## Facts

- Brevet International, Inc. (Brevet) provided management-consulting services to businesses and other entities.
- Great Plains Luggage Company (Great Plains) manufactured and sold golf bags and golf bag travel covers from its plant in Tyndall, South Dakota.
- Great Plains was struggling to manufacture efficiently and deliver on time, and had determined it would close unless its manufacturing problems were solved.
- In early March 1995, Great Plains principal Christopher Crosby contacted Brevet president Donald MacKintosh about installing a management system at the plant; Crosby disclosed Great Plains’ precarious financial condition during their initial conversation.
- After discussions and a plant visit, MacKintosh orally agreed on Brevet’s behalf to provide management-consulting services. The agreement was not put in writing.
- The parties agreed Brevet would receive a $35,000 professional fee (described on an invoice as tied to reduced costs after March 6, 1995) and that Great Plains would reimburse Brevet’s out-of-pocket expenses as invoiced.
- For about three months, Brevet consultants worked with Great Plains’ plant manager to install the management system.
- Brevet submitted weekly invoices for fees and expenses addressed to “Chris Crosby, The Great Plains Luggage Company.”
- Great Plains reimbursed Brevet’s expenses using corporate checks, which Brevet accepted, but Great Plains did not pay any portion of the $35,000 professional fee.
- Brevet sued Great Plains and its principal officers, directors, and shareholders—Crosby, W. Greg Coward, and Alan Krutsch—asserting breach of contract and fraud, and seeking to impose personal liability on the individuals by claiming it contracted with them personally or, alternatively, by piercing the corporate veil.
- The individual defendants asserted Great Plains was a duly formed corporation registered with the South Dakota Secretary of State; although its records were imperfect, they argued the corporate form should be respected.
- The trial court granted partial summary judgment against Brevet on its fraud claim and refused to pierce the corporate veil to reach the individual defendants; Brevet appealed.

## Issues

1. Did the trial court err by granting partial summary judgment on Brevet’s fraud claim, or did genuine issues of material fact require the claim to proceed?
2. Did the trial court err by refusing to pierce Great Plains’ corporate veil to impose personal liability on Crosby, Coward, and Krutsch for the claimed consulting fee?

## Decision

- The Supreme Court of South Dakota reversed the grant of partial summary judgment on fraud, holding that the record presented genuine issues of material fact that could not be resolved on summary judgment.
- The court affirmed the refusal to pierce the corporate veil, concluding Brevet did not make the showing required to disregard Great Plains’ separate corporate existence.
- The case was remanded for further proceedings on the fraud claim.

## Legal Principles

- Summary judgment is proper only when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law; the evidence and reasonable inferences are viewed in favor of the nonmoving party.
- Claims turning on intent, knowledge, and credibility commonly present fact questions not suited for resolution by summary judgment.
- “Actual fraud” in connection with a contract may be shown by intentional misrepresentation, concealment, or nondisclosure of a material fact with intent to induce another to enter the contract (as reflected in SDCL 53-4-5).
- Piercing the corporate veil is an exceptional remedy; it requires proof that recognizing the corporation as a separate entity would sanction fraud or result in unjust or inequitable consequences.
- Evidence that the parties conducted the transaction through the corporation—such as invoicing the company and accepting payment via corporate checks—supports treating the corporation as the contracting party absent a stronger showing that individuals should be bound.
- Weak corporate recordkeeping, financial distress, or business failure alone does not justify imposing personal liability on shareholders or officers.

## Conclusion

The Supreme Court held that Brevet’s fraud claim could not be dismissed at summary judgment because disputed facts remained as to whether defendants’ conduct surrounding the consulting agreement amounted to actionable fraud, but it upheld limited liability for Great Plains’ principals because Brevet did not show misuse of the corporate form sufficient to disregard the corporation’s separate existence.


Brevet International, Inc. v. Great Plains Luggage Co., 604 N.W.2d 268 (2000)