370 S.W.3d 448
Tex. App.2012Background
- KBI (Texas corporation) and Elegant (Texas LLC) were both owned/operated by Bains; in 2002–2003 Doyle contracted KBI to install a patio cover and roof for $7,000 plus $800 for extra insulation.
- The patio cover collapsed after a snowstorm in 2003; Doyle paid $2,100 of the price and refused the remaining balance.
- KBI sued Doyle; mediation in 2006 led to a partial settlement and an engineer’s report in 2008 blaming KBI for design/installation flaws.
- In June 2008, Bains formed Elegant, transferred KBI’s assets to Elegant, and began operating under Elegant’s name.
- Doyle sued KBI, Elegant, and Bains in 2008; a 2010 bench trial awarded Doyle damages against KBI on a DTPA claim but found no TUFTA violation or alter-ego/sham corporation against Elegant or Bains.
- Trial findings in 2010 concluded Bains did not conspire with Elegant nor engage in a fraudulent transfer; Doyle appeals claiming TUFTA and sham-corporation theories were proven.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TUFTA claim—fraudulent transfer by Bains via Elegant | Doyle contends Elegant was formed to defraud creditors, including Doyle. | Bains/Elegant contest that no fraudulent transfer occurred and no intent to defraud is shown. | No evidence establishes fraudulent transfer; TUFTA claim fails. |
| Sham corporation/alter ego | Doyle argues Elegant is a sham to evade liability and to pierce the corporate veil. | Bains/Elegant contend Elegant is a bona fide separate entity; no alter ego confirmed. | Evidence supports the trial court’s finding that Elegant was not a sham corporation; veil not pierced. |
Key Cases Cited
- City of Pasadena v. Gennedy, 125 S.W.3d 687 (Tex.App.-Houston [1st Dist.] 2003) (attack finds on findings when not specifying which ones are challenged)
- Pulley v. Milberger, 198 S.W.3d 418 (Tex.App.-Dallas 2006) (findings in bench trials have same force as jury findings)
- G.M. Houser, Inc. v. Rodgers, 204 S.W.3d 836 (Tex.App.-Dallas 2006) (fraudulent transfer standards and badges of fraud)
- Mladenka v. Mladenka, 130 S.W.3d 397 (Tex.App.-Houston [14th Dist.] 2004) (badges of fraud used to infer intent in TUFTA)
- Flores v. Robinson Roofing & Const. Co., Inc., 161 S.W.3d 750 (Tex.App.-Fort Worth 2005) (badges of fraud framework for TUFTA analysis)
- Willis v. Donnelly, 199 S.W.3d 262 (Tex. 2006) (alter ego and veil-piercing standards under Texas law)