Court Opinion

ID: 4020081
Source: CourtListenerOpinion
Date Created: 2016-07-29 15:14:35.64499+00
Date Added: 2024-06-11T14:06:58.515012
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                AMERICAN ASPHALT & GRADING                              No. 68304
                COMPANY,
                Appellant,
                vs.
                JANICE L. BOWMAN; i ALICE A.
                MOLASKY-ARMAN; BRADLEY ALAN
                PEARCE; RICHARD SCOTT                                          FILED
                ROTTMAN; TAMMY SUE LOVE; DICK
                                                                               JUL 2 8 2016
                LAVELLE ROTTMAN; CAROL BETH
                INGALLS; DONALD WARREN WINNE;                                TRAM K. LINDENIAN
                                                                          CLERg)P SUPREME COURT
                JEAN MARIE ROTTMAN; DOUGLAS                               BY
                                                                                DEPUTY CLERK
                CARSBURG; THOMAS EDWARD
                GEISSLER; ROBERT T. KINGSLEY;
                ROGER A. HILL; CLOWA L. LEHTO;
                AMY J. SIMPSON; AND MELISSA C.
                MELLO,
                Respondents.

                                          ORDER OF AFFIRMANCE
                               This is an appeal from a district court final judgment in a
                business action. Eighth Judicial District Court, Clark County; Nancy L.
                Allf, Judge.
                               After a bench trial, the district court granted judgment in
                favor of respondent Dick Rottman on appellant American Asphalt's claim
                for alter ego,' finding that American had failed to establish NRS
                78.747(2)'s three requirements and, more specifically, that American had
                failed to establish any of the five factors relevant to NRS 78.747(2)'s unity-
                of-interest requirement. See Polaris Indus. Corp. v. Kaplan, 103 Nev. 598,

                       'In light of this disposition, we need not resolve Rottman's argument
                regarding whether the district court properly treated American's claim in
                the Utah liquidation proceeding as a valid predicate claim for American to
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                assert its alter ego "claim" in the underlying action.
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                601, 747 P.2d 884, 887 (1987) (setting forth factors). On appeal, American
                contends that reversal is warranted because the district court (1) erred in
                considering the undercapitalization factor by focusing its analysis on the
                wrong time frame; and (2) overlooked evidence relevant to other factors, in
                that Rottman used nonparty Western Insurance Company's (WIC) assets
                to make loans to affiliated entities for his personal benefit without the
                approval of WIC's board of directors. We affirm
                            With regard to American's first argument, we need not decide
                whether or when it is appropriate to consider a corporation's capitalization
                at a time period other than at the corporation's formation, because even
                under American's proffered time period, there is no evidence in the record
                suggesting that WIC's undercapitalization in 2008-2011 2 was a sham. See
                Rowland v. Lepire,     99 Nev. 308, 317, 662 P.2d 1332, 1337 (1983)
                (observing that it "is incumbent upon the one seeking to pierce the
                corporate veil" to show that the corporation's financial structure is a
                "sham" (internal quotations omitted)). In other words, no evidence
                suggests that WIC's undercapitalization in 2008-2011 when compared
                with its adequate capitalization prior to that time period was the result of
                Rottman taking efforts to transition WIC from a legitimate business entity
                into a shell entity. Seeid.
                            With regard to American's second argument, although
                evidence showed that WIC used its assets to make loans to affiliated
                entities and that WIQs board of directors may not have approved these
                loans via formal votes at director meetings, American does not dispute

                      2 Although American references this time period as the applicable
                time period, AmericanTs expert witness was unable to provide an opinion
                at trial as to when Inc became undercapitalized.
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                that all of those loans Were repaid in full, nor does American dispute the
                district court's finding that Rottman and WIC's board of directors
                generally observed corporate formalities. More importantly, and after
                having reviewed the reCord, we agree with the district court's finding that
                the evidence introduced at trial did not show the extent to which Rottman
                was personally involved in these transactions. 3 Thus, substantial evidence
                supports the district cOurt's determinations that Rottman had not used
                WIC's corporate assets for his personal benefit and that WIC had observed
                corporate formalities. LFC Marketing Grp., Inc. v. Loomis, 116 Nev. 896,
                904, 8 P.3d 841, 846 (2000) (upholding a district court's determination
                regarding alter ego status when the determination is supported by
                substantial evidence).
                              In light of the foregoing, we conclude that substantial evidence
                supports the district court's determination that American failed to
                establish any of the five unity-of-interest factors.        Id. The district court
                therefore properly determined that Rottman was not acting as the alter
                ego of WIC for purposes of piercing the corporate veil under NRS
                78.747(2). Accordingly, we
                              ORDER the judgment of the district court AFFIRMED.

                                          a
                                          Cherry
                                                  ltia.daynAll",       '   J.

                                             J.
                Douglas                                       Gibbons

                      3 Forthis same reason, WIC's failure to place American's collateral
                deposits into a segregated account has no relevance to the issue of whether
                Rottman was acting as; WIC's alter ego.
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                cc: Hon. Nancy L. Allf, District Judge
                     Robert F. Saint-Aubin, Settlement Judge
                     Law Office of Hayes & Welsh
                     Holland & Hart LLP/Reno
                     Richard L. Elmore, Chtd.
                     Eighth District Court Clerk

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