Court Opinion

ID: 2780789
Source: CourtListenerOpinion
Date Created: 2015-02-20 16:04:39.745686+00
Date Added: 2024-06-11T11:28:17.539524
License: Public Domain

Roger Schlossberg, Chapter 7 Trustee v. Bell Builders Remodeling, Inc., et al., Misc. No. 5,
September Term 2014, Opinion by Greene, J.

Under Maryland law, where there is no allegation of fraud, evidence or finding of fraud, the
corporate veil, nonetheless, may be disregarded and personal liability established upon proof
of a paramount equity.
Case # 11-30672
Argued 2/5/15

                        IN THE COURT OF APPEALS
                             OF MARYLAND

                                  Misc. No. 5

                            September Term, 2014
                  ______________________________________

                   ROGER SCHLOSSBERG, CHAPTER 7
                             TRUSTEE

                                       v.

                   BELL BUILDERS REMODELING, INC.,
                                 ET AL.
                  ______________________________________

                       Barbera, C.J.
                       Harrell
                       Battaglia
                       Greene
                       Adkins
                       McDonald
                       Watts,

                               JJ.
                  ___________________________________

                            Opinion by Greene, J.
                  ___________________________________

                       Filed: February 20, 2015
       The United States Bankruptcy Court for the District of Maryland submitted to this

Court a Certified Question, pursuant to the Maryland Uniform Certification of Questions of

Law Act, Maryland Code (1973, 2013 Repl. Vol.), §§ 12-601 through 12-613 of the Courts

and Judicial Proceedings Article (“CJP”) and Maryland Rule 8-305. The question of law set

forth in the Certification Order is:

        Would meeting the factors set forth in DeWitt Truck Brokers, Inc. v. W. Ray
        Flemming Fruit Co., 540 F.2d 681 (4th Cir. 1976), be sufficient to establish
        a paramount equity, in the absence of common law fraud, to warrant piercing
        the corporate veil?

        In the present case we are not asked to determine the underlying facts. Nor

are we required to assume the truth of the allegations contained in the Adversary

Complaint filed in the United States Bankruptcy Court for the District of Maryland

or to apply the law of Maryland to those facts.

        Accordingly, we rephrase the question in order to provide the Bankruptcy

Court and the parties with a more definitive response to what we perceive to be the

crux of the fundamental issue provoking certification in this case. We reformulate the

question of law:

        Under Maryland law, where there is no allegation of common law fraud, may
        a court disregard the corporate entity and establish personal liability to enforce
        a paramount equity?

        Having reformulated the question, we answer it in the affirmative and hold that a

corporate entity may be disregarded when necessary to prevent fraud or to enforce a

paramount equity. See Hildreth v. Tidewater Equip. Co. Inc., 378 Md. 724, 838 A.2d 1204

(2003). For clarity, under Maryland law, where there is no allegation of fraud, evidence or
finding of fraud, the corporate veil may be disregarded nonetheless and personal liability

established upon proof of a paramount equity.           The analysis of the common factors

considered by our courts when addressing whether a complaint or set of facts are sufficient

to pierce the veil of a single corporation are delineated in Hildreth, 378 Md. at 732-37, 838

A.2d at 1208-1211. As we further pointed out in Hildreth with regard to the failure to adhere

to corporate formalities, “[t]he ‘alter ego’ doctrine must . . . take account of close corporation

laws, which commonly allow close corporations to elect not to have a board of directors and

to have the corporation run directly by the stockholders.” 378 Md. at 736 n.2, 838 A.2d at

1211 n.2.

                                             CERTIFIED QUESTION ANSWERED AS
                                             SET FORTH ABOVE. PURSUANT TO § 12-
                                             610 OF THE COURTS AND JUDICIAL
                                             PROCEEDINGS ARTICLE, THE COSTS
                                             SHALL BE EQUALLY DIVIDED BETWEEN
                                             THE PARTIES.

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