930 N.W.2d 98
N.D.2019Background
- In 2012, German Township hired Lakeview Excavating for FEMA-funded road work; Brian Welken was Lakeview’s president and sole shareholder.
- Lakeview harvested field rock from a neighboring farmer’s land but also removed rock from the Taszareks’ property.
- The Taszareks sued Lakeview and Welken for intentional trespass, conversion, and unjust enrichment; a jury found for the Taszareks and concluded Lakeview was Welken’s alter ego.
- This Court previously reversed for inadequate jury instructions on the alter ego issue and remanded for a bench trial on alter ego.
- On remand the district court adopted the plaintiffs’ proposed findings, concluded multiple Hilzendager‑Jablonsky factors were present, pierced the corporate veil, and held Welken personally liable.
- The Supreme Court reversed and remanded, holding the district court’s findings were conclusory and insufficient under N.D.R.Civ.P. 52(a) to permit appellate review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lakeview’s corporate veil should be pierced under the alter ego doctrine | Lakeview was undercapitalized, ignored corporate formalities, siphoned funds, was a facade for Welken, and equity requires piercing | Welken argued facts did not support piercing and that the court lacked adequate findings to justify personal liability | Court reversed: district court’s conclusory findings failed to analyze Hilzendager‑Jablonsky factors and were inadequate under Rule 52(a) — remanded for detailed findings |
| Whether the district court complied with N.D.R.Civ.P. 52(a) in a bench trial | Implicitly argued the adopted proposed findings were sufficient to support piercing | Argued the findings were conclusory and did not reference evidence or explain application of factors | Held: Findings were inadequate and lacked factual explanation tying evidence to each factor; reversal and remand required for specific factual findings |
Key Cases Cited
- Coughlin Constr. Co., Inc. v. Nu-Tec Indus., Inc., 755 N.W.2d 867 (N.D. 2008) (describing veil‑piercing when corporate form is used to justify wrong or defeat public convenience)
- Intercept Corp. v. Calima Fin., LLC, 741 N.W.2d 209 (N.D. 2007) (burden of proof for veil‑piercing on party asserting claim)
- Axtmann v. Chillemi, 740 N.W.2d 838 (N.D. 2007) (veil‑piercing principles)
- Taszarek v. Welken, 883 N.W.2d 880 (N.D. 2016) (prior appeal addressing alter ego jury instruction and need to consider Hilzendager‑Jablonsky factors)
- Hilzendager v. Skwarok, 335 N.W.2d 768 (N.D. 1983) (listing factors to consider in disregarding corporate entity)
- Abelmann v. Smartlease USA, L.L.C., 856 N.W.2d 747 (N.D. 2014) (Rule 52(a) requires specific findings to allow appellate review)
- Rothberg v. Rothberg, 711 N.W.2d 219 (N.D. 2006) (conclusory findings are insufficient under Rule 52(a))
- State ex rel. Schlect v. Wolff, 783 N.W.2d 642 (N.D. 2010) (court should not be required to mine the record for a rationale supporting its decision)