### F I LE D U. S . COURT OF AP PE ALS E LEVE NTH CI RCUI T D e c e m be r 02, 2004 T HOM AS K. KAHN C L E RK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 03- 15932

________________________ D . C . D ocketN o. 02 -004 33 -C V -4-D F -5 B K C Y N o . 0 1 -5 5 6 6 2 B K C -JD I CA RU S H O LD I N G , LLC, a .k .a . P ie d m o n t H a r d w o o d F lo o r in g , L L C ., D ebt or.

____________________________________________________________ B A I L L I E L U M B E R C O M P A N Y , L P , P la in tif f - A p p e lla n t, v ersu s B E R T F . T H O M P S O N , I C A R U S H O L D I N G , L L C , f .k .a . P ie d m o n t H a r d w o o d F lo o r in g , L L C ., D e f e n d a n ts - A p p e lle e s .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e M id d le D is tr ic t o f G e o r g ia

_________________________ ( D e c e m b e r 2, 2004) B efo re B IR C H , B A R K E T T an d C O X , C i rcu i tJu d g es.For merly known as Piedmont Hardw ood Flooring , LL C. 1 2 B IR C H , C i rc ui tJudg e: CE RT I FI CATI ON FR OM THE UNI TE D STATE S C OU RT OF APPE ALS F OR T HE E L E VE NT H C I R C UI T T O T HE S UP R E ME C OU R T OF GE OR GI A, P UR S UA NT T O O . C . G. A. § 1 5 - 2 - 9 . T O T HE S UP R E ME C OU R T OF G EO RG I A A N D I TS H O N O RA BLE J U STI CES: In thi s c as e w e m ustdet erm i ne i f acorporat e e nt i ty i n b ankrup t cy has e x c lu s iv e s ta n d in g to b r in g a s ta te a lte re g o a c tio n a g a in s t its p r in c ip a l. B a illie L um ber C om pany (“ B ai l l i e L um ber” ) app ea l s the order of the di stri ctcourt gr a nt i ng s um m a ry j udgm e nti n f a vorof B e r tF . T hom ps on ( “ T hom ps on” ) a nd I c a ru s H o ld in g s , L L C ( “I c a ru s ” ) a s to G e o r g ia a lte re g o c la im s a g a in s t T h o m p s o n . 1 T he di s tr i c tc our tappr ove d the ba nkrupt c y c our t ’ s de c i s i on tha the l d a n a l t e re go c l a i m i s pr ope r ty of

the de bt or ’ s ba nkrupt c y e s t a t e unde rG e or gi a l a w , a nd th e r e f o r e , th e d e b to rh a s e x c lu s iv e s ta n d in g to b r in g s u c h a c la im . B e c a u s e it is unc l e a runde rG e or gi a l a w w he the ra c orpor a t e e nt i ty c a n br i ng a n a l t e re go a c t i on a ga i ns ti t s f

or m e rpr i nc i pa l , w e c e r t i f y the que s t i on t o the S upr e m e C our tof Ge o r g i a f

o rr e v i e w. Qu e s t i o n C E R T I F I E D.

I . B AC KG RO UN D T he f a c t s of thi s c a s e a r e undi s put e d. I c a rus i s a na t i ona l m a nuf a c tur e ra ndBaillie Lumber is a member of this committee. 2 3 d is tr ib u te ro f

