Opinion ID: 1395914
Heading Depth: 3
Heading Rank: 2

Heading: Piercing TSF's Corporate Veil

Text: Likewise, several factors support piercing TSF's corporate veil to impose personal liability on Krause. First, TSF was incorporated without any capital or donations, despite Krause, on behalf of The Menace, having charged TSF $78,000 for services rendered before its incorporation. Although Krause intended to make a $2 million donation to TSF in the future, Krause's donation, like all the other donations and funds available to TSF, was contingent on the construction of the stadium. TSF's debt to HOK Sport, however, was not contingent on the construction of a stadium. By being in the business of constructing a stadium, TSF needed to be sufficiently capitalized so TSF could pay its debts even if the stadium project failed. TSF never had sufficient capital to pay for the stadium's design in the event the stadium was not built. Second, TSF's finances were not always kept separate from the finances of The Menace and of Kum & Go. Krause controlled each of these three entities and shifted money among the entities at will. Before TSF had its own bank account, TSF's receipts were deposited in The Menace's bank account. Cf. Briggs Transp., 262 N.W.2d at 810 (affirming the trial court's decision to pierce the corporate veil because sale proceeds were not deposited in the corporate bank account). Occasionally, The Menace would loan money to TSF, and, at other times, TSF would loan money to The Menace. Kum & Go loaned $190,000 to TSF to cover a payment to HOK Sport. Although The Menace and Kum & Go are corporate entities that are nominally separate from Krause, this factor still weighs in favor of piercing TSF's veil because a reasonable jury could conclude Krause treated each entity as his own slush fund. TSF's finances were not kept separate from The Menace's and Kum & Go's finances, and by extension, Krause's finances. Third, TSF failed to observe the typical corporate formalities. TSF has never held a meeting of the board of directors. TSF and The Menace loaned money back and forth without any legal documentation. Krause requested employees of The Menace and Kum & Go work as volunteers for TSF. Cf. Adam, 355 N.W.2d at 872 (noting, in dicta, the Court of Appeals pierced the veil of a corporation, in part, because (1) the officers ignored their obligations under the corporate articles and bylaws, (2) there were no board of director meetings after a certain date, and (3) the officers personally controlled the business and misused corporate funds). Sufficient evidence supports imposing personal liability on Krause by piercing TSF's veil. The defendants' argument for a new trial similarly is not warranted. See supra ; see also Matrix Group Ltd., Inc. v. Rawlings Sporting Goods, Co., 477 F.3d 583, 593 (8th Cir.2007) (The denial of a new trial motion based on the argument that the jury verdict was against the weight of the evidence is virtually unassailable on appeal. (internal quotation marks omitted)).