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• . . • III TIIF. TEr..!lITORIAL counT Of' Tilt VI~GIl1 15LM!DS DIvISION 0: ST. COOIX AT C;iP.IST!lINSTCO :-tAP'! E. GUSTAFSON, :>laintiif . v. BARCO 1-IANA:1A. INC.. ane ANITA PARASCONOOLA, Defendant. 1 1 ) crilL NO. 1i71/1!)a~ 1 1 ) ACTIOII FOR BREACH or CONTRACT ) AND OEBT 1 1 1 __________ 1 EDI-IARD HASKINS JACOBS, ESQUIRE 14ABA Church Street Christiansted, St. Croix U, S. Virqin Island, 00820 (809) 77J-J~2::! (Attorney for PhintiH) JOHN F . JANES, ESQUIRE 11'. King Street Christiansted, St. CrOix U.S. Virgin Islands 00820 (809) 773-0402 (Attorney tor Defendant) PETERSEN. Judge This action i~ brought to recover an <'IInount olll~qedly due on II promi~(lory notl!!. Plaintiff has sued both the corpor<ltion which l.r. the debtor under the note, !larco ;Lannnll, Inc. (Ilareo) • .. w':!ll ., Anita Pal:ilsconaola {[Iarilscondolll!, Clhn I'lllintiff ulloqes W<lS the Pr('sident <lnd n",~idcnt ,\<lent. .,t Barco. Plllint.itf ~cek5 to r~covcr from p<lraseo~dol~ ny diereqording the corporat.e ('ntity, and c13ims • GUST,\fSOIl v. BARCO ,U\tl/l.:IA, !;lC •• , PARASCOtlDOL.'" CIVIL 110. 671/1982 ACTlotl FOR ERE,\Cl! OF CONTRACT ArID OeDT that Parascoodola is the alter ego of Barco. Defendant Parascondol~ has moved to dismiss t~e action against her individually under Rule 12(bl (6), Fed. R. elv. P .• and argues that the complaint is insufficient and fail& to state a claim IIgllinst her. 'i'he plainti:! opposes thi. motion, stating that the allegations in the complaint All~J hor to pursue her claim against Parascondola. It is clear that under particular circumstances the corporation may be disreg<llrdsd as an intermediate bahleen the ultimate person and the adverse party. Such is the rase when the corporate nntity s<"!rves merely as the al ter ego or business conduit of individual. Under such • circumst .... nce. when an in;ustice has been pP.orpetratad on a party who has dealt with the corporation. the alter ego doctrine will operate to impose liability on the individual who use.'! the corporation as an instrumcntl\lity to conduct personal business. Sec I!anqor runta Ornrationll. Inc. v. 30'1noor (, AroostOOK R. Co .• 417 U. S. 703. 94 S.Ct. 2578. 41 L. t:n. 2d 418 (l97~1. Sec ~ 1 IL rlatcher. C}"clopedia of Cor"Ooriltion, Sections 41-41.3 at \66-208 (Perm. Ed. Rev. 1')74 b Cum. 5upp. In:!). ,\ courc: mUBt p.y.crci s f' c~ution .... hcn considering · ... hCl ttu"r t o disregard the <::orpc r.:ltc entit", lind the high GUSTAFSON v. 9/'1RCO ~II\lIANA, IUC., & PARASCotlDOLA CIVIL NO. 671/1982 ACTIOII FOR SnEACfl Of' CONTRlIC":' liND DZBT ego nust be clearly 8~tabli.hed. ~nerqv Reserves Croue, Inc, v. Sucerior Oil Co., 460 F. Sup'9 . 483, 506 fD. Kan. 1978). Sec ~ Fletcher, suora, Section 41 at 29 (Cum . Supp. 1982). The burden of proving that the alter e90 doctorine should be applied loS vith the party seeking disregard of the cor'90rate entity. This burden is not ~et by mere allegations of dor.lination and control of the corporation by the individual entitled to all of the corporation's profits. Rather, it must be sho\1O th .. t the se1)arate personalities of the corporation and the individual have ceased to e:(ist. See In Re Christian Porter Aluminum Co., 584 F.:!d 326, 338 (9th Cir. 1978). \1hcther those certain facti exist vhich would justify application by this Court of the alter ego doctrine, however, are questions of fact which the Plaintiff must prove at trial. At this stage ot the