Baughn v. LewisBaughn v. Lewis
So Ordered.
Dated: March 2nd, 2026
Frederick P. Corbit
Bankruptcy Judge
This case arises from misrepresentations made by Debtor Nathan Lewis to certain creditors who entrusted him with substantial deposits to build and renovate their homes. Mr. Lewis misrepresented to these creditors that he would provide licensed and competent construction services to induce the creditors to give him substantial cash deposits. However, he used their deposits on other people’s projects and to fund his struggling business, instead of using the money on those creditors’ projects.
After several failed building projects, Mr. Lewis and his wife, Sarah Lewis (collectively, the “Debtors”), filed for chapter 13 bankruptcy. Jon Morrison and Orei Parker (collectively, “Morrison and Parkеr”), and Tamara Baughn, filed proofs of claim in the bankruptcy case. Morrison and Parker and Ms. Baughn also filed adversary proceedings, in which they request the Court declare the debts owed to them are non-dischargeable under
The Debtors’ primary defense is that liability for the incomplete projects and missing cash rests solely with Farmhouse Legacy, Co., LLC (“Farmhouse Legacy”), a limited liability company that Mr. Lewis used in connection with his construction business. However, credible evidence establishes that Mr. Lewis used Farmhouse Legacy’s corporate form to shield personal misconduct and to obtain money by false representations.
The Court enters this memorandum opinion and order in both adversary proceedings. Contemporaneously with this order, the Court will enter judgments in each adversary proceeding detailing the precise amounts of each nondischargeable debt.
II. MEMORANDUM ORDER
The Debtors are a married couple. In December of 2018, Mr. Lewis formed Farmhouse Legacy, LLC.1 (ECF2 No. 1, p. 41) Farmhouse Legacy was established in connection with Mr. Lewis’s construction business. Mrs. Lewis had no involvemеnt in the financial affairs, business management, or day-to-day operation of Farmhouse Legacy. Mrs. Lewis testified that the only reason she was named as a member of the LLC was so that she could have access to business records in case Mr. Lewis died or could not otherwise access the records.
Sometime in August of 2021, Ms. Baughn met with Mr. Lewis and one of his employees to discuss a potential construction project. Mr. Lewis presented to Ms. Baughn a project proposal on Farmhouse Legacy’s letterhead. The proposal provided for various renovations on Ms. Baughn’s home over the course of approximately twelve to sixteen weeks, starting “Mid November 2021.” The project proposal estimated the prоject cost at $162,150 and stated “[a]bove all else, we will leave you with a home transformation built to elite standards, high quality and integrity.”
Although the Baughn project proposal never led to a signed contract, by early October 2021, Ms. Baughn was contemplating making a downpayment and formally committing to the project. In an email communication with Mr. Lewis, Ms. Baughn expressed she had the cashier’s check in hand, but she was “freaking out a little bit.” Mr. Lewis replied hours later, stating:
I totally understand the difficulty in making large changes that cost list [sic] of money. Thank you for trusting us and allowing us to work with you in this project.
Also, we are licensed, bonded and insured for more then [sic] the state requires.
On or about October 22, 2021, Ms. Baughn delivered a check of $81,075.00 payable to Farmhouse Legacy, which served as her initial deposit for the project.
In early November of 2021, Mr. Lewis told Ms. Baughn he was seeking a permit from Spokane County for the project. Mr. Lewis obtained a permit on April 1, 2022, which included approval for plumbing work. However, Mr. Lewis is not, and never has been, a licensed plumber. Nor did Farmhouse Legacy employ a licensed plumber for the Baughn project. Mark Connolley, a construction compliance inspector from the Washington State Department of Labor & Industries (“Department of L&I”), testified that Spokane County improperly permitted plumbing work for Ms. Baughn’s property.
Notwithstanding his lack of a license to perform plumbing work, Mr. Lewis undertook рlumbing work on Ms. Baughn’s home. Ms. Baughn was unaware that the plumbing work was performed by an unlicensed contractor. The plumbing work was a critical and significant part of the construction project.3
Shortly after Mr. Lewis received the Baughn permit from Spokane County, Mr. Lewis told Ms. Baughn that he needed additional funds to continue the project. On May 21, 2022, Ms. Baughn tendered a second deposit of $27,025 to Farmhouse Legacy. She paid a third deposit of $27,025 on June 25, 2022.
