Koenig et al v. Bourdeau Construction, LLC

Filing 74

MEMORANDUM AND ORDER re: 62 MOTION to Enforce Judgment Motion for a Creditor's Bill filed by Plaintiff Ryan Koenig, Plaintiff Vincent J. Nack, Plaintiff James Craig Larkin, Plaintiff James Koenig, II. IT IS HEREBY ORDERED that Plaintiffs' Motion for a Creditor's Bill in Equity and to Pierce the Corporate Veil of Bourdeau Construction (#62) is GRANTED in part. Signed by District Judge Stephen N. Limbaugh, Jr on 10/21/16. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
RYAN KOENIG, JAMES KOENIG, II,
on behalf of themselves and all others
similarly situated,
Plaintiffs,
v.
BOURDEAU CONSTRUCTION LLC,
Defendant.

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Case No. 4:13CV00477 SNLJ

MEMORANDUM AND ORDER
This case comes before the Court on Plaintiffs’ Motion for a Creditor’s Bill in
Equity and to Pierce the Corporate Veil to enforce their judgment against defendant.
[#62]. Plaintiffs wish to reach the assets of defendant’s alleged alter egos Bourdeau
Contracting and James M. Bourdeau in order to satisfy a judgment against Bourdeau
Construction. The matter has been fully briefed and is ready for disposition. For the
following reasons, the motion will be granted in part.
I.

Factual Background

Plaintiffs were former employees of defendant Bourdeau Construction L.L.C. who
brought suit against defendant alleging that the plaintiffs were not paid in accordance
with the Fair Standards Labor Act, 29 U.S.C. § 201, et seq. and Missouri’s wage and hour
laws. On June 20, 2014, defendant made an Offer of Judgment in favor of plaintiffs and
against defendant for all causes of action alleged in the plaintiffs’ complaint. [#32]. On

July 10, 2014, plaintiffs accepted defendant’s offer of judgment and subsequently filed a
Motion for Attorneys’ Fees and Costs. [#32-33]. On November 26, 2014, this Court
entered its Memorandum and Order granting Plaintiffs’ Motion for Attorneys’ Fees and
Costs pursuant to the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 216(b), and
Federal Rule of Civil Procedure 68. [#42]. On January 20, 2015, this Court entered a
judgment in favor of plaintiffs and against defendant in the amount of $37,282.01, which
included attorneys’ fees in the amount of $25,054.10 and costs in the amount of $563.55.
[#44].
On December 2, 2015, plaintiffs filed this Motion for a Creditor’s Bill in Equity
and to Pierce the Corporate Veil of Bourdeau Construction to enforce plaintiffs’
judgment against Bourdeau Construction’s alleged alter egos, Bourdeau Contracting,
L.L.C. (“Bourdeau Contracting”) and James M. Bourdeau (“Bourdeau”) personally.
[#62]. To date, the plaintiffs have recovered nothing from the January 20, 2015 judgment
against defendant.
Defendant opposes plaintiffs’ motion on the basis that 1) Bourdeau Construction
did not have sufficient control over Bourdeau Contracting and/or Bourdeau to make
either a mere alter ego of Bourdeau Construction, 2) there is no evidence of improper
actions on the part of Bourdeau Construction regarding Bourdeau Contracting and/or
Bourdeau, and that no control was used to commit a fraud or wrong or violate a positive
legal duty, and 3) there is no evidence that any alleged control by Bourdeau Construction
over Bourdeau Contracting and Bourdeau breached a duty that proximately caused
plaintiffs’ injuries. [#67].
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The two limited liability companies have many similarities between them.
Bourdeau Construction and Bourdeau Contracting both were created on April 1, 2004.
Bourdeau is the 100% owner, sole member, and registered agent for both companies.
Both companies share the same billing address --- Bourdeau’s home address. However,
they are slightly different. Each company maintains its own employment identification
numbers. They have separate bank accounts and websites.1 In regard to services offered,
Bourdeau Construction engaged in building and remodeling residential homes, residential
home additions, decks, kitchens, bathrooms, and basements, but the majority of its work
was building maintenance for commercial restaurants, including roofing work for those
commercial customers. Bourdeau Contracting’s services, in contrast, are limited to
roofing work.
Bourdeau, in an affidavit, submitted evidence that Bourdeau Construction’s
business slowed down significantly in 2013 and 2014 when many of its commercial
customers “sold out” to franchisees. During this time period, Bourdeau Construction lost
roughly eighty percent (80%) of its business revenue. According to the affidavit,
Bourdeau Construction had a net income of approximately $35,986 in 2012, $39,038 in
2013, and sustained a net loss of $31,656 in 2014. To counter the losses in Bourdeau
Construction, Bourdeau contributed over $40,000 of his personal funds to the company,
and he has not been repaid for those contributions. None of this information is disputed

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Although the two entities had separate websites, Bourdeau Construction’s website listed Bourdeau
Contracting as the owner of the site.

