Court Opinion

ID: 161214
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:02:39+00
Date Added: 2024-06-11T17:24:36.455521
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                             JUN 15 2001
                              FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                                 Clerk

    NATIONAL LABOR RELATIONS
    BOARD,

                Petitioner,

    v.                                                   No. 00-9522
                                                      (No. 27-CA-8682)
    RELIABLE ELECTRIC                                (Petition for Review)
    CONSTRUCTION COMPANY, INC.;
    ANTHONY PRILIKA,

                Respondents.

                              ORDER AND JUDGMENT          *

Before HENRY , BRISCOE , and MURPHY , Circuit Judges.

         After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      The National Labor Relations Board has filed an application for

enforcement of its order holding that respondents Reliable Electric Construction

Company, Inc.   1
                    and Anthony Prilika are to be held jointly and severally liable for

a backpay award issued as a result of Reliable Electric Company’s unfair labor

practices. We grant enforcement.

      In 1976, Anthony Prilika purchased Reliable Electric Company, a business

which had been engaged in the electrical contracting business since 1920.

Anthony Prilika was the majority shareholder, director and president of Reliable

Electric Company until 1988 when his son, Robert, acquired a twenty-five percent

ownership interest in the company. In 1980, Reliable Electric Company filed for

Chapter 11 bankruptcy protection. In 1990, Reliable Electric Company ceased

operations. It filed for Chapter 7 liquidation in 1992. In 1990, Reliable Electric

Construction, the admitted successor corporation to Reliable Electric Company,

was incorporated. Robert Prilika took a much larger role in Reliable Electric

Construction both in terms of ownership and as president of the company.

      In 1987, the NLRB determined that Reliable Electric Company had

committed unfair labor practices when Anthony Prilika had unilaterally repudiated

a contract with the International Brotherhood of Electrical Workers Union. The

1
      Reliable Electric Construction has not responded to this application. Thus,
enforcement as to this company is granted without discussion.

                                            -2-
Board ordered Reliable Electric Company to (1) pay six employees lost wages

plus interest resulting from their unlawful discharges, (2) pay damages to two

employees who remained employed, and (3) make contributions to seven trust

funds. This court affirmed that award in 1992. Since that time, the NLRB has

been attempting to collect on the award which now totals over $520,000.00. In

the action underlying this appeal, the Board held that (1) Reliable Electric

Construction is the successor corporation of Reliable Electric Company and

should be held liable for the award and (2) the corporate veil should be pierced as

to Anthony Prilika and he should be held jointly and severally liable with Reliable

Electric Construction. Anthony Prilika contests the Board’s determination to

pierce the corporate veil and hold him personally liable.

             In reviewing an NLRB order, we grant enforcement if we find
      that the Board correctly interpreted and applied the law, and if its
      factual findings are supported by substantial evidence in the record
      as a whole. Section 10(e) of the National Labor Relations Act
      (“NLRA”) establishes that the factual findings of the Board are
      conclusive if supported by substantial evidence on the record. As to
      questions of law, we generally afford the Board’s determinations
      great weight, and uphold their determinations if within reasonable
      bounds.

NLRB v. Greater Kan. City Roofing     , 2 F.3d 1047, 1051 (10th Cir. 1993)

(citations and quotations omitted).

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       In order to determine whether the corporate veil should be pierced, this

court must ask:

       (i) was there such unity of interest and lack of respect given to the
       separate identity of the corporation by its shareholders that the
       personalities and assets of the corporation and the individual are
       indistinct, and (ii) would adherence to the corporate fiction sanction
       a fraud, promote injustice, or lead to an evasion of legal obligations.

Id. at 1052. Anthony Prilika concedes the first prong. Therefore, we need only

examine whether the Board properly determined that the second prong has also

been met.

       Anthony Prilika argues that the second prong has not been met because the

Board ignored the ability of the successor corporation, Reliable Electric

Construction, to pay its obligation under the decision. Anthony Prilika also

asserts he did not commit fraud, evade existing obligations or try to circumvent

any statute.

       “The mere fact that a corporation commits an unfair labor practice . . .

does not mean that the individual shareholders of the corporation should

personally be liable.”   Id. at 1053 (footnote omitted). “It is only when the

shareholders disregard the separateness of the corporate identity       and when that

act of disregard causes the injustice or inequity or constitutes the fraud    that the

corporate veil may be pierced.”     Id. “[T]he individual who is sought to be

                                             -4-
charged personally with corporate liability must have shared in the moral

culpability or injustice . . . .”   Id.

