Lund-Ross Constructors, Inc. v. Jay Buchanan, No. 21-1856 (8th Cir. 2022)
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Appellees were the sole owners of an electrical company. Appellant is a general contractor and hired Appellee’s company to do electrical work on various projects. Appellee’s company contracted with suppliers and submitted periodic pay applications to Appellant requesting payment for work completed and supplies purchased. When Appellee’s company went out of business its suppliers filed construction liens against the properties relating to the projects for amounts the company owed them and brought lawsuits against the owners of the projects to foreclose upon their liens. Appellant was required to defend the lawsuits and indemnify the project owners and alleges that these lawsuits resulted in damages due to misrepresentations Appellee’s company made about whether its suppliers were being paid. Appellant obtained a default judgment against the company, however, the bankruptcy court granted the Appellee's motion to dismiss concluding that Appellant did not have a valid claim for a debt owed by the Appellee’s personally.
The Eighth Circuit reversed the bankruptcy court’s grant of summary judgment to the Appellees. The court found that summary judgment was inappropriate on the ground that Appellant has not shown that it has a claim against the Appellees personally because it cannot pierce the corporate veil. Because Appellees do not argue that there is no genuine dispute of material fact about whether Appellant can prove that Appellees committed a Nebraska tort, such as fraudulent misrepresentation, the bankruptcy court improperly granted summary judgment.
Court Description: [Gruender, Author, with Chief Judge Smith and Kobes, Circuit Judges] Bankruptcy Case - Bankruptcy Appellate Panel. - nondischargeability. Lund-Ross appeals the determination that its claim alleged a corporate debt to Signature Electric and not to a personal debt of the debtors. The bankruptcy court and bankruptcy appellate panel agreed that Lund-Ross had not proved a valid claim against the debtors personally. Under state law, Lund-Ross may have a valid claim if it can show the elements of a Nebraska tort and the debtors did not argue there are no genuine disputed facts about whether Lund-Ross can prove a tort. Thus the bankruptcy court improperly granted summary judgment on that claim. We decline to affirm on an alternate basis of claim preclusion: the debtors were not parties to the proof-of-claim proceeding and it is unclear whether debtors were a party-in-interest in that proceeding, and claim preclusion was not previously addressed. Summary judgment is reversed and remanded for further proceedings.
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