Gray v. Edgewater Landing, Inc.

Morris Gray (plaintiff) owned property that he leased to Edgewater Landing, Inc. (Edgewater) (defendant). Edgewater agreed to renovate the property, to operate a restaurant there, and to return the property in good condition at lease termination. During the course of the lease, Tom Bradley (defendant) purchased all Edgewater’s shares and ran the restaurant. Bradley subsequently sold half the shares to his bookkeeper, Sandra Martin (defendant). The lease (as renewed) was to expire on March 31, 1987. However, the restaurant’s liquor license expired on September 29, 1986, and Gray assumed control of the property the next day. Gray, who was distressed with the property’s condition (including a leaking roof and peeled floor tiles), refused to allow Edgewater’s employees to enter the restaurant to clean it or to collect their personal property. On October 6, Edgewater sued Gray for conversion. Gray filed a counterclaim against Edgewater, Bradley, and Martin for breaching the lease. At trial, Gray conceded that he knew and understood that Edgewater, not any individual, was the lease counterparty. Additionally, Gray submitted no evidence that Edgewater failed to comply with corporate formalities or that Bradley or Martin committed fraud. Rather, the trial record suggested that Edgewater did follow corporate formalities and that, at most, Bradley and Martin were negligent. The court directed a verdict in favor of Bradley and Martin, ruling that Gray could not pierce Edgewater’s corporate veil to hold them personally liable. The jury found for Gray on his claim against Edgewater and on Edgewater’s claim against him. The jury awarded Gray more than $100,000 in damages. Gray appealed the directed verdict for Bradley and Martin.