In April of 2023, Ms. Baughn received a “Job Progress Report” which contained an invoicе for $36,994.01. The Job Progress Report stated that $90,243.83 was spent on materials and $21,364.33 on “overhead.” However, Ms. Baughn questioned whether $90,243.83 was spent on materials, and she testified that she could not determine what expenses were encompassed within the claimed “overhead” costs. Nonetheless, out of a desire get the construction project completed, Ms. Baughn paid the invoice. In total, Ms. Baughn paid $172,119.01—despite being promised that the project’s total cost would only be $162,150.
By September 2023—almost two years after the initial deposit—Ms. Baughn realized her project was not progressing towards completion, the construction was faulty, and Mr. Lewis had not used her money for expenses related to her house as he had promised. Mr. Lewis informed Ms. Baughn that his business was experiencing “a lot of shifting internally” and he had to terminate two employees. Sometime in August or September of 2023, Ms. Baughn filed a complaint related to the project with the Department of L&I.
On September 19, 2023, Mr. Lewis gave Ms. Baughn another “Job Progress Report,” which requested an additional payment of $35,000. Ms. Baughn refused
On December 15, 2023, Mr. Connolley, of the Department of L&I, visited Ms. Baughn’s property and investigated the construction work. Mr. Connolley noticed a plethora of issues, particularly with the plumbing, piping, and structural integrity of the construction work. Mr. Connolley testified that although Spokane County had sent an inspector to approve the plumbing work at Ms. Baughn’s property, he believed the inspector did not actually conduct a proper inspection.4
In total, the Department of L&I issued three infractions against Mr. Lewis personally regarding Ms. Baughn’s property: (i) $500 for “failure to provide the customer with a disclosure statement as required and/or produce a signed copy of the disclosure statement to the Department upon request,” under
On November 1, 2023Ms. Baughn terminated her relationship with Mr. Lewis via text message.
On November 2, 2023, Mr. Lewis replied to Ms. Baughn’s text message, stating:
Hi Tammi,
I am in [sic] very saddened as well as disappointed in my self [sic] and my company for not being able to deliver you the product we originally discussed. There have been several factors and a laundry list of excuses along the way. The bottom line is I have failed you and I apologize for that. I completely understand your wanting to move on and I dont [sic] deserve the grace you have shown thus far. Thank you for being the kind person that you have and giving me a chance to try and save my company through its many failures.
Ms. Baughn testified that Mr. Lewis subsequently came to her property unannounced. During his visit, Mr. Lewis removed materials, including the HVAC system, that he had previously said were purchаsed with Ms. Baughn’s money.
By December 2023, Mr. Lewis’s business was facing severe financial problems. At trial, Mr. Lewis failed to provide credible, clear testimony revealing the exact expenditure of Ms. Baughn’s funds, or an explanation of the “overhead” costs and value of the materials purchased for Ms. Baughn’s project. However, the
As a rеsult of the substandard work, inflated charges, and removal of property paid for by Ms. Baughn, Ms. Baughn was forced to pay other contractors to repair her property. Although the new contractors fixed some of the defective work, her home remains uninhabitable, and she currently resides in a recreational vehicle parked on the property.
Morrison and Parker’s Project
Mr. Morrison and Ms. Parker are a married couple. Mr. Morrison is a professional roofer with extensive experience working as a contractor.
Mr. Morrison testified that he first interacted with Mr. Lewis in July 2022, when Mr. Lewis or Farmhouse Legacy constructed a road on an undeveloped parcel in Deer Park, Washington. In late 2023, Mr. Morrison and Ms. Parker approached Mr. Lewis again, this time seeking a contractor to build their retirement home on the same parcel.
