KCI Auto Auction, INC. v. Anderson et al
ORDER entered by Judge Nanette Laughrey. Plaintiff KCI Auto Auctions Motion for Summary Judgment, [Doc. 105] is granted. Signed on 4/13/18 by District Judge Nanette K. Laughrey. (Matthes Mitra, Renea) Modified on 4/13/2018 to correct last sentence of Order: "Plaintiffs Motions for Summary Judgment, Doc. 105, is granted." (Matthes Mitra, Renea).
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
ST. JOSEPH DIVISION
KCI AUTO AUCTION, INC.,
ALONZO ANDERSON, et al.,
Pending before the Court is Plaintiff KCI Auto Auction’s Motion for Summary
Judgment, Doc. 105. For the following reasons, the motion is granted.
Plaintiff KCI Auto Auction, Inc. is a wholesale motor vehicle auction located in Kansas
City, Missouri. In January 2014, Defendants Barry Ristick, Angelo Jefferson, and Tom Ephrem
visited KCI on behalf of the used car business, Defendant Lucky 7 Used Cars, LLC, seeking to
gain access to KCI’s weekly auctions. These Defendants were told that in order to participate in
the auctions, KCI would require proof that they are licensed vehicle salespersons and/or a
licensed vehicle dealer, and that their used vehicle dealership was registered with
AuctionACCESS.2 KCI also told these Defendants that they must obtain a dealer card and
salesperson badges, and agree to all of KCI’s auction policies and terms of sale.
In ruling on a motion for summary judgment, the Court must view all facts in a light most
favorable to the nonmoving party, and that party receives the benefit of all reasonable inferences drawn
from the facts. Robinson v. Monaghan, 864 F.2d 622, 624 (8th Cir. 1989).
AuctionACCESS is a dealer credentialing system for the wholesale auto auction industry. See
In April 2014, these Defendants completed a registration application with KCI, in the
name of “Lucky 7 Used Cars.” The application included a dealership authorization form that
listed Defendant Alonzo Anderson as the dealership’s owner, and listed Angelo Jefferson, Jason
Ephrem, Barry Ristick, and Tom Ephrem, as the dealership’s representatives. These Defendants
also provided KCI with the Used Vehicle Dealer number that they would be operating under,
which was issued by the State of Kansas, and showed that they had registered their dealership
with AuctionACCESS. These Defendants also provided an “Auction Guarantee,” signed and
executed by Anderson, which represented that he was the owner of Lucky 7 Used Cars, and that
in consideration of KCI allowing Lucky 7 Used Cars to participate at the auctions, he personally
guaranteed full payment of any debts. Upon receiving the Defendants’ registration application,
KCI permitted them to participate in the auctions.
In June 2014, Tom Ephrem and Barry Ristick approached KCI, on behalf of Anderson
and Lucky 7 Used Cars, and established a “floor plan” account (the “Lucky 7 Account”).
According to the agreement, which was not reduced to writing, KCI would allow the Defendants
to purchase vehicles without full payment at the time of sale, and instead required only that they
pay the amounts due within sixty days. If the vehicles were not paid for at the time of sale,
however, KCI would assess a service charge. The Defendants were also permitted to take
immediate possession of the vehicles, but KCI retained the original titles, and the Defendants
agreed not to sell or transfer the vehicles until full payment was made and the titles were
Over the next three years, the Defendants purchased 293 used vehicles on the Lucky 7
Account, for which the sales price and buyers fees totaled $1,156,205.62. Although there is an
individual sale contract for each purchase, all of the Defendants’ purchases were made according
to the floor plan, and the Defendants often made payments on the Lucky 7 Account that were
generic, and did not reference any specific transaction. Beginning in 2015, the Lucky 7 account
became delinquent. However, over the course of 2015 and 2016, Barry Ristick and Tom Ephrem
regularly called and personally visited KCI, and always made promises, assurances, and
representations that they would get the account paid in full soon.
In reliance on these
representations, KCI continued to allow the Defendants to participate at the auctions. In early
2017, KCI finally prohibited the Defendants from attending any more auctions, and demanded
payment of the outstanding balance on the Lucky 7 Account.
