United States Court of Appeals FOR THE EIGHTH CIRCUIT

No. 96-1864

John R. Stoebner, Trustee, *
* Appellee, *
* Appeal from the Unite d States v. * District Court for the
* District of Minnesota. Thomas A. Lingenfelter, doing * business as Heritage Collectors’ * Society, *
* Appellant. *

Submitted: February 12, 1997 Filed: May 29, 1997

Before FAG G, HEANEY, and JOHN R. GIBSON, Circuit Judges.

HEANEY, Circuit Judge.

Thomas A. Lingenfelter appeals from an order of th e district c ourt denying several motions for relief from a jury determination that Lingenfelter received propert y from an insolvent company, T.G. Morgan, Inc., i n violati on of 11 U.S.C. §§ 544, 548. Lingenfelter als o chal lenges the district court’s decision to strike a corporate veil-piercing defense offered by Lingenfelter. We affirm.2 I.

Michael W. Blodgett was president and partial owne r of T.G. Morgan, a corporation that bought and sold rar e coins. T.G. Morgan shared an office in Wayzata , Minnesota with several other companies owned by Blodgett and his family. Included among the companies in th e office was Keys to History, Inc., owned and operated b y Blod gett and his family for the purchase and sale o f historical documents.
Althoug h Keys to History and T.G. Morgan had commo n shar eholders and officers, the same employees, and th e same business location, the two corporations maintaine d separate records and were treated separately fo r acco unting purposes. In addition, Keys to History ha d its own suite address, stationery, marketing materials , phone number, bank account, and ledger.
Lingenfelter collect s and sells historical documents thro ugh his business in Lahaska, Pennsylvania. He me t Blodg ett at a trade conference in 1989, after whic h Blodg ett contacted him about the possibility o f Ling enfelter supplying historic documents to Keys t o History. He subsequently supplied the docume nts, some of which were paid for by T.G. Morgan. All documents wer e treated in the accounting records of T.G. Mor gan and Keys to Hi story as being owned by Keys to History. T.G

. Morgan’ s books showed a record of a note receivable du e from Keys to History for each document T.G. Morga n purchased and transferred to Keys to History, although no actual notes receivable were ever created.3

Lingenfelter continued to supply documents t o Blod gett, T.G. Morgan, and Keys to History through th e summer of 1991 when the Federal Trade Commission raide d T.G. Morgan’s offices. T.G. Morgan ceased operating i n late 1991, while Keys to History continued doin g business. T.G. Morgan entered bankruptcy proceedings in January 1992 with the filing of an involuntar y Chapter 11 bankruptcy petition. In MaySection 544 grants a trustee of a debtor in bankruptcy the same rights and powers 1 t o avoid transfers of property by the debtor afforded to a creditor of the debtor under various conditions. See 11 U.S.C. § 544. Section 548, in pertinent part, provides that: (a) [a] trustee may avoid any transfer of an interest of the debtor i n pr operty . . . that was made or incurred on or within one year before the date of t he filing of [a] petition [for bankruptcy protection], if the debtor voluntarily or involuntarily- (1) made such transfer . . . with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation wa s incurred, indebted; or (2) (A) received less than a reasonably equivalent value i n exchange for such transfer or obligation; and (B)(I) was insolvent on the date that such transfer was mad e

. . . . 11 U.S.C. § 548.
4 1992 , John R. Stoebner became T.G. Morgan’s trustee i n ba nkruptcy following the conversion of the case to a Chapter 7 proceeding. In May 1994, Stoebner initiated this action on behal f of T.G. Morgan’s creditors, asserting that payment s totaling $ 153,025 made by T.G. Morgan to Lingenfelter in 1990 and 1991 were fraudulent under 11 U.S.C. §§ 544 , 548. Stoebner claimed that the documents purchased b y

1 T.G. M organ were delivered to Keys to History and tha t T.G. Morgan, insolvent at the time, received no value for its payments. Lingenfelter asserted a “good faith fo r value” defense, arguing that he dealt with Blodgett an d his businesses without knowledge that Blodget t was acting5

to the detriment of T.G. Morgan’s creditors a nd that T.G. Morg an received value for the payments whether th e documents were received by it or by Keys to H istory or by Blodgett. By special verdictIn addition to his motions for judgment as a matter of law and for a new trial , 2 Lingenfelter moved for a stay of execution of the judgment. With respect to tha t mo tion and Lingenfelter’s other challenges to the proceedings, we adopt the opinio n of the di strict court in Stoebner v. Lingenfelter , No. 3-94-1009 (D. Minn. Feb. 15 , 1995) (denying stay of execution of judgment, denying judgment as a matter of law , denying motion for a new trial, and granting prejudgment interest).
6 form, the jury found that the payments had been made t o Ling enfelter; that T.G. Morgan had creditors before an d after they were made; and that they were made with th e inte nt to delay, hinder, or defraud T.G. Morgan’ s creditors. The jury also found that T.G. Mor gan received no value for its payments, that the company w as insolvent and had unreasonably small capital upon which to operate, and that i t intended to incur debts beyond what it could pay. Finally, the jury concluded that Lingenfelter ha d not tak en the payments from T.G. Morgan in good faith.

After trial, Lingenfelter moved for relief from th e verdict , including a motion for judgment as a matter o f law ( “JAML”), claiming that the evidence demonstrate d that T.G. Morgan received value and that he was entitled to the “good faith for value” defense. Linge nfelter also moved for a new trial, asserting that the district court erred in striking his proposed corporate veil-piercin g defen se through which he intended to show that T.G

. Morgan received value for its payments by receiving th e documents he delivered to Blodgett or to Keys to History. Stoebner moved for an award of prejudgment in terest. The district court denied all of Lingenfelter’s motions and 2 granted Stoebner’s motion. Lingenfelter appeals.