On December 20, 2023, Ms. Parker (on behalf of herself and Mr. Morrison) met with Mr. Lewis and signed a project proposal on Farmhouse Legacy’s
The same day she signed the project proposal, Ms. Parker delivered a check payable to Farmhouse Legacy for $121,890.36. Banking records revealed the check was deposited on January 3, 2024.
On June 3, 2024, unbeknownst to Morrison and Parker, Farmhouse Legacy was administratively dissolved. Mr. Lewis testified that the dissolution occurred only because the employee who usually handled this detail had left the company. Farmhouse Legacy was not administratively reinstated until January 2025, after Mr. Lewis’s relationship with Morrison and Parker had terminated.6
On September 10, 2024, Mr. Morrison inquired when Mr. Lewis planned to secure the necessary permit and begin excavation. Mr. Lewis responded that the permitting would be completed soon, and excavation would begin the following week. On September 28, 2024, Mr. Lewis sent photos of the excavation work to Mr. Morrison.
However, Mr. Morrison grew concerned about the project’s lack of progress. On September 30, 2024, Mr. Morrison texted Mr. Lewis to report that he had visited the work site and found it unoccupied, stating, “nobody was there.” On October 1, 2024, Mr. Morrison texted Mr. Lewis, asking if “we were working today.” Mr. Morrison testified that Mr. Lewis responded to his inquiries with a series of excuses rather than substantive аnswers.
On October 4, 2024, Mr. Morrison texted Mr. Lewis, asking: “Where is our money?” Mr. Lewis replied:
The money you put down is working for the business and is eagerly waiting for your project. It has been applied to a line of credit and credit cards allowing capacity for the business to continue to build your home. The money is available and ready to go when needed. So far $34,598.94 has been used towards the project in the excavation, permitting and foundation.
Morrison and Parker terminated their relationship with Mr. Lewis and Farmhouse Legacy shortly afterwards. On October 11, 2024, Mr. Morrison emailed Mr. Lewis to express that he and Ms. Parker were not comfortable with their funds being used to pay down Mr. Lewis’s “equity line of credit” or to finance his business. Mr. Morrison requested a refund, which neither he nor Ms. Parker received.
By the time Morrison and Parker terminated the project, Mr. Lewis and Farmhouse Legacy had done little more than dig a hole on the property. Of the $121,890.36 deposit, Mr. Lewis admitted that no more than $34,598.94 had been applied to the Morrison and Parker project, while the remaining balance was diverted and applied to Farmhouse Legacy’s existing debts.7 Given the limited
At trial, Mr. Morrison testified that he and his wife always understood they were contracting directly with Mr. Lewis, not Farmhouse Legacy. He further stated that he would not have agreed to proceed had he known that the deposit would be used for purposes other than constructing his home.
Bankruptcy
The Debtors filed for chapter 13 bankruptcy on April 2, 2025. Debtors’ sworn schedules, filed with the petition, list Morrison and Parker, and Ms. Baughn, as unsecured creditors. (ECF No. 1, pp. 23, 25) Specifically, Debtors stated that Morrison and Parker had an unsecured claim of $121,890.36, and Ms. Baughn had an unsecured claim of $40,000.8 Additionally, Mr. Lewis asserted he was employed as an estimator for ASC Machine Tools Inc, where he claimed to have been employed for one-and-a-half years pre-petition.9
On June 2, 2025, Morrison and Parker filed Proof of Claim No. 12-1, alleging $121,890.36 owed for “[c]ash down payment on dream home.” Debtors
On June 3, 2025, Ms. Baughn filed Proof of Claim No. 13-1, alleging $234,000 owed for “[c]ash payments for home renovations + appliances.” Debtors objected to the claim, similarly alleging the debt was Farmhouse Legacy’s debt, not the Debtors’ personal debt.
Morrison and Parker filed an adversary complаint against the Debtors on June 13, 2025, alleging four causes of action: (i) non-dischargeability under
This Court confirmed the Debtors’ chapter 13 plan on July 23, 2025. As of the date of this order, the Debtors are current on their plan payments.
