Commonwealth Land Title Insurance Company v. Frank J. Miceli, Defendants/Respondent.

In the Missouri Court of Appeals
Eastern District
DIVISION ONE
COMMONWEALTH LAND TITLE ) No. ED101473
INSURANCE COMPANY, )
)
Plaintiff/Appellant, ) Appeal from the Circuit Court of
) St. Louis County
vs. )
) Honorable Michael T. Jamison
FRANK J. MICELI, ET AL., )
) Filed: April 28, 2015
Defendants/Respondent. )
I. INTRODUCTION
Plaintiff Commonwealth Land Title Insurance Company appeals the judgment of the
Circuit Court of St. Louis County in favor of defendants Frank J. Miceli, in his individual
capacity and as trustee of the Frank Miceli Revocable Trust, the unknown beneficiaries of said
trust, Stephen Miceli, in his individual capacity and as trustee of the Joseph J. Miceli Revocable
Trust, the unknown beneficiaries of said trust, Miceli Homes, Inc. (“Miceli Homes”), Miceli
Development Company, Miceli Holding Company, Masterwork Homes, Inc., and Miceli
Masterwork Homes, Inc., D/B/A Miceli Custom Homes. Commonwealth raises three points on
appeal. First, Commonwealth argues that the trial court erred by dismissing Counts I-V of its
petition on the grounds of res judicata. Second, Commonwealth argues that the trial court erred
by dismissing Counts VII and VIII of its petition on the grounds of res judicata and failure to
1
allege the necessary elements of either equitable lien or constructive trust. Third, Commonwealth
argues that the trial court erred by denying its motion for creditor’s bill and to pierce the
corporate veil. We affirm in part, reverse in part, and remand to the trial court for further
proceedings consistent with this opinion.
II. FACTS
In 2006, Miceli Homes sought to sell three houses it had constructed in Chesterfield,
Missouri, to three private homebuyers. Commonwealth was to underwrite each transaction with a
policy of homeowners’ title insurance. In order to secure Commonwealth’s participation and to
complete the sales with the homebuyers, Frank Miceli, president of Miceli Homes, executed
sworn affidavits attesting that all subcontractors that had worked on the houses had been paid in
full for their services. Miceli’s affidavit contained a request that Commonwealth issue its policies
of title insurance without exception as to any possible unfiled mechanic’s liens. Commonwealth
did so, and the home sales were completed. Frank Miceli would later admit in deposition that the
affidavits were false, and that he in fact knew at the time they were executed that many of the
subcontractors had not been paid.
Soon after the sales were completed, dozens of subcontractors filed approximately 1.5
million dollars in mechanic’s liens against the homebuyers’ properties. Because the title
insurance policies on the properties had been issued without exception as to any possible unfiled
mechanic’s liens, Commonwealth was obliged to defend the homebuyers and indemnify them for
the full amount of the liens.
While the lien litigation was pending, the homebuyers filed cross-claims against Miceli
Homes to recover the money owed to the lien claimants. After several days of trial on the cross-
2
claims, the trial court entered consent judgments against Miceli Homes. The homebuyers then
assigned the judgments to Commonwealth.
This case is the product of Commonwealth’s attempts to collect on the consent judgments
in order to recover the approximately 1.5 million they spent to indemnify the homebuyers. By
the time the consent judgments were entered against Miceli Homes, the corporation was
assetless. Therefore, Commonwealth filed its own petition for damages against Miceli Homes as
well as several individuals and entities related thereto, including Frank Miceli and his brother
Stephen Miceli, the Frank Miceli Revocable Trust, the Joseph J. Miceli Revocable Trust, Miceli
Development Company, Miceli Holding Company, Miceli Masterwork Homes, and Masterwork
Homes. Counts I-V of Commonwealth’s petition alleged negligent misrepresentation, fraudulent
misrepresentation, negligent concealment, fraudulent concealment, and indemnification against
Frank Miceli and Miceli Homes. Count VI alleged civil conspiracy against Frank and Stephen
Miceli. Counts VII-VIII sought to impose an equitable lien or constructive trust on the assets of
all defendants.
The defendants filed motions to dismiss, and two hearings were held before the trial
court. The trial court granted Frank Miceli and Miceli Homes’ motion to dismiss Counts I-V,
concluding that the consent judgments assigned to Commonwealth barred its claims on the
grounds of res judicata. The court initially denied the defendants’ motions to dismiss as to
Counts VI-VIII. The defendants then filed a second motion to dismiss Counts VI-VIII. After a
third hearing, the trial court dismissed Counts VI-VIII on the basis of res judicata and failure to
allege the necessary elements of civil conspiracy, equitable lien, or constructive trust.
Approximately one month after the trial court dismissed Counts VI-VIII, Commonwealth
filed a separate motion against Frank Miceli, individually and as trustee of the Frank Miceli
3
Revocable Trust, Miceli Homes, Miceli Development Company, Miceli Holding Company,
Miceli Masterwork Homes, and Masterwork Homes for a creditor’s bill and to pierce the
corporate veil. These defendants filed motions in opposition. After a hearing, the trial court
granted judgment in favor of the defendants. This appeal follows.
III. DISCUSSION
A. COUNTS I-V
1. Standard of Review
The trial court dismissed Commonwealth’s Counts I-V for failure to state a claim. “Our
review of a dismissal for failure to state a claim is de novo.” Chochorowski v. Home Depot
U.S.A., Inc., 295 S.W.3d 194, 197 (Mo. App. E.D. 2009). “A motion to dismiss for failure to
state a claim . . . is solely a test of the adequacy of the petition.” Id. “[W]e accept all properly
pleaded facts as true, giving the pleadings their broadest intendment, and we construe all
allegations favorably to the pleader . . . . ‘to determine if the facts alleged meet the elements of a
recognized cause of action, or of a cause that might be adopted in that case.’” Armistead v.
