DNS Allen, LLC d/b/a D and S Allen, LLC v. Alan Cox and Catherine Ann Cox Mikeal Scott Allen v. Alan Cox and Catherine Ann Cox (mem. dec.)
61A01-1609-CC-2141
| Ind. Ct. App. | Jun 1, 2017Background
- DNS Allen, LLC (DNS), owned and operated by Mikeal Scott Allen, contracted in Jan 2013 to remodel and build an addition for the Coxes; the written contract lacked the Coxes’ street address, start/end dates, and change-contingency details.
- Work ran Jan–May 2013; the Coxes paid $63,000 and later paid an additional $5,000 after DNS presented a $17,000 bill; they did not provide a punch list.
- The Coxes alleged extensive defective, non-workmanlike construction (e.g., misaligned foundation, unlevel floors, improper doors, wrong-color roof, improperly installed appliances and fixtures).
- DNS sued July 10, 2014 for breach and to foreclose a mechanic’s lien; the Coxes counterclaimed against DNS and third-partied Allen for breach, violations of the Home Improvement Contract Act (HICA), deceptive acts, and slander of title.
- After a bench trial and an on-site visit, the trial court found DNS liable for breach, HICA violations, and slander of title, and pierced DNS’s corporate veil, holding Allen personally liable.
- On appeal the only contested issue was whether the trial court properly pierced the corporate veil sua sponte and held Allen personally liable.
Issues
| Issue | Plaintiff's Argument (DNS/Allen) | Defendant's Argument (Coxes) | Held |
|---|---|---|---|
| Whether the court properly pierced DNS’s corporate veil and held Allen personally liable | Piercing was improper; corporate form should protect Allen absent traditional veil-piercing factors | Trial court may pierce veil because Allen’s gross HICA violations and conduct justify personal liability | Reversed: HICA violations alone do not justify piercing; no sufficient veil-piercing factual basis shown |
| Whether HICA violations can alone support piercing the corporate veil | HICA violations do not create personal liability for LLC owners | Coxes argued HICA violations were severe enough to justify piercing | Held: No statutory or common-law authority making HICA violations by themselves a basis to pierce the veil |
| Whether the trial court’s findings support veil piercing under Indiana common-law factors | Trial court lacked findings showing Aronson factors (e.g., undercapitalization, commingling, fraud) | Coxes relied on trial court’s equitable discretion and record of conduct | Held: Record lacked sufficient Aronson-factor support and possible notice of veil-piercing theory was inadequate |
| Whether DNS still liable for breach, HICA violations, and damages | N/A (not contested on appeal) | Coxes sought damages and fees from DNS and Allen | Held: DNS liable for breach and HICA violations; damages and attorneys’ fees available, but judgment must be against DNS only, not Allen personally |
Key Cases Cited
- Aronson v. Price, 644 N.E.2d 864 (Ind. 1994) (sets factors and burden for piercing the corporate veil)
- Clark v. Crowe, 778 N.E.2d 835 (Ind. Ct. App. 2002) (standard of review for bench findings: evidence supports findings and findings support judgment)
- Thomas v. Thomas, 923 N.E.2d 465 (Ind. Ct. App. 2010) (articulates two-tiered review for findings and conclusions)
- Reed v. Reid, 980 N.E.2d 277 (Ind. 2010) (veil-piercing is fact-dependent and equity-driven)