{ "id": 8352903, "name": "EAST MARKET STREET SQUARE, INC., f/k/a BOGUES/ALSTON DEVELOPMENT CORPORATION, Plaintiff v. TYCORP PIZZA IV, INC. and GILBERT T. BLAND, Defendants", "name_abbreviation": "East Market Street Square, Inc. v. Tycorp Pizza IV, Inc.", "decision_date": "2006-02-07", "docket_number": "No. COA05-212", "first_page": "628", "last_page": "640", "citations": [ { "type": "official", "cite": "175 N.C. App. 628" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "N.C. Gen. Stat. \u00a7 55-2-03", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2005, "pin_cites": [ { "page": "(c)" } ], "opinion_index": 0 }, { "cite": "160 S.E.2d 39", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1968, "pin_cites": [ { "page": "44", "parenthetical": "emphasis in original" }, { "page": "44" } ], "opinion_index": 0 }, { "cite": "273 N.C. 253", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8575046 ], "weight": 2, "year": 1968, "pin_cites": [ { "page": "260", "parenthetical": "emphasis in original" }, { "page": "260" } ], "opinion_index": 0, "case_paths": [ "/nc/273/0253-01" ] }, { "cite": "329 S.E.2d 326", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 16, "year": 1985, "pin_cites": [ { "page": "330" }, { "page": "330", "parenthetical": "internal citation omitted" }, { "page": "330-31", "parenthetical": "internal citations omitted" }, { "page": "458" }, { "page": "332" }, { "page": "333" }, { "page": "332" }, { "page": "455" }, { "page": "330" }, { "page": "454" }, { "page": "330", "parenthetical": "emphasis added" }, { "page": "455" }, { "page": "330" }, { "page": "458" }, { "page": "332" } ], "opinion_index": 0 }, { "cite": "313 N.C. 450", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4720084 ], "weight": 5, "year": 1985, "pin_cites": [ { "page": "454" }, { "page": "455" }, { "page": "455" }, { "page": "459" }, { "page": "458" } ], "opinion_index": 0, "case_paths": [ "/nc/313/0450-01" ] }, { "cite": "418 S.E.2d 841", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1992, "pin_cites": [ { "page": "845" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 154", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527276 ], "year": 1992, "pin_cites": [ { "page": "160" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0154-01" ] } ], "analysis": { "cardinality": 967, "char_count": 29216, "ocr_confidence": 0.741, "pagerank": { "raw": 2.0020352496903974e-07, "percentile": 0.7430828978832357 }, "sha256": "13c9f155a29a80893ba869cb7f82143deb2dc0e7f42559eb6c5ef054c0a46168", "simhash": "1:da7ad560750493bc", "word_count": 4696 }, "last_updated": "2023-07-14T22:29:36.119960+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges McGEE and ELMORE concur." ], "parties": [ "EAST MARKET STREET SQUARE, INC., f/k/a BOGUES/ALSTON DEVELOPMENT CORPORATION, Plaintiff v. TYCORP PIZZA IV, INC. and GILBERT T. BLAND, Defendants" ], "opinions": [ { "text": "MARTIN, Chief Judge.\nOn 19 October 1998, plaintiff East Market Street Square, Inc. (\u201cEast Market Street Square\u201d), as landlord, and defendant Tycorp Pizza IV, Inc. (\u201cTycorp IV\u201d), as tenant, entered into a commercial lease for premises located at 1612 East Market Street in Greensboro, North Carolina. On 18 June 2003, plaintiff filed this action against Tycorp IV and its president, Gilbert T. Bland, alleging claims for breach of the lease and damage to the leased premises. In its complaint, plaintiff sought to pierce the corporate veil of Tycorp IV and hold defendant Bland individually liable for all of the corporate defendant\u2019s liabilities to plaintiff.\nThe matter was tried by the court sitting without a jury. The evidence presented at trial tended to show the following: East Market Street Square is incorporated under the laws of North Carolina and owns commercial property in Greensboro consisting of a five-unit \u201cstrip\u201d shopping center and two outparcels. Melvin \u201cSkip\u201d Alston is president of East Market Street Square.\nTycorp Pizza IV, Inc. is incorporated under the laws of Virginia and was formed for the purpose of operating a Pizza Hut restaurant franchise on one of the outparcels owned by plaintiff. Defendant Bland is the president, sole director, and sole shareholder in Tycorp IV. Tycorp IV is a member of the Tycorp family of companies organized by defendant Bland to own and operate Pizza Hut restaurants in North Carolina and Virginia. At the time of the trial, Tycorp companies owned and operated thirty-six Pizza Hut restaurants. At the top of the corporate structure is Tycorp Pizza, Inc., a holding company that owns all of the stock in three subsidiary corporations: (1) Tycorp Pizza of Virginia, Inc., (Tycorp VA) (2) Tycorp Pizza of North Carolina, Inc. (\u201cTycorp NC\u201d) and (3) Tycorp Pizza III, Inc. (\u201cTycorp III\u201d). Defendant Bland is the president and sole common shareholder in the holding company. He is also the president, sole director, and sole shareholder in each of the three subsidiary corporations. Bland was the sole shareholder of Tycorp IV until February of 2003, when its shares were sold to Tycorp NC.