In our earlier decision in this matter,
United States v. Fidelity Capital Corp.,
We organize the opinion as follows. In part I, in subpart A, we outline the federal provisions governing SBICs, and, in sub-part B, we state the relevant facts as found by the district court, most of which are undisputed. 2 In part II, we set forth the district court’s application of Georgia law 3 to these facts and its conclusion that Fidelity was Skiba’s alter ego. In part III, we find that the district court erred in its application of the law to the facts.
I.
A.
Congress passed the Small Business Investment Act of 1958 (the Act) in order to encourage the growth of small businesses by compensating for the difficulty they
The Act and the regulations limit SBICs’ investment decisions by governing the amount, terms, and conditions of financing they may provide. For instance, most SBICs must have a diversified portfolio of investments in small businesses, and certain types of investments, such as real estate, are strictly curtailed.
Id.
§ 107.101(c).
9
Similarly, the SBA limits the amount of financial assistance an SBIC may provide to any one small business to twenty percent of the SBIC’s private capital. 15 U.S.C. § 686(a); 13 C.F.R. § 107.303.
10
All loans made by SBICs must be “of such sound value, or so secured, as reasonably to assure repayment.” 15 U.S.C. § 685(e).
11
Any control an SBIC (or its officers, directors, and related companies) acquires over a small business in which it invests must be temporary, subject to a written agreement to relinquish control within seven years. 13 C.F.R. § 107.801.
12
Additionally, SBICs may not
Besides limiting SBICs’ financing decisions, the SBA also controls many of their other business decisions. For instance, SBICs must maintain a certain level of private capital. 15 U.S.C. § 682(a); 13 C.F.R. § 107.101(d). 14 In addition, SBICs may not, without the written consent of the SBA, make any distributions to a shareholder other than periodic payments out of retained earnings based on the capital contributions of the shareholder or increase salaries beyond an approved amount. Id. § 107.203(b)(3)(ii) — (iii). The SBA must approve any merger, consolidation, reorganization, or change of ownership or control. Id. §§ 107.601, .803. 15
The SBA enforces the Act and regulations by requiring SBICs to make detailed filings and reports,
id.
§ 107.1002, and through periodic SBA examinations of every SBIC, 15 U.S.C. § 687b(c). If an SBIC violates the Act or regulations, the SBA may petition a federal court to revoke the company’s license,
id.
§ 687a(a), obtain an injunction restraining future violations,
id.
§ 687c(a), ask the court to take jurisdiction of the SBIC’s assets and appoint the SBA as receiver,
id.
§ 687c(b)-(c),
16
or petition the court to dissolve the company and declare its rights and privileges under the Act forfeit,
id.
§ 687(d).
17
A loan or other transaction that violates either the Act or the regulations, however, is still valid and enforceable between the parties.
18
Talco Capital Corp. v. Canaveral Int’l Corp.,
B.
Fidelity was incorporated under Georgia law and licensed as an SBIC in late 1969, and soon merged with another SBIC, Business Investors, Inc., which had been incorporated in 1961 and was already indebted to the SBA. In 1979, Skiba and an associate, John Sisk, formed American Financial Resources, Inc. (American) to purchase the shares of Fidelity, which were owned by a subsidiary of Fidelity Mutual Life Insurance Company.
20
Skiba and Sisk each owned fifty percent of American. Their
Skiba acquired Sisk’s fifty percent interest in American in 1981; he has been president and sole director of American ever since. He was president of Fidelity after American purchased it, and became sole director after he purchased Sisk’s American stock; the SBA, as receiver for Fidelity, removed him from office in 1986. Fidelity leased its office space from American, and paid American to manage the company, as it had no employees of its own. American and Fidelity had the same telephone number and filed consolidated tax returns; each company, however, maintained separate books and records, kept its own corporate minutes, and had its own federal employer identification number. Although American’s financial report included Fidelity, Fidelity also filed a separate financial report, as the SBA regulations required.
