This opinion will be unpublished and may not be cited except as provided by Minn . Stat. § 480A.08, subd. 3 (201 4 ). STATE OF MINNESOTA IN COURT OF APPEALS A15
- 0360 Lawrence Leasing, Inc., d/b/a Lawrence Transportation Services,

Respondent,

vs. Northwoods Pallets, LLC, et al.,

Appellants Filed March 21, 2016 Reversed in part, affirmed in part, and remanded

Worke , Judge Good hue County District Court File No. 25

- CV

- 13

- 2817 Andrew A. Green, William G. Cot t rell, Cottrell Law Firm, P.A., Mendota Heights, Minnesota (for respondent) Jason W. Martell, Raihle Law Office, S.C., Chippewa Falls, Wisconsin (for appellant) Considered and decided by Kirk, Presiding Judge; Peterson, Judge; and Worke, Judge. U N P U B L I S H E D O P I N I O N WORKE , Judge Appellants argue that the distric t court abused its discretion in piercing the corporate veil and that the distri ct court’s factual findings are clearly erroneous. We reverse in part, affirm in part, and remand.2 FACTS
In F e bruary 2007, Thomas Swoboda star ted Buckboard Lo gistics and Transportation, Inc. Buckboard , a trucking company, leased trucks from respondent
Law rence Leasing, Inc. Swoboda initially owned 60 percent of Buckboard, and his wife owned 40 percent. In January 2011, Swoboda’s wife transferred her interest to Swoboda. Swoboda and Buckboard became indebted to Lawrence and fell behind on payments. Swoboda pe rsonally guaranteed Buckboard’s debt

. In February 2009, Lawrence sent Jason Krell, a cer tified public accountant, to Buck board . Krell had a difficult tim e interpreting Buckboard’s records be cause they were poorly maintained. Krell spoke to Swoboda’s business advisor to di scuss repayment options . Krell concluded that the advisor did not understand how much
money Buckboard owed Lawrence . In April 2012, the IR S shut down Buckboard for failing to withhold employee taxes.
In June 2013, Lawrence deposed Swob oda and suspected that he transferred assets from Buckboard to appellant Northwoods Pallets, LLC. Swoboda formed Nor thwoods in January 2009

. S woboda loaned money from Buckboard t o start Northwoods . Prior to January 2011, Swoboda owned 49 percent of Northwoods, and his wife owned 51
per cent. Swoboda’s wife did not participate in the day

- to

- day business of Northwoods

. Swoboda currently owns 95 percent o f Northwoods

. In August 2013, Lawrence obtained a judg ment against Swoboda personally and against Buckboard for $31 1,962.57, but Lawrence recovered only approximately $2,800

. Lawrence filed a summons and complaint against Northwoods claiming that Northwoods3

was the “alter ego” of Buckboard and that Swoboda and Buckboard fraudulently transferred assets to Northwoods

. Lawrence dep osed Swoboda again in May 2014 and su s pected that Buckboard transferred asset s to another entity, appe llant NWP Logistic s, LLC. NWP was create d in September 2013. Swoboda’s sons own NWP, and Swoboda previously worked fo r NWP

. Lawrence amend ed its complaint to add NWP as a defendant

. Lawrence claimed that Buckboard made fraudulent transfer s to NWP and that NWP wa s the “alter ego” of
Bu ckboard. At trial , Swoboda testified that Buckboard did not pay Lawrence because the IRS levied its accounts

. Swoboda t estified that Buckboard, Northwoods, and NWP used the same address, phone number, office equipment, and bookkeeper

. Sw obo da stated that Buckboard transferred money to start Northwoo ds , but the companies never used loan agreements or promissory notes. Swoboda also stated that Buckboard did not transfer tangible assets to NWP and that Northwoods repaid its loans from Buckb oard

. Swoboda stated that Northwoods does not have a lot o f equipment or assets and that NWP’s only asset is a 2004 tractor with 700,000 miles. Swoboda denied hiding assets in Northwoods and NWP

. Lawrence introduced evidence estab lishing that Buckboard deposited checks after being shut down . Swoboda could not confirm or deny whether Buckboard used that money to pay Lawrence. The documents also established that Swoboda wrote checks , as the president of NWP , to pay Northwoods and himself.
T he district co urt pierced the corporate veil and held Northwoods and NWP liable
to Lawr ence for the original judgment

. Although the district court did not rule on4

Lawrence’s fraudulent

- transfer claims, t he district court specifically found that the transfers from Buckb oard and Swoboda to Northwoods, an d ultimately to NWP, were made with actual intent to dela y creditors. This appeal follows

. D E C I S I O N Piercing the corporate v eil Northwoods and NWP argue that the district court abused its discretion by piercing the corporate veil