h a r d w o o d f

lo o r in g . B e f

o r e 1 7 D e c e m b e r2 0 0 1 , B a illie L u m b e rs o ld l um be rt o I c a rus a nd w a s ne ve rpa i d. O n 17 D e c e m be r2001, I c a rus f i l e d f or C hapt er11 bank rupt cy . P ri or t o thatdat e, T ho m pson , Ic arus’ s pri m ary m em ber an d p re sid en t, en g ag ed in ce rtain fin an cial irre g u lariti es th at h ar m ed Ic aru s’s liq u id ity . T h e s e irr e g u la r itie s in c lu d e d th e u s e o f I c a ru s ’s a s s e s t a n d r e s o u r c e s to m a k e im p r o v e m e n ts o n T h o m p s o n ’s h u n tin g lo d g e , a n d th e u s e o f I c a ru s ’s a s s e ts t o f und T hom ps on’ s s e pa r a t e c om pa ny , S outhe rn W ood S e r vi c e s , L L C . A tthe tim e o f th is s u it T h o m p s o n w a s n o lo n g e rin v o lv e d in th e m a n a g e m e n t o f I c a ru s . O n 2 8 D e c e m b e r2 0 0 1 , I c a ru s f ile d a c o m p la in t a g a in s t T h o m p s o n in bank rupt cy courtcl ai m i ng thatthe i rr egul ar i t i es w er e f raud ul enttra nsfe rs and w er e h e ld in c o n s tru c tiv e tru s t f o rI c a ru s . O n 8 J a n u a ry 2 0 0 2 , B a illie L u m b e rf ile d s u it a ga i ns tT hom ps on i n a G e or gi a s t a t e c our ta l l e gi ng T hom s on i s the a l t e re go of I c a ru s a n d th u s p e r s o n a lly liab le f o rth e d e b ts o w e d to B a illie L u m b e r . B a illie a r g u e s th a t th e s ta te a lte re g o c la im is n o t th e p r o p e r ty o f I c a ru s ’s e s ta te , a n d th a t it i s nottry i ng t o rec ov erm on ey ow ed t o the es t at e. T hu s, B ai l l i e c on t ends that I c a rus a nd the O f

f i c i a l C om m i tt e e of

U ns e c ur e d C r e di t or s of I c a rus ( “C o m m itte e ” ) h a v e n o a u th o r ity to s e ttle th e a lte re g o c la im a g a in s t T h o m p s o n . 2 M e a n w h ile , I c a ru s a n d th e C o m m itte e b e g a n n e g o tia tio n s w ith T h o m p s o n to4

s e tt l e , a m o n g o th e rth i n g s , a n y a l t e re g o s u i tth e y m a y h a v e a g a i n s tT h o m p s o n . On 17 A pr i l 2002, T hom ps on br oughtthi s s ui tr e que s t i ng i nj unc t i ve r e l i e f be c a us e the a lte re g o c la im is p r o p e r ty o f I c a ru s ’s e s ta te . A w e e k la te r , I c a ru s a ls o jo in e d in th is s u it a s a th ir d p a r ty p la in tif f . O n 1 0 O ct ob er20 02 , the bank rupt cy courti ss ued an o rderho l di ng that G e or gi a l a w m a ke s the a l t e re go c l a i m the pr ope r ty of I c a rus ’ s e s t a t e , a nd, th erefo re, Icaru s h as th e ex cl u si v e ri g h tt o b ri n g an al t er eg o cl ai m ag ai n st T h o m p s o n . F u r th e r , it h e ld th a t th e s e p a r a te a lte re g o s u it b r o u g h t b y B a illie L um be rw oul d be s ubj e c tt o a n a ut om a t i c s t a y . O n appe a l t o the di s tr i c tc our t , the de c i s i on of

the ba nkrupt c y c our tw a s uphe l d. B a illie L u m b e rn o w ap p e a ls to th is c o u r t a r g u in g th a t its a lte re g o c la im ag ai n sta th i rd p arty, i n th i s case T h o m p so n , w as sep arat e p ro p erty. S p eci fi cal l y, B ai l l i e L um ber a rgues thatun der 11 U . S . C . § 5 41 a bankrup t cy es t at e i ncl ud es onl y pr ope r ty tha tthe de bt orpos s e s s e d a tthe t i m e of the ba nkrupt c y f

i l i ng, a nd h e r e , B a illie L u m b e rc la im s th e G e o r g ia a lte re g o c la im a g a in s t T h o m p s o n is its o w n s e p a r a te p r o p e r ty . I I . DI S CUS S I ON T he ba nkrupt c y c our ta nd di s tr i c tc our tgr a nt e d s um m a ry j udgm e ntby i nt erpret i ng G eorgi a l aw t o al l ow a c orpo ra t i on ’ s a l t erego sui tagai nsti t s f orm erAtr u s t e ew a s n o ta

p p o i nt e d i nth i s c a s e , b utIc ar

u s , th ed eb t o r - i n - p o s s e s s i o n , p l ays 3 essentially

the same role for pur

poses of ba

nkruptcy law. 11 U.S.C. § 1107(a) . 5 pr i nc i pa l , thus m a ki ng a ny s uc h c l a i m s pr ope r ty of the ba nkrupt c y e s t a t e , 11 U . S . C . § 541, a nd a ny s i m i l a rc l a i m s by c r e di t or s s ubj e c tt o a n a ut om a t i c s t a y , 11 U . S . C . § 362. W e r e vi e w the di s tr i c tc our t ’ s i nt e rpr e t a t i on of l a w a nd de t e r m i na t i on of