The events that led to the conflict in this ease began in 1980 when Skiba and Sisk caused either Fidelity or American, in association with an individual named Robert C. Hill, to form a real estate development corporation, Townehouse Concepts, Inc. (Townehouse). 22 In September of that same year, Fidelity financed Townehouse’s purchase of a parcel of real estate in Atlanta, Georgia (the Peachtree/Cantrell property). Because the seller, Southeastern Land Fund, Inc. (Southeastern), preferred to hold a note from Fidelity rather than the newly-formed Townehouse, Fidelity purchased the property for $400,000 and thereafter conveyed the property to Townehouse instead of advancing the purchase price directly to Townehouse. Fidelity gave Southeastern a note secured by a mortgage on the property for $300,000 of the purchase price (the Southeastern mortgage), and paid $100,000 in cash. As consideration for Fidelity’s conveyance to Towne-house, Townehouse assumed Fidelity’s $300,000 obligation to Southeastern; Townehouse also appears to have entered on its books an obligation to repay Fidelity the $100,000 cash paid to Southeastern. The deed conveying the property from Fidelity to Townehouse was recorded after a delay of several months, which Skiba stated was due to the relationship between the companies. 23
Fidelity also financed other real estate purchases by Townehouse, and lent it additional funds for predevelopment costs. In addition, Fidelity paid $150,000 of the $300,000 Southeastern mortgage; this payment appears to have been added to the amount Townehouse owed Fidelity. None of the loans are supported by formal docu
In 1981, Fidelity defaulted on its debt to the SBA, and the SBA demanded full payment. Besides defaulting, Fidelity had violated the regulations by pledging certificates of deposit it owned to secure a debt owed by American, its parent company, to the First Georgia Bank. When American defaulted on its obligation to First Georgia, First Georgia retained Fidelity’s certificates of deposit in satisfaction of American’s debt, and Fidelity took an intercompa-ny receivable from American evidenced only by entries on each corporation’s books.
In 1982, Fidelity and the SBA reached an agreement to restructure their debt. Under this agreement, which provided an extended payment schedule, Fidelity agreed that it would surrender its SBIC license after repaying the debt. Skiba and American guaranteed payment. The SBA allowed Fidelity more time to pay its debt so that the value of the real property held by Townehouse and American’s other corporations 24 could grow enough to compensate the SBA for the full amount it had lent Fidelity. 25
After Fidelity reached this agreement with the SBA, which effectively took it out of the lending business, Skiba decided, for tax and accounting reasons, to reorganize his group of corporations and to formalize the debts owed to Fidelity. To obtain security for the $1.7 million Townehouse owed Fidelity, Skiba caused Townehouse 26 to apportion the debt among the three properties Townehouse owned; he testified that the apportionment was a rough approximation of the amounts advanced to purchase and develop each parcel. Of this sum, $500,000 was apportioned to the Peachtree/Cantrell property. On April 12, 1982, Townehouse gave Fidelity a promissory note for this amount and secured the note by granting Fidelity a mortgage on the property (the Fidelity mortgage), which was subordinate to the prior Southeastern mortgage. Townehouse then transferred the property to American, which assumed the Fidelity mortgage. American thereafter conveyed the property to a newly-formed subsidiary, Peachtree/Cantrell, Inc. (P/C, Inc.). P/C, Inc. also assumed the Fidelity mortgage. Neither American nor P/C, Inc. assumed the Southeastern mortgage.
At the end of all these transactions, P/C, Inc. owned the Peachtree/Cantrell property subject to Southeastern’s $300,000 first mortgage and subject to Fidelity’s $500,000 second mortgage, which it had assumed. Skiba was sole director and president of P/C, Inc. and the company’s only asset was the Peachtree/Cantrell property. P/C, Inc. shared office space and a telephone number with American, and had no employees of its own. It filed consolidated tax returns and financial statements with American, but kept its own books, records, and minutes and had its own federal employer identification number.
The plaintiff-in-intervention, Commonwealth Mortgage Corporation of America (Commonwealth), entered the picture in December 1982, when it lent P/C, Inc. $3.6 million to finance the construction of residential townhomes on the Peachtree/Can-trell property. P/C, Inc. granted Commonwealth a mortgage on the property (the Commonwealth mortgage), and Skiba, individually, guaranteed the debt. P/C, Inc.