        Our reading of the record supports the Board’s adoption of the

administrative law judge’s findings of fact. “Adherence to corporate formalities”

in this case was “virtually nonexistent.”        Reliable Elec. Co. , 330 N.L.R.B.

No. 111, 2000 WL 248215, at *17 (Feb 29, 2000). For example, while personal

loans to a company are not, per se, an indicia of fraud,       see Greater Kan. City

Roofing , 2 F.3d at 1055 (no injustice found where individual loaned company

her own funds), here Anthony Prilika made undocumented loans of uncertain

amounts. The record shows the loans are estimated to range from $180,000.00 to

$200,000.00. Consequently, “the actual amount of [Anthony] Prilika’s equitable

interest in [Reliable Electric] Construction can be ascertained with only

a marginal degree of certainty.”          Reliable Elec. Co. , 2000 WL 248215, at *17.

Anthony Prilika testified that he receives a weekly salary of $850.00 which he

applies towards repayment of the loans. No information was proffered as to how

much of the loans has been repaid or what interest rate, if any, is being charged

on them. As the ALJ stated:

        No real records exist which would allow a determination of the
        actual market value of the contribution in equipment and supplies
        from [Reliable Electric] Company to [Reliable Electric]
        Construction. Company’s funds were deposited in Construction’s
        account before Construction commenced any operations or performed
        any work. Company’s employees were paid from funds in

                                                 -5-
      Construction’s accounts. Tax returns purportedly contained
      erroneous statements of ownership although I seriously doubt that.
      Accounting records obviously commingled the assets of Construction
      and Company, and were used in obtaining credit and bonding for
      Construction , an otherwise seriously undercapitalized entity.    Full
      disclosure of corporate identities were not made     to important
      customers and the corporate designation was used for substantial
      periods before incorporation occurred in Construction’s case and not
      at all in the instance of Reliable Construction, the entity through
      which tax withholding payments were made. . . .     [V]ehicles
      purportedly purchased with Construction’s money were titled in the
      name of another Prilika entity owned and controlled by Anthony      .

Id. (emphases added).

      We must agree that the record contains “ample evidence” that Anthony

Prilika’s

      equitable interest and personal involvement in Construction is so
      pervasive that it is unlikely it would have existed or would continue
      to exist without his personal backing. The evidence in this case
      shows that Anthony obviously infused Construction with the
      necessary cash, supplies, and equipment-some of it his own, most of
      it Company’s-to permit its operation without regard to corporate
      formalities or candid disclosures to tax and regulatory authorities,
      retained accounting professionals, creditors, insurers, customers, or
      employees. Should Anthony decide to withdraw that support,
      Construction would likely become another empty shell and its legal
      obligations, including the backpay liability in this case, would go
      unsatisfied. . . . [T]he evidence implicates Anthony personally in
      avoidance schemes, such as using the net-loss carryovers obviously
      generated by his defunct corporation to offset the tax liability of an
      ongoing enterprise he now claims he does not own . . . .

Id. at *18.

                                        -6-
       In addition, both Anthony Prilika’s testimony and that of his son were full

of internal inconsistencies and were inconsistent with each other. The

bookkeeper also dissembled when giving her testimony.

       Applying the facts found by the Board, which are supported by substantial

evidence in the record, to the applicable law, we conclude that the Board correctly

interpreted and applied the law. As the Board’s determinations are within

reasonable bounds, we GRANT the NLRB’s application for enforcement.

Petitioner’s motion for default judgment against Reliable Electric Construction

Co. is DENIED. See 10th Cir. R. 27.2(A)(1) (identifying dispositive motions

party may file on appeal). Petitioner’s motion to strike portions of the

respondent’s brief is GRANTED.     See Micheli v. Director, OWCP, 846 F.2d 632,

635 (10th Cir. 1988) (court will not consider an issue on appeal which party did

not raise before administrative agency at appropriate time); see also Stump v.

Gates, 211 F.3d 527, 533 (10th Cir. 2000) (court will not ordinarily review issues

first raised in reply brief).

                                                    Entered for the Court

                                                    Michael R. Murphy
                                                    Circuit Judge

                                         -7-