\nEach of the thirty-six restaurants owned by Tycorp companies remits a percentage of its sales to another corporation, Tycorp Group, Inc. (\u201cTycorp Group\u201d), as a \u201cmanagement fee.\u201d Defendant Bland is the president and sole shareholder of Tycorp Group, which has approximately fifteen employees. These employees manage regional groups of restaurants and provide accounting and human resource services. Defendant Bland receives an annual salary from Tycorp Group in exchange for his services. He was compensated in the amount of $200,000 in 2003, and $150,000 in 2001 and 2002.\nDefendant Bland first approached Mr. Alston about possibly renting a building from him in May of 1998. Earlier in the year, the building had been vacated by a chicken and seafood restaurant. Following their initial meeting, defendant Bland and Mr. Alston lost contact, and Mr. Alston leased the property to Ms. Gladys Shipman for the purpose of opening a \u201csoul food\u201d restaurant. After the lease between East Market Street Square and Ms. Shipman had been negotiated and signed, defendant Bland contacted Mr. Alston and expressed his continued interest in the property, asserting that a national franchise such as Pizza Hut would be better for the surrounding community than Ms. Shipman\u2019s independently-operated restaurant. Defendant Bland also indicated the Pizza Hut he intended to operate on the property had the potential to earn between $700,000 and $800,000 per year, although Mr. Alston believed the earning potential could be between $900,000 and $1,000,000 per year. Ms. Shipman agreed to terminate her lease in exchange for $4,000, to be paid by defendant.\nNegotiations then'commenced between defendant Bland and Mr. Alston. The two men personally negotiated the terms of the lease then sent it to their attorneys for review. The agreement was signed on 19 October 1998 by Mr. Alston as president of S & J Management Corporation and defendant as president of Tycorp IV, which had been incorporated earlier the same day. The lease was for a period of ten years, with a minimum monthly base rental in the amount of $4,000. There was also a percentage rent equal to 7% of gross sales for each calendar year. Defendant Tycorp IV accepted the leased premises in its \u201cas is\u201d condition and acknowledged that it had examined and inspected the premises and was familiar with its physical condition. Defendant Tycorp IV further agreed to \u201copen for business and operate one hundred percent (100%) of the Leased Premises during the Term with due diligence and efficiency so as to produce all of the Gross Sales which may be produced by such manner of operation.\u201d\nIt was clear to both parties that the building on the premises would require a massive renovation in order to accommodate a Pizza Hut. East Market Street Square agreed to grant defendant Tycorp IV an allowance of $75,000 for the purpose of renovating the interior and exterior of the building. There was a long list of improvements to be made. The parking lot was in a state of disrepair, a new roof and heating/air conditioning system was required, cooking equipment left over from the chicken restaurant needed to be replaced, and the interior required remodeling to comply with Pizza Hut corporate standards. Furthermore, defendant Tycorp IV intended to expand the size of the building and construct a pick-up window. Tycorp IV solicited bids for the renovations, and received one for $523,000 plus the cost of new kitchen equipment. Defendant was surprised by this high cost. Nevertheless, work proceeded. The building was gutted and defendant removed all furniture and fixtures in the summer of 2002.\nIn the autumn of 2002, the Tycorp companies began to experience financial difficulties. Tycorp NC, Tycorp VA, and Tycorp III had borrowed significant sums from various lenders in order to finance their purchase of the original thirty-four Pizza Hut restaurants in 1995. In 2002, the companies stopped making payments on these loans and fell into default. In response, the lenders accelerated the loans and demanded payment. Some of the notices of default prohibited the companies \u201cfrom making any dividends or distributions including salaries, fees and other compensation.