Thus, after the closing, Commonwealth did not have the first mortgage that it had bargained for, but held a second mortgage after the Fidelity mortgage of record. 29 Skiba and Commonwealth deny that they knew, during the period from 1982 to 1987, that the Fidelity mortgage was still valid. Nevertheless, Skiba executed several quitclaim deeds releasing Fidelity’s interest in portions of the property as they were sold to individuals during this time. He testified, however, that he assumed that the Fidelity mortgage had been released and thought that the quitclaim deeds were purely cosmetic.
By 1986, Fidelity had again defaulted on its scheduled payments to the SBA. In accordance with the Act and regulations, therefore, the district court appointed the SBA as receiver under the continuing supervision of the court, initiating the present action. See supra notes 1, 16.
In February 1987, P/C, Inc. defaulted on its mortgage to Commonwealth, and Commonwealth foreclosed, 30 bid the amount of its outstanding debt at sale, and obtained a deed to the property. Commonwealth provided no notice to Fidelity, the holder of the first mortgage of record, other than the advertisements required by statute.
Meanwhile, Fidelity had received no payments from P/C, Inc. on its mortgage. Accordingly, in June 1987, the SBA, in its capacity as receiver, also began foreclosure 31 proceedings under the Fidelity mortgage. At this point, Commonwealth intervened in the receivership action, claiming that it owned the Peachtree/Cantrell property because of its earlier foreclosure.
II.
In its order of November 13, 1987 (the 1987 Order), which the SBA appealed to this court in
Fidelity I,
the district court, after a bench trial on the merits of Commonwealth’s claim, found that Skiba, as president of P/C, Inc. and as individual guarantor, had represented that Commonwealth would receive a first lien position. It also found that Fidelity was Skiba’s alter ego, and therefore was bound by Skiba’s representation. In essence, according to the court, Commonwealth lent money directly to Skiba; it was therefore inequitable to allow him to get a $500,000 windfall by permitting Fidelity to foreclose on its mortgage. Accordingly, the district court issued an injunction forbidding the SBA from foreclosing on the Fidelity mortgage and directing it to execute and deliver a release of the Fidelity deed to Common
The SBA appealed. On appeal, we found that the district court could not conclude, from the fact that Skiba owned and controlled Fidelity and used the corporation for his own ends, that Fidelity was his alter ego, especially as the court had found that “the corporate forms of ... [Fidelity] ha[d] been scrupulously maintained.”
Fidelity I,
On remand, the district court made several specific findings of fact. First, the district court reiterated its earlier conclusion that Skiba effectively owned Fidelity through his ownership of American, was its sole director and president, and controlled its business decisions. Second, the district court noted that Skiba caused Fidelity to serve as a “private lender” in an “informal financial relationship” with American, Townehouse, and Skiba’s other corporations. 34 As examples of such informality, the district court cited the manner in which Fidelity purchased the Peachtree/Cantrell property for Townehouse and the delay in recording the deed conveying the property, see supra pp. 831-832, Fidelity’s pledge of its certificates of deposit to secure the loan from First Georgia to American in violation of SBA regulations, see supra p. 832, and Fidelity’s practice of lending funds to other Skiba corporations without any repayment date or formality beyond entries on the corporate books when both corpora'tions in each transaction were represented by Skiba and Dodd, see supra p. 832.
Third, the district court found that Skiba ran all the members of his “incestuous” group of corporations for the benefit of Fidelity in order to allow Fidelity to pay its debt to the SBA, which Skiba had personally guaranteed. After the SBA and Fidelity reached their agreement to restructure and extend Fidelity’s debt in 1982 in order to allow time for the assets of Skiba’s corporations to appreciate, see supra p. 832-833, Skiba reorganized his corporate structure and formalized his corporations’ obligations to Fidelity. The allocation of $500,000 of Townehouse debt to Fidelity, the second mortgage on the property in favor of Fidelity, and the transfer of the property to P/C, Inc., see supra pp. 832-833, were all “essentially paper transactions” that were part of this process.
Fourth, the district court emphasized that Skiba, in a “gratuitous payment by one corporation of a related corporation’s debt,” caused P/C, Inc. to pay Fidelity’s debt to Southeastern (which P/C, Inc. had never expressly assumed) out of the proceeds of the Commonwealth loan, see supra p. 833. Finally, the district court found that Skiba caused Fidelity to be thinly capitalized in violation of SBA regulations by lending money to other Skiba corporations without adequate security.
