## Facts

- Two suppliers, K.C. Roofing Center and Lumbermen’s Mutual Wholesale Co. (d/b/a Adam’s Roofing Supply), sold roofing materials on unsecured credit to On Top Roofing, Inc.
- Russell Nugent and his wife, Carol Nugent, were the sole shareholders, officers, and directors of On Top; Russell had long operated roofing businesses in the Kansas City area.
- On Top was part of a sequence of closely held roofing corporations owned and controlled by the Nugents; when one entity stopped operating, another successor entity was formed and operated from the same location and with the same phone number.
- From April through August 1987, K.C. Roofing Center supplied about $45,000 in materials to On Top that went unpaid.
- After On Top stopped doing business in August 1987, materials were ordered under the On Top account from Lumbermen’s (1,360 rolls of shakeliner); Lumbermen’s obtained a default judgment against On Top but could not collect.
- At the time materials were ordered, On Top was unable to pay trade creditors, owed substantial sums to other suppliers, and had no funds to pay plaintiffs; Russell prioritized paying secured creditors and creditors with personal guarantees.
- Corporate formalities were not consistently observed (including director requirements, meetings, and recordkeeping), and corporate funds reflected substantial payments benefiting the Nugents (including significant salaries and rent paid to them).
- The trial court consolidated the suppliers’ actions, pierced the corporate veil as to Russell, and imposed personal liability on him for On Top’s debts, but declined to hold Carol personally liable.

## Issues

1. Whether the evidence met Missouri’s veil-piercing requirements to impose personal liability on Russell Nugent for On Top’s debts to the suppliers.
2. Whether the trial court abused its discretion by admitting evidence about Russell Nugent’s formation and operation of other related corporations to show control and misuse of the corporate form.

## Decision

- The Missouri Court of Appeals affirmed the judgment piercing the corporate veil and holding Russell Nugent personally liable for On Top’s unpaid debts to the suppliers.
- The court affirmed the denial of personal liability as to Carol Nugent, concluding the evidence did not show comparable control or misuse by her.
- The court held that evidence concerning Russell’s related corporations and pattern of operating successive entities was properly admitted as relevant to domination, misuse, and resulting harm.

## Legal Principles

- Missouri applies a three-part veil-piercing test requiring: (1) complete domination and control of the corporation, (2) use of that control to commit a wrong or unjust act in contravention of the plaintiff’s rights, and (3) proximate causation of the plaintiff’s loss.
- Failure to observe corporate formalities and operating a corporation as an owner’s alter ego are probative of domination and lack of separateness.
- An owner’s use of the corporate form to continue essentially the same business through successor entities while leaving unsecured creditors unpaid can satisfy the “wrong or injustice” element even without a narrow showing of common-law fraud.
- Evidence of an owner’s conduct with related entities may be admissible to prove a pattern of control and misuse relevant to veil piercing.
- Veil piercing is individualized; liability must be tied to the conduct and control of the particular person against whom the remedy is sought.

## Conclusion

The court upheld veil piercing against a controlling owner who treated the corporation as an alter ego and used a pattern of successor entities and selective payment practices to leave unsecured suppliers unpaid, while affirming that personal liability requires proof of the individual’s own control and misuse of the corporate form.


K.C. Roofing Ctr. & Lumbermen’s Mut. Wholesale Co. v. On Top Roofing, Inc., 807 S.W.2d 545 (Mo. Ct. App. W.D. 1991)