Court Opinion

ID: 9296828
Source: CourtListenerOpinion
Date Created: 2022-11-29 17:28:08.035823+00
Date Added: 2024-06-11T17:13:22.303190
License: Public Domain

MACK, Special Judge,
concurring:
¶22 I concur in the decision, but write separately to note my differences with the majority’s analysis. The central issue, as I see it, is whether the corporations, Realty Trust and Blanco Vende, were real or dummy corporations. This is an issue of both fact and law. I agree with the majority that the case was ripe for summary judgment consideration because the material facts were undisputed. Appellants dispute only the legal effect and conclusions to be drawn from the facts. The Superior Court can determine the legal consequences of facts on a summary judgment motion.
¶23 I disagree with the maj ority in its analysis to the effect that the doctrine of “piercing the corporate veil” cannot be used in conjunction with Article XII of the CNMI Constitution to challenge land transactions. Appellants could have succeeded, in my opinion, if they had presented facts to support their theory that the two corporations, Realty Trust and Blanco Vende, were mere shams. I disagree with the majority opinion in its holding that restricts the theory of disregarding the corporate status of an entity to instances where a litigant seeks to pin personal liability for debts upon individual shareholders. The benefits of incorporation can be denied, and the corporate status disregarded, in any instance where the legal entity is used to perpetuate a fraud, to justify a wrong, orto defeat justice.
¶24 The legal formation of a corporation is only one aspect in determining whether it exists as a real corporation or whether it is a sham. In my opinion, if Realty Trust or Blanco Vende were dummy corporations that were created only as business conduits for the actions of the non-NMD individuals who were controlling the transactions from behind the scenes,6 then the Court could and should have looked behind the legal entity and assessed the true relationship between the stockholders and the corporation to determine which stockholders own the assets. Cf. Dockstader v. Walker, 510 P.2d 526, 528 (Utah 1973). [ “The term ‘alter ego’ is used to describe a situation where the courts go behind the corporate entity and hold a stockholder liable for the debts of the corporation or to hold that it is the stockholder and not the corporation which owns the assets.” (emphasis added).]7 I would thus hold that a sham corporation cannot hold title as a matter of law, regardless of a certification by government officials that the corporation is legally formed.
¶25 However, appellants, in my view, did not connect the dots between the facts and their asserted conclusion that the corporations in this case, namely Realty Trust and Blanco Vende, were sham corporations. Appellants did not cite even one case to support their conclusion that the numerous facts presented about the corporate entities8 legally make them sham corporations.9 Nor did appellants present evidence of facts traditionally considered10 in determining whether to disregard the corporate status of an entity, despite having had more than three years from the commencement of the action in which to build its case.
¶26 The corporations were explicitly formed for the purpose of buying and selling real estate in the Commonwealth. The Superior Court had undisputed facts *101before it that the corporations were legally formed and that the alleged alter egos claimed no personal ownership interest in the land. I am unwilling to find that a corporation is a sham per se when it does not have an office, employee or equipment, and has little income. I am also unwilling to find that a corporation is a sham just because its formation allows persons not of Northern Marianas descent to gain long-term interests in realty to the maximum extent allowable by Article XII of the CNMI Constitution. I am thus unwilling to find, upon the record presented, that the Superior Court erred in its conclusion of law that the corporations were not shams.
¶27 Therefore, I would find no error in the Superior Court’s legal conclusion, based on the facts presented on summary judgment, that Realty Trust and Blanco Vender were real corporations eligible to hold land at the time of the relevant transactions.
¶28 I concur with the majority opinion in its discussion of the “alter-ego” theory of Ferreira as it applies to Japan Airlines’ involvement, and in the majority’s analysis and holding on the motion to disqualify the Carlsmith law firm. I also concur in the decision to not consider the constitutionality of P.L. 8-32 on this case as presented and here emphasize that nothing in this decision should be construed as upholding the constitutionality of P.L. 8-32.
For all these reasons, I concur in the judgment.

 In this case, appellants alleged that real estate dealers, Jack Layne. Kim Batcheller and Roger Gridley, were the alter egos of the two corporations.

 I agree with the majority that, as to Japan Airlines or its alternative corporate structures providing the seed money for the land purchase, the decision in Ferreira v. Borja, 2 N.M.I. 514 (1992) vacated and remanded Ferreira v. Borja, 1 F.3d 960 (9th Cir. 1993). Ferreira v. Borja, op. on remand, 4 N.M.I. 211 (1995), governs so that the Court cannot look at Japan Airlines as the alter ego of the purchaser. However. Ferreira does not prevent the Court from disregarding the corporate entity of the buyer under traditional corporation concepts and thus reaching the “alter ego” of the corporation.

 Appellants reported that the challenged corporations did not have an office, employees, office equipment, separate telephones, and had only little income. One of its shareholders was an employee of Jack Layne, the purported alter ego, and did not receive profits comparable to her corporate share ownership interest.

 Although the undisputed facts may have supported an argument in favor of such a legal conclusion, appellants have failed to go beyond the facts and cite any relevant case law; the Court is not required to complete the legal work for the appellants.

 Appellants have a heavy burden to meet to convince the Court to disregard the corporate entity. Those circumstances most often looked at in other cases involving piercing the corporate veil include: how much money each stockholder actually invested; what proof there was of the individual investments; bank records of the corporation showing capitalization and flow of the money: who controlled the deposits and withdrawals; who received the income or proceeds from the corporation’s transactions; what corporate records were kept: what corporate formalities where adhered to; and who controlled the business.