Court of Appeals of Ohio, Second District, Montgomery
WILLIAM E. WEANER & ASSOCIATES, LLC, et al. Plaintiffs-Appellants/Cross-Appellees
369 WEST FIRST, LLC, et al. Defendants-Appellees/Cross-Appellants
Appeal from Common Pleas Court Trial Court Case No.
T. MATTHEWS, Atty. Reg. No. 0029215, Attorney for
ANDREW VOLLMAR, Atty. Reg. No. 0064033 and ADAM ARMSTRONG,
Atty. Reg. No. 0079178, Attorneys for
1} This case is before the court on the appeal of
Plaintiffs-Appellants/Cross-Appellees, Shooter Construction
Company dba Possert Construction ("Possert") and
William Weaner and Associates, LLC ("Servpro"), and
the cross-appeal of Defendants-Appellees/Cross-Appellants,
Whichard Whichard, N.W. Fashion, LLC ("NW"), and
Olympia Shoppes, LLC ("Olympia").
2} Plaintiffs appeal from a judgment denying in part
their motion for summary judgment against Defendants; the
motion was also granted in part. Specifically, the trial
court found Defendants jointly and severally liable for a
total of $14, 000 toward the payment of $60, 143 in attorney
fees and/or unpaid interest on an attorney fee judgment that
was awarded to Plaintiffs in July 2015. The basis for the
judgment was that transfers of this amount by a limited
liability company (LLC), 369 West First Street, LLC
("369") to N.W. and Olympia violated the Ohio
Uniform Fraudulent Transfer Act ("UFTA").
Plaintiffs do not appeal from this part of the judgment, but
Defendants have cross-appealed, contending that the trial
court erred in awarding this amount to Plaintiffs.
3} The trial court rejected Plaintiffs'
fraudulent transfer claims concerning January 2013 transfers
of $100, 000 to Whichard and $123, 690 to Ashton Limited, LLC
("Ashton"). Ashton was a defendant in the trial
court, and like N.W. and Olympia, was an LLC owned solely by
Whichard. The trial court also refused to pierce the
corporate veil of 369 and hold Whichard responsible for the
attorney fee judgment against 369. Plaintiffs appeal from
this part of the trial court judgment as well.
4} After considering the evidence, we conclude that
the trial court did not err in awarding $14, 000 to
Plaintiffs. However, there were genuine issues of material
fact regarding the piercing of the corporate veil and the
transfers to Whichard and Ashton. As a result, the judgment
of the trial court will be affirmed in part and reversed in
part, and this cause will be remanded to the trial court for
Facts and Course of Proceedings
5} Plaintiffs' claims are based on what is now
nearly an eleven-year attempt to collect on amounts that 369
owed for work that Plaintiffs performed in 2008. As noted,
Whichard was the sole owner of 369, which was formed to
purchase property at 369 West First Street, in Dayton, Ohio.
In late August 2008, a large rainstorm damaged 369's
building. At the time, the building was the only property
that 369 owned.
6} Servpro is a company that provides water
remediation services. Whichard's assistant, Jeanette
Hagood, signed a contract with Servpro, agreeing to pay for
any amounts that were not covered by insurance immediately
upon receipt of an invoice. The contract imposed interest and
finance charges at the maximum allowable by law or at 1.5%
per month, whichever was less, on accounts that were over 30
days past due. Further, the contract provided that if legal
action were brought, Servpro would be entitled to reasonable
legal fees and costs of collection, in addition to any other
amounts the customer owed. Finally, the contract provided for
the filing of mechanics liens. The total charge for
Servpro's services was $13, 939.04.
7} Hagood also signed a contract with Possert for
needed property repairs. Although Possert estimated $75, 000
in construction costs, only limited repairs were done.
Possert's contract, like Servpro's, imposed 1.5%
interest due per month on all past-due invoices. In addition,
Possert's contract provided for recovery of reasonable
attorney fees and costs. The total cost of Possert's
repairs was $9, 402.25, which was billed by Possert on
November 7, 2008. That same day, Traveler's Insurance had
informed both Servpro and Possert that it had denied
369's claim for insurance, and that they would need to
individually invoice 369. They did so, but 369 never paid the
8} Both Servpro and Possert filed mechanics'
liens against 369's property on West First Street.