. Veil piercing constitutes an equitable remedy that may be applied to avoid an injustice that would otherwise occur. Equity Tr. Co. Custodian ex rel. Eisenmenger IRA v. Cole , 766 N.W.2d 334, 339 (Minn. App. 2009). “Granting equitable relief is within the sound discretion of the [district] court. Only a clear abuse of that discretion will result in reversal.” Nadeau v. Cty. of Ramsey , 277 N.W.2d 520, 524 (Minn. 1979). A district court abuses its discretion when “its decision is again st the facts in the record” or when its ruling is based on an erroneous view of the law. City of N. Oaks v. Sarpal , 797 N.W.2d 18, 24 (Minn. 2011). A district court may “ pierce the corporate veil” and hold a shareholder personally liabl e for a corporation ’s debts when there is fraud or when the shareholder is the “alter ego” of the corporation. Gunderson v. Harrington , 632 N.W.2d 695, 705 (Minn. 2001); see Whitney v. Leighton , 225 Minn. 1, 8, 30 N.W.2d 329, 333 (1947) (“ We recognize the rule that [when] a corporation is used as an instrument of fraud the corporate entity will be disregarded and the responsible persons held financially responsible.” (emphasis added) )

.5

“Reverse piercing” occurs when corporate form is disregarded for the benefit of a
corpora tion’s shareholders. See Cargill, Inc. v. Hedge , 375 N.W.2d 477, 480 (Minn. 1985) (disregarding corporate form to allow shareholders to claim a homestead exemption); Roepke v. W. Nat’l Mut. Ins. Co. , 302 N.W.2d 350, 352 (Minn. 1981) (describing a “reverse pierce ” as “an insider (or someone claiming through him) attempting to pierce the corporate veil from within the corporation”). These principles also apply to limited liability companies. Minn. Stat. § 322B.303, subd. 2 (2014).
T raditional piercing principles do not apply here

. The district court pierced the corporate veil, holding that Northwoods and NWP were the alter egos of Swoboda and liable for the original judgment

. But t he district court did not hold a shareholder liable , it held t wo LLCs l iable

. See Gunderson , 632 N.W.2d at 705 (stating that a court may pierce the corporate veil to hold a shareholder liable for a corporation ’ s debts)

. R everse piercing is also inapplicable because Lawrence, a corporation independent from Northwoods and NWP , attempts to disregard c orporate formalities for its benefit. See Cargill , 375 N.W.2d at 480. Here, t he district court utilized “outside reverse piercing.” Outs i de reverse piercing occurs when “a third party outsider seeks to reach corporate assets to satisfy claims against an individual shareholder.” Postal Instant Press, Inc. v. Kaswa Corp. , 77 Cal. Rptr. 3 d 96, 101 (Cal. Ct. App. 2008) , review denied (Cal. Aug. 27, 2008) ; see also Acree v. McMahan , 585 S.E.2d 873, 882 (Ga. 2003) . Minnesota has not adopted outside reverse piercing. Therefore, the district court abused its discretion by piercing the6

corporate veil because its ruling is based o n an erroneous view of the law. City of N. Oaks , 797 N.W.2d at 24. Fraudulent t

ransfer We may still uphold the district court’s decision

. Typically, this court “will not reverse a proper decision simply because the [district] court did not rely on the strongest reasons.” Carousel Autos., Inc. v. Gherity , 511 N.W.2d 472, 476 n.2 (Minn. App. 1994) (citing Katz v. Katz , 408 N.W.2d 835, 839 (Minn. 1987)), aff’d 527 N.W.2d 813 (Minn. 1995); see Jerry Mathison Const r ., Inc. v. Binsfield , 615 N.W.2d 378, 381 (Minn

. App. 2000) (stating that deciding the case on a different basis was appropriate des pite counsel ’s failure to brief the theory on appeal) , review denied (Minn. Oct. 25, 2000)

.

A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . with actual intent to hinder, delay, or defraud any creditor of the debtor. Minn. Stat. § 513.44(a)(1) (2014). To determine whether someone acted with “actual
inten t,” courts may consider, among other factors, whether “the debtor retained possession or control of the property transferred after the transfer.” Id. (b)(2) (2014). “In an action for relief against a transfer or obligation under sections 513.41 to
513.5 1, a creditor . . . may obtain . . . avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim.” Minn. Stat. § 513.47(a)(1) (2014). The creditor may recover from the original or subsequent transferee the value of the asset7

transferred “ or the amount necessary to satisfy the creditor’s claim, whichever is less

. ” Minn. Stat. § 513. 48(b)(1) , (2) (2014) (emphasis added)

