Howell Contractors, Inc. v. Berling
383 S.W.3d 465
| Ky. Ct. App. | 2012Background
- Howell sues Westview Development LLC and Berling-related entities for $179,666.97 remaining on an Ohio real estate development contract.
- Westview, owned by Berling, contracted with Howell in 2005; Howell billed over several years and Westview paid most but not all.
- Berling entities argued they were not parties to the contract and that veil-piercing theories do not apply to LLCs; the trial court granted partial summary judgment for Berling entities.
- Court recognizes Ohio law governs LLCs and piercing analysis due to Westview’s Ohio formation and Ohio development location, but considers Kentucky interests as alternative.
- Trial court’s order dismissed Berling entities and allowed Howell to pursue Westview for the debt; this appeal follows and the issue centers on piercing liability and governing law.
- The court ultimately affirms the trial court, holding no piercing liability shown and that Ohio law supports the result; Howell will pursue collection from Westview’s Ohio assets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Piercing Westview’s veil to hold Berling liable | Howell argues Berling’s control over Westview justifies piercing | Berling contends LLC protections apply; no fraud/injustice shown | Piercing not proven; insufficient to show extreme misconduct |
| Governing law for piercing analysis | Ohio law should govern piercing of Ohio-formed Westview | Kentucky standards should apply, given local interests | Ohio law applies; even Kentucky standard yields no piercing in this case |
| Sufficiency of evidence of wrongdoing beyond nonpayment | Control plus fraud/injustice should support piercing | Nonpayment alone does not establish fraud or injustice | No fraud/injustice shown; mere nonpayment not enough to pierce the entity |
Key Cases Cited
- Ossco Props., Ltd. v. United Commercial Prop. Group, L.L.C., 197 Ohio App.3d 623 (Ohio Ct. App. 2011) (piercing LLC requires extreme misconduct and control)
- Belvedere Condominium Unit Owners’ Assn. v. Roark Cos., Inc., 67 Ohio St.3d 274 (Ohio 1993) (strict standard for piercing corporate veil)
- Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506 (Ohio 2008) (high threshold for piercing; fraud/illegality required)
- Inter-Tel Techs., Inc. v. Linn Station Props., LLC, 360 S.W.3d 152 (Ky. 2012) (two-element test: loss of separateness and sanction of injustice or fraud)
- Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476 (Ky. 1991) (summary judgment standard and view favorably to nonmovant)
- Lewis v. B & R Corp., 56 S.W.3d 432 (Ky. App. 2001) (de novo review on appeal of summary judgment; no factual disputes)
- Hallaban v. Courier-Journal, 138 S.W.3d 699 (Ky. App. 2004) (appellate review on legal questions for summary judgments)