978-1285770178 Case Printout Case CPC-04-06 Part 1

Ky.App.,2010.

Bear, Inc. v. Smith

303 S.W.3d 137 Court of Appeals of Kentucky.

Background: Fuel supplier brought action against company that operated fueling station, company’s sole sharehold-

er, and an unrelated limited liability company (LLC) alleging fraud and seeking to pierce corporate veil and payment

on unpaid account. The Circuit Court, Laurel County, Roderick Messer, J., dismissed claims against shareholder and

LLC. Fuel supplier appealed.

[5] fact issue existed as to whether shareholder received assets of corporation for which he could be personally lia–

ble, precluding summary judgment in fuel supplier’s action on unpaid account; and

[6] fact issue existed as to whether shareholder abused corporate form, precluded summary judgment in action seek-

ing to pierce corporate veil.

228V On Motion or Summary Proceeding

228k182 Motion or Other Application

228k183 k. In general. Most Cited Cases

Motions to dismiss claims against defendants referred to matters outside the pleadings, and thus, the motions would

be treated as motions for summary judgment.

30k881 Estoppel to Allege Error

30k882 Error Committed or Invited by Party Complaining

30k882(3) k. Nature and theory of cause, and grounds of action or defense. Most Cited Cases

Appellate court would not consider fuel supplier’s fraud allegations against limited liability company since the alle-

gations were not asserted at the trial level, where supplier voluntarily withdrew its fourth amended complaint which

[7] Fraud 184 17

[8] Corporations 101 630(1)

101 Corporations

101XV Dissolution and Forfeiture of Franchise

101k630 Actions by or Against Corporation After Dissolution

101XV Dissolution and Forfeiture of Franchise

101k626 k. Presentation and allowance of claims. Most Cited Cases

Under the corporate survival statute, company that operated fuel station had no affirmative duty to notify its credi-

tors of dissolution; statutory provision regarding procedure for corporation to dispose of known claims against it was

permissive rather than mandatory, and thus, it did not prescribe the exclusive means of making adequate provision

101k617 Effect of Dissolution in General

101k617(1) k. In general. Most Cited Cases

Limited liability company (LLC) was not liable for debts incurred by dissolved company that operated fuel station

or by company’s sole shareholder, where the LLC was not a successor entity of dissolved company, it had not agreed

or represented to assume company’s debts, and it was not a shareholder of the dissolved company.

101k254 k. Insolvency or dissolution of corporation. Most Cited Cases

Generally, if a shareholder receives property from a dissolved corporation, that shareholder is liable to any unpaid

creditors of the dissolved corporation to the extent of the property received. KRS 271B.14–070(4).

[12] Judgment 228 181(31)

228k181(15) Particular Cases

228k181(31) k. Stock and stockholders, cases involving. Most Cited Cases

Genuine issue of material fact existed as to whether sole shareholder of dissolved corporation that operated fuel sta–

tion received assets of corporation for which he could be personally liable, precluding summary judgment in fuel

supplier’s action on station’s unpaid account. KRS 271B.14–070(4).

Corporations 101 1.4(3)

101 Corporations

101I Incorporation and Organization

[14] Corporations 101 1.4(4)

101 Corporations

101I Incorporation and Organization

101k1.4 Disregarding Corporate Entity

[15] Corporations 101 1.4(4)

101 Corporations

101I Incorporation and Organization

101k1.4 Disregarding Corporate Entity

[16] Corporations 101 1.4(1)

101 Corporations

101I Incorporation and Organization

101k1.4 Disregarding Corporate Entity

101k1.4(1) k. In general. Most Cited Cases

Corporations 101 1.7(2)

101 Corporations

101I Incorporation and Organization

101k1.7 Pleading and Procedure in Determining Corporate Entity

101k1.7(2) k. Evidence and fact questions. Most Cited Cases

101 Corporations

101I Incorporation and Organization

101k1.4 Disregarding Corporate Entity

101k1.4(1) k. In general. Most Cited Cases

pay or guarantee debts of the corporation.

[18] Corporations 101 1.4(1)

101 Corporations

228 Judgment

228V On Motion or Summary Proceeding

228k181 Grounds for Summary Judgment

228k181(15) Particular Cases

David Howard, London, KY, for appellee.

unpaid fuel charges from Tony H. Smith and an unrelated entity, Smith Heating and Air Conditioning, LLC; its

claims against Tony H. Smith for fraud relating to these charges; and its action to pierce the corporate veil of Smith

Services, Inc., as an alternate basis of liability for its sole shareholder, Tony H. Smith. For the reasons herein stated,

we affirm the circuit court regarding Laker Express’s claims of fraud and the liability of Smith Heating and Air

Conditioning, LLC. We reverse the circuit court as to the issues of Tony H. Smith’s individual liability for these

this account, Smith Services owed it approximately $35,000. Neither Smith Services nor Laker Express memorial-

ized in writing their understanding regarding this account or their understanding of what should occur in the event of

default. Furthermore, Tony H. Smith did not personally guarantee this debt, and Laker Express did not require secu-

rity of any kind. Instead, after Smith Services charged fuel, Smith Services‘ agents would complete a credit card slip

listing the date and the cost of the fuel charged, and an employee of Laker Express would write down the name of

paid. However, while Laker Express gave Smith Services a credit against its preexisting fuel debt for some nominal

HVAC work Smith Services performed at Laker Express’s store, Smith Services paid nothing further on the balance

of that debt.

Tony H. Smith testified that he shut down and dissolved Smith Services sometime in 2003 because it had not been

of the fuel account. At that time, however, Smith Services had no assets and, several months later, the Kentucky

Secretary of State administratively dissolved Smith Services. Thereafter, Laker Express amended its complaint on

three occasions, attempting to place direct liability for this debt with Tony H. Smith and with an unrelated limited

liability entity, organized by Tony H. Smith’s son, named “Smith Heating and Air Conditioning, LLC.” Laker Ex-

press also added claims of fraud in the inducement, fraud by omission, and sought to pierce the corporate veil of