4 N.E.3d 677
Ind. Ct. App.2014Background
- Country Contractors, Inc. contracted to perform earthwork/storm sewer work for Westside Storage and subcontracted much of the work to O&M and others; Country stopped work in late 2008 and did not complete the job.
- Westside paid Country approximately $191,528; Westside later paid subcontractors and a replacement contractor so the project could be finished, bringing total outlays to about $286,163 (plus ~$22,000 for a water line).
- O&M and other subcontractors recorded mechanic’s lien notices in February 2009; Westside paid those claimants to clear liens. Country then filed its own notice of intent to hold a mechanic’s lien in May 2009 for ≈$38,125.00. Country later dismissed its counterclaim.
- Westside sued Country for breach of contract and added the individual shareholders/officers Stephen and Jahn Songer seeking to pierce the corporate veil and hold them personally liable; bench trial followed with requested findings under T.R. 52(A).
- Trial court (March 2013) found: (1) corporate veil should be pierced and the Songers personally liable; (2) Country slandered Westside’s title by filing the lien; and (3) damages of $117,542.20 (including $51,162.86 completion costs, $17,500 attorney’s fees, $33,920 delay damages, and prejudgment interest). Appellants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Piercing corporate veil | Songers ran/ignored Country, undercapitalized, poor records, misuse of corporate form caused injustice — hold Songers personally liable | Songers were not the instrumentality for the Westside contract; lacked control/commingling; no causal misuse of corporate form | Reversed as to Songers — insufficient evidence tying misuse of corporate form to the injury; undercapitalization not shown at formation and no causal nexus |
| Slander of title (mechanic’s lien) | Country filed an invalid lien (after Westside paid subcontractors and with constructive notice of others’ claims/releases) — filing slandered title | Country argued lien did not cloud title because it was not discovered in a title search; also asserted lien filing was proper | Affirmed for Westside — Country’s properly filed but invalid lien (given prior liens/releases and that Country hadn’t paid O&M) supported slander finding and malice could be inferred |
| Attorney’s fees for slander claim | Fees are authorized by statute for slander of title and $17,500 is reasonable given case complexity and counsel’s testimony | Amount is excessive and imprecise; includes non-slander work | Affirmed — statutory authorization exists and trial court did not abuse discretion in assessing the reasonableness of the fee |
| Delay damages & prejudgment interest | Westside claimed ~$33,920 for delay (court adopted plaintiff’s figure); prejudgment interest calculated accordingly | Country argued delay award speculative, calculation unsupported, and court improperly adopted plaintiff’s numbers | Reversed as to delay damages — award speculative and internally inconsistent (timing mismatch); remand for recalculation of prejudgment interest |
Key Cases Cited
- Aronson v. Price, 644 N.E.2d 864 (Ind. 1994) (articulates two‑part test to pierce corporate veil: instrumentality/control and misuse causing fraud or injustice)
- Escobedo v. BHM Health Assocs., Inc., 818 N.E.2d 930 (Ind. 2004) (emphasizes requirement that misuse of corporate form must cause the alleged injustice)
- Ziese & Sons Excavating, Inc. v. Boyer Constr. Corp., 965 N.E.2d 713 (Ind. Ct. App. 2012) (fact‑sensitive veil‑piercing inquiry; courts refuse to rely on any single factor)
- Lee & Mayfield, Inc. v. Lykowski House Moving Engineers, Inc., 489 N.E.2d 603 (Ind. Ct. App. 1986) (filing an invalid lien can support an inference of malice for slander of title)
- Walsh & Kelly, Inc. v. Int’l Contractors, Inc., 943 N.E.2d 394 (Ind. Ct. App. 2011) (malice for slander of title may be inferred from refusal to release an invalid lien)
- Capital Drywall Supply, Inc. v. Jai Jagdish, Inc., 934 N.E.2d 1193 (Ind. Ct. App. 2010) (mechanic’s lien statutes are strictly construed; filing formalities serve notice and protection policies)
- Cmty. Care Ctrs., Inc. v. Hamilton, 774 N.E.2d 559 (Ind. Ct. App. 2002) (capital adequacy measured at formation; later business expansion may reopen inquiry regarding capitalization)