e s t a t e pr ope r ty de novo. S e e I n r e W i tko, 374 F . 3d 1040, 1042 ( 11th C i r . 2004) . B e c a us e s t a ndi ng t o a s s e r tthe a l t e re go c l a i m i s a que s t i on of st at e l aw i n thi s c as e, w e m ustre vi ew the di stri ctcourt ’ s dec i si on i n acc ordance w ith G e o r g ia la w . S e e E r ie R . C o . v . T o m p k in s , 3 0 4 U .S . 6 4 , 5 8 S . C t. 8 1 7 ( 1 9 3 8 ) . W here there i s dou bti n the i nt erpret at i on of st at e l aw ho w ever , “ a f eder al court shou l d cer t i fy the qu es t i on t o the st at e s up re m e c ou rtt o avo i d m aki ng un nece ss ary E r i e ‘ gue s s e s ’ a nd t o of f e rthe s t a t e c our tthe oppor tuni ty t o i nt e rpr e torc ha nge e xi s t i ng l a w . ” C S X T r a ns p. , I nc . v. C i ty of G a r de n C i ty , 325 F . 3d 1236, 1239 ( 1 1 th C ir . 2 0 0 3 ) ( c ita tio n s o m itte d ) . In o rd er t o st ay B ai l l i e L u m b er’ s sep arat e al t er eg o act i o n ag ai n st T hom ps on, I c a rus m us tha ve s t a ndi ng t o br i ng i t s ow n a l t e re go a c t i on unde r11 3 U . S . C . § 5 41 or 11 U . S . C . § 5 44 . G ener al l y, court s thatal l ow the trust ee or debt ori n-po ss es si on t o b ri ng an excl usi ve al t erego act i on do so un der s ec t i on 54 1. S ee , e. g. , S t . P aul F i re & M ar i ne Ins. C o. v. P epsi co, Inc. , 88 4 F . 2d 68 8, 70 0-05 (2d C i r. 1989) ; K oc h R e f

i ni ng v. F a r m e r s U ni on C e nt . E xc h. , I nc . , 831 F . 2d 1339, 1343- 47Whil e other circuits have re cognized that section 544 may be an alternative grounds for 4 tr us te e s and

debto r c or

po ratio ns to a ssert

e xclu siv ealter e g o c laims a s repre sentativ e s o f all cre ditors, see, e .g ., Koch, 831 F . 2d 1339, 1342-43 (7th Cir. 1987), webelieve this approach, th o u ghn o tdi s p o s i t i v eh e re , i s t e nu o u s atb e s t . O ur d e c i s i o ni nE . F . Hutt o n&C o . v . H a dl e y, casts serious doubt on the use of sec tion 544 to bring alter eg o actions. 901 F .2d 979, 985-86 (11th Cir. 1990). The pur pose of se ction 544 is to give a trustee the pow er of

a hy pothetical lien cre ditor to avoid transfers of a nd liens on the debtor’ s proper ty when the tr

ustee c annot prevent them under other sec tions of the bankruptc y code. See11 U.S.C. § 544; In re O zark Rest. Equip. Co., 816 F.2d 1222, 1229-30 ( 8th Cir. 1987) (“Ozar k”). Ma ny courts havecompletely

reje cted 544' s use as a

means for

debtor c orporations to bring alter eg o actions. See, e .g ., id. at 1230; see also Shearson L ehman Hutton, Inc. v. Wag oner, 944 F .2d 114, 118 (2d Cir. 1991) (inter preting Caplin v. Marine Midland GraceTrust Co., 406 U.S. 416, 434, 92 S. C t. 1678 (1972) to say that “a ba nkruptcy trustee ha s no standing g enerally to sue third parties on behalf of theestate’ s c re ditor s, but ma