In July 2017, with the Lucky 7 Account balance at $248,880.38, KCI brought suit against
Alonzo Anderson, Danny Ephrem, David Ephrem, Jason Ephrem, J.J. Ephrem, Tom Ephrem,
Angelo Jefferson, and Barry Ristick, as well as Lucky 7 Used Cars, L.L.C., Lucky 7 Discount
Auto Sales LLC, and Quality Used Cars, LLC. In December, 2017, the parties notified the Court
that KCI had reached a settlement with Defendants Tom Ephrem, David Ephrem, Danny
Ephrem, Barry Ristick, Angelo Jefferson, and Quality Used Cars, LLC (the “Settling
Defendants”). Doc. 89. In January, 2018, pursuant to the settlement agreement, the Court
entered a consent judgment against the Settling Defendants. Doc. 97. One week later, the Court
entered a default judgment against Lucky 7 Used Cars, L.L.C. and Lucky 7 Discount Auto Sales
LLC, Doc. 100, and KCI voluntarily dismissed Defendants Jason Ephrem and J.J. Ephrem from
the suit. Docs. 102, 103. Thus, there is only one defendant remaining, Alonzo Anderson, who
proceeds pro se.
KCI seeks summary judgment against Anderson on nine claims: Breach of Contract,
Action on Account, Account Stated, Fraudulent Misrepresentation, Fraudulent Conveyance,
Unjust Enrichment and Quantum Meruit, Conversion, Negligence Per Se, and Alter Ego/Piercing
the Corporate Veil. The purpose of summary judgment is to “pierce the pleadings and assess the
proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). To obtain summary judgment, the movant must show
that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). If the movant satisfies this burden, then the non-moving
party “must set forth specific facts sufficient to raise a genuine issue for trial and cannot rest on
allegations in the pleadings.” Ryan v. Capital Contractors, Inc., 679 F.3d 772, 776 (8th Cir.
2012) (quoting Nw. Airlines, Inc. v. Astraea Aviation Servs., Inc., 111 F.3d 1386, 1393 (8th
In deciding whether to grant summary judgment, the Court must view all facts in a light
most favorable to the nonmoving party, and give that party the benefit of all reasonable
inferences drawn from the facts. Robinson v. Monaghan, 864 F.2d 622, 624 (8th Cir. 1989).
Both parties, however, must support their assertions “by citing to particular parts of materials in
the record . . . or showing that the materials cited do not establish the absence or presence of a
genuine dispute.” Fed. R. Civ. P. 56(c)(1). Anderson does not address KCI’s section of
uncontroverted facts, nor does his response provide its own. Moreover, despite relying on new
facts, Anderson supports only some of his assertions by swearing to them in a single, self-serving
KCI has also represented to the Court that it submitted to Anderson a written request to
admit, which he failed to answer. When a party serves a written request to admit, every matter
included in that request “is admitted unless, within 30 days after being served, the party to whom
the request is directed serves on the requesting party a written answer or objection addressed to
the matter and signed by the party or its attorney.” Fed. R. Civ. P. 36(a)(3). “A matter admitted
under this rule is conclusively established unless the court, on motion, permits the admission to
be withdrawn or amended.” Fed. R. Civ. P. 36(b). Anderson does not dispute KCI’s contentions
with regard to the request to admit, and has not moved for the Court to withdraw or amend the
admissions. Accordingly, the Court must treat the admissions as conclusively established. See
Doc. 106-2 (KCI’s Request for Admissions).
Count I: Breach of Contract
To obtain summary judgment on its breach of contract claim, KCI must show that there is
no genuine dispute as to the material facts that establish “(1) the existence of a valid contract; (2)
[Anderson’s] obligation under the contract; (3) a breach by [Anderson] of that obligation; and (4)
resulting damages.” Clayborne v. Enter. Leasing Co. of St. Louis, LLC, 524 S.W.3d 101, 106
(Mo. Ct. App. 2017) (citing C-H Building Associates, LLC v. Duffey, 309 S.W.3d 897, 899 (Mo.
Ct. App. 2010).
KCI maintains that it has a valid contract with Anderson, imposing mutual obligations on
the parties, as a result of the Lucky 7 Account “floor plan” and Anderson’s personal guarantee.