Subsequently, on December 29, 2008, Whichard signed a general
warranty deed, conveying the 369 property to Eufala
corporation. Whichard's son, Chad Whichard
("Chad"), who was the managing member of another
LLC (Northwest Outparcels, LLC), also signed the warranty
deed. According to Whichard, 369 owned a 90% interest in the
property, and Northwest owned 10%.
9} According to the settlement statement, the
purchase price was $300, 000, and the cash amount due to the
sellers was $226, 478.98, based on various settlement
charges, including payoff of several mechanics' lien.
These liens included $14, 103.38 for Possert, $22, 612.15 for
Servpro, and $28, 547.61 to Beerman Realty Company. However,
Possert or Servpro were not paid. As a result, Servpro filed
suit against 369 in October 2009, seeking $13, 939.04, plus
interest and reasonable attorney fees. Possert also sued 369
in March 2011, seeking $9, 402.25, plus interest and
reasonable attorney fees. After the cases were consolidated, a
magistrate held a joint two-day trial in November 2012. The
magistrate found in favor of Servpro and Possert and awarded
the requested amounts, plus interest at the contractual rate
of 1.5% from the date of default by 369 (October 21, 2008,
and November 7, 2008, respectively).
10} The magistrate's April 2013 decision noted
that due to the inclusion in the contract of provisions for
reasonable attorney fees and costs, the matter of attorney
fees would be set for a hearing. April 10, 2013 Amended
Magistrate's Decision in Montgomery C.P. No.
2009-CV-9715, pp. 11 and 14-15. In addition, the magistrate
stressed that "[t]he Court is well aware of the
extensive procedural history of this case." Id.
at p. 2. Both Plaintiffs and 369 filed objections to the
magistrate's decision. In October 2013, the case was
transferred to another judge.
11} In November 2013, Whichard's attorney,
Lemuel Whitsett, offered to settle both claims for $25, 000.
According to Plaintiff's counsel, the amount of the
judgment at that time (prior to the attorney fee award) was
$58, 601.87. More than five years had elapsed since the work
was done on 369. Plaintiff's counsel offered to settle
the action for $42, 250, but no agreement was reached.
12} In April 2014, the trial court issued a decision
overruling all the objections to the magistrate's
decision. 369 appealed from the decision, but we dismissed
the appeal for lack of a final appealable order. See
Weaner & Assocs. v. 369 W. First LLC, 2d Dist.
Montgomery No. 26404 (December 8, 2014).
13} Another judge was assigned to the 2009
collection case early in 2015 and held a hearing on attorney
fees. In July 2015, the judge awarded Plaintiffs a total of
$60, 143.25 in attorney fees. Following 369's appeal,
which raised only the attorney fee issue, we affirmed the
trial court's judgment. See Weaner & Assocs.,
LLC. v. 369 W. First St., LLC, 2d Dist. Montgomery No.
26792, 2016-Ohio-8077. In rejecting 369's claim that
Plaintiffs' recovery should be limited to a contingency
amount, we stressed that "limiting plaintiffs'
recovery to that amount encourages the precise behavior that
occurred in this case: defendant's obfuscation, denial,
delay and distraction that turned this rather simple
collection case into a six year ordeal." Id. at
14} Our opinion was issued in December 2016, and no
further appeal was taken. Plaintiffs then filed an action on
January 1, 2017, against 369 and Whichard, as well as three
other LLCs that Whichard owned: Ashton, NW, and Olympia. The
complaint alleged violation of the UFTA and also asked the
court to pierce the corporate veil. Another extensive course
of litigation ensued. In May 2017, the court set a trial for
July 23, 2018. In February 2018, Plaintiffs filed a motion
for summary judgment on all claims. Defendants then filed a
cross-motion for summary judgment in April 2018. However, in
late May 2018, 369 filed for bankruptcy and then filed a
motion on August 1, 2018, asking the trial court to stay the
case until the bankruptcy proceeding was complete.
15} Although Plaintiffs had dismissed 369 as a party
in July 2018 and had opposed a stay, the trial court stayed
the action on September 9, 2018. After the bankruptcy case
ended in November 2018, the trial court lifted the stay and
reactivated the action. Subsequently, in April 2019, the
court ruled on Plaintiffs' motion for summary judgment
and Defendants' cross-motion for summary judgment.