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by plaintiffs. Bourdeau Construction ceases to have any employees or assets, a bank
account, or any customers.
Just two days after the Court’s Memorandum and Order entered on November 26,
2014, Bourdeau Construction’s bank records show that the company had a balance of
$34,747.12. The highest balance between November 28, 2014 and December 31, 2014
was $43,754.80 on December 8, 2014. But by the end of December 2014, Bourdeau
Construction’s bank account was down to $8,901.31 and was completely empty by
March 31, 2015.
During this critical time period, Bourdeau Construction’s bank records show that
on three occasions Bourdeau withdrew money from one company and deposited it into
the other. In particular, on December 9, 2014, Bourdeau Construction transferred $1,000
to Bourdeau Contracting. On December 16, 2014, Bourdeau Construction transferred
$6,900 to Bourdeau Contracting. On December 22, 2014, Bourdeau Contracting
transferred $4,000 back to Bourdeau Construction. These transfers resulted in a net gain
for Bourdeau Contracting of $3,900.00. Finally, Bourdeau Construction’s last check
went to Bourdeau himself for $1,030.61 on March 10, 2015.
Plaintiffs do not claim defendant improperly paid bills to other creditors.
However, they contend that Bourdeau Construction’s bank account was drained in a four
month period and that the checks made between Bourdeau Construction and Bourdeau
Contracting and Bourdeau himself are evidence of wrongdoing. These checks, however,
resulted in only a $4,930.61 net loss to the account out of $43,754.80 total during the

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four-month period. Plaintiffs tacitly concede that the difference was legitimately paid to
other creditors.
II.

Legal Standard

In the absence of a controlling federal statute, the district court “has the same
authority to aid judgment creditors in supplementary proceedings as that which is
provided to state courts under local law.” H.H. Robertson Co. v. V.S. DiCarlo Gen., 994
F.2d 476, 477 (8th Cir. 1993) (quoting United States ex rel Goldman v. Meredith, 596
F.2d 1353, 1357 (8th Cir. 1979)). The Eighth Circuit has “recognized the availability of
the creditor’s bill in equity under Missouri law.” H.H. Robertson Co., 994 F.2d at 477.
III.

