American Asphalt & Grading Co., Inc. v. Bowman

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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