16} In its judgment, the court set aside November
2015 transfers from 369 to N.W. and Olympia, and held
Whichard and both entities jointly and severally liable for
payment of $14, 000. However, the court rejected the attempt
to set aside transfers from 369 in January 2013 to Whichard
and Ashton. Following the judgment, Plaintiffs filed a notice
of appeal, and Defendants cross-appealed.
Piercing the Corporate Veil
17} Plaintiffs First Assignment of Error states
The Trial Court Erred by Granting [Defendants'] Motion
for Summary Judgment as to the [Plaintiffs'] Claim
Regarding Piercing the Corporate Veil of 369 and Holding
[Whichard] Personally Liable for the Debt Owed.
18} Under this assignment of error, Plaintiffs
contend that the trial court erred in refusing to pierce the
corporate veil and hold Whichard responsible for 369's
debts. According to Plaintiffs, the trial court failed to use
the well-known test for disregarding corporate entities. They
stress that by using this test, the court should have found
that 369 was Whichard's alter ego and had no separate
mind, will, or existence of its own.
19} In its decision, the trial court concluded that
there has been little discussion in Ohio case law of how the
standards of Ohio corporations apply to Ohio limited
liability companies. The court then rejected the
Plaintiffs' claims against Whichard because she did not
exercise complete control over 369's operation. The court
also relied on the fact that Whichard used her "personal
credit" to pay off the mechanics' liens.
20} The law is well-settled concerning the standards
that apply to summary judgment decisions." 'A trial
court may grant a moving party summary judgment pursuant to
Civ.R. 56 if there are no genuine issues of material fact
remaining to be litigated, the moving party is entitled to
judgment as a matter of law, and reasonable minds can come to
only one conclusion, and that conclusion is adverse to the
nonmoving party, who is entitled to have the evidence
construed most strongly in his favor.'" GNFH,
Inc. v. W. Am. Ins. Co., 172 Ohio App.3d 127,
2007-Ohio-2722, 873 N.E.2d 345, ¶ 16 (2d Dist.), quoting
Smith v. Five Rivers MetroParks, 134 Ohio App.3d
754, 760, 732 N.E.2d 422 (2d Dist.1999). Due to the nature of
summary judgment, we apply a de novo standard of review,
which means that we apply the same standards as the trial
21} "A fundamental rule of corporate law is
that, normally, shareholders, officers, and directors are not
liable for the debts of the corporation. * * * An exception
to this rule was developed in equity to protect creditors of
a corporation from shareholders who use the corporate entity
for criminal or fraudulent purposes." Belvedere
Condominium Unit Owners' Assn. v. R.E. Roark Cos.,
Inc., 67 Ohio St.3d 274, 287, 617 N.E.2d 1075 (1993).
22} In Belvedere, the Supreme Court of Ohio
held that "the corporate form may be disregarded and
individual shareholders held liable for corporate misdeeds
when (1) control over the corporation by those to be held
liable was so complete that the corporation has no separate
mind, will, or existence of its own, (2) control over the
corporation by those to be held liable was exercised in such
a manner as to commit fraud or an illegal act against the
person seeking to disregard the corporate entity, and (3)
injury or unjust loss resulted to the plaintiff from such
control and wrong." Id. at 289. The party who
seeks to impose individual liability under this theory has
the burden of proof. Zimmerman v. Eagle Mtge. Corp.,
110 Ohio App.3d 762, 772, 675 N.E.2d 480 (2d Dist.1996).
23} Subsequently, the Supreme Court of Ohio accepted
a certified conflict concerning whether Belvedere
would allow piercing when a shareholder's acts were
simply unjust or inequitable, rather than fraudulent or
illegal. Dombroski v. WellPoint, Inc., 119 Ohio
St.3d 506, 2008-Ohio-4827, 895 N.E.2d 538, ¶ 1. The
court rejected this theory. However, the court also stressed
that its "pronouncement in Belvedere is too
limited to protect other potential parties from the wide
variety of egregious shareholder misdeeds that may occur.
