Greater St. Louis Construction Laborers Welfare Fund et al v. Kirkwood Masonry, Inc.

Filing 98

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs' motion for a creditor's bill in equity and to pierce the corporate veil [# 77 ] is granted. Signed by District Judge Catherine D. Perry on March 14, 2014. (BRP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
GREATER ST. LOUIS CONSTRUCTION, )
LABORERS WELFARE FUND, et al.
)
)
Plaintiffs,
)
)
vs.
)
)
KIRKWOOD MASONRY, INC.,
)
)
Defendant.
)

Case No. 4:12 CV 694 CDP

MEMORANDUM AND ORDER
This closed matter is before the court on plaintiffs‟ motion for a creditor‟s
bill in equity and to pierce the corporate veil, which they support with affidavits
and documents. Plaintiffs obtained a default judgment against Kirkwood Masonry,
Inc., and now seek a creditor‟s bill in equity against Luna Builds STL, LLC, which
plaintiffs allege is the alter-ego entity of the named defendant. Luna Builds has
been served with the motion, and the time for opposing the motion has passed
without response. Because I find that Luna Builds operates as the alter ego of
Kirkwood Masonry and its owner, Daniel Head, I will grant plaintiffs‟ motion.
1.

Background

Plaintiffs are benefit plans, the trustees and fiduciaries of benefit plans, and
one union. Defendant Kirkwood Masonry is a Missouri corporation that
performed masonry and bricklaying services. Plaintiffs brought suit against

Kirkwood Masonry to recover delinquent contributions and liquidated damages
owed to the plaintiff employee benefit funds under collective bargaining
agreements between Kirkwood Masonry and Laborers Local Unions 42-53-110660. On May 11, 2012, plaintiffs sought a default judgment against Kirkwood
Masonry. Doc. 5. On May 29, 2012, this court entered judgment against
Kirkwood Masonry in the amount of $34,457.47 for delinquent contributions,
liquidated damages, interest, attorneys‟ fees, and costs owed to plaintiffs under
collective bargaining agreements and the Employee Retirement Income Security
Act of 1974 (ERISA), 29 U.S.C. § 1132(g)(2), and the Labor Management
Relations Act (LMRA), 29 U.S.C. § 185. Doc. 9.
Daniel Head owns Kirkwood Masonry and served as its President until its
dissolution on August 29, 2012.1 Luna Builds filed its Articles of Organization
with the Secretary of State of Missouri on May 15, 2012. Luna Builds is owned by
David Fox, Mr. Head‟s brother-in-law. Doc. 78-12 at 16. Both companies
perform stonemasonry and brickwork. Docs. 78-11 at 9, 33; 78-12 at 6–7. Mr.
Head manages the day-to-day operations of Luna Builds, including hiring/firing
employees, procuring jobs, and purchasing materials. Doc. 78-12 at 12, 15–17.
Mr. Fox‟s only job duties are to sign checks; however, Mr. Head also signs checks.

1

In his deposition, Mr. Head testified that his mother, Rachel Head, owns a minority stake in
Kirkwood Masonry; however, his tax returns for 2008 and 2009 show that he maintained 100%
ownership. Doc. 17-11 at 7; 78-22.

