adoption agreements and or putative fathers, the place for that is the legislature and can only apply to future cases. We do not apply new laws to past actions, as the Kramers seem intent on doing, to no helpful end.

  5. I am saddened to hear about the loss of Zeff Weiss. He was an outstanding member of the Indianapolis legal community. My thoughts are with his family.

ADVERTISEMENT