In support, KCI provides the affidavit of Tom Ephrem, Danny Ephrem, David Ephrem, Barry
Ristick, and Angelo Jefferson, Doc. 106-1, and the request for admissions that Anderson failed to
respond to. Doc. 106-2. According to both the affidavit and the unanswered request for
admissions, Barry Ristick and Tom Ephrem approached KCI and set up the Lucky 7 Account
floor plan agreement on behalf of Anderson. Doc. 106-1, p. 4; Doc. 106-2, p. 15. Under the
agreement, the Defendants would purchase vehicles on Anderson’s behalf, and charge them to
the Lucky 7 Account. The Defendants would then be allowed to take immediate possession of
the vehicles, and Anderson would be permitted up to 60 days to pay the full sale price. Doc.
106-1, p. 8; Doc. 106-2, p. 15. If the Defendants did not pay for the vehicles at the time of sale,
KCI would assess a service charge based on the amount of time between the sale and payment.
Doc. 106-1, p. 4. According to both the affidavit and the unanswered request for admissions,
Barry Ristick and Tom Ephrem were acting on behalf of and as agents for Anderson when they
agreed that he would be responsible and obligated on the Lucky 7 Account. Doc. 106-1, p. 4.
In addition to the orally agreed to Lucky 7 Account floor plan, KCI also bases its breach
of contract claim on a document entitled “KCI Kansas City Auction Guarantee” (the “Auction
Guarantee”). Doc. 106-2, p. 62. According to the Auction Guarantee, which is signed by
Anderson and was delivered to KCI with the registration forms in April 2014, in consideration of
KCI allowing the Defendants to participate at the auctions, Anderson personally guaranteed full
payment of any debts of Lucky 7 Used Cars to KCI. Doc. 106-4, p. 46.
Anderson first argues that the Auction Guarantee and 293 sales contracts are forged.
Doc. 111-1, p. 2. This is the first time that Anderson has raised any issues of forgery or falsified
documents, however, and indeed on several prior occasions he has affirmed the Guarantee’s
In his answer to the First Amended Complaint, Anderson states that “[a]ll
documents that Defendant faxed or sent to KCI (Plaintiff) are true and correct.” Doc. 81, p. 2.
Additionally, KCI included the Auction Guarantee in its request for admissions, and requested
that Anderson admit its authenticity. Doc. 106-2, pp. 11-12. Anderson did not respond, much
less raise any claim of forgery at that time, and pursuant to Federal Rule of Civil Procedure
36(a)(3) admitted the document’s authenticity. Although he supports his argument with an
affidavit, it does not create a disputed issue of fact because his admission is conclusive. See
Quasius v. Schwan Food Company, 596 F.3d 947 (8th Cir. 2010).
Anderson also argues that Tom Ephrem and Angelo Jefferson had no authority to enter
into any agreements on his behalf. However, he does not include this contention in his affidavit,
and offers no evidence to support it, let alone any that overcomes KCI’s affidavits. Tom Ephrem
and Barry Ristick have both sworn under oath that they were acting as Anderson’s agents when
they set up the Lucky 7 Account floor plan, and when they entered into the purchase agreements
on the account. Doc. 106-1, pp. 4-6. Additionally, Anderson failed to deny that Tom Ephrem
and Barry Ristick were his agents and had his authority to enter into the Lucky 7 Account floor
plan with KCI when he was served with KCI’s request for admissions. Doc. 106-2, p. 14.
Anderson’s completely unsupported argument that there was no authority to enter into the
agreements on his behalf does nothing to refute KCI’s evidence.
Finally, Anderson argues that the Mo. Rev. Stat. § 432.047 required the Lucky 7 Account
floor plan agreement to be in writing. However, Section 432.047 states that “[a] debtor party
may not maintain an action upon or a defense . . . .” Mo. Rev. Stat. § 432.047(2) (emphasis
added). It also states that “[n]othing contained in this section shall affect the enforceability by a
creditor of any . . . agreement . . . evidencing or creating an obligation for the payment of money
or other financial accommodation, lien, or security interest.” Mo. Rev. Stat. § 432.047(4).
Here, KCI is the creditor, not the debtor, and thus it is unclear that the statute applies. See
BancorpSouth Bank v. Paramont Properties, L.L.C., 349 S.W.3d 363, 368 (Mo. Ct. App. 2011)
(“The Missouri Credit Agreement Statute acts as a statute of frauds to protect banks from losing
their right to enforce a loan according to the terms of the written loan documents, if they
informally attempt to accommodate debtors.”).
