Opinion ID: 2276728
Heading Depth: 2
Heading Rank: 3

Heading: The trial judge's findings.

Text: Following a one-day bench trial on the employees' claims against the Littlejohns, Urban Shelters, and Valrob, the trial judge issued a detailed 22-page ruling. The judge found that, at the times relevant to these proceedings, Roy Littlejohn either owned or exercised managerial control over nineteen separate corporations. [9] Mr. Littlejohn was the sole stockholder of Urban Shelters, and he served as president of that company and as a member of its Board of Directors. Marilyn A. Littlejohn, Roy Littlejohn's wife, served on the Board of Urban Shelters and as the corporation's Secretary/Treasurer. Mr. Littlejohn was also the Chief Executive Officer of Valrob, Inc. Valrob's sole shareholder was Mr. Littlejohn's daughter, Robin. Robin Littlejohn was also the president of Valrob. All of the Littlejohn-controlled corporations shared a suite of offices in northwest Washington, D.C. The judge found that at the time of trial, none of these corporations possessed any significant assets. The only Littlejohn corporation with employees, Valrob, Inc., had two secretaries, and these individuals also worked as needed for other Littlejohn companies. Valrob paid the rent and other bills for the shared office space by obtaining loans from undisclosed sources. Urban Shelters and Valrob were not the only Littlejohn-controlled corporations involved with the J.B. Johnson Home. Roy Littlejohn owned all of the stock of Savemore Foods, Inc., a company which supplied food to the nursing home pursuant to a contract with Urban Shelters. At some point during the 1980's, Savemore Foods became indebted to Urban Shelters for over $611,000. Savemore Foods later declared bankruptcy, and the debt was never paid. At trial, Roy Littlejohn was unable to explain to the trial judge's satisfaction why Savemore Foods, a company which had supplied goods to Urban Shelters, owed Urban Shelters such a large sum of money. The judge found that the loan from one company owned by Mr. Littlejohn to another company owned by Mr. Littlejohn did not have a legitimate business purpose. The judge also found that Roy Littlejohn regularly engineered loans from one corporation to another and transferred funds in and out of various corporate accounts. The judge concluded that Mr. Littlejohn had abandoned [his companies'] corporate entity by commingling funds, that Valrob was no more than a shell corporation that laundered money received pursuant to the District of Columbia contract, that the various Littlejohn corporations were indistinguishable from the Littlejohns' own personal financial interests, and that the evidence therefore warranted piercing the corporate veils of Urban Shelters and Valrob. The trial judge found that the plaintiffs had suffered severe hardship at the hands of the Littlejohns, because they had detrimentally relied upon Urban Shelters and Valrob's representations regarding the payment of withholding taxes. According to the judge's findings, the defendants had represented to the employees of Urban Shelters, by notations on the employees' W-2 forms, that withholding taxes had been deducted from their paychecks and had been paid to the appropriate authorities, when withholding taxes had not in fact been paid. The defendants also represented to the employees, on documents which accompanied their paychecks, that money had been deducted from their wages to satisfy court-ordered child support payments and other obligations, and that the deducted amounts had been paid to the appropriate authorities. In fact, Urban Shelters had not forwarded the deducted money to the appropriate court, but instead had apparently retained it. Norman Parker, an employee of Urban Shelters, testified that he first learned of this diversion when he was threatened with arrest for non-payment of child support because sums purportedly deducted to pay that support had not reached the court. The judge credited Mr. Parker's testimony. The judge also found that Robin Littlejohn was personally involved in the wrongful manipulation of the corporate form. One Valrob check for $75,006.00, signed by Robin Littlejohn, was made payable to cash and included the notation loan to Urban Shelters. Another Valrob check was apparently used to purchase a $48,066.41 cashier's check for Urban Shelters. Some of the exchanges between the companies were accomplished without the benefit of documentation or collateral, and were never satisfactorily explained at trial. The trial judge found that Roy Littlejohn dominated decision-making for Valrob and Urban Shelters. Robin Littlejohn testified that although her father owned no Valrob stock, she took her orders as `president' of Valrob directly from Roy Littlejohn. The judge concluded that Roy Littlejohn took Urban Shelters funds and put them in separate accounts to defraud the federal government, the IRS and the employees, and . . . he committed fraud against the employees when he used Valrob to launder the District's payment. The trial judge made no specific finding that Roy Littlejohn had transferred money from corporate accounts to his own personal use or to any member of his family, but the judge did find that Mr. Littlejohn sought to enrich himself at the expense, inter alia, of the employees. Mr. Littlejohn claimed that the motivation for his actions was to provide continued care to the residents of the Home, but the judge reject[ed] this argument, and found that Mr. Littlejohn's purpose was personal and beneficial primarily to himself and his family. According to the judge, the evidence amply established that the corporations are indistinguishable from the Littlejohns' own personal, financial interests. In light of his findings, the judge held that Roy and Robin Littlejohn were liable, as shareholders, for the debts of their corporations. The trial judge also imposed personal liability on each of the individual defendants for his or her conduct as a corporate officer of Valrob and Urban Shelters. The judge held Roy Littlejohn liable for his own personal torts because Mr. Littlejohn participated, encouraged, and ultimately decided to convert the funds of the employees without their authorization to use for his own personal gain. The judge extended liability to Robin Littlejohn based on the fact that she signed the checks at issue, [and] managed the accounts, even though Ms. Littlejohn testifie[d] that she knows very little as to why she was writing checks, what the transferred funds [were] for, where the money came from, or where it went. Robin's mother, Marilyn A. Littlejohn, was not shown to have been personally involved in any of the decisions or actions now at issue, but the judge found her liable to the employees because, as a corporate officer, she shared responsibility for the gross misuse of the corporate form and corporate assets described herein. Each of the three Littlejohns has appealed from the decision holding him or her personally liable.