Limiting piercing to cases of fraud or illegal acts protects
the established principle of limited liability, but it
insulates shareholders when they abuse the corporate form to
commit acts that are as objectionable as fraud or illegality.
In view of the reality that shareholders could seriously
misuse the corporate form and evade personal liability under
the second prong as presently worded, we find it necessary to
modify the second prong of the Belvedere test to
allow for piercing in the event that egregious wrongs are
committed by shareholders." Id. at ¶ 28.
24} The court, therefore, held that "to fulfill
the second prong of the Belvedere test for piercing
the corporate veil, the plaintiff must demonstrate that the
defendant shareholder exercised control over the corporation
in such a manner as to commit fraud, an illegal act, or a
similarly unlawful act." Id. at ¶ 29.
25} Contrary to the trial court's impression,
numerous Ohio cases have applied the standard in
Belvedere to limited liability corporations. See
Denny v. Breawick, LLC, 3d Dist. Hancock No. 5-18-12,
2019-Ohio-2066, ¶ 15 (citing cases from the First,
Second, Seventh, Eighth, and Tenth Appellate Districts). The
trial court also stressed that LLCs are set up to conduct
business in a less formal manner than corporations.
See Doc. #90, Decision and Entry on Cross-Motions
for Summary Judgment, p. 10. However, this was not a
limitation expressed in either Dombrowski or
Belvedere. In fact, Belvedere emphasized
that "[t]he ease with which close corporations and
corporate subsidiaries can be created and the ability to
transfer ownership of an existing corporation lead us to
believe that corporations formed for legitimate purposes can
easily be later used to commit fraud or other wrongs."
Belvedere, 67 Ohio St.3d at 288, 617 N.E.2d 1075.
26} The same comment would apply to LLCs, which are
a hybrid of a close corporation and a partnership.
Holdeman v. Epperson, 2d Dist. Clark No. 2004-CA-49,
2005-Ohio-3750, ¶ 33. Close corporations also resemble
partnerships. Vontz v. Miller, 2016-Ohio-8477, 111
N.E.3d 452, ¶ 31 (1st Dist.). Both close corporations
and LLCs have the advantage, however, of limited liability.
Holdeman at ¶ 33; Vontz at ¶ 33.
We further noted in Holdeman that because an LLC has
"some attributes of a corporation" and also has
"some partnership attributes, the logical approach would
be to use rules typically applied to these entities."
Holdeman at ¶ 34.
27} With these points in mind, we will consider
whether summary judgment was appropriate on the question of
piercing the corporate veil.
28} "The first prong of the Belvedere
test 'is a concise statement of the alter ego doctrine;
to succeed a plaintiff must show that the individual and the
corporation are fundamentally indistinguishable.'"
State ex rel. DeWine v. S & R Recycling, Inc.,
195 Ohio App.3d 744, 2011-Ohio-3371, 961 N.E.2d 1153, ¶
30 (7th Dist.), quoting Belvedere at 288. A
party's sole control of a company is not sufficient to
establish that an individual is the alter ego of a company.
Springfield v. Palco Invest. Co., 2013-Ohio-2348,
992 N.E.2d 1194, ¶ 83 (2d Dist.) Instead, to decide if a
corporation [or LCC, as here, ] "is an individual's
alter ego, Ohio appellate courts consider various factors,
such as (1) whether corporate formalities were observed, (2)
whether corporate records were kept, (3) whether corporate
funds were commingled with personal funds, (4) whether
corporate property was used for a personal purpose, and (5)
gross undercapitalization." Id. at ¶ 84,
citing My Father's House No. 1 v. McCardle,
2013-Ohio-420, 986 N.E.2d 1081, ¶ 28 (3d Dist.) (using
factors 1-4) and DeCaprio v. Gas & Oil, Inc.,
9th Dist. Summit No. 26140, 2012-Ohio-5866, ¶ 14 (using
29} Courts have also considered other factors,
including "insolvency at the time of the disputed
act"; whether "the individual held himself out as
personally liable for certain corporate obligations";
"the entity's inability to pay debts due to high
salaries or loans to shareholders"; "commingling of
individual and entity funds"; "lack of corporate
records, especially regarding claimed loans to or from the
entity to be pierced"; "common office space";
and "the degree of domination by the person to be held
liable, e.g. where the corporation was a mere facade
for the operations of the dominant shareholders."
