Denny v. Breawick, L.L.C.
137 N.E.3d 578
Ohio Ct. App.2019Background
- Plaintiff Cheryl Denny contracted with Breawick, LLC (contractor) for construction of a house; Timothy Hunsaker was sole member of Breawick and Buren Trace and signed the contract on Breawick’s behalf.
- Construction began April 2013; disputes arose over unapproved changes, incomplete work, and demands for undocumented "extras." Denny paid about $341,696 before Hunsaker stopped work in December 2013.
- Multiple supplier liens occurred; Denny paid some costs and later hired a different contractor, spending at least $46,057 to make the house habitable and an expert estimated $125,216 more needed to meet original specs.
- Denny sued Breawick, Buren Trace, and Hunsaker asserting breach of contract, violations of the Home Construction Service Law (HCSL), CSPA, fraud, conversion, and sought to pierce the LLC veil to hold Hunsaker personally liable.
- Trial court found breach of contract and HCSL violations (charging unapproved excess costs; failing to perform in a workmanlike manner), awarded attorney fees under R.C. 4722.08(D)(2), and pierced the corporate veil to hold Hunsaker personally liable.
- Defendants appealed only the veil-piercing aspect (arguing standards for corporations were wrongly applied to single-member LLCs); the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court correctly pierced the LLC veil to hold Hunsaker personally liable | Denny argued Hunsaker exercised complete control, committed illegal acts (HCSL violations), and caused injury, satisfying Belvedere factors | Defendants argued single-member LLC should not be treated like a corporation and corporate-form standards were inapplicable to pierce veil | Court affirmed: competent credible evidence showed alter-ego control, HCSL violations (illegal acts), and resulting damages; veil piercing proper |
| Whether Hunsaker’s conduct amounted to "illegal act(s)" under Dombroski so as to justify veil piercing | HCSL violations (charging unapproved extras; failing to perform workmanlike) constituted illegal, egregious acts | Defendants contended violations were not the kind of illegal/egregious acts required to pierce veil | Court held the HCSL violations were illegal acts meeting Dombroski’s requirement on these facts |
| Whether evidence supported alter-ego (first Belvedere prong) | Denny pointed to sole ownership, lack of corporate formalities, commingled funds, use of company account for personal expenses | Defendants disputed characterization of records and use of funds as personal commingling | Court held there was evidence (sole membership, no separate accounts for Buren Trace, use of Breawick funds for personal expenses, no records) supporting alter-ego finding |
| Whether piercing was improperly used to reach Buren Trace via Breawick | N/A (Denny sought to hold Hunsaker personally liable) | Appellants argued veil-piercing to reach Buren Trace was improper | Court noted it pierced only to reach Hunsaker personally; argument inapplicable and rejected |
Key Cases Cited
- Belvedere Condominium Unit Owners’ Assn. v. R.E. Roark Cos. Inc., 67 Ohio St.3d 274 (sets three-part test for piercing the corporate veil)
- Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506 (clarifies second Belvedere prong: must show fraud, illegal act, or similarly unlawful act)
- Minno v. Pro-Fab, Inc., 121 Ohio St.3d 464 (discusses piercing corporate veil and personal liability)
- Snapp v. Castlebrook Builders, Inc., 7 N.E.3d 574 (addresses proof and standard of evidence supporting veil piercing)
- My Father’s House No. 1 v. McCardle, 986 N.E.2d 1081 (discusses alter-ego factors and privity in veil-piercing analysis)