Even if the statute does apply, however,
Anderson is unable to overcome the “Kansas City Auction Guarantee,” which is in writing,
signed by Anderson, and personally guarantees all of Lucky 7 Used Cars’ debts. Doc. 106-2, p.
The final two elements of KCI’s breach of contract claim are undisputed. At the time this
lawsuit was filed, the Lucky 7 Account balance was $248,880.38, which Anderson refused to
pay. In addition to the outstanding balance, KCI also suffered damages in the form of attorney’s
fees and costs spent attempting to collect. Anderson has failed to overcome KCI’s showing that
there is no genuine dispute of material facts, and establish that he is liable. Therefore, summary
judgment must be entered against Anderson on Count I, breach of contract, in the amount of
Count II: Action on Account
KCI also seeks summary judgment on its claim for action on account, which is based on
the Lucky 7 Account floor plan agreement. To prevail, KCI must show that there is no genuine
dispute as to the material facts establishing that “1) [Anderson] requested plaintiff to furnish
merchandise or services, 2) [KCI] accepted [Anderson’s] offer by furnishing such merchandise
or services, and 3) the charges were reasonable.” Helmtec Industries, Inc. v. Motorcycle Stuff,
Inc., 857 S.W.2d 334, 335 (Mo. Ct. App. 1993).
Here, KCI relies on the same evidence that supported its breach of contract claim: the
affidavit of Tom Ephrem, Danny Ephrem, David Ephrem, Barry Ristick, and Angelo Jefferson,
and the unanswered requests for admission. Docs. 106-1, 106-2. According to the affidavit and
unanswered requests for admission, the Defendants approached and solicited KCI, as Anderson’s
agents, and requested that KCI agree to establish the Lucky 7 Account floor plan for Anderson.
KCI accepted the request, and furnished 293 vehicles to Anderson. The affidavit and requests
for admissions also conclusively establish that the charges on the Lucky 7 Account were
“reasonable, true and accurate.” Doc. 106-1, p. 9.
Anderson does not dispute that KCI furnished the vehicles to Anderson, or that the
charges were reasonable. His only argument relevant to KCI’s action on account is the same as
was discussed above, that his agents did not have any authority to enter into the agreements on
his behalf. However, for the same reasons as discussed, Anderson’s arguments are insufficient.
Therefore, summary judgment must be entered in KCI’s favor on Count II, action on account, in
the amount of $443,957.85.
Count IV: Account Stated
KCI also moves for summary judgment on its claim for account stated. “An account
stated is an agreement between parties, having had previous financial transactions, that a balance
struck is correct and due between them, and a promise by the debtor, either express or implied, to
pay the balance.” Ozark Mountain Timber Prod., Inc. v. Redus, 725 S.W.2d 640, 648 (Mo. Ct.
App. 1987) (citing Chisler v. Staats, 502 S.W.2d 424 (Mo. Ct. App. 1973)). Partial payment by
a debtor without dispute constitutes an implied promise to pay the balance. Chisler, 502 S.W.2d
at 426. Here, it is undisputed that a debtor-creditor relationship existed between KCI and
Anderson, and that after the Lucky 7 Account was outstanding, Anderson’s agents made express
promises to pay the amounts owed. KCI demanded payment when $254,380.38 became due, and
Anderson’s agents promised to pay. Indeed, Anderson’s agents made partial payments to KCI
on several occasions, including more than one year after the account was delinquent, due and
payable, all without any objection to the amounts due under the account by Anderson or any of
his agents. Anderson’s agents made several express promises to pay the balance, and moreover,
by tendering partial payments to KCI, Anderson made an implied promise to pay the rest of the
Once again, the only argument that Anderson raises that is relevant to Count IV is his
denial that his agents had the authority to enter into the Lucky 7 Account floor plan. For the
reasons already discussed, Anderson’s argument is insufficient. Therefore, summary judgment is
granted on Count IV, account stated, in the amount of $443,957.85.
Count V: Fraudulent Misrepresentation
KCI also seeks summary judgment on its claim of fraudulent misrepresentation.