Creditor’s Bill and Piercing the Corporate Veil

The creditor’s bill in equity is a long-recognized equitable remedy “available to a
creditor who seeks to enforce the payment of debts out of assets which cannot be reached
by traditional means of execution on a judgment established in a suit at law.” Shockley v.
Harry Sander Realty Co., 771 S.W.2d 922, 924 (Mo. App. 1989) (internal citations
omitted). A court must find, prior to issuing a creditor’s bill in equity, that there was (1) a
judgment, (2) an issuance of an execution against the assets of the judgment debtor, and
(3) a nulla bona return thereon. Id. at 925.
A creditor’s bill “is considered the equitable equivalent of garnishment on
execution and is comparable to proceedings supplementary to and in aid of execution.”
Id. at 925 (internal citations omitted). The creditor’s bill, under Missouri law, allows the
judgment creditor to “trace the value of goods and services rendered to an empty-shell
corporation to the parties behind such a corporation who have received and benefitted
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from the property or services.” H.H Robertson Co., 994 F.2d at 477. In other words, the
creditor’s bill allows the creditor to reach beyond the judgment debtor to the alter egos of
that debtor. See id. at 478. The fact that a corporation’s alleged alter ego was not an
original party or judgment debtor, or even had formal notice of the proceedings, is
irrelevant. Id. at 476, 478.
Piercing the corporate veil, on the other hand, is considered a distinct equitable
remedy, though there is a substantial overlap with the creditor’s bill. Both seek to
recover fraudulently transferred funds on the basis that the entities that received those
funds are the alter egos of the judgment debtor. It appears the main difference between
the two remedies is that application of the creditor’s bill has not been subject to a “rigid
doctrinal development,” William C. Jones, The Use of Equity: Creditors’ Bills, 16 J. Mo.
Bar. 182, 186 (1960), but in contrast, application of piercing the corporate veil is subject
to well-established rules. As a practical matter, and in the absence of rules for applying
the creditor’s bill, many cases simply conflate the analysis by applying the rules
pertaining to piercing the corporate veil to both remedies. See, e.g., Carpenters District
Council of Greater St. Louis and Vicinity v. Metro Acoustics, L.L.C., No. 4:09-CV-1311
CAS, 2011 WL 6056695 (E.D. Mo. Dec. 6, 2011); Mobius Management Systems v. West
Physician Search, L.L.C., 175 S.W.3d 186 (Mo. App. 2005); Greater St. Louis Const.
Laborers Welfare Fund v. Mertens Plumbing and Mechanical, Inc., 552 F. Supp. 2d 952
(E.D. Mo. 2007).
Actions to pierce the corporate veil “rest on an equitable doctrine used by courts to
look past the corporate form and impose liability upon [those who control] the
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corporation – be they individuals or other corporations – when [they] create or use the
corporate form to accomplish a fraud, injustice, or some ‘unlawful purpose.’” Id. (quoting
Blanks v. Fluor Corp., 450 S.W.3d 308, 375 (Mo. App. 2014)). Although Missouri law
does not take the action of piercing the corporate veil lightly, when a corporation is so
dominated by a person as to be a mere instrument of that person, and indistinct from the
person controlling it, the court will disregard the corporate form if its retention would
result in injustice. Osgood v. Midwest Parking Solutions, No. 4:07-CV-1365 SNLJ, 2009
WL 4825192 at *3 (E.D. Mo. Dec. 11, 2009) (citing Mobius, 175 S.W.3d at 188). The
piercing the corporate veil analysis is highly fact-specific and depends on the equities of
the situation at hand. Blanks, 450 S.W.3d at 376.
In order to pierce the corporate veil, a plaintiff must show: 1) control, not mere
majority or complete stock control, but complete domination, not only of finances, but of
policy and business practice with respect to the transaction, such that the corporate entity
had no separate mind, will, or existence of its own; and 2) such control must have been
used by the corporation to commit fraud or wrong, to perpetrate the violation of statutory
or other positive legal duty, or to commit a dishonest or unjust act in contravention of the
plaintiff’s legal rights; and 3) the control and breach of duty must proximately cause the
injury or unjust loss. Osgood, 2009 WL 4825192 at *3 (citing 66, Inc. v. Crestwood
Commons Redevelopment Corp., 998 S.W.2d 32, 40 (Mo. banc 1999)). Courts may
consider piercing the corporate veil of an entity “upon finding that the entity is the alter
ego of the defendant judgment debtor.” Greater St. Louis Const. Laborers Welfare Fund
v. Mertens Plumbing & Mech., Inc., 552 F.Supp.2d 952, 955 (E.D. Mo. 2007).
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A.

Control by Bourdeau Construction over Bourdeau Contracting

In determining whether one entity exercised control over another to the extent of
piercing the corporate veil, the court looks to a number of factors: “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.” Carpenters District Council of Greater St. Louis and Vicinity v. Metro
Acoustics, L.L.C., No. 4:09-CV-1311 CAS, 2011 WL 6056695 at *3 (Dec. 6, 2011).
Further, the Court looks to whether the entity has “the same business purpose, operations,
equipment, customers, management, and supervision” as the other operation. Woodline
Motor Freight, Inc. v. N.L.R.B., 843 F.2d 285, 288 (8th Cir. 1988).
Control must be “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.”
Grote Meat Company v. Goldenberg, 735 S.W.2d 379, 386 (Mo. App. 1987). The
question is whether the individual “against whom the claim is asserted disregarded the
corporation’s existence as a distinct and separate legal entity, and instead used it as an
extension of their own personal mind or will.” Commonwealth Land Title Ins. Co. v.
Miceli, 480 S.W.3d 354, 371 (Mo. App. 2015) (internal citations omitted).
In this case, this Court finds that the first element of piercing the corporate veil is
met because Bourdeau Construction exercised complete dominion and control over
Bourdeau Contracting. This conclusion holds even though Bourdeau Construction did
not necessarily dominate all aspects of Bourdeau Contracting at all times. Id. at 371-372.

