Free Motion for Partial Summary Judgment - District Court of Arizona - Arizona

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STRUCKMEYER & WILSON 910 E. Osborn Rd. Phoenix, AZ 85014 PHONE: (602) 248-9222 FAX: (602) 263-0464 Donald R. Wilson, 1239 [email protected] Garvey M. Biggers, 9932 [email protected] S. Lee White, 17551 [email protected] Attorneys for Defendants Darrell Lee Ekdahl; Jane Doe Ekdahl; George Vanden Bossche; Karolyn Vanden Bossche; and Vandy's Transportation, Inc.

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

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) ) ) ) ) Plaintiffs, ) ) vs. ) ) Darrell Lee Ekdahl and Jane Doe Ekdahl, ) husband and wife; George Vanden Bossche ) and Karolyn Vanden Bossche, husband and ) wife; and Vandy's Transportation, Inc., a ) California corporation, ) ) Defendants. ) ____________________________________)

Palma Baca Urrutia; Patricia Urrutia-Baca; Luis Javier Urrutia-Baca; Elizabeth UrrutiaBaca; Javier Arturo Urrutia-Arrieta; and Gloria Estela Sandate,

NO. CV-03-1990-PHX-PGR DEFENDANTS GEORGE AND KAROLYN VANDEN BOSSCHE'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM OR, IN THE ALTERNATIVE, MOTION FOR PARTIAL SUMMARY JUDGMENT

(Oral Argument Requested)

(Assigned to the Honorable Paul G. Rosenblatt)

Defendants GEORGE AND KAROLYN VANDEN BOSSCHE ("Defendants"), by and through undersigned counsel, hereby move to dismiss the Plaintiffs' claims against Defendants

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for the reason that Plaintiffs have failed to state a claim upon which relief may be granted against
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George and Karolyn Vanden Bossche, as individuals. In the alternative, pursuant to Fed. R. Civ.
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P. 56(b), Defendants request the Court grant a Motion for Partial Summary Judgment finding that Plaintiffs are not entitled to "pierce the corporate veil" and subject Defendants to individual liability. Defendants submit that there is no genuine issue of material fact and that Defendant's Motion should be granted. This Motion is supported by the following Memorandum of Points and Authorities, the accompanying Statement of facts ("SOF"), and the entire record in this

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matter.
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MEMORANDUM OF POINTS AND AUTHORITIES
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I.

INTRODUCTION A. Factual Background

On December 15, 2003, Plaintiffs filed their Amended Complaint, which included three causes of action. See Plaintiffs' Amended Complaint, p.4. In their Amended Complaint, Plaintiffs sued Defendants George and Karolyn Vanden Bossche as individuals. Id. However, there are no allegations by Plaintiffs and nothing in the record that would permit the piercing of the corporate veil and allow the imposition of personal liability. Id. B. Standard of Review

In considering a Motion to Dismiss, all of the material allegations of the pleadings of the non-moving party are taken to be true. See Cooper v. Pete, 378 U.S. 546 (1964). It is the moving party's responsibility to show that, even given the truth of the facts alleged in the

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Complaint, there are no legal grounds for relief. In addition, under Fed. R. Civ. P. 12(b), the
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Court may treat a 12(b)(6) motion as a Motion for Summary Judgment.
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Summary judgment should be awarded where "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. Proc., Rule 56(c). Since both summary judgment motions and motions for directed verdict under Rule 56 serve the same purpose of "removing meritless claims from the civil justice system,"

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Orme School v. Reeves, 802 P.2d 1000 (Ariz. 1990), the trial courts have been instructed to apply the same standards for a summary judgment as they would for a directed verdict, "even though that might entail evaluating the evidence to some degree." Arizona Civil Rules Handbook, pp. 410-11 (St. Paul: West Publishing, 1995) (citing Matos v. City of Phoenix, 859 P.2d 748 (Ariz. App. 1993)).

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"While trial courts were cautioned not to use summary judgment proceedings as a
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substitute for jury trials, the motion should be granted if the facts produced in support of the
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claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Id. at 412 (citing Riley, Hogatt & Suagee v. English, 864 P.2d 1042 (Ariz. 1993)). Furthermore, "[w]here a moving party makes a prima facie showing of the absence of any genuine dispute of fact, the adverse party may not simply rest on the pleadings, but must show by competent evidence specific facts that create a genuine issue for trial. Id. at 416 (citing MacConnell v. Mitten, 638 P.2d 689 (Ariz. 1981)). II. LEGAL ARGUMENT A. Defendants George and Karolyn Vanden Bossche, as individuals, should be dismissed from this action because Plaintiffs fail to state a claim upon which relief may be granted.

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Defendants have been named individually as a party to this action. Since Defendant
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Karolyn Vanden Bossche is neither an officer, a director, or even a shareholder of the corporation in question, this Motion will focus on Defendant George Vanden Bossche. Defendant George Vanden Bossche is an officer of Vandy's Transportation, Inc. There have been no allegations that Mr. Vanden Bossche acted outside the scope of his corporate duties such as to impose personal liability on the Mr. Vanden Bossche.

