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Taszarek v. Lakeview Excavating, Inc.

Supreme Court of North Dakota

June 27, 2019

Eugene E. Taszarek, Marlys J. Taszarek, Trina E. Schilling, Steven E. Taszarek, and Michael E. Taszarek, Plaintiffs and Appellees
v.
Lakeview Excavating, Inc., Brian Welken, German Township, and Dickey County, Defendants and Brian Welken, Defendant and Appellant

          Appeal from the District Court of Dickey County, Southeast Judicial District, the Honorable Daniel D. Narum, Judge.

          William C. Black, Bismarck, ND, for plaintiffs and appellees.

          Douglas W. Gigler, Fargo, ND, for defendant and appellant.

          OPINION

          VANDEWALLE, CHIEF JUSTICE.

         [¶1] Brian Welken appealed a district court judgment piercing Lakeview Excavating, Inc.'s corporate veil and holding him personally responsible for money damages awarded to Eugene Taszarek, Marlys Taszarek, Trina Schilling, Steven Taszarek, and Michael Taszarek. We reverse and remand, concluding the court's findings are inadequate to permit appellate review.

         I

         [¶2] In the spring of 2012, German Township in Dickey County selected Lakeview Excavating as a contractor for FEMA-funded road projects. Welken was Lakeview Excavating's president and sole shareholder. A farmer who owned land adjacent to land owned by the Taszareks permitted Lakeview Excavating to enter his property to harvest field rock used for the road projects. However, Lakeview Excavating also took rock from the Taszareks' property that was used in the road projects.

         [¶3] The Taszareks sued Lakeview Excavating and Welken for intentional trespass, conversion of property, and unjust enrichment. The trespass and conversion claims were tried to a jury. The jury returned a verdict in the Taszareks' favor, finding Lakeview Excavating was the alter ego of Welken and holding both parties liable for damages. In Taszarek v. Welken, 2016 ND 172, ¶¶ 24, 26-27, 883 N.W.2d 880, we reversed and remanded, concluding that while Welken had consented to the jury deciding the alter ego issue, the district court did not adequately instruct the jury on the alter ego doctrine.

         [¶4] On remand the district court ordered a March 2018 bench trial on the issue of whether Lakeview Excavating was the alter ego of Welken. At the conclusion of trial, the court requested the parties submit closing arguments and proposed findings. The court adopted the proposed findings submitted by the Taszareks and found Welken used Lakeview Excavating and other corporate entities to conceal his individual dealings. The court concluded Lakeview Excavating was the alter ego of Welken and ruled the Taszareks could recover damages from either Welken or Lakeview Excavating.

         II

         [¶5] Welken argues the district court erred in piercing Lakeview Excavating's corporate veil and holding him personally liable for the Taszareks' damages.

         [¶6] Generally, the officers and directors of a corporation are not liable for the ordinary debts of a corporation; however, the corporate veil may be pierced when the legal entity is used to justify wrong, defeat public convenience, protect fraud, or defend crime. Coughlin Constr. Co., Inc. v. Nu-Tec Indus., Inc., 2008 ND 163, ¶ 19, 755 N.W.2d 867 (citing Intercept Corp. v. Calima Fin., LLC, 2007 ND 180, ¶ 15, 741 N.W.2d 209; Axtmann v. Chillemi, 2007 ND 179, ¶ 12, 740 N.W.2d 838). Under the alter ego approach to piercing the corporate veil:

[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist, and there must be an inequitable result if the acts in question are treated as those of the corporation alone.

Taszarek, 2016 ND 172, ¶ 10, 883 N.W.2d 880 (quoting Red River Wings, Inc. v.Hoot, Inc., 2008 ND 117, ΒΆ ...


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