A.L.W. Grp., 155 S.W.3d 814, 816 (Mo. App. E.D. 2005) (quoting Nazeri v. Mo. Valley Coll.,
860 S.W.2d 303, 306 (Mo. banc 1993)).
2. Analysis
In its first point on appeal, Commonwealth argues that the trial court erred by concluding
that Counts I-V of its petition against Frank Miceli and Miceli Homes are barred by the consent
judgments on the basis of res judicata. Commonwealth contends that the consent judgments do
not bar Counts I-V, because they are “separate and distinct” claims from those underlying the
consent judgments. Specifically, Commonwealth asserts that Counts I-V are based on the fact
that Miceli Homes’ misrepresentation about having paid all of its subcontractors induced it to
4
issue policies of title insurance, whereas the consent judgments are based on the fact that that
misrepresentation induced the homebuyers to purchase their homes. Commonwealth also
contends that Count I-V and the consent judgments involve different parties. Namely,
Commonwealth asserts that the consent judgments were brought by the homebuyers against
Miceli Homes, whereas Counts I-V were brought by Commonwealth against Miceli Homes and
Frank Miceli in his individual capacity.1
In response, the defendants argue that Counts I-V are barred by the consent judgments,
because they are based on the same basic series of transactions, i.e., the home sales in which
Commonwealth, the homebuyers, Frank Miceli, and Miceli Homes all participated. Additionally,
the defendants contend that Counts I-V and the consent judgments should be treated as if they
were brought by the same party, because the homebuyers’ assignment of the consent judgments
to Commonwealth demonstrates they were in privity with one another.
“Res judicata [or claim preclusion] operates as a bar to the reassertion of a cause of action
that has been previously adjudicated in a proceeding between the same parties or those in privity
with them.” Lauber-Clayton, L.L.C. v. Novus Props. Co., 407 S.W.3d 612, 618 (Mo. App. E.D.
2013). “The doctrine is designed to prevent a multiplicity of lawsuits.” Id. Res judicata applies
where “four identities” are present: “(1) identity of the things sued for; (2) identity of the cause
of action; (3) identity of the persons or parties to the action; and (4) identity of the quality or
status of the person for or against whom the claim is made.” Id. “When these four identities
concur, res judicata operates to bar ‘any claim that was previously litigated between the same
1
Commonwealth suggests that a consent judgment is not treated in the same manner as other types of final
judgments for the purposes of res judicata. We disagree. A consent judgment “is accorded the same force as other
judgments . . . . [and is] conclusive of matters adjudicated.” Household Fin. Corp. v. Jenkins, 213 S.W.3d 194, 196
(Mo. App. E.D. 2007); State ex rel. Sanders v. Martin, 945 S.W.2d 641, 643 (Mo. App. E.D. 1997) (“The consent
judgment was conclusive not only as to those matters actually decided, but as to those matters which could properly
have been raised and decided.”); Adams by Northcutt v. Williams, 838 S.W.2d 71, 73 (Mo. App. E.D. 1992) (“Upon
entry of the consent judgment in the first lawsuit, all of mother’s rights to remedies against father with respect to all
or any part of the acts or events out of which the first action arose merged into that judgment.”).
5
parties or those in privity with them.’” Id. (quoting Spath v. Norris, 281 S.W.3d 346, 350 (Mo.
App. W.D. 2009)).
“Res judicata also precludes all points ‘properly belonging to the subject matter of the
litigation and which the parties, exercising reasonable diligence, might have brought forward at
the time.’” Id. (quoting King Gen. Contractors, Inc. v. Reorganized Church of Jesus Christ of
Latter Day Saints, 821 S.W.2d 495, 501 (Mo. banc 1991)). In other words, if res judicata applies,
the doctrine precludes a litigant from bringing ‘claims that should have been brought in the first
suit.’” Id. (quoting Kesterson v. State Farm Fire & Cas. Co., 242 S.W.3d 712, 715 (Mo. banc
2008)). “However, res judicata does not operate to preclude later litigation, including those
claims that could have been brought, unless the four identities first occur.” Id.
Here, as we will explain, the doctrine of res judicata bars Commonwealth’s Counts I-V
against defendant Miceli Homes, but does not bar these claims as to defendant Frank Miceli. As
such, we will discuss each defendant separately, beginning with Miceli Homes. Because the trial
court dismissed Counts I-V, we look only to the face of Commonwealth’s petition and the
consent judgments for the facts upon which the following discussion is based.2 See
Chochorowski, 295 S.W.3d at 197.
The consent judgments bar Commonwealth’s Counts I-V against Miceli Homes, because
each of the four identities of res judicata is met. First, the element of “identity of the thing sued
for” is met, because the subject matter of Commonwealth’s Counts I-V and the consent
judgments are the same. See Winter v. Northcutt, 879 S.W.2d 701, 708 (Mo. App. S.D. 1994).
The homebuyers, and in turn Commonwealth, both sought damages against Miceli Homes,
because they were unwittingly forced to assume responsibility for approximately 1.5 million
2
Even though the trial court considered matters outside the pleadings, i.e., the consent judgments, in
dismissing these claims, we still apply the standard of review applicable to dismissals. See Chesterfield Vill., Inc. v.
City of Chesterfield, 64 S.W.3d 315, 318 n.1 (Mo. banc 2002).