y on ly a ssert c laims he ld b y

theba nk ru pt c or po ra tio n it se lf .” ); City Communic atio ns , 1 05 B .R. at 10 21 (interp retingCa plin a nd su bs e qu e nt c on gre ssi on al hi sto ry to mean se ction 544 is not an alternative for alter eg o claims). 6 (7th C i r. 19 87 ) ( “ K och”); In re S . I. A cqui si t i on , 81 7 F . 2d 11 42 , 11 53 (5th C i r. 19 87 ); In re C i ty C om m un i ca t i on s, L t d. , 10 5 B . R . 10 18 , 10 20 (B ankr. N . D . G a. 19 89 ). 4 A . S e c t i on 541 S ec t i on 54 1 est abl i shes a debt or’ s bankrup t cy es t at e a nd i ncl ud es “ al l l egal a nd e qui t a bl e i nt e r e s t s of the de bt ori n pr ope r ty a s of the c om m e nc e m e ntof

the ca se . ” 11 U . S . C . § 5 41 (a ). T hi s i ncl ud es l egal causes of ac t i on the debt or had agai nstothers atthe com m ence m entof the bank rupt cy ca se . S ee K och, 83 1 F . 2d at 13 43 -44; In re A dam F urni ture I nd us. , Inc. , 19 1 B . R . 24 9, 25 5 (B ankr. S . D . G a. 1 9 9 6 ) (“ A d am F u rn i tu re”). If su ch cau ses o f act i o n , i n cl u d i n g al t er eg o act i o n s, a r e p r o p e r ty o f

th e e s ta te u n d e rs e c tio n 5 4 1 ( a ) , a n y s im ila re x tr a n e o u s la w s u its br oughtby i ndi vi dua l c r e di t or s w i l l be s ubj e c tt o the a ut om a t i c s t a y pr ovi s i on of 11A bankr uptcy petition “operates as a[n] [ automatic] stay applicableto all entities, of . . . 5 any act to obtain possession of property of the e state or of

proper ty from the e state.” 11 U .S.C. § 362(a) (3). 7 U . S . C . § 3 62 (a )( 3). S ee S . I. A cqui si t i on , 81 7 F . 2d at11 53 . W e m ust , there fore , 5 l ook t o G e or gi a l a w t o de t e r m i ne w he the rI c a rus i s a l l ow e d t o br i ng a n a l t e re go ac t i on agai nsti t s f

orm erpri nci pal , there fore m aki ng i tprop erty of the bank rupt cy e s ta te a n d B a illie L u m b e r ’s s e p a r a te s ta te a c tio n s u b je c t to th e a u to m a tic s ta y . A lth o u g h s e v e r a l c ir c u its h a v e e x a m in e d th is s a m e is s u e , n o t a ll c ir c u its h a v e a rr iv e d a t th e s a m e r e s u lt. B e f o r e a llo w in g a d e b to r - in - p o s s e s io n o rtru s te e to br i ng a n a l t e re go a c t i on on be ha l f of the c orpor a t i on, m os tc our t s r e qui r e tha t( 1) the a l t e re go c l a i m be a ge ne r a l c l a i m tha tappl i e s e qua l l y t o a l l c r e di t or s , a nd ( 2) s ta te la w a llo w s th e c o rp o r a te e n tity to b r in g a n a lte re g o a c tio n a g a in s t its p r in c ip a l. S e e S t. P a u l F ir e & M a r in e I n s ., 8 8 4 F .2 d a t 7 0 3 - 0 4 ( in te rp r e tin g s ta te la w to a llo w c o rp o r a tio n s to b r in g a lte re g o a c tio n s a g a in s t a p a r e n t b e c a u s e it pr e ve nt s i nj us t i c e a nd a l l ow i ng thi r d pa r ty c r e di t or s t o onl y br i ng pe r s ona l a nd not g e n e r a l a lte re g o ty p e c la im s ) ; K o c h , 8 3 1 F .2 d a t 1 3 4 5 - 4 6 . I n K oc h f

ore xa m pl e , oi l c om pa ny c r e di t or s a s s e r t e d the i rr i ghtt o br i ng a s e p a r a te a lte re g o a c tio n a g a in s t a d e b to rc o rp o r a tio n . T h e S e v e n th C ir c u it concl ud ed thatIl l i no i s a nd Indi ana l aw al l ow ed a trust ee i n b ankrup t cy t o b ri ng an al t erego act i on on behal f of the debt or corporat i on , and t here fore , the trust ee hadThe Illinois Supreme Court later reje cted this interpretation of I llinois law, statingthat 6 I llinois alter e g o law does not allow a subsidiary to bringan alter

eg o claim ag ainst its parent beca use to do so would torture the notion that alter eg o claims aretools for cre ditors only and not corporations. S ee I