-2-

Doc. 78-12 at 17, 22. Mr. Head has used his own funds to purchase supplies for
Luna Builds. Doc. 78-12 at 22.
Luna Builds purchased scaffolding, hand tools, a mortar mixer, and a trailer
from Kirkwood Masonry for $3500. Mr. Fox did no research in determining the
purchase price for that equipment, but instead relied upon the word of Mr. Head as
to its worth. Doc. 78-12 at 23–25.
When advertising its services, Luna Builds listed Kirkwood Masonry‟s
telephone number as its own contact number and used Kirkwood Masonry‟s
symbol. Doc. 78-12 at 9–11. Both Kirkwood Masonry and Luna Builds employed
Mr. Head‟s wife, Alisa Head, as well as Bryan Cady, Chris Kuseki, and Pedro
Alvarez. Docs. 78-12 at 20–21; 78-11 at 33–35. Both Luna Builds and Kirkwood
Masonry use common suppliers and the same insurance provider. Doc. 78-4.
They have also both performed work for the same general contractors and worked
at the same job sites. Docs. 78-4; 78-18; 78-19.
After entry of judgment, plaintiffs received $11,500 from a garnishment
with BSI Contractors, Inc. However, that garnishment and all others have been
released, and plaintiffs have been unable to otherwise collect on the judgment
owed by Kirkwood Masonry. They now seek a creditor‟s bill in equity and to
pierce the corporate veil of Luna Builds, in order to obtain $20,012.81, the balance

-3-

owed of the previous judgment. Luna Builds has been served with the instant
motion, and the time for opposition has passed without response.
2.

Discussion

The LMRA establishes liability of one business entity for the obligations of
another under the “alter ego” theory “if the two are substantially identical in terms
of ownership, management, supervision, business purpose, operations, customers,
equipment, facilities and employees.”2 Greater St. Louis Constr. Laborers Welfare
Fund v. Mertens Plumbing and Mech., Inc., 552 F. Supp. 2d 952, 955 (E.D. Mo.
2007) (citing Woodline Motor Freight, Inc. v. NLRB., 843 F.2d 285, 288–89 (8th
Cir. 1988)). Each of the above factors need not be identical. Id. Under ERISA,
one business entity is the alter ego of another if the two entities, “exist
independently in form only, and those separate forms are used as a subterfuge to
defraud, to justify a wrong or to mislead or discourage pursuit of legal action.” Id.
(citing Kansas City Laborers, 104 F.3d at 1055).
The creditor‟s bill in equity assists creditors who seek “to enforce the
payment of debts out of assets that cannot be reached by traditional means of
execution on a judgment established in a suit at law.” Shockley v. Harry Sander
Realty Co., Inc., 771 S.W.2d 922, 924 (Mo. App. 1989) (citations omitted); see
2

“The focus of the labor law alter ego doctrine is on the existence of a disguised continuance of
a former business entity or an attempt to avoid the obligations of a collective bargaining
agreement.” Greater Kan. City Laborers Pension Fund v. Superior General Contractors, Inc.,
104 F.3d 1050, 1055 (8th Cir. 1997) (internal quotations and citations omitted).

-4-

also H.H. Robertson Co. v. V.S. DiCarlo General Contractors, Inc., 994 F.2d 476,
477 (8th Cir. 1993) (recognizing the availability of the action under Missouri law).
A creditor‟s bill may be brought in a separate equitable action or in the underlying
lawsuit where judgment was originally obtained. Fleming Cos., Inc. v. Rich, 978
F. Supp. 1281, 1294 (E.D. Mo. 1997). To obtain a creditor‟s bill, a plaintiff must
establish the existence of a judgment, the issuance of execution against that
judgment, and a nulla bona return. Shockley, 771 S.W.2d at 924. However, where
a judgment debtor is insolvent and issuance of execution would, therefore, be of no
use, its issue is not required. See Buckley v. Maupin, 125 S.W.2d 820, 823 (Mo.
1939).
A creditor‟s bill “enables a judgment creditor to „trace the value of the goods
and services rendered to an empty-shell corporation to the parties behind such a
corporation who have received and benefitted from the property or services.‟”
H.H. Robertson, 994 F.2d at 477 (quoting Shockley, 771 S.W.2d at 925). “The
Missouri alter ego standard applies to such claims.” Mertens, 552 F. Supp. 2d at
955 (citing H.H. Robertson, 994 F.2d at 477; Mobius Mgmt. Sys., Inc. v. W.
Physician Search, L.L.C., 175 S.W.3d 186, 189 (Mo. App. 2005)).
Missouri law presumes that corporations are separate entities, and courts do
not lightly disregard the corporate form to hold one corporation liable for the
behavior of another. Mid-Mo. Tel. Co. v. Alma Tel. Co., 18 S.W.3d 578, 582 (Mo.