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Corporations afford protection from liability to individuals acting within the scope of their duties within the corporation. A.R.S. §§ 10-842 and 10-830. 1 Under Arizona law, "where the corporation is shown to be the alter ego or business conduit of a person, and where observing the corporate form would work an injustice, a court may properly pierce the corporate veil." Standage v. Standage, 711 P.2d 612, 615 (Ariz. App. 1985)(citing Dietel v. Day, 492 P.2d 455

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(Ariz. App. 1972)). There are no allegations by Plaintiffs that Mr. Vanden Bossche acted in any
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way outside the scope of his corporate duties such that the Court would be permitted to pierce
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the corporate veil and impose personal liability. It is inappropriate to allow this matter to proceed against Mr. Vanden Bossche individually. Plaintiffs simply fail to state a claim upon which relief may be granted against an individual by virtue of the individual's position within the corporation. For this reason, Defendants should be dismissed from this action with prejudice. B. In the alternative, Defendants are entitled to summary judgment because there is no evidence of fraud, unfairness, or undercapitalization, and thus, there is no genuine issue as to any material fact.

The record in this matter does not support Plaintiffs' allegation that would entitle them to pierce the corporate veil and subject Defendants to individual liability. The law regarding piercing the corporate veil is explained in detail in Dietel v. Day, supra, which states:

18 19 20 21 22 23 24 25 26 See also See Melisewski v. Singer, 598 P.2d 1014, 1015 (Ariz. App. 1979)("It is well established that a corporate structure is a separate legal entity which has the legitimate purpose of insulating individuals from personal liability for acts done on behalf of the corporation").
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As a general rule, a corporation will be treated as a legal entity until sufficient reason appears to disregard the corporate form. The corporate fiction will be disregarded when the corporation is the alter ego or business conduit of a person, and when to observe the corporation would work an injustice. The alter-ego status is said to exist when there is such unity of interest and ownership that the separate personalities of the corporation and owners cease to exist. 492 P.2d at 457; see also Chapman v. Field, 602 P.2d 481, 483 (Ariz. 1979).

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The record does not only fail to provide "sufficient reason" to disregard the corporate form, but also fails to provide any reason to disregard the corporate form. The fact of the matter is that no sufficient reason exists. In addition, there is no evidence that the corporation is the alter ego or business conduit of Defendants. Arizona statutes governing professional corporations authorize a one-man

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corporation. Ize Nantan Bagowa, Ltd. v. Scalia, 577 P.2d 725, 728-29 (Ariz. App. 1978).
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However, "this does not mean that the corporate entity can be disregarded." Id. at 729. As in Ize
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Nantan Bagowa, it is important to note that "the mere fact that it is a one-man corporation does not mean the corporation is the alter ego of that one man." Id. at 728; see also Bass v. Shutan, 259 F.2d 561, 563 (9th Cir. 1958)(Zipco Incorporated was not the alter ego of its sole shareholder, director, president and general manager). Imposition of personal liability is reasonable and understandable where there has been a complete or almost complete assimilation of the two identities, as where the shareholder uses corporate capital for private purposes, thereby depleting the corporate reservoir of assets which otherwise would be available to creditors, or where he has such inextricable confusion that they cannot be segregated. Ize Nantan Bagowa at 729 (quoting Fuller, The Incorporate Individual: A Study of the One-Man Company, 51 Harv. L. Rev. 1371, 1381 (1938)). In this case, the record does not support a finding of assimilation. Moreover, "[w]here a corporation is operated and maintained for the purpose for which it was incorporated and Not as a mere shield of the stockholders, the corporate form should Not be disregarded....But it must be noted that a legitimate purpose of incorporation is to avoid personal liability." Id.; see also Chapman at 483. In this case, the corporation was formed for the purpose of engaging in any lawful activity for which a corporation may be organized under the General Corporation Law of California other than the banking, the trust company business or the

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practice of a profession permitted to be incorporated by the California Corporations Code. See
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Exhibit 1, Articles of Incorporation. At present time, the corporation is still operating as such.
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There is no evidence that the corporate structure was used for other than legitimate corporate purposes. "Further, there would have to be a showing that observance of the corporate form would sanction a fraud." Id. at 458 (emphasis in original); see also Chapman at 484. There has been absolutely no allegation or evidence of fraud. Thus, Defendants are entitled to summary judgment on the issue of their individual liability because the record does not show fraud,

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unfairness, or undercapitalization to support piercing the corporate veil.
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III.

CONCLUSION For the foregoing reasons, Defendants George and Karolyn Vanden Bossche should be

dismissed from this action with prejudice. In the alternative, Defendants respectfully request the Court grant a Motion for Partial Summary Judgment finding that Plaintiffs are not entitled to pierce the corporate veil and subject Defendants to individual liability. Defendants submit that there is no genuine issue of material fact and that Defendant's Motion should be granted.

RESPECTFULLY SUBMITTED this 13th day of December, 2005.
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STRUCKMEYER AND WILSON

s/S. Lee White____________________ Donald R. Wilson Garvey M. Biggers S. Lee White Attorneys for Defendants Darrell Lee Ekdahl; Jane Doe Ekdahl; George Vanden Bossche; Karolyn Vanden Bossche; and Vandy's Transportation, Inc.

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ORIGINAL of the foregoing NOTICE OF SCHEDULING CONFLICT electronically submitted using the CM/ECF System for filing and transmittal of a Notice of Filing to the following CM/ECF registrants: Augustine B. Jimenez III AUGUSTINE B. JIMENEZ III, P.C. 3200 N. Central Ave., Suite 2550 Phoenix, AZ 85012 [email protected] (Attorney for Plaintiffs) COPY of the foregoing submitted by email transmission this 13th day of December, 2005 to: (*) The Honorable Paul G. Rosenblatt UNITED STATES DISTRICT COURT Sandra Day O'Connor US Courthouse 401 W. Washington St. Phoenix, AZ 85003 ([email protected])

s/S. Lee White______________

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