The Court held a combined trial on both adversary matters on January 29 and 30, 2026. The Debtors appeared pro se. Farmhouse Legacy was not reprеsented by counsel. At trial, the Court heard testimony from: Mark Connolley,
Piercing the Corporate Veil
In the State of Washington, piercing the corporate veil or “alter ego” theories are known as “corporate disregard.” The question whether the corporate form should be disregarded is a question of fact. Truckweld Equip. Co. v. Olson, 26 Wash. App. 638, 643 (1980). Corporate disregard is an equitable remedy, warranted in exceptional circumstances where recognition of the corporate form would aid in perpetrating a fraud or result in a manifest injustice. Id.
In determining whether to disregard the corporate form, the reviewing court examines whether (1) the corporate form was intentionally used to violate or evade a duty, and (2) disregard is necessary to prevent unjustified loss to the injured party. Meisel v. M&N Modern Hydraulic Press Co., 97 Wn.2d 403, 410 (1982). However, “the absence of an adequate remedy alone does not establish corporate misconduct.” Id. at 410–11.
Regarding the first element, intentional violations or evasions of a duty typically involve “fraud, misrepresentation, or some form of manipulation of the corporation to the stockholder’s benefit and creditor’s detriment.” Id. (quoting Truckweld, 26 Wash. App. at 645).
“[W]here one entity ‘so dominates and controls a corporation that such corporation is [the entity‘s] alter ego, a court is justified in piercing the veil of corporate entity and holding that the corporation and private person are one and the same.’” In re Rapid Settlements, Ltd. v. Symetra Life Ins. Co., 166 Wash. App. 683, 692 (2012) (quoting Standard Fire Ins. Co. v. Blakeslee, 54 Wash. App. 1, 5 (1989)).
Ms. Baughn Introduced Substantial Evidence that Supports Corporate Disregard.
Ms. Baughn has established with substantial, credible evidence that Mr. Lewis intentionally used Farmhouse Legacy’s corporate form to violate or evade a duty, and disregard of the corporate form is necessary to prevent unjustified loss to Ms. Baughn.
First, Mr. Lewis personally misrepresented his ability to perform work on Ms. Baughn’s propеrty, and the misrepresentations caused Ms. Baughn to make deposits on the project. Mr. Lewis made multiple representations to induce Ms.
Second, Ms. Baughn’s injury flows directly from Mr. Lewis’s misuse of the corporate form. The evidence reveals that Ms. Baughn’s deposits were not fully applied to her projеct, and that Mr. Lewis used the corporate entity while the corporation was financially distressed to continue accepting customer funds. This case involves more than poor workmanship; Mr. Lewis made intentional misrepresentations, he committed statutory violations, and he overcharged Ms. Baughn without any credible explanation of where her money was spent. By the time Ms. Baughn terminated the project, her funds had dissipated. Without disregarding the corporate form, Ms. Baughn will likely never recover any of the money she gave to Mr. Lewis.
Morrison and Parker Introduced Substantial Evidence that Supports Corporate Disregard.
Mr. Morrison and Ms. Parker established with substantial, credible evidence that Mr. Lewis intentionally used Farmhouse Legacy’s corporate form to violate or
First, Mr. Lewis abused the corporate form by misrepresenting how Morrison and Parker’s deposit would be used. Morrison and Parker paid $121,890.36 after Mr. Lewis promised their funds would be used to build their home. Specifically, Mr. Lewis told Mr. Morrison: “the money is available and ready to go when needed.” However, Mr. Lewis knew at the time he made the statement that it was false and that he intended to use the deposit to pay Farmhouse Legacy’s debts unrelated to the Morrison-Parker project. Mr. Lewis remained the primary decision-maker of Farmhouse Legacy and controlled the flow of funds—even while Farmhouse Legacy was administratively dissolved for six months.
Second, Morrison and Parker suffered actual harm from Mr. Lewis’s actions because the funds they paid were intended for constructing a house, but Mr. Lewis only managed to dig a hole for the foundation. The majority of the Parker-Morrison money was spent on unrelated debts of Farmhouse Legacy. Absent disregard of the corporate form, Morrison and Parker are unlikely to recover their deposits.