-5-

App. 2000). Missouri courts will pierce the corporate veil and hold a defendant
liable for the torts of another corporation under the “alter ego” rule, if the plaintiff
can establish:
(1) Control, not mere majority or complete stock control, but complete

domination, not only of finances, but of policy and business practice
in respect to the transaction attacked so that the corporate entity as to
this transaction had at the time no separate mind, will or existence of
its own; and
(2) Such control must have been used by the defendant to commit
fraud or wrong, to perpetrate the violation of a statutory or other
positive legal duty, or dishonest and unjust act in contravention of
plaintiff‟s legal rights; and
(3) The aforesaid control and breach of duty must proximately cause
the injury or unjust loss complained of.
Radaszewski v. Telecom Corp., 981 F.2d 305, 306 (8th Cir. 1992) (citation
omitted); see also Mobius Mgmt., 175 S.W.3d at 188–89. This standard is almost
identical to the standard applied in ERISA cases. See Mertens, 552 F. Supp. 2d at
955 (citing Kan. City Laborers, 104 F.3d at 1055).
In determining whether one corporation exercised control over another to the
extent necessary to pierce the corporate veil, the court looks to a number of factors,
including: “the ownership and creation of both corporations, the management of
the corporations, the physical location of corporate offices, and the transfer of
assets, contracts, and employees between the corporations.” See Mertens,
552 F. Supp. 2d at 955–56 (citations omitted).

-6-

In this case, plaintiffs have established the first element. Because the
owners of both businesses are brothers-in-law, the businesses are deemed to have
common ownership. See id. at 956 (spousal connection between owners
establishes common ownership); see also Walton Mirror Works, Inc. & Waldon
Mirror & Blinds, Inc., 313 NLRB 1279, 1284 (1994) (finding common ownership
where brother-in-law owned successor business). Both companies share the same
supervision under Mr. Head, who manages the day-to-day operations of both
companies and has the authority to use the funds for both companies. Kirkwood
Masonry sold equipment, including scaffolding, a trailer, and a mortar mixer, to
Luna Builds, who bought it without researching its market value. Both companies
share employees, and both companies have worked on the same job sites for the
same general contractors. Each factor supports a finding that Mr. Head exercised
control over both companies‟ business practices and finances.
Plaintiffs have also shown that Mr. Head‟s control caused Kirkwood
Masonry to breach its legal duty. Under its collective bargaining agreements with
the union, Kirkwood Masonry had the legal duty to make contributions to benefit
plans for each covered employee. However, its failure to make those contributions
led this court to enter default judgment against Kirkwood Masonry in the amount
of $34,457.47. Luna Builds filed its Articles of Organization four days after
plaintiffs filed its motion for default judgment against Kirkwood Masonry. The

-7-

timing of its organization, viewed in light of the above facts, yields a strong
inference that Luna Builds was organized in order to avoid payment of Kirkwood
Masonry‟s debts.
Finally, plaintiffs have demonstrated the third element. Mr. Head‟s control
of Kirkwood Masonry‟s operations and finances, and the breach of its legal duties,
resulted in the plaintiffs‟ inability to collect the total judgment owed.
A judgment has been obtained, and the evidence before the court shows that
Kirkwood Masonry is insolvent and that no further can be expected on plaintiffs‟
garnishments. I will issue a creditor‟s bill in equity in order that plaintiffs may
satisfy the balance of the judgment against Kirkwood Masonry, totaling
$20,012.81, from the assets of Luna Builds STL, LLC.
Accordingly,
IT IS HEREBY ORDERED that plaintiffs‟ motion for a creditor‟s bill in
equity and to pierce the corporate veil [# 77] is granted.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 14th day of March, 2014.

-8-