n re Reha b. of Centaur

Ins. Co., 632 N.E.2d 1015, 1019 (I ll. 1994). The court noted that allowing a corporation to pierceits own veil would effe ctively deny the c or po ratio n o f its o wn

e xistenc e . Se eid. at 10 18 (q uo tingIn reDa

ko ta Drill ing , Inc ., 13 5 B .R. 878, 884 (B ankr. D .N.D. 1991)) . 8 the excl usi ve ri gh tt o b ri ng an al t erego cl ai m . S ee i d. at13 46 . T he courtre as on ed thatbo th Ind i ana a nd Il l i no i s a l t erego l aw w as base d o n a do ctri ne thati m po se d l i a bi l i ty t o r e a c h a n e qui t a bl e r e s ul t , a nd, the r e f or e , c oul d a l l ow a trus t e e t o br i ng an al t erego sui tagai nstthe pri nci pal i f e qu i ty s o requi re d. S ee i d. T he K och 6 c o u r tn o t e d , h o w e v e r , th a tth e tru s t e e w o u l d o n l y b e a b l e t o b r i n g g e n e r a l c l a i ms tha ta r e c om m on t o a l l c r e di t or s of the de bt orc orpor a t i on, a nd c oul d nota voi d the pers on al cl ai m s of c re di t ors thatar e uni qu e t o thatcr edi t or. S ee i d. at13 48 -49. In K o c h , th e c o u r t c o n c lu d e d th a t th e o il c o m p a n y ’s c la im s w e r e g e n e r a l to a ll cr edi t ors a nd on l y a ff

ec t ed the debt or corporat i on di re ct l y a nd the oi l com pani es i nd i re ct l y. Id. at13 49 . T hu s, the trust ee i n K och cou l d b ri ng an excl usi ve al t er e go a c t i on w he n the c l a i m s w e r e c om m on t o a l l c r e di t or s a nd s t a t e l a w a l l ow e d a c o rp o r a tio n to s u e its p r in c ip a l. I n a s ubs e que ntopi ni on, the S e ve nth C i r c ui tpr e ve nt e d a trus t e e f r om bri ng i ng an al t erego act i on because the cl ai m w as pers on al t o the i nd i vi du al cr edi t or and n otgeneral . S ee S t ei nb er g v . B uczy nski , 40 F . 3d 89 0, 89 3 (7t h C i r. 1994) . I n S t e i nbe r g, the ba nkrupt c y trus t e e br oughta n a l t e re go s ui ta ga i ns ttheSteinbergcompares this claim to a hy pothetical tort claim, wherethe neighbor of the 7 debtor c orporation’s principal is injured on the princ ipal’s property . The action brought by the ne ighb or in t hat c a sewo uld

bepers on al to thene ighb or and no t th eso rt

of g e neral c laim a bankruptc y

trustee c ould take. Steinberg , 40 F.3d at 892. 9 d e b to rc o rp o r a tio n ’s p r im a ry s h a r e h o ld e r s in a n a tte m p t to o b ta in m o n e y n o t p a id t o a n e m pl oy e e pe ns i on f und. S e e i d. a t891. T he c our tf ound no e vi de nc e tha tthe s ha r e hol de r s di r e c t l y ha r m e d the c orpor a t i on i t s e l f by t a ki ng unr e a s ona bl y hi gh sa l ar i es or “ l oo t i ng ” the corporat e a ss et s. Id. at89 2. O nl y the pensi on fund w as ha r m e d di r e c t l y . S e e i d. T hus , the c our the l d tha ta n a l t e re go c l a i m by the c orpor a t i on i t s e l f

w oul d be i m pr ope rbe c a us e the i nj ury w a s t o the pe ns i on f und a n d n o t th e c o rp o r a tio n a n d c r e d ito r s in g e n e r a l. 7 O n the othe rha nd, the E i ghth C i r c ui tha s i nt e rpr e t e d A rka ns a s l a w t o not al l ow al t erego act i on s by the corporat i on i t se l f. O za rk, 81 6 F . 2d at12 25 . In O z a r k , A r k a n s a s la w a llo w e d v e il p ie r c in g w h e n “th e c o rp o r a te s tru c tu r e is i l l e ga l l y orf