\u201d Tycorp NC had been paying the rent on the Market Street property for Tycorp IV since the lease was signed in October of 1998. Therefore, in February of 2003, rent payments ceased on the Market Street property. Defendant Bland testified that this was due to the acceleration of Tycorp\u2019s loans, and that there was a \u201cvery clear understanding that [Tycorp\u2019s] dollars were to be expended only in ways that would repay their loans.\u201d\nThroughout this time, the gutted building stood dormant. In the summer of 2003, it caught the attention of the City of Greensboro Inspection Department. Inspectors condemned the building and ordered plaintiff to repair or demolish it due to the following conditions: (1) gutted and abandoned building shell, (2) broken windows, (3) deteriorated roof structure, (4) vegetative overgrowth of roof and gutters, and (5) lack of operable electrical, mechanical, or plumbing services. The building was eventually demolished at plaintiffs expense.\nThe trial court awarded damages to plaintiff for breach of the lease and property damages in the amount of $115,500 plus costs and interest. The trial court also pierced the corporate veil of Tycorp IV and held defendant Bland individually liable for the damages awarded plaintiff. Defendant Bland appeals.\nDefendant Bland\u2019s sole argument on appeal is that the trial court erred in holding him individually liable for the acts and obligations of the corporate defendant Tycorp IV. In support of this argument, defendant Bland contends that (1) he did not exercise the control over Tycorp IV required to support an action to pierce the corporate veil, (2) if such control is found, it was not used to commit a tort or any unjust act, (3) no action by him was the proximate cause of injury to plaintiff, and (4) the lease was an arm\u2019s length transaction negotiated between two corporations and their respective attorneys, therefore equity does not require piercing the corporate veil.\nThe standard of review on appeal from a non-jury trial is \u201cwhether there was competent evidence to support the trial court\u2019s findings of fact and whether its conclusions of law were proper in light of such facts.\u201d Shear v. Stevens Building Co., 107 N.C. App. 154, 160, 418 S.E.2d 841, 845 (1992). Where the trial court sits without a jury, its findings of fact \u201chave the force and effect of a jury verdict and are conclusive on appeal if there is evidence to support those findings.\u201d Id. However, we review the trial court\u2019s conclusions of law de novo. Id.\n\u201cIt is well recognized that courts will disregard the corporate form or \u2018pierce the corporate veil,\u2019 and extend liability for corporate obligations beyond the confines of a corporation\u2019s separate entity, whenever necessary to prevent fraud or to achieve equity.\u201d Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985). North Carolina courts use the \u201cinstrumentality rule\u201d to determine whether to disregard the corporate entity and hold parent or affiliated corporations or shareholders liable for the acts of a corporation. Id. The instrumentality rule may be stated as follows:\n\u201c[if] the corporation is so operated that it is a mere instrumentality or alter ego of the sole or dominant shareholder and a shield for his activities in violation of the declared public policy or statute of the State, the corporate entity will be disregarded and the corporation and the shareholder treated as one and the same person, it being immaterial whether the sole or dominant shareholder is an individual or another corporation.\nHenderson v. Finance Co., 273 N.C. 253, 260, 160 S.E.2d 39, 44 (1968) (emphasis in original). There are three elements necessary to pierce the corporate veil under the instrumentality rule:\n(1) Control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; and\n(2) Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiffs legal rights; and\n(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.\nGlenn, 313 N.C. at 455, 329 S.E.2d at 330 (internal citation omitted).\nDefendant Bland first argues he did not exercise sufficient control over Tycorp IV to support an action to pierce the corporate veil. The trial court made the following findings of fact regarding defendant Bland\u2019s control over Tycorp IV and the other Tycorp companies:\n17. Defendant Bland was the sole shareholder of Defendant Tycorp Pizza IV, Inc. and had total autonomy and control of Defendant Tycorp Pizza IV, Inc.\n18. Defendant Bland controlled, completely dominated and had total autonomy of Tycorp Pizza TV, Inc., so that it had no independent identity and no separate mind, will or existence of its own.