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Although defendant claims that the control element is not met because each company has
separate identities, the facts are at odds with this claim.
James M. Bourdeau is the sole owner and sole member of both Bourdeau
Construction and Bourdeau Contracting. Bourdeau commingled the funds of the
companies, as evidenced by his withdrawal of funds from Bourdeau Construction to pay
Bourdeau Contracting’s year-end bills and taxes, and vica versa. Bourdeau did not
observe formal corporate formalities. Bourdeau Construction and Bourdeau Contracting
shared the same facilities, billing address, same registered agent, and Bourdeau
Construction’s website listed Bourdeau Contracting as the site’s owner. Bourdeau
himself was solely in charge of Bourdeau Construction’s accounts receivable. In
addition, Bourdeau Construction and Bourdeau Contracting shared a sufficiently common
business purpose. Although Bourdeau Contracting’s work was exclusively roofing, a
substantial part of Bourdeau Construction’s work was roofing as well.
B.

Bourdeau Construction’s Control Breached a Legal Duty to Plaintiffs

The second element of piercing the corporate veil is met where the defendant
judgment debtor uses its control of a corporation to perpetrate the violation of a statutory
or other positive legal duty, or to commit a “dishonest and unjust act in contravention of
[a] plaintiff’s legal rights.” Commonwealth Land Title Ins. Co., 480 S.W.3d at 373
(quoting Collet v. American Nat. Stores, Inc., 708 S.W.2d 273, 284 (Mo. App. 1986)).
Certainly defendant here owed the plaintiffs a positive legal duty to satisfy the judgment
entered against it. Instead, defendant wrote checks to pay Bourdeau Contracting’s yearend bills and taxes and even a check to Bourdeau personally.
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C.

Bourdeau Construction’s Breach of Duty Proximately Caused
Plaintiffs’ Damages

To satisfy the final element to pierce the corporate veil, the plaintiffs must show
that the control and breach of duty by the defendant proximately caused the injury or loss
of which the plaintiffs complain. Fleming Companies, Inc. v. Rich, 978 F.Supp. 1281,
1303 (Mo. E.D. 1997). The continuation of business activity by the alter ego business
entities suggest that assets exist from which the plaintiffs may collect the judgment due to
them. Cement Masons Local 527 v. Stika Concrete Contracting Co., Inc., No. 4:14-CV1030 JAR, 2016 WL 2894716 at *3 (E.D. Mo. May 15, 2016).
In this case, the proximate causation element is established by the shifting of
assets from Bourdeau Construction to Bourdeau Contracting and Bourdeau. However,
the shifting of these assets did not result in a benefit to Bourdeau Contracting or to
Bourdeau, himself, except to the extent of $4,930.61, far short of the $37,282.01
judgment against Bourdeau Construction. As noted, between December 9, 2014 and
December 22, 2014, Bourdeau Construction wrote checks to Bourdeau Contracting for
$7,900 and received $4,000 back from Bourdeau Contracting, for a total benefit of
$3,900 to Bourdeau Contracting. Additionally, Bourdeau Construction wrote a check to
James M. Bourdeau in March 2015, with the last amount of money still in its account, for
$1,030.61 and received nothing back. All other funds from Bourdeau Construction were
paid to legitimate creditors other than plaintiffs. Despite the fact that plaintiffs were
provided three years of Bourdeau Construction’s bank records as part of the postjudgment assets discovery process, plaintiffs have failed to identify a single transfer of

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funds to Bourdeau Contracting or Bourdeau other than the transfers in December, 2014.
Accordingly, proximate cause exists to pierce the corporate veil only in the amount of
$4,960.31, $3,900.00 attributable to Bourdeau Contracting, and $1,030.61 to Bourdeau.
IV.

Conclusion

To conclude, this is not the classic case of a shell company being used to defraud
creditors. By 2014, Bourdeau Construction was a dying company. Bourdeau had
attempted to revive it by contributing over $40,000 of his personal funds but to no avail.
In its last breaths, Bourdeau Construction paid more than $38,000 worth of year-end bills
that were not challenged by the plaintiffs. In fact, there was only $4,930.61 that had any
suggestion of wrongdoing.
For the foregoing reasons, judgment is granted in favor of the plaintiffs in the
amount of $3,900.00 against Bourdeau Contracting and against Bourdeau personally in
the amount of $1,060.31.

Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ Motion for a Creditor’s Bill in
Equity and to Pierce the Corporate Veil of Bourdeau Construction (#62) is GRANTED
in part.
So ordered this 21st day of October, 2016.
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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