. Here, t he district court found that Swoboda and Buckboard fraudulently transferred m oney to Northwoods because the transfer was made with the act ual intent to delay creditors. Despite being indebted t o Lawrence, Buckboard transferred money to
start Northwood s . Swoboda was an owner of Buckboar d and Northwoods and had the abi lity to contr ol both companies. Thus, the transfer from Buckboard to Northwoods involved “actual intent” to defraud. Northwoods also transferred assets to NWP . Thus, Lawrence could recover damages from N orthwoods

— the original transferee

— and NWP

— a subsequent
trans fer ee

— for the value of the asset s transferred or the amount ne cessary to satisfy it s claim, whichever is less

. We therefore remand to the district court for further proceedings

. Factual f indings Northwo ods and NWP argue that the district court’s factual findings are clearly

erroneous. “Findings of fact . . . shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the [district] court to judge the credibility of the witnesses.” Min n. R. Civ. P. 52.01. A finding is clearly erroneous if it “is palpably and manifestly against the weight of the evidence.” Kral v. Boesch , 557 N.W.2d 597, 598 (Minn. App. 1996). T his court views the evidence “in the light most favorable to the verdict.” Rasmussen v. Two Harbors Fish Co. , 832 N.W.2d 790, 797 (Minn. 2013)

. If reasonable evidence supports the district court’s factual findings, “a reviewing court8

should not disturb those findings.” Fletcher v. St. Paul Pioneer Press , 589 N.W.2d 96, 101 (M inn. 1999). Northwoods and NWP argue that the district court cl early erred in finding that , i nstead of pa ying the original judgment , Swoboda transferred income and assets from himself and Buckboard to Northwoods and NWP without valid consideration, at a time when both wer e insolvent. This argument is persuasive. Lawrence did not introduce evidence indicating that Swoboda or Buckboard transferred assets to Northwoods or
NWP after receiving the original judg me nt

. Lawrence argue s that the capital used to start Northwoods came from Buckboard, and that the capital used to start NWP came from Northwoods, thus establishing that Swoboda transferred income and assets from himsel f and Buckboard. This argument i s unpersuasive because, de spite the source of capital, nothing indicate s that Swoboda or Buckboard transferred money to Northwoods or NWP after the initial judgment. Therefore, the district court’s finding is clearly erroneous. Northwoods and NWP make a sim ilar argument, stating that the district c ourt clear ly erred in finding that Swoboda attempted to shield assets to keep the busines ses running by avoiding the original j udgment owed to Lawrence , while at the same time transferring assets from himself and Buckboard to Northwoods and then to NWP. But this argument mischaracterize s the district court’s finding

. The district court first found that Swoboda attempted to shield assets and keep the businesses running b y avoi ding the original judgment owed to Lawrence. Lawrence establi shed that Buckboard deposited a check for $4,252.75 on November 4, 2013, over9

two months after the original judgment. Krel l testified that Lawrence has recovered only approximately $2,800 from one of Swoboda’s bank accounts. Swoboda used assets from Buck board to fund Northwoods and, after the original j udgment was entered , he used funds from Northwoods to start NWP. Thus, viewed in a light m ost favorable to the decision, the record supports the district court’s find ing.
T he di strict court next found that Swoboda promise d to make payments to
Lawrence which were never made, while at the same time transferring assets from himself and Buckboard to Nort hwoods and then to NWP. Krell testified that by 2008 , Buckboard had accumulated $ 50,000 in past

- du e obligations

. Swob oda promised to pay the debt , but Lawrence received only approximately $2,800

. Swoboda also transferred money from Buckboard to start Northwoods in 2009 and transfered money from Northwoods to start NWP in 2013

. Thus, viewed in a ligh t most f avorable to the decision, the record suppo rts the district court’s finding

. Northwoods and NWP finally argue that the district court erred by finding that the transfers from Buckb oard and Swoboda to Northwoods, and eventually to NWP, were with act ual intent to delay creditors. “Actual intent” may be present when a debtor retains possession or control of the property transferred. Minn. Stat. § 513.44(b)(2). Here, Krell went to Buckboard in February 2009 because Buckboard was beh ind on its payments to Lawrence

. Swoboda transferred money from Buckboard to Northw oods in January 2009

. Swoboda partially owned both companies and was involved in the day

- to

- day activities

. Swoboda also transferred money f rom Northwoods
to NWP in Septembe r 2013, which is after Lawrence obtained the original judgment10

against Swoboda and Buckboard. Swoboda worked for NWP and wrote checks on behalf of NWP. Swoboda also identified himself as the president of NWP

. Thus, viewed in a light most favorable to th e decision , the record suppor ts the district court’s finding

. We therefore reverse the district court’s decision to pierce the corporate veil because it abused its discretion by applying an erroneous v iew of the law. Additionally,

w e affirm the district court’ s conclusion that the transfers to Northwoods and NWP were made with actual intent to delay creditors and remand for a determination of damages. Reversed in part, affirmed in part, and remanded.