This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2014).

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

Goodhue County District Court

File No. 25-CV-13-2817

Andrew A. Green, William G. Cottrell, 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 district court abused its discretion in piercing the 

corporate veil and that the district court’s factual findings are clearly erroneous. We 

reverse in part, affirm in part, and remand.
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FACTS

In February 2007, Thomas Swoboda started Buckboard Logistics and 

Transportation, Inc. Buckboard, a trucking company, leased trucks from respondent 

Lawrence 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 personally guaranteed Buckboard’s debt.

In February 2009, Lawrence sent Jason Krell, a certified public accountant, to 

Buckboard. Krell had a difficult time interpreting Buckboard’s records because they 

were poorly maintained. Krell spoke to Swoboda’s business advisor to discuss 

repayment options. Krell concluded that the advisor did not understand how much

money Buckboard owed Lawrence. In April 2012, the IRS shut down Buckboard for 

failing to withhold employee taxes. 

In June 2013, Lawrence deposed Swoboda and suspected that he transferred assets 

from Buckboard to appellant Northwoods Pallets, LLC. Swoboda formed Northwoods in 

January 2009. Swoboda loaned money from Buckboard to start Northwoods. Prior to 

January 2011, Swoboda owned 49 percent of Northwoods, and his wife owned 51 

percent. Swoboda’s wife did not participate in the day-to-day business of Northwoods. 

Swoboda currently owns 95 percent of Northwoods.

In August 2013, Lawrence obtained a judgment against Swoboda personally and

against Buckboard for $311,962.57, but Lawrence recovered only approximately $2,800. 

Lawrence filed a summons and complaint against Northwoods claiming that Northwoods 
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was the “alter ego” of Buckboard and that Swoboda and Buckboard fraudulently 

transferred assets to Northwoods.

Lawrence deposed Swoboda again in May 2014 and suspected that Buckboard 

transferred assets to another entity, appellant NWP Logistics, LLC. NWP was created in 

September 2013. Swoboda’s sons own NWP, and Swoboda previously worked for NWP. 

Lawrence amended its complaint to add NWP as a defendant. Lawrence claimed that 

Buckboard made fraudulent transfers to NWP and that NWP was the “alter ego” of 

Buckboard.

At trial, Swoboda testified that Buckboard did not pay Lawrence because the IRS 

levied its accounts. Swoboda testified that Buckboard, Northwoods, and NWP used the 

same address, phone number, office equipment, and bookkeeper. Swoboda stated that

Buckboard transferred money to start Northwoods, 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 Buckboard. Swoboda 

stated that Northwoods does not have a lot of 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 establishing 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.

The district court pierced the corporate veil and held Northwoods and NWP liable 

to Lawrence for the original judgment. Although the district court did not rule on 
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Lawrence’s fraudulent-transfer claims, the district court specifically found that the 

transfers from Buckboard and Swoboda to Northwoods, and ultimately to NWP, were 

made with actual intent to delay creditors. This appeal follows.

D E C I S I O N

Piercing the corporate veil

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 against 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 

liable 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)).
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“Reverse piercing” occurs when corporate form is disregarded for the benefit of a 

corporation’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).

Traditional 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 the district court did not hold a shareholder liable, it 

held two LLCs liable. 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). Reverse 

piercing is also inapplicable because Lawrence, a corporation independent from 

Northwoods and NWP, attempts to disregard corporate formalities for its benefit. See 

Cargill, 375 N.W.2d at 480.

Here, the district court utilized “outside reverse piercing.” Outside 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. 3d 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 the 
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corporate veil because its ruling is based on an erroneous view of the law. City of N. 

Oaks, 797 N.W.2d at 24.

Fraudulent transfer

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 Constr., Inc. v. Binsfield, 615 N.W.2d 378, 381 (Minn. App. 

2000) (stating that deciding the case on a different basis was appropriate despite 

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 

intent,” 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 

513.51, 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 asset 
7

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, the district court found that Swoboda and Buckboard fraudulently 

transferred money to Northwoods because the transfer was made with the actual intent to 

delay creditors. Despite being indebted to Lawrence, Buckboard transferred money to 

start Northwoods. Swoboda was an owner of Buckboard and Northwoods and had the 

ability to control 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 Northwoods—the original transferee—and NWP—a subsequent

transferee—for the value of the assets transferred or the amount necessary to satisfy its 

claim, whichever is less. We therefore remand to the district court for further 

proceedings.

Factual findings

Northwoods 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.” Minn. 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). This 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 court 
8

should not disturb those findings.” Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 

101 (Minn. 1999). 

Northwoods and NWP argue that the district court clearly erred in finding that,

instead of paying the original judgment, Swoboda transferred income and assets from 

himself and Buckboard to Northwoods and NWP without valid consideration, at a time 

when both were 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 judgment.

Lawrence argues 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 himself and Buckboard. This argument is 

unpersuasive because, despite the source of capital, nothing indicates 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 similar argument, stating that the district court 

clearly erred in finding that Swoboda attempted to shield assets to keep the businesses 

running by avoiding the original judgment owed to Lawrence, while at the same time 

transferring assets from himself and Buckboard to Northwoods and then to NWP. But 

this argument mischaracterizes the district court’s finding.

The district court first found that Swoboda attempted to shield assets and keep the 

businesses running by avoiding the original judgment owed to Lawrence. Lawrence 

established that Buckboard deposited a check for $4,252.75 on November 4, 2013, over 
9

two months after the original judgment. Krell testified that Lawrence has recovered only

approximately $2,800 from one of Swoboda’s bank accounts. Swoboda used assets from 

Buckboard to fund Northwoods and, after the original judgment was entered, he used 

funds from Northwoods to start NWP. Thus, viewed in a light most favorable to the

decision, the record supports the district court’s finding.

The district court next found that Swoboda promised to make payments to 

Lawrence which were never made, while at the same time transferring assets from 

himself and Buckboard to Northwoods and then to NWP. Krell testified that by 2008,

Buckboard had accumulated $50,000 in past-due obligations. Swoboda 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 light most favorable to the 

decision, the record supports the district court’s finding.

Northwoods and NWP finally argue that the district court erred by finding that the 

transfers from Buckboard and Swoboda to Northwoods, and eventually to NWP, were 

with actual 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 behind

on its payments to Lawrence. Swoboda transferred money from Buckboard to 

Northwoods in January 2009. Swoboda partially owned both companies and was 

involved in the day-to-day activities. Swoboda also transferred money from Northwoods 

to NWP in September 2013, which is after Lawrence obtained the original judgment 
10

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 the decision, the record supports 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 view of the law. Additionally, 

we 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.