6
dollars in debt owed to the subcontractors that constructed the homebuyers’ houses. See, e.g.,
Xiaoyan Gu, 447 S.W.3d at 689 (holding identity of thing sued for was satisfied where both
actions sought damages arising out of same set of facts).
Second, the element of “identity of the cause of action,” is met, because
Commonwealth’s Counts I-V against Miceli Homes and the consent judgments arose out of the
same act, contract, transaction, or series of transactions.3 See Chesterfield Vill., 64 S.W.3d at
319; see also Restatement (Second) of Judgments section 24 (1982) (“[The] claim extinguished
includes all rights of the plaintiff to remedies against the defendant with respect to all or any part
of the transaction, or series of connected transactions, out of which the action arose.”). In other
words, they are based on the same set of facts. See Chesterfield Vill., 64 S.W.3d at 319 (“[A]
court looks to the factual bases for the claims, not the legal theories.”). Both Counts I-V and the
consent judgments rest upon the misrepresentation that Miceli Homes had paid all of the
subcontractors that worked on the homebuyers’ houses. Both rest on the fact that the homebuyers
and Commonwealth participated in the home sale transactions with the understanding that the
subcontractors had been paid. Finally, both rest on the fact that the homebuyers and
Commonwealth thereby unwittingly became liable for the mechanic’s liens that would later be
filed against the properties
3
This opinion and many other cases refer to the “identity of the thing sued for” and the “identity of the
cause of action” as being separate elements of res judicata. See, e.g., King Gen. Contractors, 821 S.W.2d at 501,
Xiaoyan Gu v. Da Hua Hu, 447 S.W.3d 680, 689 (Mo. App. E.D. 2014), Lauber-Clayton, L.L.C., 407 S.W.3d at
618. However, in Dahn v. Dahn, 346 S.W.3d 325, 332 n.3 (Mo. App. W.D. 2011), the court noted that the Missouri
Supreme Court case of Chesterfield Vill., Inc. v. City of Chesterfield, 64 S.W.3d 315, 319 (Mo. banc 2002), could be
interpreted as “treat[ing] the ‘thing sued for’ and ‘cause of action’ as equivalent.” Dahn 3 46 S.W.3d at 332 n.3. In
Chesterfield Village, the Court observed:
The key question is what is the “thing”—the claim or cause of action—that has previously been
litigated? A claim is the aggregate of operative facts giving rise to a right enforceable by a court.
The definition of a cause of action is nearly the same: a group of operative facts giving rise to one
or more bases for suing. Whether referring to the traditional phrase “cause of action” or the
modern terms “claim” and “claim for relief” used in pleading rules such as Rule 55.05, the
definition centers on “facts” that form or could form the basis of the previous adjudication.
64 S.W.3d at 318 (footnotes omitted).
7
Nevertheless, Commonwealth asserts that the element of “identity of the cause of action”
is defeated, because Counts I-V and the consent judgments raise different claims that require
different proof. It contends that Miceli Homes’ misrepresentations induced it to issue policies of
title insurance, whereas those misrepresentations induced the homebuyers to purchase their
homes. However, “[t]hat a number of different legal theories casting liability on an actor may
apply to a given episode does not create multiple transactions and hence multiple claims.”
Restatement (Second) of Judgments section 24, cmt. c. “This remains true although the several
legal theories depend on different shadings of the facts, or would emphasize different elements
of the facts, or would call for different measures of liability or different kinds of relief.” Id.; see
also Chesterfield Vill., 64 S.W.3d at 320 (“Claim preclusion ‘prevents reassertion of the same
claim even though additional or different evidence or legal theories might be advanced to support
it.’” (quoting Fleming James Jr., Geoffrey C. Hazard, Jr. & John Leubsdorf, Civil Procedure
section 11.8, at 684 (5th ed. 2001)). “In order for a subsequent claim on the same transaction to
be considered separate, . . . there must be new ultimate facts, as opposed to evidentiary details,
that form a new claim for relief.” Dahn, 346 S.W.3d at 332 (alteration in original) (quoting
Kesterson v. State Farm Fire & Cas. Co., 242 S.W.3d 712, 716 (Mo. banc 2008)).
Here, Commonwealth’s Counts I-V and the consent judgments are based on the same
ultimate facts, i.e., the misrepresentations, the home sales, and the ensuing mechanic’s liens.
Therefore, there is “identity of the cause of action” between those claims.
The third element of res judicata, “identity of the persons or parties to the action,” is also
met, because Commonwealth and the homebuyers, though not the same party in name, were in
privity with one another. “A party is identical, for purposes of res judicata, when it is the same
party that litigated the prior suit or when the new party was in privity with the party that litigated
8
the prior suit.” Lauber-Clayton, L.L.C., 407 S.W.3d at 619. “‘Privity,’ as a basis for satisfying
the ‘identical party’ requirement of res judicata, ‘is premised on the proposition that the interests
of the party and non-party are so closely intertwined that the non-party can fairly be considered
to have had his or her day in court.’” Id. (quoting Lomax v. Sewell, 50 S.W.3d 804, 809 (Mo.
App. W.D. 2001)). Here, Commonwealth’s interest in the homebuyers’ cross-claims against
Miceli Homes and resulting consent judgments was more than “closely intertwined” with the
homebuyers’ interests. Indeed, Commonwealth was the only party that had an actual interest in
obtaining the consent judgments.
