from the Iowa District Court for Chickasaw County, James C.
appeals the district court decision against piercing the
corporate veil to enforce a judgment debt.
B. Howie of Shindler, Anderson, Goplerud & Weese, PC,
West Des Moines, for appellant.
C. Martin and Mark H. Rettig of Day Rettig Martin, PC, Cedar
Rapids, for appellee.
Considered by Vogel, P.J., and Doyle and Bower, JJ.
Construction, LLC (Woodruff), appeals the district
court's decision not to pierce the corporate veil of
Clark Farms, Ltd. (Clark Farms) and enforce a judgment debt
against K.W. Clark (Clark). We reverse.
Background Facts and Proceedings
Farms is an Iowa corporation, with articles of incorporation
filed in 1997, then reincorporated in 2001 following an
administrative dissolution. Clark Farms is in the business of
biosolids management. Clark Farms has also done business
under the name Clark Contract Services but never registered
the name with the Iowa Secretary of State. Clark is the
president, secretary, and treasurer of the corporation. He is
also the sole owner and director of the corporation. Clark
owns and operates two other entities, Casey Clark Farms and
White Pines Farm, which are sole proprietorships.
is a commercial industrial construction company. In 2009,
Woodruff contracted with the city of Leon, Iowa, to act as
general contractor during the construction of a wastewater
treatment facility. In April 2010, Woodruff contracted with
Clark Farms for lagoon sludge removal. Clark Farms began
work, then in 2011 abandoned the project when Clark
determined he had underbid the contract, leaving the work
incomplete. In July 2012, Woodruff brought a breach of
contract action against Clark Farms. In September 2014,
Woodruff obtained a judgment against Clark Farms for $410,
066.83 plus interest. The court ruled on a motion to amend and
enlarge filed by Clark on January 15, 2015.
Farms failed to pay the judgment. In June 2015, Woodruff
brought suit to pierce the corporate veil of Clark Farms and
recover personally from Clark, and impose a constructive
trust and equitable lien on all assets of Clark Farms. In a
deposition that July, Clark stated Clark Farms still existed
but was not bidding any projects and no longer had any
employees aside from the bookkeeper. By the time of trial,
Clark Farms had no employees.
April 2017, the court held a bench trial. The court issued
its ruling in August, denying Woodruff's request to
pierce the corporate veil and denying the request to impose a
constructive trust and equitable lien on the assets of Clark
Farms. Woodruff appeals only the piercing the corporate veil
Standard of Review
parties in this case do not agree on the appropriate standard
of review. Woodruff argues piercing the corporate veil is to
be reviewed de novo. Clark identifies the standard of review
as for correction of errors at law-that the question is one
at law to be decided by the trier of fact.
the corporate veil has roots in both courts of equity and
law. Int'l Fin. Servs. Corp. v. Chromas Techs. Can.,
Inc., 356 F.3d 731, 736 (7th Cir. 2004). Under our rules
of appellate procedure, cases tried in equity will be
reviewed de novo, while cases tried at law are reviewed for
correction of errors at law. Iowa R. App. P. 6.907.
"Piercing the corporate veil . . . is not itself an
action; it is merely a procedural means of allowing liability
on a substantive claim." Int'l Fin. Servs.
Corp, 356 F.3d at 736. Some sources refer to the
doctrine as an equitable one. 1 William Meade Fletcher,
Fletcher Cyclopedia of the Law of Corporations
§ 41.29 (2017); 6 Matthew G. Doré, Iowa Practice
Series, Business Organizations § 39:20
("[A]lthough piercing the corporate veil is an equitable
remedy, the Iowa courts have held that factual questions
related to piercing are for the jury."). The imposition
of "liability on a shareholder for corporate obligations
where there is no basis for liability at law is necessarily
an equitable remedy." Minger Constr., Inc. v. Clark
Farms, Ltd., No. 14-1404, 2015 WL 7019046, at *6 (Iowa
Ct. App. Nov. 12, 2015) (McDonald, J., concurring in part and
dissenting in part); see also Stacey-Rand, Inc. v. J.J.
Holman, Inc., 527 N.E.2d 726, 728 (Ind.Ct.App. 1988)
(noting a request to pierce the corporate veil to be
equitable by nature).
issue before us is that of piercing the corporate veil, with
no additional claims at law requiring a different review. The
only remedy requested is an equitable remedy-to shift
liability to the owner of the corporation for equitable
reasons. Woodruff filed the claim in equity. Clark made no
attempt to move the case to a court at law. We will treat the
case as it was tried below, as a claim in
review of equitable proceedings is de novo. Iowa R. App. P.
6.907. We may give weight to the court's factual
findings, but we are not bound by those findings. Porter
v. Harden, 891 N.W.2d 420, 424 (Iowa 2017). "We
give respectful consideration to the district court's
fact findings, especially when witness credibility is an
issue, but we are not bound by those facts." Sun
Valley Iowa Lake Ass'n v. Anderson, 551 N.W.2d 621,
629 (Iowa 1996); Iowa R. App. P. 6.904(3)(g). We have a duty
to examine the entire record and adjudicate anew the issues
properly presented. Hensch v. Mysak, 902 N.W.2d 822,
824 (Iowa Ct. App. 2017).
seeks to have us pierce the corporate veil on Clark Farms,
and hold Clark personally liable for the judgment against
corporate veil is central to the concept of a
corporation-separation between the corporate entity and the
stockholders, limiting their personal liability to the extent
of their investment. Ross v. Playle, 505 N.W.2d 515,
517 (Iowa Ct. App. 1993); see also Iowa Code §
490.622(2) (2016) ("Unless otherwise provided in the
articles of incorporation, a shareholder of a corporation is
not personally liable for the acts or debts of the
corporation."). "But the corporate device cannot in
all cases insulate the owners from personal liability."
Ross v. Playle, 505 N.W.2d at 517.
the corporation is "a mere shell, serving no legitimate
business purpose, and used primarily as an intermediary to
perpetuate fraud or promote injustice[, ]" the corporate
veil may be pierced. Briggs Transp. Co. v. Starr
SalesCo., 262 N.W.2d 805, 810 (Iowa 1978).
Plaintiffs must prove exceptional circumstances exist to
warrant piercing the corporate veil. ...