r a udul e nt l y a bus e d t o the de tr i m e ntof a thi r d pe r s on. ” I d. ( c i t a t i ons om i tt e d) . T he c our tc onc l ude d tha tthi s l a ngua ge m e a ns tha ta ve i l - pi e r c i ng a c t i on br oughta ga i ns ta c orpor a t i on i s pe r s ona l t o the c r e di t or s the m s e l ve s a nd c a nnotbe br oughtby the c orpor a t i on. S e e i d. T hus , the ve i l pi e r c i ng ora l t e re go c l a i m i s not pr ope r ty of

the ba nkrupt c y e s t a t e f orthe trus t e e t o a dm i ni s t e r . S e e i d. L ik e m a n y c o u r ts th a t h a v e a d d r e s s e d th is is s u e , w e h o ld th a t in o r d e rto b r in g a n e x c lu s iv e a lte re g o a c tio n u n d e rs e c tio n 5 4 1 , a b a n k ru p tc y tru s te e ’s c la im10

s houl d ( 1) be a ge ne r a l c l a i m tha ti s c om m on t o a l l c r e di t or s a nd ( 2) be a l l ow e d by s ta te la w . S e e I n r e iP C S , I n c ., 2 9 7 B .R . 2 8 3 , 2 9 7 ( B a n k r . N .D . G a . 2 0 0 3 ) . I n th is a c t i on, w e f

i nd tha tB a i l l i e L um be ra s s e r t s onl y a ge ne r a l c a us e of a c t i on a nd no pe r s ona l da m a ge s tha ta r e uni que t o the m . B a i l l i e L um be r ’ s c l a i m w oul d be pers on al i f B ai l l i e L um ber i t se l f w as “ harm ed and n o o ther . . . cr edi t or has a n i nt er es ti n the cause. ” K och, 83 1 F . 2d at13 48 . T he cl ai m i s ageneral on e w hen l i abi l i ty e xt ends “ t o al l cr edi t ors of the corporat i on w i tho utre gard t o the pers on al de a l i ngs be tw e e n s uc h of f i c e r s a nd s uc h c r e di t or s . ” I d. a t1349. H e r e , the a s s e r t i on i s tha tT hom ps on bl urr e d the l i ne be tw e e n hi m s e l f a nd the c orpor a t i on by t a ki ng a s s e t s of

the c orpor a t i on a nd us i ng the m t o hi s ow n pe r s ona l e nds . U nl i ke the S t e i nbe r g s ha r e hol de r s , T hom ps on di d “ l oot ” the c orpor a t e a s s e t s . A n a l t e re go a c tio n u n d e rth e s e c ir c u m s ta n c e s c o u ld b e b r o u g h t b y a ll c r e d ito r s o f I c a ru s . B ai l l i e L um ber has show n n o u ni qu e or per sonal harm as i de fr om the fa ctthatea ch c r e di t orw oul d de m a nd a di f f e r e nta m ounti n c om pe ns a t i on. B y m i s appr opr i a t i ng corporat e a ss et s, T ho m son cause d d i re ctharm t o the corporat i on and o nl y i nd i re ct h a r m to B a illie L u m b e r . T h u s , th is a c tio n m e e ts o u rf ir s t f a c to r . H o w e v e r , it is unc l e a rw he the rG e or gi a l a w a l l ow s a c orpor a t i on t o br i ng a n a l t e re go a c t i on a g a in s t its e lf

. B . G eorgi a A l t erE go L awIt is unclear whether public policy

in the second pa

rt of this statement would allow a 8 corporation to bringan alter eg o suit ag ainst a principal.

11 T he r e i s no G e or gi a l a w tha tdi r e c t l y a ddr e s s e s w he the ra trus t e e f ora de bt or co rp o ra ti o n in b an k ru p tcy c an b rin g an alter e g o ac ti o n ag ain st th e c o rp o ra ti o n ’s f or m e rpr i nc i pa l . I n G e or gi a , a l t e re go a nd ve i l - pi e r c i ng a c t i ons a r e ba s e d on e q u itab le p r in c ip a ls . A c r e e v . M c M a h a n , 5 8 5 S .E .2 d 8 7 3 , 8 8 2 ( G a . 2 0 0 3 ) . G eorgi a c ou rt s a l l ow al t erego act i on s “ t o rem edy i nj ust i ce s w hi ch ar i se w here a p a r ty h a s o v e r e x te n d e d h is p r iv ile g e in th e u s e o f a c o rp o r a te e n tity in o r d e rto de f e a tj us t i c e , pe rpe tr a t e f