Commonwealth’s petition clearly states that the title insurance policies it issued to the
homebuyers required it to indemnify and defend them against the various mechanic’s liens. The
import of this indemnification agreement is that the homebuyers actually stood to lose nothing in
these actions. Instead, it was Commonwealth that stood to lose the approximately 1.5 million
dollars that the mechanic’s liens claimants sought in damages. Therefore, it was Commonwealth
that had the interest in going after Miceli Homes to recoup those loses. To do so,
Commonwealth’s lawyers filed cross-claims against Miceli Homes on behalf of the homebuyers,
and obtained consent judgments thereon. The homebuyers then assigned the consent judgments
to Commonwealth, so that Commonwealth could collect from Miceli Homes. Thus, the
homebuyers’ and Commonwealth’s interests in the consent judgments were “so closely
intertwined that [Commonwealth] can be fairly said to have had [its] day in court” against Miceli
Homes. Id. The element of “identities of the persons or parties to the action” is met, because
Commonwealth and the homebuyers were in privity with one another.
Lastly, the fourth element of res judicata, “identity of the quality or status of the person
for or against whom the claim is made,” is easily met with respect to defendant Miceli Homes.
9
“Quality or status of the person” exists where the defendants were identical and sued in the same
capacity in both suits. See Xiaoyan Gu, 447 S.W.3d at 692. “A party appearing in an action in
one capacity, individual or representative, is not thereby bound by or entitled to the benefits of
the rules of res judicata in a subsequent action in which he appears in another capacity.”
Restatement (Second) of Judgments section 36. “A party appears in his individual capacity
unless, in his designation as a party or by other manifestation, it is made evident that he appears
in some other capacity.” Id. Here, there is no indication in either Commonwealth’s petition on
Counts I-V or the consent judgment that Miceli Homes was sued in anything but its individual
capacity.4 Accordingly, the element of “identity of the quality or status of the person for or
against whom the claim is made” is met.
The consent judgments bar Commonwealth’s Counts I-V against Miceli Homes, because
each of the four identities of res judicata is satisfied. The trial court did not err by dismissing on
this basis Counts I-V against Miceli Homes.
However, the consent judgments do not bar Commonwealth’s Counts I-V against
defendant Frank Miceli, because the fourth element of “identity of the quality or status of the
persons for or against whom the claim is made” is not met. Again, “quality or status of the
person” exists where the defendants were identical and sued in the same capacity in both suits.
See Xiaoyan Gu, 447 S.W.3d at 692. “When two defendants are potentially liable for the same
loss, the claims are considered separate and two suits can be maintained against the differing
parties.” Lauber-Clayton, L.L.C., 407 S.W.3d at 620 (quoting Hollida v. Hollida, 190 S.W.3d
550, 556 (Mo. App. S.D. 2006)). As the Restatement (Second) of Judgments explains:
4
We note that though Missouri case law refers to the “quality or status of the person,” the rule applies to
corporate entities in the same way. See Restatement (Second) of Judgments section 36, cmt. a (“A person, including
a corporate entity, may have more than one legal capacity.”).
10
When a person suffers injury as the result of the concurrent or consecutive acts of
two or more persons, he has a claim against each of them. If he brings an action
against one of them, he is required to present all the evidence and theories of
recovery that might be advanced in support of the claim against that obligor . . . .
If he recovers judgment, his claim is ‘merged’ in the judgment so that he may not
bring another action on the claim against the obligor whom he has sued . . . .
Correlatively, if judgment is rendered against him, he is barred from bringing a
subsequent action against the obligor . . . . But the claim against others who are
liable for the same harm is regarded as separate. Accordingly, a judgment for or
against one obligor does not result in merger or bar of the claim that the injured
party may have against another obligor.
Restatement (Second) of Judgments section 49, cmt. a; see also Lauber-Clayton, L.L.C., 407
S.W.3d at 620; Hollida, 190 S.W.3d at 556. Here, the consent judgments were entered only
against Miceli Homes and not Frank Miceli in his individual capacity. Because Frank Miceli was
a separate defendant not named in the consent judgments, those judgments are not res judicata as
to Commonwealth’s Counts I-V against him. The trial court erred by dismissing on this basis
Counts I-V against Frank Miceli.
B. COUNTS VII-VIII
1. Standard of Review
The trial court dismissed Commonwealth’s Counts VII-VIII. Again, our review of a
dismissal is de novo. Chochorowski, 295 S.W.3d at 197. “[W]e accept all properly pleaded facts
as true, giving the pleadings their broadest intendment, and we construe all allegations favorably
to the pleader . . . . ‘to determine if the facts alleged meet the elements of a recognized cause of
action, or of a cause that might be adopted in that case.’” Armistead, 155 S.W.3d at 816 (quoting
Nazeri, 860 S.W.2d at 306).
2. Analysis
In its second point on appeal, Commonwealth argues that the trial court erred by
dismissing its petition on Count VII, constructive trust, and Count VIII, equitable lien, against
11
Frank Miceli and his brother Stephen Miceli, the Frank Miceli Revocable Trust, the Joseph J.
Miceli Revocable Trust, Miceli Homes, Miceli Development Company, Miceli Holding
Company, Miceli Masterwork Homes, and Masterwork Homes on the basis of res judicata and
for failure to allege the necessary elements of either of those claims. Commonwealth contends
that it stated a claim in Count VII for equitable lien, because it alleged facts showing a debt or
obligation owed by the defendants, an identifiable res to which the obligation attaches, and an
intent, express, or implied, that the property serve as security for the debt or obligation.
Commonwealth contends that it stated a claim in Count VIII for constructive trust, because it
alleged facts showing the defendants were unjustly enriched by retaining the proceeds of the
sales of the homebuyers’ homes. Finally, Commonwealth argues that Counts VII and VIII are
not barred by the consent judgments on the basis of res judicata for substantially the same
reasons it asserted regarding Counts I-V.
