Konrad Motor and Welder Service, Inc., Konrad Lambrecht, and Sharon Lambrecht v. Magnetech Industrial Services, Inc.
973 N.E.2d 1158
Ind. Ct. App.2012Background
- Konrad Electric, an Indiana corporation formed in 1991, had Sharon as sole shareholder/officer and her husband Konrad as general manager.
- Konrad Electric repaired electric motors and welded equipment for customers including Jupiter Aluminum and Magnetech; corporate records existed but meetings were rarely held.
- From 1991–2008 Konrad Electric maintained records, a bank account, contracts, and other corporate documents, with limited assets at formation.
- In 2005 Jupiter sued Konrad Electric for motor repairs; Konrad Electric subcontracted to Magnetech and later stopped taking new customers in 2006, while Konrad MWS was formed by the Lambrechts in February 2006.
- Konrad Electric suspended operations by 2008; Sharon withdrew remaining funds and paid wages owed; Magnetech obtained a judgment against Konrad Electric in December 2008 with no assets to satisfy it.
- In January 2011 Magnetech filed a third-party complaint seeking to pierce Konrad Electric’s corporate veil and to hold Konrad MWS and the Lambrechts liable; the trial court granted summary judgment against them, piercing the veil, which this Court remanded for further proceedings on piercing and alternative theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Should the corporate veil be pierced to hold Lambrechts and Konrad MWS liable | Magnetech argues veil should be pierced due to misuse of the corporate form | Lambrechts argue insufficient evidence to pierce on summary judgment | No; denial of piercing on summary judgment; remand for fact-specific determination |
| Is Konrad MWS the alter ego of Konrad Electric | Magnetech contends Konrad MWS and Konrad Electric were a single entity | MWS argues separate entities; lack of unity | Yes; Konrad MWS is the alter ego; Magnetech entitled to summary judgment against MWS |
Key Cases Cited
- Ziese v. Gates, 965 N.E.2d 720 (Ind. Ct. App. 2012) (piercing standard and factors for veil/alter ego in Indiana)
- Hamilton (Estate of Hamilton), 774 N.E.2d 563 (Ind. 2004) (piercing corporate veil is rare and fact-sensitive; summary judgment appropriate only in extraordinary circumstances)
- Escobedo v. BHM Health Assocs., 818 N.E.2d 930 (Ind. 2004) (burden to show misuse of corporate form for piercing)
- Gates (CBR Event Decorators v. Gates), 962 N.E.2d 1276 (Ind.Ct.App. 2012) (misuse of corporate form; list of factors for piercing)
- In re Fairfield Development, Inc. v. Georgetown Woods Senior Apartments LP, 768 N.E.2d 463 (Ind. Ct. App. 2002) (alter ego concepts and liability when veil pierced)