Fraudulent misrepresentation requires:
(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge
of its falsity or ignorance of its truth; (5) the speaker's intent that it should be
acted on by the person in the manner reasonably contemplated; (6) the hearer's
ignorance of the falsity of the representation; (7) the hearer's reliance on the
representation being true; (8) the hearer's right to rely thereon; and (9) the hearer's
consequent and proximately caused injury.
Freitas v. Wells Fargo Home Mortg., Inc., 703 F.3d 436, 438–39 (8th Cir. 2013) (quoting
Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 131–32 (Mo. 2010)). KCI
seeks to hold Anderson liable for the fraudulent acts of his agents. “The universally recognized
rule is that the principal is civilly liable for the . . . fraud . . . of his agent in the course of his
employment . . . .” Milton v. Missouri Pac. R. Co., 193 Mo. 46, 91 S.W. 949, 951 (1906); see
also Premium Fin. Specialists, Inc v. Hullin, 90 S.W.3d 110, 114 (Mo. Ct. App. 2002) (“The
proper inquiry is, whether the act was done in the course of the agency and by virtue of the
authority as agent. If it was, then the principal is responsible, whether the act was merely
negligent or fraudulent.”) (quoting Tietjens v. General Motors Corporation, 418 S.W.2d 75, 84
KCI bases its fraudulent misrepresentation claim on the representation that if the
Defendants received some of the titles from KCI for the vehicles that were purchased, but still
owed payment on, then Anderson would resume making payments on the Lucky 7 Account.
It is undisputed that the elements of fraudulent misrepresentation are established with
regard to Tom Ephrem and Barry Ristick. These Defendants admit in their affidavit that they
made the representations, that those representations were false, that they knew the
representations were false when they made them, and that they intended for KCI to act on the
false statements. Doc. 106-1, p. 12. KCI, in an affidavit prepared by assistant general manager
Steve Goettling, states that the representations were material, KCI did not know that the
representations were false, and that KCI relied on the promises and assurances when they
provided the titles to some of the vehicles to defendants. Doc. 106-4, p. 19. It is also undisputed
that KCI had a right to rely on Tom Ephrem and Barry Ristick’s representations. As a result of
the false representations, KCI provided the titles to vehicles that were not paid for, and
Anderson’s agents then sold the vehicles and kept the proceeds and profits without making
payment to KCI, which caused KCI damages.
Anderson does not specifically oppose summary judgment on the fraudulent
misrepresentation claim. Although he maintains that Tom Ephrem and Angelo Jefferson had no
authority to enter into the floor plan agreement, he does not specifically refute that they were his
agents. Indeed, he has admitted as much by virtue of failing to respond to KCI’s requests for
admission. It is undisputed that Tom Ephrem and Barry Ristick made the false representations
during their business dealings with KCI, done in the course of their agency and by virtue of their
authority as Anderson’s agent. Therefore, Anderson is liable for his agents’ fraudulent actions.
See Tietjens v. General Motors Corporation, 418 S.W.2d 75, 84 (Mo. 1967) (Principal is liable
for fraud by agent in course of agency and for benefit of principal.). Summary judgment is
granted in favor of KCI on Count V, Fraudulent Misrepresentation, in the amount of
Count VI: Fraudulent Conveyance
KCI’s claim for fraudulent conveyance is based on the Missouri Uniform Fraudulent
Transfer Act (MUFTA). Mo. Rev. Stat. §§ 428.005 to 428.059. Under the MUFTA, to set aside
a transfer as fraudulent,
it is necessary to show that the transfer was made with an intent to hinder, delay,
or defraud creditors. Intent to defraud must be shown by clear and convincing
evidence. Fraudulent intent is rarely proven by direct evidence; thus, it is
acceptable in Missouri courts to determine the presence of fraud by considering
particular badges of fraud. The badges of fraud include: 1) a conveyance to a
spouse or near relative; 2) inadequacy of consideration; 3) transactions different
from the usual method of transacting business; 4) transfers in anticipation of suit
or execution; 5) retention of possession by the debtor; 6) the transfer of all or
nearly all of the debtor's property; 7) insolvency caused by the transfer; and 8)
failure to produce rebutting evidence when circumstances surrounding the transfer
are suspicious. For a transfer to be found fraudulent, several indicia of fraud must
be shown. More than one badge of fraud must be present.