In response, the defendants argue that Commonwealth failed to state a claim for either an
equitable lien or a constructive trust, because it failed to identify a specific “res” to which the
equitable lien or constructive trust would attach. Lastly, the defendants, like Commonwealth,
rely on their arguments in point one as to the matter of res judicata.
As we will explain, Commonwealth’s petition fails to allege the necessary elements to
sustain a claim for either equitable lien or constructive trust. We therefore need not reach the
matter of res judicata. We first address Commonwealth’s Count VII for equitable lien.
“Equity allows a lien to be placed on the proceeds of the sale of property on which an
obligation is owed and where the law does not provide an adequate remedy and justice would
suffer without equitable relief.” Ethridge v. TierOne Bank, 226 S.W.3d 127, 133 (Mo. banc
2007) (quoting Estate of Ripley v. Mortgage One Corp., 16 S.W.3d 593, 596 (Mo. App. E.D.
12
1999)). The elements required to establish an equitable lien are: “(1) a duty or an obligation
owing by one person to another; (2) a res to which that obligation fastens, which can be
identified or described with reasonable certainty; and (3) an intent, express or implied, that the
property serve as security for the payment of the debt or obligation.” Id. at 134.
Here, Commonwealth’s petition fails to identify with reasonable certainty a res to which
the equitable lien would attach. The petition names only the “[p]roperty and assets belonging to
Stephen Miceli, Frank Miceli, the Joseph Miceli Trust, the Frank Miceli Trust, and the Miceli
Corporate Defendants.”5 It provides no other detail. A plaintiff wishing to assert a claim for
equitable lien cannot satisfy the requirement of identifying a res with “reasonable certainty” by
naming several defendants and their “property and assets.” Rather, the plaintiff must name some
specific property or asset in possession of the defendant—e.g., real estate, chattel, or a financial
instrument—to which she wishes the lien attached. See Wilkinson v. Tarwater, 393 S.W.2d 538,
542 (Mo. 1965) (“[G]enerally there must be an express agreement, or conduct or dealings of the
parties from which an intention may be implied, that some specific property shall be
appropriated as security for a debt or obligation before equity will consider that a lien should be
declared on the property.”). It is not the province of the court to inventory the possessions of the
defendant and choose among them which should be subject to the lien. Further, if no specific
property or asset is named, it is impossible for the plaintiff to show that said property or asset
was intended by the parties to serve as security for the payment of a debt or obligation.
Accordingly, Commonwealth’s petition fails to state a claim for an equitable lien, because it does
5
We note that Commonwealth’s brief cites to several exhibits in the record regarding the value of several
specific properties owned by the defendants. However, the trial court dismissed Commonwealth’s Counts VII and
VIII. When reviewing a motion to dismiss, we ordinarily cannot look beyond the pleadings to entertain other
evidence that may be present in the record. See Estate of Saling, 924 S.W.2d 312, 313-14 (Mo. App. E.D. 1996); but
see Chesterfield Vill., 64 S.W.3d at 318 n.1 (explaining court may look beyond the pleadings to consider the former
judgment for motion to dismiss based on res judicata).
13
not name a “res . . . which can be identified or described with reasonable certainty.” Ethridge,
226 S.W.3d at 134. The trial court did not err by dismissing Count VII.
We now move to Commonwealth’s Count VIII for constructive trust. “A court of equity
may impose or declare a constructive trust to provide a remedy in cases where one who has
acquired property under such circumstances as make it inequitable for him to retain it by making
him or her a trustee for the person or persons injured thereby.” Ralls Cnty. Mut. Ins. Co. v. RCS
Bank, 314 S.W.3d 792, 795 (Mo. App. E.D. 2010) (quoting Brown v. Brown, 152 S.W.3d 911,
916 (Mo. App. W.D. 2005)). “However, the very essence of the remedy of a constructive trust is
the identification of specific property or funds as the res upon which the trust may be attached.”
Id. (quoting Blue Cross Health Servs. Inc. v. Sauer, 800 S.W.2d 72, 76 (Mo. App. E.D. 1990)).
Here, Commonwealth’s petition states only that “Frank Miceli, individually and as
trustee of the Frank Miceli Revocable Trust, and Stephen Miceli, individually and as trustee for
the Joseph Miceli Trust, and the Miceli Corporate Defendants are in possession of funds and/or
assets purchased with those funds, which are owed to Commonwealth.” For substantially the
same reasons as set out regarding Commonwealth’s equitable lien claim, a plaintiff wishing to
assert a constructive trust cannot satisfy the requirement of identifying a specific res by merely
naming several defendants and their “funds and/or assets.” The plaintiff must name discrete
funds or assets. Accordingly, Commonwealth’s petition fails to state a claim for a constructive
trust, and the trial court did not err by dismissing Count VIII.
C. MOTION FOR CREDITOR’S BILL AND TO PIERCE THE CORPORATE VEIL
1. Standard of Review
14
Commonwealth argues that we should review its motion for creditor’s bill and to pierce
the corporate veil as the “denial of [a] post-judgment motion[] submitted in aid of execution [or]
collection.” This contention is erroneous.
Though generally dependent on the existence of a prior judgment at law, a creditor’s bill
is a distinct claim in equity. See Shockley v. Harry Sander Realty Co., 771 S.W.2d 922, 924, 925
(Mo. App. E.D. 1989); see also 21 Am. Jur. 2d Creditors’ Bills section 2 (2015) (“Creditors’
bills . . . [are] independent actions in form . . . [but] ancillary in effect where brought in aid of
another proceeding or in collecting a judgment obtained in another proceeding.”). In much the
same way, a “motion” to pierce the corporate veil is a distinct claim in equity. Saidawi v.