II.7

A. JAML

We review the district court’s denial of a motion fo r JAML de novo, applying the same standard used by th e district c ourt. Kaplon v. Howmedica, Inc. , 83 F.3d 263,Stoebner presented numerous witnesses and exhibits over the course of a ten-day 3 tria l. Stoebner’s evidence addressed each of the findings to be made by the jury , includ ing the testimony of T.G. Morgan’s financial representatives and creditors , can celed checks, Lingenfelter’s business records, and shipping labels. We ar e confident that the jury relied on more than mere speculation in making it s determinat ions for which Stoebner had the burden of proof. See City of Omah a Employees Betterment Ass’n v. Omaha , 883 F.2d 650, 651-52 (8th Cir. 1989) (a court may not deny a motion for JAML where the verdict is a result of nothing more tha n speculation by the jury).
8 266 ( 8th Cir. 1996). We resolve all conflicts in th e evidenc e in favor of the nonmoving party, giving tha t part y the benefit of all reasonable inferences an d
assu ming as true all facts supporting the nonmovin g party’s case. Id. at 266-67. We affirm a denial of a motio n for JAML if a reasonable jury could differ as t o the co nclusions to be drawn from the evidence. Trito n Corp

. v. Hardrives, Inc. , 85 F.3d 343, 345 (8th Cir

. 199 6). We do not weigh or evaluate the evidence nor d o we consider the credibility of the witnesses. Id.

After c areful review of the record, we believe tha t th e jury’s findings on the special verdict are full y supported by the evidence. For each of the jur y findings, Stoebner presented evidence to perm it a jury to find i n his favor. Moreover, Lingenfelter failed t o 3 carry the substantial burden necessary to war rant JAML on his “good faith for value” defense. Lingenfelte r pres ented little more than his personal background t o demo nstrate that he acted in good faith. This scan t offer of proof barely challenged Stoebner’s voluminou s evidenc e that T.G. Blodgett received no value for th e paymen ts it made to Lingenfelter. Thus, we affirm th e9

dist rict court’s denial of Lingenfelter’s motion fo r JAML.10

B. Corporate Veil-Piercing Defense
Lingenfelter moved for a new trial, asserting tha t the district court erred in striking his propose d corporate veil-piercing defense through which he intended to show th at T.G. Morgan received value for its payments to him . We review the district court’s conclusions o f law de novo. Friends of the Boundary Waters Wildernes s v. Thomas , 53 F.3d 881, 885 (8th Cir. 1995). Whether to pierce a corporate veil is a legal determinat ion that, in
our c ircuit, is governed by state law. See Minnesot a Powe r v. Armco., Inc. , 937 F.2d 1363, 1367 (8th Cir

. 1991). Un der Minnesota law, deciding whether to allow a
cor porate veil to be pierced requires a court to 1 ) anal yze whether the corporation functioned as the mer e inst rumentality of the principals a party is attemptin g to reach by piercing the corporate veil, and 2) determine whether injustice or fundamental unfairness would occu r if t he corporate veil were left intact. Id. (citin g Vict oria Elevator Co. v. Meriden Grain Co. , 283 N.W.2 d 509, 512 (Minn. 1979)). Whereas the first pr ong involves qu estions of fact, National Bond Fin. Co. v. Genera l Motors Corp. , 341 F.2d 1022, 1023 (8th Cir. 1965), th e second prong raises equitable considerations, Roepke v

. Western Nat’l Mutual Ins. Co. , 302 N.W.2d 350 , 352 (Minn. 1981 ); Victoria Elevator , 283 N.W.2d at 512 (corporat e veil properly pierced where, after making the necessar y factual determinations, leaving the corporate veil intact would be inequitable). The district court did no t address whether Lingenfelter’s requested defense ha d fact ual support, determining that there were n o equitable considerations to support a veil-piercin g defense in this case. We agree.11

Lingenfelter argues that T.G. Morgan’s corporate vei l sho uld be pierced to show that Blodgett and Keys t o History we re actually alter egos of T.G. Morgan, and, as such , T.G. Morgan received value when it purchase d historical documents and delivered them to eithe r Blodgett or Keys to History. Traditionally, piercing a co rporate veil is conducted to show that a principa l hidi ng behind a fictitious corporation is liable t o creditors of the corporation. What Lingenfelte r req uests, however, in effect constitutes a “revers e piercing” of the corporate veil in that it wouldMinnes ota has recognized the “reverse pierce” of the corporate veil under ver y 4 limi ted circumstances, namely when “no shareholder or creditor would be adversel y affected.” Roepke v. Western Nat’l Mutual Ins. Co. , 302 N.W.2d 350, 352-53 (Minn. 1981).
12 show that the principal behind the purportedl y fictitious corp oration received value from him. Lingenfelter’ s appr oach is inconsistent with the proper application o f the doctrine.

Minnesota courts do not apply the doctrine wher e nonprincip als, such as T.G. Morgan’s innocent creditors, will be harmed. See In re: Bellanca Aircraft Corp. , 56 4 B.R. 339, 399 (Bankr. D. Minn. 1985), aff’d in part an d remanded in part , 850 F.2d 1275 (8th Cir. 198 8); Cargill, Inc. v . Hedge , 375 N.W.2d 477, 479 (Minn. 1985)

. Further , even if the doctrine were applicable to thi s case, Lingenfelter was unable to convince the jury tha t he took payments from T.G. Morgan in good fai th. Thus it
was n ot necessary for the jury to decide whether one o f the corporations was an alter ego of another principal

. In th e absence of a finding of good faith o n Lingenfelter’s part, leaving the corporate ve il intact is not fundamentally unfair.

III.

Based on the foregoing, we affirm the distric t court’s order in all respects.

A true copy.

Attest.13 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT

.