Birkenmeier v. Keller Biomedical, LLC, 312 S.W.3d 380, 389 (Mo. Ct. App. 2010) (internal
The undisputed facts of this case support entry of summary judgment against Anderson.
Anderson does not dispute that he transferred the Lucky 7 LLCs’ assets, including most or all of
the vehicles purchased from KCI without payment, to himself and others with the intent to avoid
KCI. Anderson also does not dispute that he siphoned the income and profit from the sales and
transfers of the vehicles purchased from KCI, which caused the Lucky 7 LLCs to become
insolvent, and without sufficient capital and income so that it was unable to pay its debts. Such
transfers exemplify “several indicia of fraud.” Id. Anderson’s transfers were often to himself or
his business associates, they were in anticipation of KCI’s execution of a judgment against the
Lucky 7 LLCs, Anderson retained possession of most assets even after transfer, he transferred
“all or nearly all” of the Lucky 7 LLCs’ property, and caused the LLCs’ insolvency. Moreover,
Anderson offers no rebutting evidence surrounding the transfers.
If, as here, fraud is sufficiently established, the MUFTA provides that a creditor may
Avoidance of the transfer or obligation to the extent necessary to satisfy
the creditor's claim;
An attachment or other provisional remedy against the asset transferred or
other property of the transferee in accordance with the procedure
prescribed by applicable laws of this state;
Subject to applicable principles of equity and in accordance with
applicable rules of civil procedure,
An injunction against further disposition by the debtor or a
transferee, or both, of the asset transferred or of other property;
Appointment of a receiver to take charge of the asset transferred or
of other property of the transferee; or
Any other relief the circumstances may require.
Mo. Rev. Stat. § 428.039.1. KCI seeks to invoke the statute’s offer of “any other relief the
circumstances may require.” KCI argues that the most equitable solution is to enter an Order
holding Anderson liable for actual damages in the amount of $426,831.60, which is the amount
of the default judgment entered against Lucky 7 Used Cars, LLLC and Lucky 7 Discount Auto
Sales LLC. The Court agrees. Summary judgment is granted for KCI on Count VI, fraudulent
conveyance, against Anderson in the amount of $426,831.60.
KCI also seeks punitive damages in the amount of $1,000,000, because Anderson’s
conduct was so egregious, and the harm that he did was intentional and deceitful, and it involved
repeated actions over years of intentionally and purposefully defrauding KCI.
declines to award punitive damages because KCI is asking for summary judgment, not a finding
that punitive damages are warranted.
Count VII: Unjust Enrichment and Quantum Meruit
KCI seeks summary judgment on Count VII only in the event it does not prevail on its
breach of contract claim. Because the Court grants summary judgment on KCI’s breach of
contract claim, it need not address Count VII, unjust enrichment and quantum meruit.
Count VIII: Conversion
KCI also seeks summary judgment against Anderson on its claim for conversion.
“Conversion is the unauthorized assumption of the right of ownership over the personal property
of another to the exclusion of the owner's rights.” Herron v. Barnard, 390 S.W.3d 901, 908
(Mo. Ct. App. 2013) Conversion requires proof of three elements: “(1) the plaintiff ‘owned the
property or was entitled to possess it; (2) the defendant took possession of the property with the
intent to exercise some control over it; and (3) the defendant thereby deprived the plaintiff of the
right to possession.’” Id. at 909.
It is undisputed that in accordance with the Lucky 7 Account floor plan agreement, KCI
was to retain possession of the original title of the vehicles until it received payment in full for
the sale price, buyer fee, and all fees and charges due for the vehicles. It is also undisputed that
the vehicles were not to be sold or transferred to any party until full payment was received, and
the title was transferred. Indeed, KCI maintained a security interest in the vehicles until they
were paid for, and therefore had a right to possess the vehicles that Anderson defaulted on.
Anderson does not dispute that he sold and transferred vehicles to third parties without making
full payment to KCI. By selling the vehicles, Anderson deprived KCI of their right to possession
of the vehicles.
Anderson has failed to show that there is any genuine issue of material fact with regard to
Count VIII, conversion, and therefore summary judgment is granted for KCI in the amount of
Count XIII: Negligence Per Se
KCI argues that it is entitled to judgment against Anderson as a matter of law on its claim
for negligence per se. KCI bases its claim on Mo. Rev. Stat. § 417.200, which states
That every name under which any person shall do or transact any business in this
state, other than the true name of such person, is hereby declared to be a fictitious
name, and it shall be unlawful for any person to engage in or transact any business
in this state under a fictitious name without first registering same with the
secretary of state as herein required.
