Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Case 14.1
ALLI AND BSA CORPORATION V. UNITED STATES
United States Court of Federal Claims
83 Fed.CI. 250; 2008 U.S. Claims LEXIS 236 [August 26, 2008]
FACTS:
Dr. Alli and his wife, Shaki, were property owners who sued the U.D. Department of Housing and
Urban Development (HUD) for failing to pay housing assistance for residents of their apartment
complexes.
The Plaintiffs held the apartment complexes through a business called BSA Corporation.
HUD counterclaimed that the Allis breached the agreement for housing assistance due to multiple
health and safety violations.
All the properties (Pingree, Riverside, and Collingwood) had multiple, serious violations such as fire
hazards, roach infestations, sewer and plumbing problems, heat problems, water leaks, and many
other issues over many years.
HUD provided numerous written notices (over several years) for Plaintiffs to correct the problems
which they failed to do.
Defendant sought $90,646.40 for the cost of moving the families to safe housing, $18,128.80 for
foreclosures costs, and $1,112,173.45 for the cost to HUD for providing basic services, security, and
repairs while acting as mortgagee-in-possession of Collingwood.
HUD argued that the Allis were personally liable for the violations and the costs incurred by HUD.
PROCEDURE: This is the first hearing on this matter. However, the Plaintiffs brought another case in
2006. [Alli v. United States, 2006 U.S. Claims LEXIS 504]
ISSUE: Whether the corporate veil of BSA Corporation should be disregarded and liability imposed
directly to the Plaintiffs?
RULE: “Courts will pierce the corporate veil to achieve justice, equity, to remedy or avoid fraud or
wrongdoing, or to improve a just liability.” The Michigan Courts employ the following formula for
piercing the corporate veil: “First, the corporate entity must be a mere instrumentality of another
entity or individual. Second, the corporate entity must be used to commit a fraud or wrong. Third,
there must have been an unjust loss or injury to the party seeking to pierce the veil.”
REASONING:
1. Plaintiffs commingled their funds with those of the corporation by providing interest-free loans to
BSA Corp. and, at other times, depositing their personal funds into accounts supposedly controlled
3. The Allis took funds from the Collingwood project account to make payment on these loans and to
pay for personal expenses. Thus, there is clear proof that BSA Corp. was a mere instrumentality.
would lead the United States to suffer an unjust loss.
ADDITIONAL INFORMATION:
HUD was not the only department to conduct inspections, and independent inspections were
performed as well. HUD was not targeting the Allis as was alleged.
The Court found that significant portions of the testimony of many of Plaintiffs’ witnesses,
particularly that of Dr. Alli were not worthy of belief. The Court found the witnesses less than