These five findings, according to the district court, are sufficient under Georgia law to support the conclusion that Fidelity was Skiba’s alter ego; it therefore found that Fidelity was bound by Skiba’s repre
III.
Federal Rule of Civil Procedure 52(a) provides that findings of fact made by a district court sitting without a jury may not be reversed unless clearly erroneous.
36
The resolution of the factual components of the alter ego issue is governed by the clearly erroneous standard.
See United Steelworkers of Am. v. Connors Steel Co.,
Our review of the district court’s application of the law to its findings of fact, however, is de novo.
See Bose Corp. v. Consumers Union of United States, Inc.,
Under Georgia law, a corporation and its shareholders and officers are separate, even if one person owns all of its shares and controls its actions.
Corley v. Cozart,
When the person who owns or controls the corporation has abused this privilege, however, by using the corporate form to defeat justice, perpetuate fraud, promote crime, evade contractual or tort responsibil
One theory used by Georgia courts to pierce the corporate veil under this standard is that the corporate entity is the alter ego or business conduit of its owner, and should therefore be disregarded.
See, e.g., Derbyshire v. United Builders Supplies, Inc.,
This standard for the determination of whether a corporation is the alter ego of its shareholders or officers is difficult to meet. Accordingly, courts must exercise “great caution,” and must not disregard the corporate entity without a showing that the corporate form has been abused.
Maley,
More evidence of abuse, such as evidence that the controlling person commingled the corporation’s assets with his own or those of other corporations he controlled, or that he failed to maintain corporate records separately, is essential.
Stewart Bros. v. Allen,
The district court’s findings of fact do not show, under this standard, that Skiba has abused Fidelity’s corporate form; the court erred, therefore, by holding that Fidelity was Skiba’s alter ego.
37
We will
First, Skiba’s beneficial ownership (through his ownership of American) of Fidelity, and the fact that he was the sole director and president of the company and controlled all its business decisions, are insufficient by themselves to allow a finding that the company was Skiba’s alter ego.
See, e.g., Derbyshire,
Second, Fidelity’s practice of lending money, as “private lender” to Townehouse, American, and other Skiba corporations with few formalities does not show that Skiba abused Fidelity’s corporate form. An entry on the corporate books is a sufficient formality, under Georgia law, for an intercorporate loan.
Cf. Stewart Bros.,
Third, the district court’s finding that Skiba ran all his corporations for the benefit of Fidelity to allow Fidelity to repay the SBA will not justify its conclusion that Fidelity was Skiba’s alter ego. Fideli
Fourth, the district court states that P/C, Inc.’s payment of the remaining balance of the Southeastern mortgage owed by Fidelity was evidence of abuse of the corporate form. We disagree. Under Georgia law, a court may disregard the corporate form if one corporation has “bled” or depleted the assets of another for its own benefit.
See Brunswick Mfg. Co. v. Sizemore,
Fifth, the district court found that Fidelity was Skiba’s alter ego because the company was inadequately capitalized in violation of SBA regulations. It had inadequate capital, according to the court, because it had lent money to related companies without adequate security. We agree that Fidelity had made poor investment decisions and suffered financial reverses that caused it to become insolvent; this is not, however, a reason to disregard the corporate entity. Georgia law will allow the disregard of the corporate entity when a corporation is thinly capitalized
at the time of formation
and other evidence of abuse of the corporate form is present.
Hyzer v. Hickman,
Finally, our review of the record has indicated some other factors, not specifically included in the district court’s findings of fact, that might be relevant in an alter ego determination. For instance, Fidelity and American shared offices, had the same telephone number, filed consolidated tax returns, and both seem to have used American’s stationary for business communications. American managed Fidelity pursuant to a management agreement, and Fidelity had no employees of its own. Such factors, in combination with other indications of abuse of the corporate form, may indicate that the corporation is the alter ego of its owner or parent.
