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Woodruff Construction, LLC v. K.W. “Casey” Clark

Iowa Court of Appeals
924 N.W.2d 534 (2018)


Facts

In 2001 K. W. “Casey” Clark (defendant) incorporated Clark Farms, Ltd., an Iowa biosolids-management company. Clark was its president, secretary, treasurer, registered agent, and sole owner and director. Initially, the business had assets, employed workers, and made profits, but it began to struggle sometime before 2010. Woodruff Construction, LLC (plaintiff) contracted with Clark Farms, which began work, but it abandoned the project in 2011 when Clark realized he underbid the contract. Woodruff obtained a $410,067 judgment for breach of contract, but Clark Farms failed to pay. Woodruff sued to pierce the corporate veil and collect from Clark personally. At trial, records showed Clark had followed few corporate formalities other than filing taxes. The corporation had been dissolved and reinstated three times for failure to file biennial reports and did not produce any bylaws, minutes book, or shareholder ledger. The bookkeeper testified that Clark failed to keep separate books and wrote as many corporate checks for himself personally and his other businesses as for Clark Farms’ expenses. After Woodruff sued, either Clark loaned the corporation or it loaned Clark hundreds of thousands of dollars. The bookkeeper said the corporation loaned Clark the money, but taxes showed a loan over $500,000 from Clark to the corporation. Either way, the loan never reached Clark Farms’ account, and Clark likely used it to pay off notes he owed or had personally guaranteed for other businesses. The records also showed Clark used Clark Farms funds to pay interest on all his notes, whether the corporation owed them or not. The bookkeeper said Clark owed the corporation $665,422, but Clark testified he would not make any effort to pay back the debts, because he owned Clark Farms. Finally, the corporation still had equipment Woodruff could lien against, but Clark had started a new limited-liability company performing the same work Clark Farms did. The trial judge denied Woodruff’s request to pierce the corporation veil. Woodruff appealed.

Rule of Law

Issue

Holding and Reasoning (Bower, J.)

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