Giovanni's Little Place, Inc., 987 S.W.2d 501, 504 (Mo. App. E.D. 1999) (holding piercing
corporate veil is independent claim) 6; but cf. 18 C.J.S. Corporations section 38 (2015) (“Without
an underlying [fraud or wrong] creating corporate liability, evidence of an abuse of the corporate
form is immaterial.”).
Here, the record shows that the trial court treated Commonwealth’s motion for creditor’s
bill and to pierce the corporate veil as an independent claim, not a post-judgment motion. The
court rendered a final judgment, which was denominated as such and signed by the trial judge.
See Coleman v. Meritt, 324 S.W.3d 456, 459 (Mo. App. S.D. 2010) (“A judgment is considered
rendered . . . when “a writing signed by the judge and denominated ‘judgment’ or ‘decree’ is
filed.’” (quoting Rule 74.01(a))). The judgment contains findings of fact, conclusions of law, and
disposes of all of Commonwealth’s claims. See Huff v. Dewey & LeBoeuf, L.L.P., 340 S.W.3d
6
See also, e.g., Mobius Mgmt. Sys., Inc. v. W. Physician Search, L.L.C., 175 S.W.3d 186, 187 (Mo. App.
E.D. 2005) (reviewing claim to pierce the corporate veil brought as separate action to enforce prior judgment);
Patrick V. Koepke Const., Inc. v. Paletta, 118 S.W.3d 611, 613 (Mo. App. E.D. 2003) (same); Edward D. Gevers
Heating & Air Conditioning Co. v. R. Webbe Corp., 885 S.W.2d 771, 773 (Mo. App. E.D. 1994) (same); Real Estate
Investors Four, Inc. v. Am. Design Grp. Inc., 46 S.W.3d 51, 55 (Mo. App. E.D. 2001) (reviewing judgment on
merits where plaintiffs plead veil piercing as separate claim in original action); Swall v. Custom Auto. Servs., Inc.,
831 S.W.2d 237, 238 (Mo. App. W.D. 1992) (same); Fairbanks v. Chambers, 665 S.W.2d 33, 36 (Mo. App. W.D.
1984) (same).
15
623, 627 (Mo. App. W.D. 2011) (explaining that to determine if final judgment is rendered “we
look to the judgment’s content, substance, and effect” (quoting West v. Sharp Bonding Agency,
Inc., 327 S.W.3d 7, 11 n. 5 (Mo. App. W.D. 2010))). Thus, we review the trial court’s judgment
on Commonwealth’s motion as we would any other. “[T]he decree or judgment of the trial court
will be sustained by the appellate court unless there is no substantial evidence to support it,
unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it
erroneously applies the law.” Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).
2. Analysis
In its third point on appeal, Commonwealth argues that the trial court erred by granting
judgment in favor of Frank Miceli, individually and as trustee of the Frank Miceli Revocable
Trust, Miceli Homes, Miceli Development Company, Miceli Holding Company, Miceli
Masterwork Homes, and Masterwork Homes on its motion for creditor’s bill and to pierce the
corporate veil. Specifically, Commonwealth contends that Frank Miceli’s deposition testimony
shows that Frank had complete dominion and control over Miceli Homes, Miceli Development
Company, and Miceli Holding Company, and that he used his control to avoid legal obligations
under the consent judgments by discarding these enterprises in favor of Miceli Masterwork
Homes and Masterwork Homes. Further, they argue that Frank Miceli disregarded the corporate
form by using the selective transfer of funds between Miceli Homes, Miceli Development
Company, and Miceli Holding Company to satisfy personal debts.7 In response, the defendants
7
Commonwealth argues that Miceli Homes, Miceli Development Company, and Miceli Holding Company
were run as a single economic enterprise, with common ownership, management, and supervisory personnel. The
trial court found that they were not run as a single enterprise. However, Commonwealth’s position is irrelevant to
the issue presented. Whether two corporations are run as a single economic enterprise generally pertains to the
question of whether the corporate veil of a subsidiary corporation can be pierced to reach its parent, and specifically
to the factor of whether the parent has complete dominion and control over the subsidiary. See, e.g., Collet v. Am.
Nat. Stores, Inc., 708 S.W.2d 273, 284 (Mo. App. E.D. 1986). Missouri case law also suggests that if sister
corporations are run as a single economic enterprise to perpetrate a fraud or wrong, the corporate veil may be
pierced to provide relief. See Camelot Carpets, Ltd. v. Metro Distrib. Co., 607 S.W.2d 746, 750 (Mo. App. E.D.
16
argue that Commonwealth failed to establish the proof necessary to pierce the corporate veil, and
particularly the element of common ownership and control.
Both Commonwealth’s motion and the trial court’s judgment focused primarily on the
matter of piercing the corporate veil, and whether Commonwealth would be permitted to reach
beyond the corporate entity of Miceli Homes to execute the consent judgment against Frank
Miceli, his trust, and other related corporations. Because the trial court erroneously declared and
applied the law in regard to the matter of piercing the corporate veil, we will focus our discussion
on this matter as well.
“Ordinarily, a corporation is regarded as a separate legal entity, separate and distinct from
its stockholders, officers, and directors, with separate and distinct liabilities and obligations.” 114
Am. Jur. Proof of Facts 3d 403, section 3 (2015). Actions to pierce the corporate veil rest on an
equitable doctrine used by courts to look past the corporate form and impose liability upon [those
who control] the corporation—be they individuals or other corporations—when [they] create or
use the corporate form to accomplish a fraud, injustice, or some unlawful purpose.” Blanks v.
