Tisch v. Tisch

Outcome

Excerpt

Corporations—Shareholder Derivative Action—Closely Held Corporation—Civil Theft—Piercing the Corporate Veil—Alter Ego—Dividends and Distributions—Statute of Limitations. Father assigned his stock in the Liquor Barn, Ltd. (Liquor Barn) to his son Gary, who was the company's sole director and majority shareholder. The two other Tisch siblings (the Tisch siblings) held nonvoting shares in Liquor Barn. The Tisch siblings filed a complaint against Gary alleging various causes of action related to his fiduciary duties. A jury found that Gary had committed civil theft against the Tisch siblings individually and against Liquor Barn by using the Liquor Barn profits for his private use. It awarded the Tisch siblings treble damages on the civil theft claim. The trial court entered judgment against Gary and Liquor Barn and awarded the Tisch siblings costs and attorney fees. Gary moved to amend the judgment, arguing that the trial court erred in piercing the corporate veil and that this error would prejudice Liquor Barn's creditors. He then filed a combined motion for new trial and relief from judgment, arguing that the trial court erred in disqualifying his expert witness and in piercing the corporate veil. The trial court denied the postjudgment motions and awarded the Tisch siblings attorney fees that exceeded the lodestar. On appeal, Gary contended that the trial court erroneously found that he, as an individual, and the Liquor Barn were "alter egos." Here, the record shows that Gary comingled his personal and other business funds with the Liquor Barn's funds, kept inadequate corporate records, routinely disregarded the legal formalities of declaring shareholder distributions and filing taxes related to payments he made to himself, and used corporate funds for noncorporate purposes and Gary's position as controlling and sole voting shareholder facilitated his misuse of Liquor Barn's funds. The record also shows that Gary used the corporate fiction to defeat the Tisch sibling