An Indianapolis man who was awarded $3,000 in a small claims dispute with a fence installation company has failed in convince the Court of Appeals of Indiana that the corporate veil should have been pierced in his case.
The dispute in Sjon Martin v. Top Quality Professional Construction, LLC, Joe Krise, Tina Krise, 21A-SC-1337, began in September 2020, when Sjon Martin hired Top Quality Professional Construction to install a chain-link fence at his house. Martin agreed to pay $4,600 for materials and labor costs, including a $3,000 deposit paid after measurements were taken.
But Martin didn’t hear from Top Quality for several weeks after he paid the deposit, and by early November, the fence was not installed. Top Quality refused to refund Martin’s deposit, so he took the dispute to Washington Township Small Claims Court on a breach of contract claim.
The small claims court conducted a virtual bench trial in February and subsequently found that Top Quality had, in fact, breached the contract. The court entered a $3,000 judgment of Martin, plus pre- and post-judgment interest.
But Martin appealed, arguing Joe and Tina Krise, the individual members of Top Quality, should have been held personally liable for the breach. It had been Joe Krise whom Martin paid the deposit to after Joe took measurements for the fence at Martin’s house.
The Court of Appeals, however, found Martin failed to demonstrate prima facie error in the trial court’s decision not to pierce the corporate veil.
Parties such as Martin seeking to prove the corporate veil should be pierced must present evidence demonstrating under capitalization, absence of corporate records, fraudulent representation by corporation shareholders or directors, use of the corporation to promote fraud, injustice or illegal activities, payment by the corporation of individual obligations, commingling of assets and affairs, failure to observe required corporate formalities, or other shareholder acts or conduct ignoring, controlling or manipulating the corporate form, according to the COA, which cited Reed v. Reid, 980 N.E.2d 277 (Ind. 2012), and Blackwell v. Superior Safe Rooms LLC, 174 N.E.3d 1082, 1092, 1093 (Ind. Ct. App. 2021).
“Martin made no such showing at trial,” Judge Paul Mathias wrote in a Wednesday opinion. “He casually complains that ‘the way in which the trial was conducted was itself not conducive to allowing a meaningful opportunity for a highly fact-sensitive inquiry’ into the above-listed factors, but Martin does not contend that he was denied an opportunity to present evidence to the trial court.
“It was Martin’s burden — not the trial court’s — to put forth evidence demonstrating the propriety of piercing the corporate veil,” Mathias continued. “Our review of the record reveals that Martin presented no such evidence, and he has not directed us to any.
“… Having presented no evidence in support of his request to pierce Top Quality’s corporate veil,” Mathias concluded, “Martin has failed to demonstrate that the trial court committed prima facie error in attributing liability to Top Quality — the limited liability company with whom he entered the fence-installing contract — rather than holding the company’s two members, Joe and Tina Krise, personally liable.”