United States Court of Appeals

FOR THE EIGHTH CIRCUIT

 

No. 96-1864

 

John R. Stoebner, Trustee, *

*

 Appellee, *

* Appeal from the United

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 FAGG, HEANEY, and JOHN R. GIBSON, Circuit Judges.

 

HEANEY, Circuit Judge.

Thomas A. Lingenfelter appeals from an order of the

district court denying several motions for relief from a

jury determination that Lingenfelter received property

from an insolvent company, T.G. Morgan, Inc., in

violation of 11 U.S.C. §§ 544, 548. Lingenfelter also

challenges 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 owner

of T.G. Morgan, a corporation that bought and sold rare

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 the

office was Keys to History, Inc., owned and operated by

Blodgett and his family for the purchase and sale of

historical documents.

Although Keys to History and T.G. Morgan had common

shareholders and officers, the same employees, and the

same business location, the two corporations maintained

separate records and were treated separately for

accounting purposes. In addition, Keys to History had

its own suite address, stationery, marketing materials,

phone number, bank account, and ledger. 

Lingenfelter collects and sells historical documents

through his business in Lahaska, Pennsylvania. He met

Blodgett at a trade conference in 1989, after which

Blodgett contacted him about the possibility of

Lingenfelter supplying historic documents to Keys to

History. He subsequently supplied the documents, some of

which were paid for by T.G. Morgan. All documents were

treated in the accounting records of T.G. Morgan and Keys

to History as being owned by Keys to History. T.G.

Morgan’s books showed a record of a note receivable due

from Keys to History for each document T.G. Morgan

purchased and transferred to Keys to History, although no

actual notes receivable were ever created.
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Lingenfelter continued to supply documents to

Blodgett, T.G. Morgan, and Keys to History through the

summer of 1991 when the Federal Trade Commission raided

T.G. Morgan’s offices. T.G. Morgan ceased operating in

late 1991, while Keys to History continued doing

business. T.G. Morgan entered bankruptcy proceedings in

January 1992 with the filing of an involuntary Chapter 11

bankruptcy petition. In May 
 Section 544 grants a trustee of a debtor in bankruptcy the same rights and powers 1

to 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 in

property . . . that was made or incurred on or within one year before the

date of the 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 was

incurred, indebted; or

 (2)(A) received less than a reasonably equivalent value in

exchange for such transfer or obligation; and

 (B)(I) was insolvent on the date that such transfer was made

. . . . 

11 U.S.C. § 548. 

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1992, John R. Stoebner became T.G. Morgan’s trustee in

bankruptcy following the conversion of the case to a

Chapter 7 proceeding. 

In May 1994, Stoebner initiated this action on behalf

of T.G. Morgan’s creditors, asserting that payments

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 by

1

T.G. Morgan were delivered to Keys to History and that

T.G. Morgan, insolvent at the time, received no value for

its payments. Lingenfelter asserted a “good faith for

value” defense, arguing that he dealt with Blodgett and

his businesses without knowledge that Blodgett was acting
5

to the detriment of T.G. Morgan’s creditors and that T.G.

Morgan received value for the payments whether the

documents were received by it or by Keys to History or by

Blodgett. By special verdict 
 In 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 that

motion and Lingenfelter’s other challenges to the proceedings, we adopt the opinion

of the district 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 to

Lingenfelter; that T.G. Morgan had creditors before and

after they were made; and that they were made with the

intent to delay, hinder, or defraud T.G. Morgan’s

creditors. The jury also found that T.G. Morgan received

no value for its payments, that the company was insolvent

and had unreasonably small capital upon which to operate,

and that it intended to incur debts beyond what it could

pay. Finally, the jury concluded that Lingenfelter had

not taken the payments from T.G. Morgan in good faith.

After trial, Lingenfelter moved for relief from the

verdict, including a motion for judgment as a matter of

law (“JAML”), claiming that the evidence demonstrated

that T.G. Morgan received value and that he was entitled

to the “good faith for value” defense. Lingenfelter also

moved for a new trial, asserting that the district court

erred in striking his proposed corporate veil-piercing

defense through which he intended to show that T.G.

Morgan received value for its payments by receiving the

documents he delivered to Blodgett or to Keys to History.

Stoebner moved for an award of prejudgment interest. The

district court denied all of Lingenfelter’s motions and 2

granted Stoebner’s motion. Lingenfelter appeals.