r a ud ore va de c ontr a c tua l ort or tr e s pons i bi l i ty . ” P a ul v. D e s tito , 5 5 0 S .E .2 d 7 3 9 , 7 4 7 ( G a . A p p . 2 0 0 1 ) ( c ita tio n s o m itte d ) . T h e G e o r g ia S u p r e m e C o u r t in p a s t d e c is io n s , h o w e v e r , h a s n o te d th a t it “h a s b e e n r e lu c ta n t to di s r e ga r d the c orpor a t e e nt i ty e xc e ptw he r e thi r d pa r t i e s w e r e i nvol ve d i n de a l i ng w i th the corporat i on and d i re ct or or shar ehol der l i abi l i ty w as i n q uest i on , or w here p u b lic p o lic y m ig h t r e q u ir e lo o k in g b e y o n d th e c o rp o r a te s tru c tu r e in th e p u b lic i nt er es t . ” P i ckettv. P ai ne, 19 9 S . E . 2d 22 3, 22 7 (G a. 19 73 ). In P i ckett , the court 8 r e f u s e d to p ie r c e th e c o rp o r a te v e il f o rth e b e n e f

it o f a m in o r ity s h a r e h o ld e r ’s s u it ag ai n stth e m aj o ri ty sh areh o l d er. Id . at2 2 8 . T h e G eo rg i a C o u rto f A p p eal s, ho w ever , has r ej ec t ed the prop osi t i on thatG eorgi a l aw per s e “ proh i bi t s adi re ct or, of f i c e r , ors ha r e hol de rf

r om pi e r c i ng the c orpor a t e ve i l . ” P a ul , 550 S . E . 2d a t747; s e e a ls o C h e n e y v . M o o r e , 3 8 7 S .E .2 d 5 7 5 , 5 7 6 - 7 7 ( G a . A p p . 1 9 8 9 ) ( h o ld in g th a t aTh eba nk ru ptcy c ourt did no tethat, t

radition ally, alter e g o ac tio ns area ssert e d b y on ly 9 c re ditor s and

no t th ec or

po ratio n. Se eCity

Communic atio ns , 1 05 B .R. at 10 22 . Thec ourt , however, explained that state law ma kes it unlikely

for a corporation to bringan alter eg o action outside of bankr

uptcy beca use that would normally

requirethe offic ers a

nd direc tors to sue themselves. See id. B ankruptc y policy on the other ha

nd has “diff

erent motives and policies underlying thedevelopment of their equitablereme dies. . . .” a nd there foremakes “ the log ical and proper par

ty to pursue [an alter e g o] claim . . . the trustee.” Id. 12 50 perc entshar ehol der c an pi er ce the corporat e vei l ). T hu s, as fa r a s w e c an det erm i ne there i s no cl ea r dem ar ca t i on i n G eorgi a l aw thatal l ow s us t o say an a lte re g o a c tio n is p r o p e r ty o f th e b a n k ru p tc y e s ta te . T he on l y c ou rt s i n G eorgi a t o add re ss thi s i ss ue di re ct l y a re the fe dera l b an k ru p t cy co u rt s, b u tth ey are d i v i d ed o n w h eth er G eo rg i a l aw al l o w s a c o rp o r a t i o n t o b r i n g th i s ty p e o f a l t e re g o a c t i o n . Co mp a r e A d a m Fu rn i tu r e , 1 9 1 B. R . a t 2 5 5 ( c o n s id e r in g th e c o rp o r a tio n ’s a lte re g o c la im a s p r o p e r ty o f th e e s ta te unde rG e or gi a l a w ) , a nd C i ty C om m uni c a t i ons , 105 B . R . a t1022 ( i nt e rpr e t i ng G eo rg i a l aw t o al l o w co rp o rat i o n s t o b ri n g al t er eg o cl ai m s), w i th In re M attress N M ore, 23 1 B . R . 10 4, 10 9 (B ankr. N . D . G a. 19 98 ) ( ho l di ng thatG eorgi a l aw do es nota l l ow a c orpor a t i on t o br i ng a l t e re go a c t i ons ) . I n the f i r s tc a s e t o c ons i de rthe que s t i on, the C i ty C om m uni c a t i ons c our tc om pa r e d the K oc h a nd O z a r k c a s e s a nd de t e r m i ne d tha t , l i ke the K oc h c our t , G e or gi a a l t e re go l a w w oul d a l l ow a de bt or corporat i on t o b ri ng general al t erego cl ai m s i n b ankrup t cy because G eorgi a l aw w a s f ounde d on e qui ty c onc e rns . S e e C i ty C om m uni c a t i ons , 105 B . R . a t1022. 9 T he A da m F urni tur e c our ts ubs e que nt l y f ol l ow e d the s a m e r e a s oni ng a nd13