For the violation of a statute to constitute actionable negligence, there must be “a violation of the
statute,” the injured party must be “within the class of persons intended to be protected by the
statute,” the injury must be “of such character as the statute . . . was designed to prevent,” and the
violation of the statute must be “the proximate cause of the injury.” Hartenbach v. Johnson, 628
S.W.2d 684, 687 (Mo. Ct. App. 1982).
KCI maintains that Anderson did business with KCI under several fictitious names,3
without registering any with the Missouri Secretary of State. In support, KCI presents several
registration forms that Anderson completed, in which he states that he is the owner of Lucky 7
Used Car Sales LLC and Lucky 7 Used Cars, which are not actual entities. Doc. 106-2, pp. 50,
53. KCI argues that Anderson violated Mo. Rev. Stat. § 417.200 by failing to register the names
as fictitious with the office of the Missouri Secretary of State.
Anderson does not dispute that he failed to register the fictitious names with the Missouri
Secretary of State, and therefore violated Mo. Rev. Stat. § 417.200 by doing business with KCI
Lucky Used Car Sales, Lucky 7 Used Car Sales LLC, Lucky 7 Used Cars, Lucky 7 Used Cars,
LLC, Lucky 7 Discount Auto Sales, Lucky 7 Discount Auto Sales LLC, Lucky 7 Used Car Sales LLC,
Lucky Seven used Cars, and Lucky 7 Used Cars, L.L.C.
under the fictitious name “Lucky 7 Used Car Sales LLC.” KCI, who conducted business with
Anderson, is within the class of persons the statute intends to protect. Additionally, KCI’s
injury, the unpaid account balance for the vehicles furnished, was of such character that the
statute was designed to prevent.
It is undisputed that Anderson’s violation of the statute
proximately caused KCI’s damages. Accordingly, the Court grants summary judgment on Count
XIII, negligence per se, in the amount of $443,957.85.
Count XIV: Alter Ego/Piercing the Corporate Veil
Finally, KCI seeks to pierce the corporate veil of the judgment debtors, Lucky 7 Used
Cars, L.L.C., and Lucky 7 Discount Auto Sales LLC (the “Lucky 7 LLCs”). “The rationale
behind piercing the corporate veil is that when a controlling entity or individual misuses the
controlled corporation for the controlling entity's own purposes, rather than the purposes of the
controlled corporation, it loses the limited liability privilege and the debts of the controlled
corporation become the obligations of the controlling entity or individual.” Fleming Companies,
Inc. v. Rich, 978 F. Supp. 1281, 1303 (E.D. Mo. 1997) (quoting Dwyer v. ING Investment Co.,
Inc., 889 S.W.2d 902, 904 (Mo. Ct. App. 1994)). Missouri courts use a three-part test in
determining whether to pierce the corporate veil, and hold that an individual and a company are
alter egos of each other when:
1) The individual completely dominates and controls the finances, policy and
business practice of the other corporation.
2) Such control was for an improper purpose such as “fraud or wrong, or ... unjust
act in contravention of [a third parties'] legal rights.”
3) The alter ego's control of the corporation caused injury to the third party.
Dean v. United States, 987 F. Supp. 1160, 1164 (W.D. Mo. 1997).
In determining proof of dominion and control, courts “focus on the transaction at issue.”
Commonwealth Land Title Ins. Co. v. Miceli, 480 S.W.3d 354 (Mo. Ct. App. 2015). The first
element of the test is satisfied where there is “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.” Id. at 371
(quoting 66, Inc. v. Crestwood Commons Redevelopment Corp., 998 S.W.2d 32, 40 (Mo. 1999))
(emphasis in original). Courts also look to “the management of the corporations, the physical
location of corporate offices, and the transfer of assets, contracts, and employees between the
corporations,” when determining whether to pierce the corporate veil. Greater St. Louis Constr.
Laborers Welfare Fund v. Mertens Plumbing and Mech., Inc., 552 F. Supp. 2d 952, 95-56 (E.D.