Direct Liability under Washington’s Consumer Protection Act (“CPA”)
Additionally, Mr. Lewis is personally liable because he violated Washington’s Consumer Protection Act (“CPA”),
“If a corporate officer participates in wrongful conduct or with knowledge approves of the conduct, then the officer, as well as the corporation, is liable for the penalties.” Grayson v. Nordic Constr. Co., 92 Wn.2d 548, 554 (1979) (citing State v. Ralph Williams’North West Chrysler Plymouth, Inc., 87 Wn.2d 298 (1976)); see also State v. Arlene’s Flowers, Inc., 193 Wn.2d 469 (2019) (holding florist personally liable for violating the CPA even though she kept her affairs separate from the corporation and no traditional grounds existed to pierce the corporate veil).
Injured plaintiffs may enforce the CPA.
Ms. Baughn Established Mr. Lewis Violated the Washington CPA.
First, Mr. Lewis engaged in deceptive practices. Credible evidence introduced at trial revealed Mr. Lewis represented that he was “licensed, bonded, and insured” for an amount “more than” Washington state requires, and that Ms. Baughn’s deposit would fund licensed, quality work. Yet, Mr. Lewis personally performеd unlicensed and defective plumbing work on Ms. Baughn’s property, which resulted in the imposition of infractions.
Second, the deceptive acts and practices occurred in trade or commerce because Mr. Lewis made the misrepresentations in the course of operating a home renovation and construction business.
Third, Mr. Lewis’s deceptive acts affect the public interest. The public has an interest in protection from false representations regarding licensure and from substandard or unlicensed construction work.
Fourth, Ms. Baughn suffered significant financial injury. She lost the benefit of her deposits and incurred additional costs for remedial work.
Because Mr. Lewis, as a corporate officer of Farmhouse Legacy, participated in wrongful conduct, Mr. Lewis is personally liable for the penalties.
Mr. Morrison and Ms. Parker Established Mr. Lewis Violated the Washington CPA.
First, Mr. Lewis engaged in deceptive practices. He represented that the deposit from Morrison and Parker would be applied to constructing their retirement home, but instead he used their money to pay unrelated Farmhouse Legacy’s debts.
Second, the deceptive acts and practices occurred in trade or commerce beсause Mr. Lewis made the misrepresentations in the course of operating a home renovation and construction business.
Third, Mr. Lewis’ deceptive acts affect the public interest. The public has an interest in protection from false representations regarding licensure and from substandard or unlicensed construction work.
Fourth, Morrison and Parker suffered financial injury. They lost the benefit of their deposit and incurred additional costs to construct the home.
Because Mr. Lewis, as a corporate officer of Farmhouse Legacy, participated in wrongful conduct, Mr. Lewis is personally liable for the penalties.
Non-dischargeability under § 523(a)(2)(A)
A debt may be non-dischargeable in bankruptcy if it is obtained by false pretenses, false representations, or actual fraud, except if the false statement was “a statement respecting the debtor’s financial condition.”
To prevail on a claim under
The creditor bears the burden of proving all five of these elements by a preponderance of the evidence. Id. To strike a balance between allowing debtors a fresh start and preventing a debtor from retaining the benefits of property obtained by fraudulent means, exceptions to discharge under
The Debt owed Ms. Baughn is Non-Dischargeable under § 523(a)(2)(A)
At trial, Ms. Baughn proved by a preponderance of the evidence that the debt owed to her is not dischargeable under
First, Mr. Lewis made false representations to Ms. Baughn that he was licensed to do the work and that he had the current ability to construct a finished, and livable, two-story addition to her home.
Second, at the time Mr. Lewis made the false representations about his licensure and ability to construct the livable, two-story addition, he did not have a plumbing license, nor the necessary resources to complete the Baughn project.
Third, Mr. Lewis misrepresented his licensure and ability to construct a finished, and livable, two-story addition to Ms. Baughn’s home because he knew that Ms. Baughn would not give him the money if he lacked the proper licenses and ability to construct the addition.
