Court Opinion

ID: 9498222
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:11:31.353836+00
Date Added: 2024-06-11T17:58:41.820752
License: Public Domain

GILMAN, Circuit Judge,
dissenting.
I agree with the majority’s conclusion that Great Events, Inc. was the alter ego of Lana C. Keeton, with “no separate mind, will, or existence of its own,” Belvedere Condominium Unit Owners’ Ass’n. v. R.E. Roark Cos., 67 Ohio St.3d 274, 617 N.E.2d 1075, 1086 (1993), primarily because Keeton’s failure to produce corporate documents legitimately requested by Taylor Steel during discovery created a presumption that Taylor Steel would have been able to meet its burden on this issue. I have grave doubts, however, whether the majority is correct in holding that Keeton ran afoul of the second prong of the three-part test set forth in Belvedere, which postulates that the corporate veil cannot be pierced unless “control over the corporation by those to be held liable was exercised in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity.” Id. The Ohio Supreme Court explained that piercing the veil is “[a]n exception to th[e] rule [of limited liability] developed in equity to protect creditors of a corporation *611from shareholders who use the corporate entity for criminal or fraudulent purposes.” Id. at 1085.
As the majority notes, at least seven lower courts in Ohio courts have interpreted Belvedere’s language more broadly, piercing the veil not only in cases of “fraud or an illegal act,” id. at 1086, but also in cases where “it would be unjust under the circumstances ... to not pierce the corporate veil.” Robert A. Saurber General Contractor, Inc. v. McAndrews, No. CA2003-09-239, 2004 WL 2937627, at *5 (Ohio App. 12 Dist.Dec. 20, 2004) (unpublished); see also Sanderson Farms, Inc. v. Gasbarro, No. 01AP-461, 2004 WL 583849, at *8 (Ohio App. 10 Dist.Mar. 25, 2004) (unpublished) (listing several Ohio cases that hold that “the second [Belvedere ] prong is satisfied when unjust or inequitable consequences occur”) (quotation marks omitted). At least one lower court in Ohio, however, has reached the opposite conclusion. See Collum v. Perlman, No. L-98-1291, 1999 WL 252725, at *3 (Ohio App. 6 Dist.Apr. 30, 1999) (unpublished) (disagreeing with its sister courts that have interpreted the Belvedere standard to apply to unjust acts that do not rise to the level of fraud or illegality).
Because the expansive interpretation by the majority of Ohio’s lower courts is at odds with the narrow language of Belvedere itself, and because most of those cases are unpublished opinions, I am uncertain whether they accurately reflect the Ohio Supreme Court’s view on this issue. I would therefore resolve the uncertainty by certifying the following question to the Ohio Supreme Court: Does the second prong of Belvedere, which appears on its face to limit the remedy of piercing the corporate veil to cases in which control of the corporation “was exercised[ ] in such a manner as to commit fraud or an illegal act against the person seeking to disregard the corporate entity,” Belvedere, 617 N.E.2d at 1086, also allow.the veil to be pierced in cases where control was exercised to commit “unjust acts” that do not rise to the level of fraud or an illegal act? See Ohio S.Ct. Practice R. 18 (permitting federal courts to certify questions of Ohio law to the Ohio Supreme Court).
If this question were to be answered in the negative by the Ohio Supreme Court, then I would decline to pierce the corporate veil in the present case. Taylor Steel, as the district court correctly notes, “failed to demonstrate any tortious conduct or intent on the part of Keeton” and did not allege that Keeton’s conduct was illegal.
On the other hand, if the Ohio Supreme Court were to answer the question in the affirmative, then I would respectfully request the Court to provide a working definition of “unjust acts.” The concept of limited liability, after all, would be rendered meaningless if a corporation’s failure to pay a creditor were, by itself, deemed unjust. Yet I find the various lower court opinions in Ohio unhelpful in articulating the parameters of the expanded Belvedere standard that they have applied in a con-clusory manner. If the Ohio Supreme Court were to agree with this expansion of the second prong of Belvedere, then it would hopefully provide guidance as to what level the “unjust act” must reach — on the broad spectrum between the simple failure to pay a debt and outright fraud— before the courts will pierce the corporate veil.
In the absence of such guidance, I am unable to say with any degree of confidence whether Keeton’s alleged misconduct, which appears to constitute somewhat more than the simple failure to pay Taylor Steel, but is certainly less egregious than fraud or an illegal act, justifies piercing the corporate veil under Ohio law. *612I would therefore certify the issue to the Ohio Supreme Court.