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Gasstop Two, LLC v. Seatwo

March 4, 2010

GASSTOP TWO, LLC, APPELLANT (PLAINTIFF),
v.
SEATWO, LLC, AND LAWRENCE N. SMALL AND JILL SMALL, APPELLEES (DEFENDANTS).



Appeal from the District Court of Sheridan County, The Honorable John G. Fenn, Judge.

The opinion of the court was delivered by: Hill, Justice

Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

[¶1] Gasstop Two, LLC (Gasstop) challenges the Judgment and Order of the district court. One of the principal owners of Gasstop was Joel Kurtenbach (Kurtenbach). After a trial to the court sitting without a jury, Gasstop prevailed and the district court awarded a judgment to Gasstop in the amount of $236,672.12. The judgment was against Seatwo, LLC (Seatwo). However, Seatwo was essentially insolvent and the district court dismissed Gasstop's claims against Lawrence N. Small and Jill A. Small (Smalls). Gasstop asserted that the district court should have "pierced the LLC veil" so as to make the Smalls liable for the judgment. Kurtenbach and the Smalls had had previous business dealings that had been successful. In June of 2000, they entered into another separate agreement whereby Gasstop would build and operate a convenience store in a location along a major highway that runs south from Gillette to Douglas. Seatwo agreed to lease space from Gasstop to operate a Burger King franchise at that location. This appeal is concerned with only the specific transaction described above, although the course of dealings between these parties plays some role in the resolution of this case. The essence of Gasstop's appeal is that the district court erred in denying Gasstop's demand that the "LLC veil" be pierced so that the Smalls could be held personally liable for the judgment against Seatwo. We will affirm.

ISSUES

[¶2] Gasstop raises these issues:

A. The district court erred by refusing to hold Small personally liable for the rent due to Gasstop when Small signed the lease on June 2, 2000, purportedly on behalf of Seatwo, a company which was not formed or organized until August 17, 2000.

B. The district court erred by considering factors for piercing the company veil of Seatwo, which are not relevant to piercing the company veil and by failing to consider factors which are relevant under Wyoming law.

C. The district court erred when it misstated the undercapitalization factor in Wyoming and failed to properly apply it to the facts of this case.

D. Even if the district court considered the appropriate factors in LLC piercing, its findings of fact are clearly erroneous.

Seatwo and Small raise these issues in response:

A. In the trial court, Gasstop failed to raise the argument that Small was personally liable as a promoter who signed a pre-incorporation lease, and, therefore, is now foreclosed from raising this issue.

B. The district court applied the correct factors to determine that the Seatwo veil could not be pierced.

C. The district court correctly stated and applied the undercapitalization factor to the facts of this case.

D. The district court's findings of fact are not clearly erroneous.

In its reply brief, Gasstop contends:

A. Gasstop should not be foreclosed from asserting that Small is personally liable to Gasstop on the ...


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