Fluor Corp., 450 S.W.3d 308, 375 (Mo. App. E.D. 2014). The doctrine should be employed with
caution, and only when the circumstances clearly justify it. See id. at 376. A Missouri court will
disregard the corporate form and hold the corporate owners or officers liable if three elements
are met:
(1) Control, not mere majority or complete stock control, but complete
domination, not only of finances, but of policy and business practice in respect to
the transaction attacked so that the corporate entity as to this transaction had at the
time no separate mind, will or existence of its own; and
(2) Such control must have been used by the corporation to commit fraud or
wrong, to perpetrate the violation of statutory or other positive legal duty, or
dishonest and unjust act in contravention of plaintiff’s legal rights; and
1980). In this case, however, it appears that Miceli Homes, Miceli Development Company, and Miceli Holding
Company are all assetless or defunct, and Commonwealth wishes to reach beyond them entirely.
17
(3) The control and breach of duty must proximately cause the injury or unjust
loss complained of.
66, Inc., 998 S.W.2d at 40 (quoting Collet, 708 S.W.2d at 284). However, “[t]here is no hard and
fast rule for when a court will pierce the corporate veil; the inquiry is highly fact-specific and
depends on the equities of the situation at hand.” Blanks, 450 S.W.3d at 376; see also 18 C.J.S.
Corporations section 16 (“Because disregarding corporate separateness as an equitable remedy is
one that differs with the circumstances of each case, no single factor or even combination of
factors is dispositive . . . .”).
We first address the proof of dominion and control. The trial court found that proof of
dominion and control was not met, because Frank Miceli generally shared the legal authority to
make decisions on behalf of Miceli Homes, Miceli Development Company, and Miceli Holding
Company with Stephen Miceli and Steve Hays, the trustees of the Joseph Miceli Trust.
Specifically, the trial court concluded that Frank, “as [president of the three entities], was a
salaried employee running th[eir] routine day-to-day operations . . . with all financial decisions
and major decisions requiring approval of the trustees.”8 The trial court also observed that Frank
was not a shareholder of these companies.9
8
The trial court also concluded that Miceli Masterwork Homes and Masterwork Homes did not have
complete dominion and control over Miceli Homes, Miceli Development Company, and Miceli Holding Company.
Commonwealth did not assert that they did. Rather, Commonwealth argued that Miceli Homes, Miceli Development
Company, and Miceli Holding Company were cast off in favor of Miceli Masterwork Homes and Masterwork
Homes in order to avoid satisfying the consent judgments. Whether Commonwealth may satisfy its judgments from
the assets of Miceli Masterwork Homes or Masterwork Homes is an issue of successor corporation liability, not
piercing the corporate veil, though the analysis is similar. See W. Fletcher, 1 Fletcher Cyc. Corp. section 48 (2015).
If Miceli Masterwork Homes and Masterwork Homes are merely a continuation of Miceli Homes, Miceli
Development Company, and Miceli Holding Company, then the former may be responsible for the latter’s liabilities.
See, e.g., Roper Elec. Co. v. Quality Castings, Inc., 60 S.W.3d 708, 711 (Mo. App. S.D. 2001).
9
While shareholder status is a factor to be considered in assessing the degree of control an individual or
entity might have over a corporation, a lack of ownership interest by itself does not defeat a claim for piercing the
corporate veil. “[I]f veil piercing was solely dependent upon an individual’s ownership interest in an entity, it would
allow ‘unscrupulous’ individuals to avoid liability by acting in a capacity that does not involve ownership.” 114 Am.
Jur. Proof of Facts 3d 403, section 5.
18
The trial court drew an erroneous legal conclusion from these facts. The fact that more
than one individual possesses decision-making authority for a corporation does not per se defeat
the element of domination and control. See Saidawi, 987 S.W.2d at 505 (holding that several
members of family, who were variously shareholders, directors, and officers of corporation,
collectively possessed complete dominion and control); Edward D. Gevers Heating & Air
Conditioning Co., 885 S.W.2d at 774. (holding that husband and wife, who were officers,
directors, and shareholders of corporation, could together possess complete dominion and
control); Irwin v. Bertelsmeyer, 730 S.W.2d 302, 304 (Mo. App. E.D. 1987) (same). Rather, the
question is whether the individual or individuals against whom the claim is asserted disregarded
the corporation’s existence as a distinct and separate legal entity, and instead used it as an
extension of their own personal mind or will. See 66, Inc., 998 S.W.2d at 40 (quoting Collet, 708
S.W.2d at 284). Thus, the trial court erroneously applied the law by concluding that the element
of domination and control was defeated by the fact that Frank Miceli generally shared legal
authority to make major financial decisions on behalf of the Miceli entities with Stephen Miceli
and Steve Hays, the trustees of the Joseph Miceli Trust.
Further, with respect to determining proof of dominion and control, we focus on the
transaction at issue. The first element of the test for piercing the corporate veil is met where it is
shown that there was “complete domination, not only of finances, but of policy and business
practice in respect to the transaction attacked so that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its own.” 66, Inc., 998 S.W.2d at 40
(emphasis added) (quoting Collet, 708 S.W.2d at 284); see also Grote Meat Co. v. Goldenberg,
735 S.W.2d 379, 386 (Mo. App. E.D. 1987) (focusing on transaction-specific nature of dominion
and control inquiry). Thus, the first element of piercing the corporate veil is met if Frank Miceli
19
exercised complete dominion and control over Miceli Homes in its commission of a wrong at
issue in this case, even if he did not dominate all aspects of the corporation at all times.10 The
trial court erroneously applied the law by failing to examine the element of dominion and control
as it pertained to the specific wrongful acts asserted by Commonwealth.