\n19. Defendant Bland controlled and had total autonomy of his other corporations as well, including Tycorp Pizza, Inc., Tycorp Pizza of N.C., Inc., Tycorp Pizza of Virginia, Inc. and TVcorp Pizza III, Inc.\n20.- Defendant Bland exerted complete domination over Defendant Tycorp Pizza IV, Inc.\u2019s policies, finances and business practices.\n21. As Defendant Bland was the sole shareholder, sole director and President of Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C.,. Inc., Defendant Bland made all the decisions for Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc. and his other corporations.\n22. There was no Board of Directors for Defendant Tycorp Pizza IV, Inc. to oversee Defendant Bland\u2019s decisions.\n23. The only individual to answer to in transactions of business on behalf of Tycorp Pizza TV, Inc. was Defendant Gilbert Bland.\n24. Defendant Tycorp Pizza TV, Inc. had no assets except for an undocumented loan from Tycorp Pizza of N.C., Inc. and had no business operation of any kind.\nWe must determine whether these findings of fact are supported by competent evidence in the record.\nDefendant Bland testified at trial that he controlled Tycorp IV in that he made all decisions regarding its finances, policies, and business practices. He also testified he was Tycorp TV\u2019s sole director, sole shareholder, president and sole officer. This testimony constitutes competent evidence to support Finding Nos. 17, 18, and 20 that Bland was the \u201csole shareholder\u201d of Tycorp TV, that he had \u201ctotal autonomy over Tycorp Pizza IV, Inc. so that it had no independent identity and no separate mind, will or existence of its own,\u201d and that he \u201cexerted complete domination over Defendant Tycorp Pizza TV, Inc.\u2019s policies, finances and business practices.\u201d\nBland also testified that he was responsible for all contracts made by Tycorp IV except those made by Pizza Hut for its franchises, he managed the details of the lease negotiations for Tycorp IV rather than his attorneys, he interacted with Pizza Hut representatives when considering opening a franchise, and he signed the application for a certificate of authority to transact business in North Carolina on behalf of Tycorp IV. Melvin Alston, president of plaintiff, testified that all of his interactions regarding the lease negotiation were with defendant Bland. He never heard of Tycorp IV during these negotiations; he only became aware of its existence upon receiving the first rent check under the lease. Defendant Bland presented no evidence of a Board of Directors to oversee his decisions. Therefore, there was also competent evidence to support Finding Nos. 22 and 23 that \u201c[t]he only individual to answer to in transactions of business on behalf of Tycorp Pizza IV, Inc. was Defendant Gilbert Bland,\u201d and that \u201c[t]here was no Board of Directors for Defendant Tycorp Pizza IV, Inc. to oversee Defendant Bland\u2019s decisions.\u201d\nIn Finding Nos. 19 and 21, the trial court found Bland \u201ccontrolled and had total autonomy of\u201d Tycorp Pizza, Inc., Tycorp NC, Tycorp Pizza of Virginia, and Tycorp Pizza III, Inc., and as president, director, and sole shareholder of these companies, Bland made all business decisions for them. Bland testified he was president, director, and sole common shareholder of these companies as well as Tycorp Group Inc., the management company for all the Tycorp corporations. Bland stated he \u201ccontinually review[s] information with [the] staff all the time. . . . [and] as sole shareholder, digest[s] that information and make[s] decisions.\u201d He specifically claimed to have \u201cthe authority for the final decisions\u201d of Tycorp NC. Defendants presented no evidence of any other individual or entity with the authority to conduct the business of the Tycorp group of companies. We therefore conclude competent evidence existed to support Finding Nos. 19 and 21 of the trial court.\nFinally, Finding No. 24 states that \u201cDefendant Tycorp Pizza IV, Inc. had no assets except for an undocumented loan from Tycorp Pizza of N.C., Inc. and had no business operation of any kind.\u201d Defendant Bland testified that Tycorp IV owned no real or personal property. When asked if Tycorp IV ever had any assets, he stated it \u201chad a fair amount of cash that was being advanced to it from Tycorp Pizza of North Carolina.\u201d According to Bland, Tycorp NC made lease payments for Tycorp IV for over four years, totaling $232,622.91. Tycorp NC also paid architectural fees and renovation costs.. However, Tycorp NC had lost money every year since its inception. Tycorp NC was funded by bank loans and profits made by Tycorp Pizza of Virginia, Inc. because the earnings from all thirty-six of defendant\u2019s restaurants went \u201cinto a single pot.