Premier Therapy, LLC v. Childs, 2016-Ohio-7934, 75
N.E.3d 692, ¶ 84 (7th Dist.). These lists are not
exhaustive, nor are the factors mandatory considerations.
Id. at ¶ 84-85.
30} Under the standard for assessing directed
verdicts, which is the same for summary judgment motions,
reviewing courts consider" 'only whether there
exists any evidence of substantive probative value that
favors the position of the nonmoving party.'"
Id. at ¶ 62, quoting Goodyear Tire &
Rubber Co. v. Aetna Cas. & Sur Co., 95 Ohio St.3d
512, 2002-Ohio-2842, 769 N.E.2d 835, ¶ 3. See also
Knop v. Toledo, 107 Ohio App.3d 449, 453, 669 N.E.2d 27
(6th Dist.1995) (the same standard applies to both summary
judgments and directed verdicts). Therefore, the issue here
is not whether Plaintiffs will prevail on their claim of
piercing the corporate veil, but whether any substantive,
probative evidence existed in Plaintiffs' favor on this
31} After applying the factors, we conclude there is
substantive, probative evidence that Whichard was the alter
ego of 369. Whichard was the sole member of 369, which was
created to buy the property at 369 West First Street in
Dayton, Ohio. See Doc. #57, Ex. C, Deposition of
Angela Whichard, pp. 15-16. Whichard also had full control
and authority over 369. Id. at p. 27. In addition to
NW, Olympia, Ashton, and 369, Whichard was a member or
shareholder of other LLCs and corporations, including Branson
Commercial Properties, LLC, in Branson, Missouri; Georgetown
Village Shoppes in Georgetown, Kentucky; Windsor Richland
Mall, LP, which was formed in Texas; Angela Whichard, a
Nevada corporation; AT100, LLC, a Nevada LLC; Whichard Family
Holdings; and OKO, LLC, an Oklahoma LLC. Id. at pp.
25-26, 71, and 101.
32} During its life as an LLC, 369 owned three
properties: (1) the 369 building in Dayton, Ohio, which was
purchased in 2007 and was sold in January 2009; (2) a Pearl
Road property in Cleveland, Ohio, which was purchased in 2012
and sold in August 2013; and a Boaz, Alabama property, which
was purchased in December 2012 and sold in January 2013.
Whichard Affidavit at ¶ 3, 10, and 11; Whichard
Affidavit, Ex. A-2 and Ex. A-5, pp. 5 and 6. After the August
2013 sale of the Pearl Road property, 369 owned no other
properties and did not earn any money.
33} 369 did not have any employees. Hagood assisted
Whichard with 369, but she was Whichard's personal
assistant and was paid by Whichard, not 369. Whichard
Deposition at pp. 30-31 and 34.
34} During her deposition, Whichard presented no
evidence that corporate formalities were observed, nor did
she have any idea where corporate records might be kept.
Later, in opposing summary judgment, Whichard did produce
documents indicating that 369 was registered with the Ohio
Secretary of State and also produced a general ledger for 369
from May 2012 through August 2016. However, Whichard did not
attach any other documents indicating that formalities were
observed, including holding meetings and keeping minutes, and
she did not provide any evidence like promissory notes or
other loan documents to explain or substantiate the terms
under which 369 gave money to other entities or allegedly
borrowed from other entities.  Additionally, no explanation was
ever offered as to what happened to the $300, 000 that 369
received when it sold the Dayton property in January 2009.
35} As to mingling corporate and personal money, the
evidence indicates that this occurred in many instances. As
an initial point, Whichard stated that as a sole owner of an
LLC, she could take money out of the LLC whenever she needed
it; she could also put the money in another LLC, or she could
use it for personal matters, like real estate taxes. Whichard
Deposition at pp. 96-97.