We now move to the second element of piercing the corporate veil: the existence of a
fraud or wrong. The trial court concluded that this element was not satisfied, because
Commonwealth knew that Miceli Homes was assetless before the consent judgments were
entered. Specifically, the trial court found that Frank Miceli had testified in a deposition three
months before the consent judgments that Miceli Homes had “ceased to have a checking account
once it ran out of money a few months or a year [before the deposition], that [it] had no assets
left, and [had] no intention to pay the lien claimants.” It also found that Frank had disclosed the
existence of his new, operational homebuilding corporations, Miceli Masterwork Homes and
Masterwork Homes, before the consent judgments were entered. Because of this “full
disclosure,” the court found that the defendants had not “committed any fraud or wrong, or
perpetrated a statutory violation, or violation or breach of any other positive legal duty which
would allow for piercing the corporate veil.”
The trial court drew an erroneous legal conclusion from these facts. Proof of the second
element of piercing the corporate veil may be met where the defendant uses control of a
corporation to “perpetrate the violation of . . . [a] positive legal duty.” 66, Inc., 998 S.W.2d at 40
(quoting Collet, 708 S.W.2d at 284). A defendant has a positive legal duty to satisfy a judgment
10
We also note that a factor to be considered in the dominion and control inquiry is whether there was a
failure to observe corporate formalities. See Real Estate Investors Four, Inc., 46 S.W.3d at 57. Commingling of
assets is one factor indicating the corporate form has been ignored. W. Fletcher, supra at section 41.50. “In order to
be recognized as an entity separate from its shareholders, [directors, or owners], a corporation should be operated as
a distinct and separate business and financial unit, with its own books, records and bank accounts.” Id. “Evidence
that [such individuals] used corporate funds for personal purposes, mixed corporate and personal accounts, or
commingled assets so that the ownership interests were indistinguishable will be weighed, along with other factors,
when a disregard of corporate separateness is pleaded.” Id.
20
against it. See 66, Inc., 998 S.W.2d at 41; Mobius Mgmt. Sys., Inc., 175 S.W.3d at 189. This
principle rings especially true in the case of a consent judgment, which “is not a judicial
determination of rights, but . . . an agreement of the parties . . . . [that] is contractual in nature.”11
Household Fin. Corp., 213 S.W.3d at 196. “It is well settled in Missouri that a [contractual]
promise made without the present intention to perform is a misrepresentation sufficient to
demonstrate fraud.” Info. Technologies, Inc. v. Cybertel Corp., 66 S.W.3d 126, 128 (Mo. App.
E.D. 2001). Thus, the trial court’s finding that Frank Miceli entered into the consent
judgments—despite the fact that Miceli Homes was assetless and had no intention to satisfy
them—is evidence that the second element of piercing the corporate veil is actually met, not that
Frank or the Miceli entities are blameless. See Mobius Mgmt. Sys., Inc., 175 S.W.3d at 189
(piercing corporate veil where, inter alia, defendant had “signed a $175,000 consent judgment
one year after [the corporation] had been abandoned,” and where defendant admitted that “when
he agreed to and signed the consent judgment, he knew [his corporation] was unable to pay it”);
66, Inc., 998 S.W.2d at 41 (piercing corporate veil where, inter alia, corporation initiated
condemnation action that resulted in interest judgment against it, but had no capital or plan to
acquire capital to satisfy judgment).
Moreover, the second element of piercing the corporate veil is met where the defendant
uses control of a corporation to “perpetrate . . . [a] dishonest and unjust act in contravention of
[a] plaintiff’s legal rights.” Id. (quoting Collet, 708 S.W.2d at 284). “In some situations, the
corporate veil may be pierced when a corporation is undercapitalized, or when its assets are
stripped to avoid creditors.” Mobius Mgmt. Sys., 175 S.W.3d at 188-89. “[A]ctivity conducted to
strip a corporation of its assets in anticipation of impending legal liability may be considered in
11
Though, as we have explained, “it is accorded the same force as other judgments . . . . [and] conclusive of
matters adjudicated.” Household Fin. Corp., 213 S.W.3d at 196.
21
making the determination whether to disregard the corporate entity.” W. Fletcher, supra at
section 41.34. Here, the trial court found that Frank Miceli had disclosed prior to the consent
judgments that Miceli Homes had simply been allowed to run out of money while approximately
1.5 million dollars in lien claims were pending against it, and while other Miceli-related entities,
including Miceli Masterwork Homes and Masterwork Homes, continued to operate in the
construction industry. The trial court erred as a matter of law by concluding that these facts are
evidence that there was not a dishonest or unjust act in contravention of Commonwealth’s rights.
For the foregoing reasons, the trial court erroneously declared and applied the law with
respect to Commonwealth’s motion for creditor’s bill and to pierce the corporate veil. The trial
court erred by granting judgment against Commonwealth on these claims.
IV. CONCLUSION
We affirm the trial court’s dismissal of Counts I-V with respect to defendant Miceli
Homes. We also affirm the trial court’s dismissal of Commonwealth’s Counts VII-VIII in their
entirety.
However, we reverse the trial court’s dismissal of Counts I-V with respect to defendant
Frank Miceli. We also reverse the trial court’s judgment in favor of the defendants on
Commonwealth’s motion for creditor’s bill and to pierce the corporate veil. We remand to the
trial court for further proceedings consistent with this opinion.
_________________________________
Lisa S. Van Amburg, Judge
Lawrence E. Mooney, P. J. and
Clifford H. Ahrens, J. concur.
22