\u201d\nDefendant argues in his brief that in addition to the financing from Tycorp NC, Tycorp IV also had the following assets: a commitment from the landlord under the lease to provide a $75,000 construction allowance, $200,000 worth of restaurant equipment, a subscription agreement for $1,000, and authorization from Pizza Hut to open and operate a Pizza Hut restaurant on the premises. However, these assets, in addition to advancements from a failing corporation, were insufficient to allow defendants to conduct the necessary renovations to the leased premises and to open and operate a restaurant thereon. Furthermore, Finding No. 24 states that Tycorp IV \u201chad no business operation of any kind.\u201d Bland testified Tycorp IV \u201cnever had any operations\u201d and \u201cwas formed to simply hold this one lease.\u201d While the trial court\u2019s statement that Tycorp IV had \u201cno assets except for an undocumented loan from Tycorp Pizza of N.C., Inc.\u201d may have been technically incorrect, the evidence in the record does support a finding that these assets were insufficient under the circumstances to support the operation of defendants\u2019 restaurant and that Tycorp IV \u201chad no business operation of any kind.\u201d\nWe conclude, based on the evidence before us, that the trial court\u2019s findings of fact regarding the extent of Bland\u2019s control over Tycorp IV and the other Tycorp companies were supported by competent evidence. We must now ask whether these findings of fact support the trial court\u2019s conclusions of law that Tycorp IV was the alter ego and mere instrumentality of the individual defendant Bland.\nWe have previously considered the following factors in determining the level of control a corporate or individual defendant exercises over a corporation:\n1. Inadequate capitalization (\u201cthin incorporation\u201d).\n2. Non-compliance with corporate formalities.\n3. Complete domination and control of the corporation so that it has no independent identity.\n4. Excessive fragmentation of a single enterprise into separate corporations.\nGlenn, 313 N.C. at 455, 329 S.E.2d at 330-31 (internal citations omitted). However, it \u201cis not the presence or absence of any particular factor that is determinative. Rather, it is a combination of factors which . . . suggest that the corporate entity attacked had \u2018no separate mind, will or existence of its own\u2019 and was therefore the \u2018mere instrumentality or tool of the dominant corporation.\u201d Id. at 458, 329 S.E.2d at 332.\nThe trial court made the following conclusions of law regarding defendant Bland\u2019s control over Tycorp IV:\n3. Defendant Tycorp Pizza IV, Inc. was inadequately capitalized.\n4. Defendant Bland commingled the funds from his 36 restaurants between his corporations including Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc.\n5. Defendant Bland exercised complete domination and control over Tycorp Pizza IV, Inc. so that it had no independent identity and no separate mind, will or existence of its own.\n6. Defendant Bland excessively fragmented his pizza restaurant enterprise into separate corporations.\n7. Defendant Bland and Defendant Tycorp Pizza IV, Inc. are one and the same.\n8. Defendant Tycorp Pizza IV, Inc. is the alter ego of Defendant Bland.\n9. Defendant Tycorp Pizza IV, Inc. is a mere instrumentality of Defendant Bland.\nThese conclusions were properly drawn from the trial court\u2019s findings indicating that Tycorp IV was a shell corporation intended to shield defendant Bland and his other corporations from liability. Defendant Bland alone conducted all negotiations and made all decisions for Tycorp TV. He failed to capitalize the coiporation sufficiently for it to open a Pizza Hut on the leased premises. Tycorp IV\u2019s most significant asset was the money it received from Tycorp NC, another of Bland\u2019s corporations. Indeed, Bland testified that the money from all of the Tycorp corporations went \u201cinto a single pot,\u201d that he used profits from one corporation to operate others, that he considered his corporations \u201cas a group\u201d rather than \u201cseparate,\u201d and that the corporations sometimes guaranteed one another\u2019s loans. However, instead of entering into the lease in question through Tycorp NC, an existing corporation operating restaurants in the immediate area, Bland created Tycorp IV solely for this particular transaction. As in Glenn, 313 N.C. at 459, 329 S.E.2d at 333, \u201cthe two corporations . . . functioned as a single business enterprise in substance, if not in form.