proceeding, the pleading stage, it is E2! the burden at the Plaintiff to prove , without a doubt, that Barco was the alter ego of Para~cond01a. It is the burden of PI .. intiff. <It this atage, to appropriately plead the nepcl for applic~tion of the ~ltcr 090 doctrine. The n~ re ,llegation th .. t a corporation is the ~lter ~90 of an in(iividual is insu!'ficient absen t ')11cqation:. of fact which "auld intlic1ttn that I"hc p.H:ty s!;!o kinq ':0 pierce the corporate 'leil i5 the victim of "ome froud , inju!ltiCQ 01;" fund"m'Jntlll • • U:l.1I1rrlCSS. .. (T1 ho .. ppropriate oCCllllion ~or di!lre"<lrdin9 the • GUSTI'.FSOIt v. O;\RCO !IANM1A, Inc •• to PAAASCDNDOLA CIVIL NO. 671Jl~a2 FlCTIOIl =OR BREACH OF CONTRACT AIID aI:BT corporate c:dstencc occurs ..,hen t.he court must prevent fraud, illegality. or injustice, or ~lhen :,eeoqnition of thp. corporate entity would. defeat public policy or shield SODao!'!e from liability for" crif!le,- Zubik v. Zubik, 354 F.2d 267, 272 (3d Cir . 1967). ~!!!2 Ll'Ib .. die Coal Co. v. Dlac!:, 672 F . ld 92, 99 (D.C . Cir. 1982) (fraud :"lot prereouisitl'!!, need only sho .... injustice or !unda~cntal untairne&.)~ Uni~ed States v. Pisani, 646 Fo2d 133, 68 ()d Cir. 1981) (element of injustice or fundaf.lental unfairness required) 1 ~loodd.le Inc., v. Fidelitv and Decosit Co, o f IIl1tvlllnd, 378 F.ld 627, 631 (8th Cir . 1967) : Henry v. General Hotors CorD., ~36 F . Supp. 854, 357 W.O.tLY. 1964); United Statell v. Standard Oil Co. of Calif., 155 F. Supp . 121, 152-53 (S.D.fLY. 1957); United States Fire Ins. Co . v. National U. Fire Inl . , 107 Cal. IIpp . 3d 45G, 165 Cal. Rptr. 726, 734 (Cal. Ct. IIpp. 1980); Hever v. Glcnmoor' Homes, Inc., 246 C"l. IIpp. 2d 242, S4 Cal. Rptr. 786, 798 (Cal. Ct. App. 1966); North .... estecn tlat. Bank v. Hetco Ctr., JO) ~1.~1.2d )95, )!:\8-99 (Iowa 1981): 'lcKe!) v. Harri:;-Sl!vbold Co., 109 ~!.J. Su~(. 555, 264 A.2d 9B, lOB (1970); li.E. Hedger ?r;;lnsD. Co:::o. v. Ira S. Ilu~hoy 50n9, Gl tl .Y.S.2d B76, 880-81 (l1.Y. ;'pp. Div. 1945); Tiqnott v. POinter, 580 S .',i.2<1 375. )81->12 (Tel':. Ci'l. App. 1978). The tllleglltion in the cOl:lplaint ,'limply .. tate .. that P;;lrascondola, ~s the alter ego of ~1l1d • GUSTAFSON II. BARCO ~lAtJAili\, H!C., ~ PARASCONDOl.A CIVIL NO . 671/1982 ACTION !"OR BReACH Of' CONTRACT 1I./lD OI::BT P.!Ige 5 corporation, is, and has b~en. conducting. managing and controlling the .!Itfairs of the corporation since ita incorporation, as though it were her own business, And she has used the Defendant Corpor.!ltion for the purpose of entering into the promissory note referred to above, commiting (sic) the contract breach reterred to above. Nowhere are there facts or nlleg.!ltions .tllted which would indicate that, it the acts COMplained of were to be tre~ted as those of the corporation alone, an inequit",ble. unjust or fraudulent result would follow. As such, the complaint is insufficient . Therefore, Parascondol.!l's motion to dismiss the action against her individually should be granted.. 1l00~ever , Court being unwilling to peremptorily foreclose Plaintiff's opportunity to have her claim d.eternined. on substantive rights r~ther than technicalities, and. in light of the liberal policy under the Fed.eral Rules of Civil Procedure which ~llow8 a plaintiff to cure formal d.efects in plcad.ings, sec 5 C. Wright (; A. r1iller Federal Practico and Procedure, Civil, Section 1357 at 611-14 (1969), the Plaintiff is granted leave to ~mend her complaint.