Mo. 2007). Commingling of assets is also a factor that indicates the corporate form has been
ignored. Commonwealth, 480 S.W.3d at 372 n.10.
KCI seeks to pierce the corporate veil with respect to the Lucky 7 Account floor plan
agreement, and Anderson’s siphoning of the income and profit from the sales and transfers of the
vehicles he purchased from KCI, which caused the Lucky 7 LLCs to be insolvent and without
sufficient capital and income so that they were unable to pay their debts. It is undisputed that
Anderson managed the Lucky 7 LLCs, not only with regard to their financial affairs, but also the
day-to-day affairs in connection with their transactions with KCI. Additionally, both of the
Lucky 7 LLCs were located in the same location, 2759 S. Broadway, Wichita, Kansas, and when
it became defunct, Anderson freely transferred the assets of Lucky 7 Used Cars, LLC to Lucky 7
Discount Auto Sales LLC. Anderson has also admitted to commingling his own private assets
with those of the Lucky 7 LLCs, and he often paid KCI with checks drawn from personal
The first element in piercing the corporate veil is therefore satisfied.
completely dominated and controlled the finances, policy, and business practices of the Lucky 7
In Missouri, torts, violation of statutory duties, inadequate capitalization, and the
stripping of assets from a corporation are all wrongs that satisfy the second prong of piercing the
corporate veil. See 66, Inc. v. Crestwood Commons Redevelopment Corp., 998 S.W.2d 32, 41
(Mo. 1999); Fleming Companies, Inc. v. Rich, 978 F. Supp. 1281, 1303 (E.D. Mo. 1997). Actual
fraud is not required to justify piercing the corporate veil; violation of statutory duties or
inadequate capitalization alone may be sufficient. See 66, Inc., 998 S.W.2d at 41 (“‘Inadequate
capitalization’ means assets that are very small in comparison to known risks associated with the
planned corporate enterprise.”).
The Missouri Supreme Court has stated that “inadequate
capitalization is circumstantial evidence tending to show an improper purpose or reckless
disregard for the rights of others.” Id.
Anderson does not dispute that he stripped the Lucky 7 LLCs of their assets, and
transferred them to himself and others in order to avoid paying KCI as a creditor. Doc. 106-1, p.
19. Anderson also does not dispute that he siphoned the income and profits from the sales and
transfers of KCI’s vehicles, or caused the Lucky 7 LLCs to become insolvent, and without
sufficient capital or income to pay its debts and obligations to KCI. Accordingly, the second
element of piercing the corporate veil is satisfied. See K.C. Roofing Center v. On Top Roofing,
Inc., 807 S.W.2d 545 (Mo. Ct. App. 1991), (piercing the corporate veil where the defendant “was
operating an intricate corporate shell game in which he would cease doing business as one
corporate entity when he was unable to pay the corporation's creditors and he then would form
another corporation in place of the prior one in order to get a ‘fresh start’”)
Finally, KCI has established the requisite causation between Anderson’s actions and the
harm to KCI. Anderson’s siphoning of funds from the sale of KCI’s vehicles, and stripping the
Lucky 7 LLCs of their assets rendered them insolvent, and caused them to become unable to
repay their debts to KCI. See Dave Kolb Grading, Inc. v. Lieberman Corp., 837 S.W.2d 924,
937 (Mo. Ct. App. 1992) (finding that where defendant’s actions rendered the corporation
insolvent, it established the requisite injury and causal connection).
All three elements of the test for piercing the corporate veil are satisfied. Anderson
completely dominated and controlled the Lucky 7 LLCs, used his control for an improper
purpose, and in doing so caused KCI’s injuries. See Dean v. United States, 987 F. Supp. 1160,
1164 (W.D. Mo. 1997). Accordingly, KCI’s motion for summary judgment on Count XIV,
piercing the corporate veil, is granted. Alonzo Anderson, Lucky 7 Used Cars, LLC, and Lucky 7
Discount Auto Sales LLC are alter egos of each other, and are liable for each other’s debts.
Accordingly, Anderson is liable for the $426,831.60 judgment entered against Lucky 7 Used
Cars, LLC and Lucky 7 Discount Auto Sales LLC.
For the reasons set forth above, Plaintiff’s Motions for Summary Judgment, Doc. 105, is
/s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: April 13, 2017
Jefferson City, Missouri
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