Rosson v. McFarland
| Docket Number: | 2006-CA-01107-SCT Linked Case(s): 2006-CA-01107-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 08-23-2007 Opinion Author: RANDOLPH, J. Holding: ON DIRECT APPEAL: REVERSED AND RENDERED; ON CROSS-APPEAL: DISMISSED |
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| Additional Case Information: |
Topic: Contract - Piercing the corporate veil Judge(s) Concurring: SMITH, C.J., WALLER, P.J., EASLEY, CARLSON, DICKINSON AND LAMAR JJ. Non Participating Judge(s): DIAZ, P.J. Dissenting Author : GRAVES, J. Procedural History: Jury Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 05-30-2006 Appealed from: Hancock County Circuit Court Judge: Stephen Simpson Disposition: Jury returned a verdict against Appellant individually & all post trial motions were denied by the trial court Case Number: 99-0205 |
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| Consolidated: 2004-CA-00078-SCT Julie Rosson v. Dr. Mark McFarland | ||
| Party Name: | Attorney Name: | |||
| Appellant: | JULIE ROSSON |
JOE SAM OWEN |
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| Appellee: | DR. MARK McFARLAND | S. CHRISTOPHER FARRIS |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Piercing the corporate veil |
| Summary of the Facts: | Dr. Mark McFarland filed a complaint against Acadian Bay Development, Inc. and Julie Rosson, individually, alleging that they breached their contractual obligations, that they negligently failed to construct his home in a fit and workmanlike manner, and that they made false representations to induce McFarland to enter into the contract to build his home. Subsequently, McFarland filed an amended complaint adding Time Warner, Inc., alleging it to be the parent company of Southern Living magazine. McFarland obtained the plans for building his home from Southern Living. More than three years later, a second amended complaint was filed omitting Time Warner, Inc., as a defendant, but naming Southern Living, Inc. as a defendant. The second amended complaint also named Julie Rosson Builder, Inc. as an additional defendant and alleged that all defendants made material misrepresentations and were guilty of fraud and deceptive advertising in addition to breach of contract. During trial, Southern Living settled for $100,000. The jury returned a verdict of $325,000, but only against Rosson as an individual. Rosson was then given credit for the settlement payment by Southern Living, and the verdict was reduced by agreement. Final judgment was entered against only Rosson, individually, for $225,000. Rosson appealed, and McFarland cross-appealed. Subsequent to the appeal, Rosson allegedly discovered evidence McFarland withheld at trial. The Supreme Court, sua sponte, found that a final judgment had not been entered, because the final judgment from which Rosson appealed failed to address the corporate defendants Acadia Bay or Julie Rosson Builder, Inc., and was not certified as final under M.R.C.P. 54(b). The Court dismissed the appeal for lack of jurisdiction. Subsequently, Rosson filed a Motion for Correction of Final Judgment, to which McFarland agreed. The trial court granted the motion. The trial court re-stated that the evidence not produced at trial was not prejudicial in light of its cumulative nature and denied Rosson’s motion. Rosson appeals. |
| Summary of Opinion Analysis: | The issue before the Court is whether Rosson should incur individual liability vel non regarding the faulty construction of McFarland’s home. Piercing the corporate veil is reserved for factual circumstances which are clearly extraordinary, and the distinct corporate identity will be maintained unless to do so would subvert the ends of justice. Where, in the context of an action for breach of a lease or other consensual undertaking, a party seeks to pierce the veil of the corporation with whom he has contracted and to hold the shareholders personally liable, the Court’s focus is fixed upon the expectations of the parties in concluding the bargain. Since contract liability arises from an essentially consensual relationship, courts generally decline to disregard the corporate entity, choosing instead to enforce the contract as written. Under Mississippi law, to pierce the corporate veil, one must demonstrate some frustration of contractual expectations regarding the party to whom he looked for performance; the flagrant disregard of corporate formalities by the defendant corporation and its principals; and a demonstration of fraud or other equivalent misfeasance on the part of the corporate shareholder. The testimony is uncontraverted that the contract was between McFarland and Acadian Bay, a company owned by Rosson. McFarland admitted in testimony that he was aware that the contract was executed with Acadian Bay, through its president, Rosson. In his testimony, McFarland conceded he did not demand that Rosson individually guarantee the performance of the contract by Acadian Bay, nor that Rosson personally guarantee the construction on the home. Further, McFarland testified he paid Acadian Bay for construction. It is clear that McFarland did not contract with Rosson individually for performance or require Rosson to guarantee the performance of Acadian Bay. Thus, McFarland fails to satisfy the first prong required to pierce the corporate veil. Rosson testified that she operated three corporations during the period in which McFarland’s home was being built. These companies operated from the same street address and used the same phone number. Rosson introduced into evidence twenty-four invoices from the suppliers used to construct McFarland’s home. Of these twenty-four invoices, four invoices list the items being sold to Julie Rosson, individually. The remaining twenty invoices list items sold to either Acadian Bay; Good Earth; Julie Rosson Builder, Inc.; or Seaside Interiors. Rosson applied for a license in 1994. In her 1994 application, she applied for the license in the name of “Julie Rosson.” However, when asked what type of business entity the license was for, she stated “corporation.” The date of incorporation and the officers of the corporation were listed as well. The corporation had a separate checking account, as well as separate tax returns. Acadian Bay was licensed by the Secretary of State to do business in Mississippi. Thus, the evidence is insufficient to establish a disregard for corporate formalities. Julie Rosson Builder, Inc., was listed in Southern Living magazine as a Custom Home Builder. Rosson’s application was shown to be factually correct, and she was recommended to Southern Living by others in the building industry. Southern Living based its selection of Julie Rosson Builders, Inc., as a Custom Home Builder on these elements. Although Rosson stated she had no formal education in home building, she said she gained experience in home building through experience and that she also relied on her subcontractors. There is no evidence that Rosson used McFarland’s money for her own personal benefit, or that Rosson was using a shell corporation as a shield from personal liability. McFarland contracted with Acadian Bay to construct his home properly, and did not demand any individual guarantees from Rosson, nor did she make any. Given the evidence, the trial court erred in failing to grant a JNOV for Rosson individually. |
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