See Najran Co. for Gen. Contracting & Trading v. Fleetwood Enters.,
We hold, therefore, that Fidelity was not Skiba’s alter ego and was not bound by his representations. 40 In the end, all that the district court’s findings of fact on abuse of the corporate form show is that Skiba controlled Fidelity, caused it to make some poor business decisions by investing in related companies, and then attempted to run Fidelity and the related companies in a manner that would allow them to repay their legal obligations and make a profit. 41 The evidence shows that Fidelity advanced $500,000 cash to Townehouse, and took a mortgage as security on this debt. It is inconceivable that Fidelity would agree to release this debt for nothing, 42 and we decline to allow the district court to force it to do so.
IV.
For the reasons stated above, the judgment of the district court is VACATED and the case-in-intervention is REMANDED with the instruction that it be dismissed with prejudice.
IT IS SO ORDERED.
Notes
. As we noted in
Fidelity I,
the district court had jurisdiction to litigate the alter ego issue. Pursuant to 15 U.S.C. § 678c(b)-(c), the present action began when the district court properly took jurisdiction over Fidelity’s assets at the request of the United States and appointed the Small Business Administration (SBA) as receiver to hold and administer those assets under the continuing supervision of the court. When the SBA, exercising its broad authority as receiver, foreclosed on a mortgage Fidelity held, Commonwealth Mortgage Corporation of America (Commonwealth) intervened, claiming that it owned the mortgaged property by virtue of an earlier foreclosure under another mortgage. The district court had ancillary jurisdiction to determine the merits of Commonwealth’s state-law claim that its mortgage was prior to Fidelity’s; the alter ego issue arose as part of this determination.
See Fidelity I,
. We include some undisputed facts that the district court did not specifically find; most of these facts are drawn from Skiba’s testimony at trial and in deposition. The district court found that Skiba’s testimony was "credible" and "largely uncontroverted.”
. Georgia law governs the substantive aspects of the case, because all the relevant events occurred in Georgia.
Fidelity I,
. The Act states, in pertinent part:
It is declared to be the policy of Congress ... to improve and stimulate the national economy ... and the small-business segment thereof ... by establishing a program to stimulate and supplement the flow of private equity capital and long-term loan funds which small-business concerns need ... and which are not available in adequate supply....
15 U.S.C. § 661.
. The United States is the plaintiff (because it filed the initial complaint asking the district court to take jurisdiction of Fidelity's assets) and defendant-in-intervention in this action. See supra note 1. The SBA, however, is Fidelity’s receiver and has been active in this suit. For the sake of clarity and convenience, we refer to the SBA throughout.
. When the SBA is deciding whether to license an SBIC, it considers the need for small business financing in the area in which the SBIC will operate, the business reputation and character of the proposed owners and management, and the probability that the SBIC will be successful and financially sound. 15 U.S.C. § 681(c). SBICs formed to invest in small companies owned by socially or economically disadvantaged persons, id. § 681(d), are subject to more lenient standards and restrictions, see, e.g., id. § 683(c)-(d).
. Each loan from the SBA to an SBIC incorporates provisions of the regulations, which allow the SBA to accelerate payment on either default or a violation of the statute or regulations, 13 C.F.R. § 107.203(b)(1); a default in payment of a debt to the SBA itself constitutes a violation of the regulations, id. § 107.906(a). Under these provisions, the SBA in 1981 accelerated Fidelity’s debt, as it had both defaulted and violated other regulations. See infra p. 832.
. SBICs also may guarantee obligations of small businesses, id. § 107.401, and may provide limited short-term financing, id. § 107.403(b)(1).
. Fidelity is one of the rare SBICs that is an exception to this rule, as the SBA allows it to invest exclusively in real estate. See infra p. 831.
Most SBICs may not invest in farm land, id. § 107.804, provide capital for relending, lend to certain real estate firms, provide any real-estate financing unless at least 50% of the funds will be used for improvements begun within one year of financing, or lend to foreign or passive firms, id. § 107.901. In addition, no SBIC may provide assistance to a small business unless the small business certifies that it will not illegally discriminate against members of minority groups and women in its operations. Id. § 107.304(b).
. Private capital is defined as private paid-in capital and paid-in surplus. Id. § 107.3. Assistance provided to affiliated corporations is presumed to be made to a single small business for the purpose of this 20% limit. Id. § 107.303(a).