d et erm i n ed G eo rg i a l aw al l o w ed a co rp o rat i o n ’ s al t er eg o su i tfo r eq u i ty reaso n s. 1 9 1 B .R . a t 2 5 5 . T h e M a ttr e s s N M o r e c o u r t, o n th e o th e rh a n d , r e je c te d th e r e a s o n in g o f

b o th C i ty C om m uni c a t i ons a nd A da m F urni tur e t o hol d tha tG e or gi a l a w w i l l nota l l ow a c orpor a t i on’ s a l t e re go s ui t . T he c our tr e a s one d tha ta l though i tm i ghtm a ke s e ns e f ora trus t e e t o ha ve e xc l us i ve pos s e s s i on of a n a l t e re go a c t i on, the r e w a s no ba s i s i n G e or gi a orba nkrupt c y l a w f ors uc h a r e s ul t . S e e M a ttr e s s N M or e , 231 B .R . a t 1 0 9 - 1 0 . T h e c o u r t w a s tr o u b le d th a t a c o rp o r a te e n tity c r e a te d to s h ie ld s ha r e hol de r s f

r om l i a bi l i ty w oul d i t s e l f a s s e r ta c l a i m t o de s tr oy tha tpr ot e c t i on. I d. a t109. F ur the r , the c our tde t e r m i ne d tha ti tw a s “ r e l a t i ve l y di f f i c ul tt o pi e r c e the c orpor a t e ve i l i n G e or gi a . ” I d. T hus a s the c our te xpl a i ne d, the i s s ue i s r i pe f or c e r tif ic a tio n to th e G e o r g ia S u p r e m e C o u r t. I d . a t 1 0 9 n .3 . C o n s id e r in g th e s p lit be tw e e n G e or gi a ba nkrupt c y c our t s a nd the unc e r t a i n s t a t e of G e or gi a a l t e re go la w , w e c h o o s e to c e r tif y th e f o llo w in g q u e s tio n to th e G e o r g ia S u p r e m e C o u r t:

1 . W I LL G EO RG I A LA W A LLO W TH E REPRESEN TA TI V E O F A D E B T O R C O R P O R A T IO N T O B R IN G A N A L T E R E G O C L A IM AG AI NST T HE CORP ORATI ON ’ S F ORM ER PR I NCI PAL?14

2 . I F S O, WHAT I S T HE ME AS UR E OF R E C OV E R Y?

I I I . CONCL US I ON T hi s app ea l com es af

t erthe bank rupt cy and d i stri ctcourt s i nt erpret ed G eorgi a l aw t o al l ow a c orpo ra t i on t o b ri ng an al t erego sui t , there fore m aki ng such a s ui tpr ope r ty of

the ba nkrupt c y e s t a t e unde r11 U . S . C . § 541. B e c a us e w e f i nd G e or gi a l a w i s notc l e a ri n r e ga r d t o thi s i s s ue w e ha ve c e r t i f i e d the que s t i on abov e. O ur part i cul arph ra si ng of thi s quest i on i s noti nt ended t o l i m i tthe i nq ui ry o f th e S u p r e m e C o u r t. N e ith e ris o u rr e c ita l o f th e p a r tie s ' ar g u m e n ts in te n d e d to subst i tut e f

or the ful l st at em entof cont ent i on s by the part i es . T he S up re m e C ou rt i s a tl i berty t o con si der the prob l em s a nd i ss ues i nv ol ved i n thi s c as e a s i tperc ei ves the m t o be . T o a s s i s ti n i t s c ons i de r a t i on of thi s que s t i on, the e nt i r e r e c or d, a l ong w i th the bri ef

s of the part i es , w i l l be tra nsm i tt ed t o the S up re m e C ou rtof G eorgi a. U nt i l the S upr e m e C our tr e s ponds t o ourc e r t i f i e d que s t i on, a l l r e l e va nt p r o c e e d i n g s i n th i s ap p e a l a r e S T AY E D. QU E S T I ON C E R T I F I E D.