36} As an example of mingling corporate and personal
money, the evidence indicates that between 2012 and 2016, 369
paid a total of $26, 351.97 in expenses on a 2011 Ford Ranger
truck that was titled in 369's name, but was kept by
Whichard for her personal use. See Whichard
Affidavit Ex. A-5 at p. 17. Although Whichard claimed the
truck could be driven to Cleveland if needed (the location of
the Pearl Road property that 369 owned from around May 2012
through August 2013), there is no evidence that it was ever
used for that property or for the only other property 369
owned - a property in Boaz, Alabama that was owned for a very
short period of time in late 2012 to early 2013. Furthermore,
369 did not own any property after August 2013, nor
is there any indication that it did any business thereafter.
37} Whichard's home was located in North
Carolina, and she stated that the truck was used for whatever
she wanted, or by anyone who came by the house and wanted to
use it; it was a "community truck." Whichard
Deposition at pp. 92-93. The expenses 369 paid for the truck
included car payments, car insurance payments, and license
plates for something that was for Whichard's personal
use, particularly after August 2013. See Ex. A-5.
38} In other examples of co-mingling, Whichard used
money from 369 to pay expenses of other LLCs she owned, with
no evidence that any of these entities were obligated to pay
the money back. According to the evidence, 369 purchased a
property in Boaz, Alabama, on December 27, 2012, for $25,
000. The property was sold to 369 by the Boaz Downtown
Redevelopment Authority. See Whichard Affidavit at
¶ 11 and Ex. A-2 attached to the affidavit. According to
Whichard's affidavit and the attached documents, 369 sold
the same property to VFFO Boaz Opportunity, LLC for $633, 000
in January 2013. Id. at Ex. A-2. $411, 798 was then
deposited into 369's checking account on January 18,
2013. Id. at ¶ 11 and Ex. A-5 at p. 3.
39} The oddities in this transaction abound. As a
preliminary point, Ex. A-2 indicates that Whichard signed a
deed transferring the property to VFFO on December 26, 2012 -
before the property was deeded to her. The deed was
then not filed until April 11, 2013, several months
after the $411, 798 was deposited into 369's
account. Furthermore, the difference between the low purchase
price and the very high selling price is inexplicable - and
Whichard offered nothing to explain this anomaly. She also
did not explain why only $411, 798 was deposited, rather than
the additional $196, 202 that would have resulted from the
sale ($633, 000 minus $25, 000 equals 608, 000. $608, 000
minus $411, 798 equals $196, 202). Legitimate explanations
may have existed, at least for the difference between the
sales price and the amount deposited, but there appears to be
no rational explanation for the significant increase in the
sales price in less than a month.
40} More importantly, after the money from this sale
was deposited, Whichard took a member's draw of $100,
000. During her deposition, which was taken on August 4,
2016, Whichard stated that she "did not know" why
she would have paid herself $100, 000 in January 2013.
Whichard Deposition at pp. 86-87. However, in her summary
judgment affidavit, which was signed on April 16, 2018,
Whichard stated that she had taken an owner's draw of
$100, 000 "[i]n good faith, after the sale of the Boaz
property and in consideration of the personal risk I accepted
in making this purchase, including my personal guarantee of
the loan." Whichard Affidavit at ¶ 11. These
statements, made on separate dates, are irreconcilable.
41} Moreover, no documents were submitted to
substantiate that Whichard personally guaranteed a loan in
connection with this purchase. However, even if she had done
so, the risk involved in a $25, 000 loan that was satisfied
by a sale less than a month later in an amount more than 25
times the loan amount is hardly a risk - particularly where
the property was conveyed to the purchaser prior to
the date when the seller received its own deed to the
42} 369's ledger also indicates a deposit of
$107, 401.25 on August 9, 2013 from the sale of 369's
remaining property, the Pearl Road property in Cleveland,
Ohio. On August 28, 2013, Whichard took another $100, 000 in
a member's draw. In her affidavit, Whichard again claimed
that she took this draw in consideration of the risk she took
in making this purchase, including her personal guarantee of
the loan. No documents were offered to support this
43} In its decision, the trial court made numerous
references to the fact that Whichard personally guaranteed
loans. See Doc. #90 at p. 6 (referencing
"statements" in Defendants' memorandum); p. 7
(referencing the fact that Whichard acquired and sold the
Boaz and Pearl Road properties with contributions from her
other companies and her personal guarantee); p. 8 (referring
to Ex. A-3, an open-end mortgage); and p. 10 (concerning
piercing the corporate ...