ILNews

Judges disagree over use of summary judgment to pierce corporate veil

Back to TopCommentsE-mailPrintBookmark and Share

One Court of Appeals judge believed the “only reasonable inference” that could be drawn from the evidence in a collections case is that a former company was a “sham corporation,” so the trial court properly pierced the corporate veil on summary judgment.

In Konrad Motor and Welder Service, Inc., Konrad Lambrecht, and Sharon Lambrecht v. Magnetech Industrial Services, Inc., 45A04-1203-CC-109, Judge Terry Crone dissented from his colleagues on the corporate veil issue, writing, “Although piercing the corporate veil is, and should be, a rare occurrence on summary judgment because of the highly fact-sensitive nature of the inquiry involved, I believe that it is appropriate when the relevant facts are undisputed and lead to only a single reasonable conclusion. The trial court reached the right conclusion here.”

Magnetech Industrial Services Inc. sued Konrad Motor & Welder Service Inc. and husband and wife Konrad and Sharon Lambrecht to recover a $35,000 judgment entered against a former company, Kondrad Electric, which was owned by Sharon Lambrecht. She shut down Konrad Electric in 2008. Her husband formed the corporation Konrad MWS in 2006.

The lawsuit at issue began in 2005 when a company sued Konrad Electric after problems arose with work Magnetech performed. Konrad Electric subcontracted the work to Magnetech. Konrad Electric then filed a third-party against Magnetech, leading to Magnetech’s counterclaim for payment of services.

While the lawsuits were pending, Sharon Lambrecht – who was sole shareholder and president – decided to close Konrad Electric and her husband launched Konrad MWS. Konrad Lambrecht worked for Konrad Electric as its general manager.

After Magnetech won the $35,000 judgment, it sued Konrad MWS and the Lambrechts in 2011 to recover the money. Konrad Electric was without assets to satisfy the judgment. The trial court granted summary judgment for Magnetech, piercing the corporate veil of Konrad Electric to hold the Lambrechts liable and finding Konrad MWS is the alter ego of Konrad Electric.

Judges Nancy Vaidik and Cale Bradford reversed on the corporate veil ruling, finding “While it may be that Konrad Electric’s corporate veil should be pierced, this determination should not have been made on summary judgment,” Vaidik wrote. The majority believed more than one inference can be drawn from the facts of this case.

The three judges upheld summary judgment regarding the finding Konrad MWS is the alter ego of the former corporation, finding significant similarities between the two corporations, including names, similar business services, and the timing of the shutting down of Konrad Electric and creating Konrad MWS.

“Konrad Electric tried to avoid paying the judgment to Magnetech while still conducting the same business under a new name, Konrad MWS. Konrad MWS offers no other reasonable inference,” Vaidik wrote.

The majority noted that on remand, if Konrad Electric’s corporate veil is pierced, Konrad Lambrecht, even though not a shareholder, may be held individually liable along with his wife.

 

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. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

ADVERTISEMENT