. The SBA determines the permissible interest rate and costs on such loans. 15 U.S.C. § 687(i); 13 C.F.R. § 107.302. Their terms must be at least five years. Id. § 107.301(a).
. Control is presumed when the SBIC owns or controls 50% or more of the shares of a small business with less than 50 shareholders. 13 C.F.R. § 107.801(b)(1). The SBA will permit SBICs to retain control over a small business for a period longer than seven years only in exceptional circumstances. Id. § 107.801(g).
. Moreover, SBIC associates may not be officers or directors of small businesses in which SBICs have invested unless necessary to protect the investment, id. § 107.903(f), and SBICs may not dispose of assets to associates without SBA approval, id. § 107.904(a).
An associate of an SBIC who acts as an officer or director of a small business in which the SBIC has invested may not, without SBA approval, own more than three percent of the small business and may not have served as an officer or director for more than 30 days before financing. Id. § 107.903(f).
. SBICs (like Fidelity) that were licensed before October 1, 1979, must have $150,000 of private capital; those licensed between that date and the effective date of the current regulation must have $500,000; all others must have $1 million. Id. § 107.101(d).
SBICs may not decrease their private capital by an amount greater than two percent per year without SBA approval, even if the capital remains above the limit, id. §§ 107.203(b)(3)(i), 802, and may not pledge ten percent or more of their capital without notifying the SBA, id. § 107.603.
. The Act and regulations place many other restrictions on SBICs. See, e.g., id. § 107.704 (SBICs must identify themselves as SBA licensees in all written communications); id. § 107.708 (directing the manner in which SBICs must invest idle funds, apart from a petty cash fund of $500); id. § 107.710 (if an SBIC acquires assets in liquidation of an investment it has made in a small business, it must dispose of these assets within a reasonable time, and the improvements it may make to render these assets saleable are limited).
. The SBA initiated the present action by asking the district court to appoint it as receiver for Fidelity. See supra note 1.
. The SBA also may remove or suspend directors and officers of SBICs, if the officers or directors violate the Act or regulations or breach their fiduciary duty in a manner that involves personal dishonesty. 15 U.S.C. § 687e.
. Those who pay interest to an SBIC in excess of the rate allowed by the SBA, however, may recover double damages from the SBIC. Id. § 687(i)(4)(B).
. In
Bonner v. City of Prichard,
. Fidelity Mutual Life Insurance Company appears to have incorporated Fidelity.
. According to the SBA's original complaint in this action, by 1977 the total of Fidelity’s debt to the SBA was 19,604,816.40 plus interest. This indebtedness arose from a series of subordinated debentures that the SBA purchased from Fidelity and its predecessor SBIC, Business Investors, Inc., beginning in 1961. The total amount of principal and interest owing when the complaint was filed in 1986 was 313.8 million.
. The testimony on the exact ownership of Townehouse is unclear. When Townehouse was formed, either Fidelity or American owned at least 49% of the company. Hill owned the remainder, which he pledged to Fidelity to secure advances made by Fidelity to Townehouse. Originally, Hill was the president of Towne-house. When it became apparent, sometime in 1981, that Hill could not run Townehouse effectively, American acquired his shares, and by late 1981 or early 1982, it was the sole shareholder. After Hill’s interest in Townehouse terminated, Skiba served as sole director and president. Townehouse kept its own books, records, and minutes, but shared a telephone number and office with American and filed consolidated tax returns and financial reports with its parent company.
.Skiba stated that the delay "wasn’t a major issue since all the corporations were related. And Fidelity ..., in effect, controlled Towne-house ... under its financing arrangements ... [A]t some point we probably decided to start getting the trail a little more documented.”
.American owned several corporations besides those involved in the events described herein. Most owned and developed real estate. Because none are implicated in this suit, for the sake of clarity we will not describe them further.
. In 1982, immediate sale of all assets owned by members of Skiba’s corporate group would have repaid only one-third to one-half of Fidelity's debt.
. By this time, American owned all of Towne-house's shares. See supra note 22.