II.
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A. JAML 

We review the district court’s denial of a motion for

JAML de novo, applying the same standard used by the

district court. Kaplon v. Howmedica, Inc., 83 F.3d 263,
 Stoebner presented numerous witnesses and exhibits over the course of a ten-day 3

trial. Stoebner’s evidence addressed each of the findings to be made by the jury,

including the testimony of T.G. Morgan’s financial representatives and creditors,

canceled checks, Lingenfelter’s business records, and shipping labels. We are

confident that the jury relied on more than mere speculation in making its

determinations for which Stoebner had the burden of proof. See City of Omaha

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 than

speculation by the jury).

8

266 (8th Cir. 1996). We resolve all conflicts in the

evidence in favor of the nonmoving party, giving that

party the benefit of all reasonable inferences and

assuming as true all facts supporting the nonmoving

party’s case. Id. at 266-67. We affirm a denial of a

motion for JAML if a reasonable jury could differ as to

the conclusions to be drawn from the evidence. Triton

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

1996). We do not weigh or evaluate the evidence nor do

we consider the credibility of the witnesses. Id.

After careful review of the record, we believe that

the jury’s findings on the special verdict are fully

supported by the evidence. For each of the jury

findings, Stoebner presented evidence to permit a jury to

find in his favor. Moreover, Lingenfelter failed to

3

carry the substantial burden necessary to warrant JAML on

his “good faith for value” defense. Lingenfelter

presented little more than his personal background to

demonstrate that he acted in good faith. This scant

offer of proof barely challenged Stoebner’s voluminous

evidence that T.G. Blodgett received no value for the

payments it made to Lingenfelter. Thus, we affirm the
9

district court’s denial of Lingenfelter’s motion for

JAML.
10

B. Corporate Veil-Piercing Defense 

Lingenfelter moved for a new trial, asserting that

the district court erred in striking his proposed

corporate veil-piercing defense through which he intended

to show that T.G. Morgan received value for its payments

to him. We review the district court’s conclusions of

law de novo. Friends of the Boundary Waters Wilderness

v. Thomas, 53 F.3d 881, 885 (8th Cir. 1995). Whether to

pierce a corporate veil is a legal determination that, in

our circuit, is governed by state law. See Minnesota

Power v. Armco., Inc., 937 F.2d 1363, 1367 (8th Cir.

1991). Under Minnesota law, deciding whether to allow a

corporate veil to be pierced requires a court to 1)

analyze whether the corporation functioned as the mere

instrumentality of the principals a party is attempting

to reach by piercing the corporate veil, and 2) determine

whether injustice or fundamental unfairness would occur

if the corporate veil were left intact. Id. (citing

Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d

509, 512 (Minn. 1979)). Whereas the first prong involves

questions of fact, National Bond Fin. Co. v. General

Motors Corp., 341 F.2d 1022, 1023 (8th Cir. 1965), the

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 (corporate

veil properly pierced where, after making the necessary

factual determinations, leaving the corporate veil intact

would be inequitable). The district court did not

address whether Lingenfelter’s requested defense had

factual support, determining that there were no

equitable considerations to support a veil-piercing

defense in this case. We agree. 
11

Lingenfelter argues that T.G. Morgan’s corporate veil

should be pierced to show that Blodgett and Keys to

History were actually alter egos of T.G. Morgan, and, as

such, T.G. Morgan received value when it purchased

historical documents and delivered them to either

Blodgett or Keys to History. Traditionally, piercing a

corporate veil is conducted to show that a principal

hiding behind a fictitious corporation is liable to

creditors of the corporation. What Lingenfelter

requests, however, in effect constitutes a “reverse

piercing” of the corporate veil in that it would 
 Minnesota has recognized the “reverse pierce” of the corporate veil under very

4

limited circumstances, namely when “no shareholder or creditor would be adversely

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 purportedly fictitious

corporation received value from him. Lingenfelter’s

approach is inconsistent with the proper application of

the doctrine. 

Minnesota courts do not apply the doctrine where

nonprincipals, 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 and

remanded in part, 850 F.2d 1275 (8th Cir. 1988); Cargill,

Inc. v. Hedge, 375 N.W.2d 477, 479 (Minn. 1985).

Further, even if the doctrine were applicable to this

case, Lingenfelter was unable to convince the jury that

he took payments from T.G. Morgan in good faith. Thus it

was not necessary for the jury to decide whether one of

the corporations was an alter ego of another principal.

In the absence of a finding of good faith on

Lingenfelter’s part, leaving the corporate veil intact is

not fundamentally unfair.

III.

Based on the foregoing, we affirm the district

court’s order in all respects.

A true copy.

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