Retirement Corp. of Am. v. Henning

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

Buy and Sell Contract—Mineral Rights—Warranty Deed—Negligence—Breach of Contract—Statute of Limitations—Third Party—Cause of Action—Accrual Date. The Bells hired Orr Land Company LLC (Orr) and its employee Ellerman to represent them in selling their real property. Orr found a buyer and the Bells entered into a buy and sell contract with the buyer, which provided, as pertinent here, that the sale excluded all oil, gas, and mineral rights in the property. Orr then retained Land Title Guarantee Company (Land Title) to draft closing documents, including the warranty deed. In 2005 the Bells signed the warranty deed and sold the property to the buyer. The Bells didn't know that the warranty deed prepared by Land Title didn't contain any language reserving the Bells' mineral rights as provided in the buy and sell contract. For over nine years, the Bells continued to receive the mineral owner's royalty payments due under an oil and gas lease on the property. In 2014 the lessee oil and gas company learned that the Bells didn't own the mineral rights, so it began sending the payments to the buyer. After that, the Bells discovered that the warranty deed didn't reserve their mineral rights as provided in the buy and sell contract. In 2016 the Bells filed this negligence and breach of contract action against defendants Land Title, Orr, and Ellerman. Defendants moved to dismiss, arguing that the Bells' claims were untimely because the statute of limitations had run. The district court granted defendants' motion to dismiss. On appeal, the Bells contended that the district court erred in granting defendants' motions to dismiss because they sufficiently alleged facts that, if true, establish that the statute of limitations didn't begin to accrue on their claims until the oil and gas company ceased payment in September 2014, which is when they contended they discovered that the warranty deed didn't reserve their mineral rights. A plaintiff must commence tort actions within two years