. In its order of November 23, 1987, the district court found that although "all persons involved in the loan transaction intended that Commonwealth receive a first lien position,” "Skiba was not formally acting as President of [Fidelity] at ... the closing," and Fidelity "did not affirmatively promise to release its deed.” It reached its conclusion that Fidelity was bound by the representations of those involved in the transaction by finding that Fidelity was Skiba’s alter ego; we remanded for findings of fact and conclusions of law to support that holding.
. See
Fidelity
I,
. Commonwealth intervened to attempt to correct this problem.
. Commonwealth executed a nonjudicial foreclosure under the power of sale clause in its mortgage. Georgia law impliedly authorizes a nonjudicial foreclosure under a power of sale clause by providing minimal statutory standards for such sales.
Fidelity
I,
. This action also was a nonjudicial foreclosure under a power of sale clause.
.We rely on our opinion in Fidelity I for a full description of the district court's 1987 Order. The 1987 Order read, in pertinent part:
Considering all the evidence and testimony presented, this court cannot allow [Fidelity] to foreclose on the [Fidelity] deed. It is true that the corporate forms of [P/C, Inc.] and [Fidelity] have been scrupulously maintained, and that [Fidelity] did not affirmatively promise to release its deed. However, the reality was that [Fidelity] and [P/C, Inc.] were, for all intents and purposes, Mr. Skiba. Mr. Skiba’s intent was to release that deed. He testified that had he been presented a release, he would have signed it as president of [Fidelity]. This court could not in equity allow Mr. Skiba or [Fidelity] to benefit from their failure to carry out what was agreed and intended.
(Footnote omitted; emphasis added.) The district court also found that the SBA as receiver was bound to the same extent as Fidelity.
. For instance, commingling of assets or failure to maintain separate corporate records.
Fidelity I,
. Skiba testified that Fidelity provided the "seed money” for all of American’s various real estate ventures.
. The district court found that the Commonwealth loan “was made with both the actual and constructive knowledge of both American and Fidelity who acted solely through Skiba.” The loan "directly benefitted” Fidelity (through the payment of its Southeastern obligation and, presumably, through the increase in value of the property that eventually would allow Fidelity to pay its debt to the SBA). In light of this knowledge and benefit, the district court concluded:
It would defeat justice, promote fraud and allow the SBA [acting as receiver] to evade its contractual responsibilities if Skiba and his agents, while representing Peachtree, were allowed to make representations to Commonwealth that it would receive the first lien position on the property, and such representations were not binding on Fidelity whose principal Skiba also knew that Commonwealth would not have made the loan unless it received a first lien position. Because the SBA stands in the shoes of Fidelity in this action and because Skiba abused Fidelity’s corporate form, the SBA is barred by equitable principles from foreclosing on Fidelity's deed.
(Emphasis added.)
. Federal Rule of Civil Procedure 52(a) states, in pertinent part: “Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses." If the district court’s findings of fact are "plausible in light of the record viewed in its entirety,” the court of appeals must accept them even if it is “convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently."
Anderson v. City of Bessemer City,
. The effect of disregarding the corporate entity is generally to hold that the individual (or parent corporation) who owns or controls a corporation is liable for the corporation’s torts or contracts.
See Condenser Serv.,
The effect of applying the alter ego doctrine ... is that the corporation and the personwho dominates it are treated as one person, so that any act committed by one is attributed to both, and if either is bound, by contract, judgment, or otherwise, both are equally bound....
Dudley v. Smith,
. Georgia courts have found, in similar cases, no abuse of the corporate form.
See Stewart Bros.,
. In lending money to associates and pledging its certificates of deposit for the benefit of American, we realize that Fidelity (and Skiba) may well have violated several provisions of the Act and regulations governing SBICs.
See, e.g., United States v. Vanguard Inv. Co.,
. The court therefore may not use its equitable powers to force Fidelity to release its mortgage. Cf.
Brega v. CSRA Realty Co.,
. We note that one Georgia case seems to be factually similar to the instant case. In
Derbyshire,
. Indeed, Skiba testified in deposition that if Fidelity had released its mortgage, a 1500,000 debt to Fidelity would have been entered on P/C, Inc.’s books as an unsecured obligation.