Court Opinion

ID: 9854950
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:17:23.522866+00
Date Added: 2024-06-11T09:23:37.440413
License: Public Domain

Pope, Presiding Judge,
dissenting.
I respectfully dissent. The trial court correctly denied summary judgment since the plaintiffs presented sufficient evidence to create a jury issue as to whether the corporate veil was pierced.
“Using terminology such as ‘piercing the corporate veil,’ ‘looking at the substance rather than at the form,’ or ‘disregarding the corporate fiction,’ our courts have disregarded the separate entity of a corporation where it has overextended its privileges. [Cit.] To activate this cut-through, there must be abuse of the corporate form. ‘Sole ownership of a corporation by one person or another corporation is not a factor,. . . and neither is the fact that the sole owner uses and controls it to promote his ends.’ [Cit.]” Derbyshire v. United Bldrs. Supplies, 194 Ga. App. 840, 844 (2) (392 SE2d 37) (1990).
“The law intervenes when the separate personalities of the corporation and its owner no longer exist. The question is whether the corporation serves as the alter ego or business conduit of its owner. To establish this, ‘it must be shown that the stockholders’ disregard of the corporate entity made it a mere instrumentality for the transaction of their own affairs; that there is such unity of interest and ownership that the separate personalities of the corporation and the owners no longer exist; and to adhere to the doctrine of corporate entity would promote injustice or protect fraud.’ [Cit.]” Id. at 844. Similarly, in the context of parent/subsidiary corporations, “great caution should be exercised in disregarding or going behind the corporate entity, [but] it may be done when the subsidiary is shown to be the alter ego or business conduit of the parent. However, it must appear that the subsidiary is a mere instrumentality of the parent.” (Citation and punctuation omitted.) SunAmerica Financial v. 260 Peachtree St., 202 Ga. App. 790, 798 (3) (415 SE2d 677) (1992).
“ ‘When litigated, the issue of “piercing the corporate veil is a jury question.” [Cit.] For the issue to be submitted to a jury there must be evidence that the corporate arrangement was a sham, used to defeat justice, to perpetrate fraud or to evade statutory, contrac*72tual or tort responsibility.’ ” Derbyshire, 194 Ga. App. at 844.
Here, the following evidence was presented. At the time of the incident in 1991, General Hospital of Galen, Inc., d/b/a Humana Hospital-Newnan (“the hospital”) used the Humana national logo on its letterhead, signs, and in various advertising. The Humana logo was displayed on hospital brochures, maps to the hospital, and the hospital’s annual report. The Humana logo was also displayed on the hospital’s admission and discharge summary sheets, and on the sign in front of the hospital.
During his deposition, Walter Neely, Humana’s vice-president and general counsel, acknowledged that Humana and its various subsidiaries tried to create a public awareness that the Humana name was synonymous with good service and good quality. Neely also stated that the name “Humana” was equated with a large national health care company, and that this name recognition was a “goal.”
Humana hired attorneys for the hospital to handle lawsuits. Moreover, there was evidence that Humana pursued collection suits on behalf of the hospital in the name “Humana Hospital-Newnan.”
The hospital’s chief executive officer, Jack Davis, was hired and supervised by Humana’s regional vice president. All the officers of the hospital were also officers of Humana and Humana owned 100 percent of the stock in the hospital. Davis received stock options or stock bonuses in Humana stock. The hospital’s budget was set by Humana’s regional vice-president. Bills and payroll were paid for the hospital on Humana’s intercompany account and the hospital had no separate banking account. When the hospital received payments, they were withdrawn by Humana and “an asset was created on the hospital books in the intercompany account.” The hospital did not have access to the money which it was paid, instead this money “was swept daily into a Humana, Inc. account.”
As the majority notes, the hospital managed its day-to-day affairs, maintained its separate minute books and corporate seal, and was fully insured. Although there was evidence that the hospital was fully capitalized, Davis explained that “Humana always funded whatever was necessary in order to allow the hospital to maintain a position where it could pay its creditors, payroll, et cetera. . . .”
There was sufficient evidence to create a jury issue on the issue of piercing the corporate veil. Unlike the facts of Boafo v. Hosp. Corp. of America, 177 Ga. App. 75 (338 SE2d 477) (1985), the evidence of the control that Humana exerted over the hospital here created a factual issue. There was evidence that there was such a unity of interest and ownership that the separate personalities of Humana and the hospital no longer existed, and to adhere to the doctrine of corporate entity would unfairly allow Humana to evade tort responsibility. See generally Mark Six Realty Assoc. v. Drake, 219 Ga. App. 57 (463 SE2d *73917) (1995).
I do not agree with the suggestion in the majority opinion that an element resembling scienter is necessary to pierce the corporate veil. In this case, the fact that Humana corporation was operating legally does not factor into the assessment of the distinctiveness of the corporate entities. See Condenser Svc. &c. Co. v. Brunswick Port Auth., 87 Ga. App. 469, 475 (74 SE2d 398) (1953) (veil may be pierced to avoid fraud, injustice, or for other equitable reasons).
Because a jury issue was created as to whether the corporate veil was pierced, I need not address the issue of whether Humana may be sued under a theory of apparent authority. Usually the question of apparent authority has been combined into the analysis of whether the corporate veil has been pierced, see generally Triple “C” Recreation Assn. v. Cash, 124 Ga. App. 754 (186 SE2d 145) (1971). Although there could be situations in which a corporation acts with the apparent authority of another and the corporate veil has not been pierced, the instant case does not present this separate question. Similarly, because of my conclusion, I need not reach the issue of joint venture addressed in Presiding Judge McMurray’s dissent.