Fifth, Ms. Baughn suffered a loss of $172,119.01.10 She paid Mr. Lewis $172,119.01 for a construction project thаt was initially estimated to cost $162,150. However, the credible evidence at trial established that Ms. Baughn received no benefit. For example: the plumbing work had to be replaced because parts were installed in the wrong place and some of the drainage pipes, as installed, would have required water to impossibly drain up hill; the roof was installed with holes so it leaked; a window was installed backwards; and faulty drywall work had to be replaced.
The Debt to Morrison and Parker is Non-Dischargeable under § 523(a)(2)(A) .
At trial, Morrison and Parker proved by a preponderance of the evidence that the debt owed to them is not dischargeable under
First, Mr. Lewis and Mr. Morrison spoke to each other on many occasions about Mr. Lewis building a home for Mr. Morrison and his wife. Through his credible testimony, Mr. Morrison estаblished that Mr. Lewis represented that the money he would receive from Morrison and Parker, which totaled $121,890.36,
Second, Mr. Morrison established through credible testimony and admitted evidence that at the time Mr. Lewis made the misrepresentations, Mr. Lewis was under financial distress. At the time Mr. Lewis accepted the Morrison-Parker money, Mr. Lewis planned to use their money to cover debts that were unrelated to building their home.11
Third, the evidence establishes that Mr. Lewis deliberately misrepresented how he would use Morrison and Parker’s money because he knew that if he told the truth, Morrison and Parker would not provide him the money.
Fourth, Mr. Morrison’s credible testimony demonstrated that Morrison and Parker would not have entered into any construction agreement with Mr. Lewis or Farmhouse Legacy if they had known their money would be used for anything other than building their home.
Fifth, Morrison and Parker suffered a loss of $121,890.36. By the end of their business relationship, the only work performed by Mr. Lewis or Farmhouse
Mrs. Lewis’s Separate Estate Liability
A recent opinion of the United States Supreme Court sets forth the law this Court must follow in determining whether Mr. Lewis’s actions result in a separate, nondischargeable debt against Mrs. Lewis. See Bartenwerfer v. Buckley, 598 U.S. 69 (2023). Bartenwerfer holds that when a debt is created by one spouse’s misrepresentations in operating a business, and the second spouse is a рartner in the business, that debt is nondischargeable against both spouses pursuant to
Washington state courts use similar factors for determining the existence of a partnership. See DeFelice v. Emp’t Sec. Dep’t, 187 Wash. App. 779, 788–89 (2015) (listing various factors which lend towards a partnership, such as: joint ownership of the business, a joint right of control over the business’s affairs, whether a person
When reviewing the facts related to the claims of Ms. Baughn and Mr. Morrison and Ms. Parker, this Court concludes that Mrs. Lewis was not a partner in Mr. Lewis’s business and thus she has no separate nondischargeable debt.
Primarily, no credible evidence was presented to suggest Mrs. Lewis acted as a business partner. She never executed a partnership agreement with Mr. Lewis regarding Farmhouse Legacy, nor did she act in a way that suggested she had a partnership agreement with Mr. Lewis. The evidence introduced at trial revealed only Mr. Lewis or Farmhouse Legacy employees made representations on behalf of the business. Mrs. Lewis was never an employee of the business. Furthermore, no evidence was presented to indicate Mrs. Lewis directly received profits or had direct personal responsibility for losses of the business.13 Nor did she have any control over business assets or how customers’ money was used or applied to existing debts. No evidence suggested Mrs. Lewis made financial or other
Although both Mr. and Mrs. Lewis were listed as “members” of Farmhouse Legacy, LLC, Mr. Lewis was the only party that acted with disregard for the corporate form and committed CPA violations. None of the evidence presented at trial suggested Mrs. Lewis violated or evaded a duty using Farmhouse Legacy’s corporate form, and Mrs. Lewis did not contribute to or amplify any of the losses incurred by Ms. Baughn and/or Mr. Morrison and Ms. Parker.
Without any credible evidence to suggest a business partnership between Mrs. Lewis and Mr. Lewis, Mrs. Lewis cannot be vicariously liable for Mr. Lewis’s acts.
III. CONCLUSION
The Court will enter judgments in each adversary proceeding consistent with the above memorandum order.14
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