Opinion
A1205434
04-30-2013
KEN BUILDERS SUPPLY, INC., Plaintiff v. D. ROARK CCD, LLC, et al., Defendants
DECISION/ENTRY
Judge Beth A. Myers.
This case is before the Court on Defendants' Motion for Summary Judgment and Defendants' Motion to Strike Affidavit. For the reasons discussed below, both motions are denied.
STANDARD
Summary judgment is appropriate when there are no genuine issues of material fact that remain to be litigated and the moving party is entitled to judgment as a matter of law. Civ. R. 56(C); Celotex Corp. v. Catrett , 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment should be granted if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, if any, timely filed in the action and construed most strongly in favor of the non-moving party, show that there is no genuine issue as to any material fact. Civ. R. 56(C). The burden of establishing that the material facts are not in dispute, and that no genuine issue of fact exists, is on the party moving for summary judgment. Vahila v. Hall , 77 Ohio St.3d 421, 1997 Ohio 259, 674 N.E.2d 1164 (1997). If the moving party asserts that there is an absence of evidence to establish an essential element of the non-moving party's claim, the moving party cannot discharge this burden with a conclusory allegation, but must specifically point to some part of the record which affirmatively demonstrates this absence of evidence. Dresher v. Burt , 75 Ohio St.3d 280, 1996 Ohio 107, 662 N.E.2d 264 (1996).
The Ohio Supreme Court has established three factors to be considered upon a motion for summary judgment. These three factors are:
(1) That there is no genuine issue as to any material fact; (2) that the moving party is entitled to judgment as a matter of law; and (3) that reasonable minds can come to but one conclusion, and that the conclusion is adverse to the party against whom the motion for summary judgment is made, who is entitled to have the evidence construed most strongly in his favor.Bostic v. Connor , 37 Ohio St.3d 144, 146 N.E.2d 881 (1988) (quoting Harless v. Willis Day Warehousing Co ., 54 Ohio St.2d 64, 375 N.E.2d 46 (1978)).
Once a motion for summary judgment has been made and supported as provided in Civ. R. 56(C), the nonmoving party then has a reciprocal burden to set forth specific evidentiary facts showing the existence of a genuine issue for trial and cannot rest on the allegations or denials in the pleadings. Wing v. Anchor Media, Ltd. Of Texas , 59 Ohio St.3d 108, 111, 570 N.E.2d 1095 (1991).
DISCUSSION
1. Affidavit
Defendants seek to strike the Affidavit of David Roark. Defendants object to the Affidavit because it was not filed prior to the discovery cut-off. This is irrelevant since either party could have deposed Mr. Roark before the cut-off and did not. There is nothing in the Rules precluding the submission of Affidavits after a discovery cut-off. In fact, the Rules permit filing of opposing Affidavits three days prior to hearing. The Court denies the motion to strike and considers the Affidavit.
2. Summary Judgment
As recognized by Defendants, " David Roark swears to facts that dramatically oppose Defendant James Wade's sworn testimony." This creates a question of fact. And because the disputes are of material facts impacting whether or not Plaintiff can pierce the corporate veil, the motion for summary judgment must be denied.
R.C. 1705.48(B) provides:
Neither the members of the limited liability company nor any managers of the limited liability company are personally liable to satisfy any judgment, decree or order of a court for, or are personally liable to satisfy in any other manner, a debt, obligation, or liability of the company solely by reason of being a member or manager of the limited liability company.
" The debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the limited liability company." Arts Rental Equip., Inc. v. Bear Creek Constr., LLC , No. A0902785, (Ohio C.P., Feb. 23, 2012), quoting Tenable Protective Servs., Inc. v. Bit E-Technologies, L.L.C ., 2008 Ohio 4233 (Ohio App. 8 Dist. 2008). " Members of a limited liability company may only be reached individually if the plaintiff demonstrates that the behavior of the members merits disregarding, or piercing, the entity's limited liability structure." Huttenbauer Land Co., LLC v. Harley Riley, Ltd. , 2012 Ohio 4585, 15 (Ohio App. 1 Dist. 2012). The corporate veil may be pierced when:
(1) Control over the corporation by those to be held liable was so complete that the corporate has no separate mind, will, or existence of its own, (2) control over the corporate by those to be held liable was exercised in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust loss resulted to the plaintiff from such control and wrong.Id., quoting Belvedere Condominium Unit Chvners' Assn. v. R.E. Roark Co. Inc . (1993), 67 Ohio St.3d 274, 1993 Ohio 119, 617 N.E.2d 1075.
To pierce the corporate veil, the company and individual must be virtually indistinguishable. Courts look to such factors as: grossly inadequate capitalization; failure to observe corporate formalities; diversion of company property and funds for personal use; and the absence of corporate records. Siva v. 1138 LLC , 2007 Ohio 4667 (10th Dist. 2007).
The Supreme Court of Ohio addressed the " fraud" element in Dombroski v. Wellpoint, Inc ., 119 Ohio St.3d 506, 2008 Ohio 4827, 895 N.E.2d 538 (2008). The Court found that Defendant must exercise control over the corporation to commit fraud, an illegal act or a similarly unlawful act. The remedy of piercing the corporate veil should be used only in instances of extreme misconduct.
Here, the Roark affidavit creates genuine issues of material fact as to all required elements of piercing the corporate veil. Thus, Defendants' Motion is denied.