\u201d In that case, our Supreme Court held the parent corporation liable for the actions of its subsidiary.\nBecause Bland was president, sole director, and sole shareholder of the entire hierarchy of Tycorp corporations, his creation of Tycorp TV in this instance appears unnecessary and redundant. Although we recognize that \u201c[t]he mere fact that one person . . . owns all of the stock of a corporation does not make its acts the acts of the stockholder so as to impose liability therefor upon him,\u201d Henderson, 273 N.C. at 260, 160 S.E.2d at 44; see also N.C. Gen. Stat. \u00a7 55-2-03(c) (2005), we agree with the trial court\u2019s conclusion that in this case, Tycorp IV was so dominated by Bland that it had no \u201cseparate mind, will or existence of its own\u201d other than as a \u201cmere instrumentality or tool\u201d of Bland himself. Glenn, 313 N.C. at 458, 329 S.E.2d at 332.\nThe second element necessary to pierce the corporate veil is that a defendant must use his control of the corporation \u201cto commit fraud or wrong\u201d such as \u201cthe violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiffs legal rights.\u201d Id. at 455, 329 S.E.2d at 330. Defendant argues his \u201cmere breach of a contractual obligation\u201d does not constitute an unjust act as contemplated by the Court in Glenn. According to defendant, North Carolina law requires a \u201cheightened wrongful act,\u201d such as a tort or the violation of a statute, to pierce the corporate veil. However, we find defendant\u2019s argument to be without merit for two reasons. First, we consider performance under a contract to be a \u201cpositive legal duty,\u201d the violation of which constitutes a clear \u201cwrong\u201d done to plaintiffs. Our Supreme Court in Glenn defined piercing the corporate veil as \u201cextend[ing] liability for corporate obligations beyond the confines of a corporation\u2019s separate entity.\u201d Id. at 454, 329 S.E.2d at 330 (emphasis added). It is undisputed that Tycorp IV owed an obligation to plaintiffs to pay rent under the lease and to renovate the building, which it failed to do.\nThe trial court also made the following conclusions of law regarding defendant Bland\u2019s use of his control of the corporation:\n12. Defendant Bland has used his complete domination and control of Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc. to commit a fraud, wrong and dishonest and unjust act in contravention of Plaintiff\u2019s legal rights.\n13. The damage to the Premises by Defendants is one of the wrongs and unjust acts which Defendants inflicted upon Plaintiff.\n14. The wrongs done unto Plaintiff include the damage to the building on the Premises, the control of Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc. which caused the failure to pay rent and the dishonesty regarding the solvency of Defendant Tycorp Pizza IV, Inc. at the time the Lease was entered into.\n15. Also, Defendant Bland used his control over Tycorp Pizza IV, Inc., Tycorp Pizza of N.C., Inc. and his other corporations to perpetrate a wrong upon the Plaintiff when he engaged in business, specifically with Plaintiff and this wrong caused injury and loss to Plaintiff.\n16. A dishonest and unjust act was committed by Defendants upon Plaintiff when Defendant Bland represented himself and Defendant Tycorp Pizza IV, Inc. as a solvent individual and a solvent corporation when Defendant Tycorp Pizza IV, Inc. and Defendant Bland\u2019s other corporations, including Tycorp Pizza of N.C., Inc. were struggling financially when Defendant Bland entered into the lease with Plaintiff on behalf of Defendant Tycorp Pizza IV, Inc.\nThese conclusions of law were supported by the trial court\u2019s findings of fact, including its findings that (1) defendant Bland represented both he and Tycorp IV as solvent, (2) Bland continually promised plaintiff he would open a Pizza Hut on the leased premises but failed to do so, and (3) defendants removed and destroyed fixtures in the building, rendering the building worthless and resulting in its eventual demolition. These findings, which are supported by competent record evidence, and the subsequent conclusions of law indicate defendant Bland misrepresented the financial state of his corporations, resulting in the loss of plaintiff\u2019s building and the fixtures therein. This misrepresentation, in addition to the breach of contract, satisfies the second element necessary to pierce the corporate veil. We hold, therefore, the trial court properly concluded defendant Bland \u201cused his complete domination and control of Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc. to commit a fraud, wrong and dishonest and unjust act in contravention of Plaintiff\u2019s legal rights.