Court Opinion

ID: 43849
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:01:26+00
Date Added: 2024-06-11T09:37:14.984021
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                               F I L E D
                 IN THE UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT                  June 22, 2006

                                                           Charles R. Fulbruge III
                                                                   Clerk
                             No. 05-30471
                           Summary Calendar

                     CREATIVE SOFT SOLUTIONS, LLC,

                              Plaintiff,

                                versus

                    SOARING EAGLE CONSULTING, LTD,

               Defendant - Counter Claimant - Appellant,

                                versus

          JONATHAN NGUYEN, also known as Duoung Nguyen,
     also known as Jonathan Duoung Nguyen; BERNARD BAISIER;
        DAVID BUI; CLINICAL HEALTHCARE LABORATORY, INC.,

                    Counter Defendants - Appellees

                       --------------------
          Appeal from the United States District Court
              for the Eastern District of Louisiana
                      USDC No. 2:03-CV-2874
                       --------------------

Before HIGGINBOTHAM, BENAVIDES, and DENNIS, Circuit Judges.

PER CURIAM:*

     Soaring Eagle Consulting appeals in this suit involving a

contract to develop a human resources software package for Creative

Solutions. Soaring Eagle argues that the district court erred in

refusing to pierce the corporate veil of Creative Solutions and

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                                 No. 05-30471
                                      -2-

hold its principals to be liable for its actions. Soaring Eagle

also contends that the district court, on its own initiative,

relied on evidence from outside the record by viewing the web site

of    Soaring   Eagle’s    principal   and   commenting   on   its   apparent

appropriation of the software package.

       The determination as to whether or not to pierce the corporate

veil is a factual determination which we review for clear error.

Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 646 (5th

Cir. 2002). The district court determined that the corporate veil

should not be pierced under either Louisiana or Nevada law. In

Louisiana, absent an allegation of fraud, the plaintiff must “bear

a heavy burden of proving that the shareholders disregarded the

corporate entity to such an extent that it ceased to become

distinguishable from themselves.” Riggins v. Dixie Shoring Co.,

Inc., 590 So.2d 1164, 1168 (La. 1991). In Nevada, the veil may be

pierced if a) the corporation is influenced and governed by the

stockholder, b) there is such unity of interest and ownership that

the    corporation   and   the   stockholder    are   inseparable,    and   c)

adherence to the corporate fiction would sanction fraud or promote

a manifest injustice. Nev. Rev. Stat. § 78.747(2)(West 2005).

       The court found that corporate formalities were generally

followed with the exception of an “eleventh hour payment via wire

transfer” on a single occasion by a principal intending to save the

company. It found that there was no fraud or deceit upon Soaring

Eagle. It credited a statement by Soaring Eagle’s principal Jeff
                              No. 05-30471
                                   -3-

Garbus that the first phase of software development would cost

between $100,000 and $150,000, and found that Creative Solutions

was not undercapitalized given this amount. Soaring Eagle relies

upon a stipulation that “CSS has no, nor ever had, capital or

insurance” as evidence that it was undercapitalized. The district

court found that CSS members had contributed $140,000 in start-up

capital to the corporation, and the record reflects testimony from

Creative Solutions principals supporting this finding and the

finding that Creative Solutions paid $190,000 to Soaring Eagle. A

stipulation may be disregarded if there is substantial evidence to

the contrary. Quest Medical, Inc. v. Apprill, 90 F.3d 1080, 1087

(5th Cir. 1996). We find no clear error in the district court’s

decision to ignore the stipulation or in its determination that,

under either Louisiana or Nevada law, the corporate veil should not

be pierced.

       While the district court’s reference to the web site of a

Soaring Eagle principal appears to be based on its own independent

review of the site, any error is harmless. We have previously held

that a curiosity-inspired view by a judge’s clerk of the accident

site    subject   to   litigation   was   an   impermissible   ex   parte

communication. Kennedy v. Great Atl. & Pac. Tea Co., Inc., 551 F.2d

593, 597 (5th Cir. 1977). Unlike in the Kennedy case, in which the

law clerk testified to his observations of the accident site before

a jury, any error here was harmless because it was noted in passing
                          No. 05-30471
                               -4-

in a footnote, was unrelated to the core of the district court’s

reasoning, and the outcome of the proceedings was not affected.

     We therefore AFFIRM the decision of the district court.