\u201d\nThe third and final element required for piercing the corporate veil is that the defendant\u2019s \u201ccontrol and breach of duty must proximately cause the injury or unjust loss complained of.\u201d Id. at 455, 329 S.E.2d at 330. Defendant Bland argues the trial court erred in concluding that his \u201ccontrol and complete domination of Defendant Tycorp Pizza IV, Inc. and Tycorp Pizza of N.C., Inc. was the proximate cause of the injury and unjust loss suffered by Plaintiff.\u201d However, Tycorp IV\u2019s failure to perform under the contract resulted in plaintiff\u2019s loss of rental income as well as its loss of the building on its premises. After gutting the building, defendant was unable to pay for the necessary renovations and was forced to leave it dormant, resulting in its eventual demolition. The trial court found that \u201c[although the Lease allowed for destruction of the building on the Premises, this was only contemplated if Defendants were to proceed with construction of a facility to operate a Pizza Hut.\u201d Defendant does not contest the trial court\u2019s finding in this respect, but simply argues that its lenders\u2019 acceleration of its loans caused the breach of lease rather than any action by defendant Bland. However, Bland\u2019s complete domination and exclusive control of the Tycorp companies\u2019 business decisions ultimately resulted in the acceleration of these loans. This argument is overruled.\nFinally, defendant argues the lease in this case was an arm\u2019s length transaction negotiated between two corporations and their respective attorneys, therefore equity does not require piercing the corporate veil. \u201c [T]he theory of liability under the instrumentality rule is an equitable doctrine. Its purpose is to place the burden of the loss upon the party who should be responsible. Focus is upon reality, not form, upon the operation of the corporation, and upon the defendant\u2019s relationship to that operation.\u201d Id. at 458, 329 S.E.2d at 332. Equity, therefore, requires placing \u201cthe burden of the loss\u201d on the party responsible for the breach of contract. We have already found defendant Bland so dominated Tycorp IV as to make the individual and the corporation \u201calter egos.\u201d As such, the individual defendant was equally responsible for the plaintiff\u2019s loss, and we see no error in the trial court\u2019s decision to hold him personally liable for the breach of the lease.\nAffirmed.\nJudges McGEE and ELMORE concur.", "type": "majority", "author": "MARTIN, Chief Judge." } ], "attorneys": [ "Isaacson Isaacson & Sheridan, LLP, by Jennifer N. Fountain, for plaintiff.", "Carruthers & Roth, P.A., by Kenneth R. Keller and J. Patrick Haywood, for defendant." ], "corrections": "", "head_matter": "EAST MARKET STREET SQUARE, INC., f/k/a BOGUES/ALSTON DEVELOPMENT CORPORATION, Plaintiff v. TYCORP PIZZA IV, INC. and GILBERT T. BLAND, Defendants\nNo. COA05-212\n(Filed 7 February 2006)\n1. Corporations\u2014 piercing corporate veil \u2014 individual\u2019s control over corporations \u2014 evidence supporting findings\nIn an action involving piercing the corporate veil, competent evidence supported the trial court\u2019s findings of fact regarding the extent of defendant Bland\u2019s control over the corporations.\n2. Corporations\u2014 piercing corporate veil \u2014 corporation as instrumentality of individual \u2014 equity\nIn an action to pierce the corporate veil, the trial court\u2019s findings supported its conclusions that the corporate defendant was the alter ego and mere instrumentality of the individual defend-' ant. The corporate defendant (Tycorp IV) was so dominated by the individual defendant (Bland) that it had no separate mind, will, or existence; the corporation owed an obligation to plaintiffs to pay rent under the lease and to renovate the building, which it failed to do; Bland misrepresented the financial state of his corporations; and, as equity requires placing the burden of the loss on the person responsible, there was no error in holding him responsible.\nAppeal by defendant Gilbert Bland from judgment entered 30 June 2004 by Judge L. Todd Burke in Guilford County Superior Court. Heard in the Court of Appeals 14 November 2005.\nIsaacson Isaacson & Sheridan, LLP, by Jennifer N. Fountain, for plaintiff.\nCarruthers & Roth, P.A., by Kenneth R. Keller and J. Patrick Haywood, for defendant." }, "file_name": "0628-01", "first_page_order": 662, "last_page_order": 674 }