## Facts

- K.W. “Casey” Clark formed Clark Farms, Ltd., an Iowa corporation in the biosolids-management business.
- Clark was Clark Farms’ president, secretary, treasurer, registered agent, and its sole owner and director.
- Woodruff Construction, LLC served as general contractor on the City of Leon, Iowa wastewater-treatment-facility project.
- In April 2010, Woodruff subcontracted lagoon sludge-removal work to Clark Farms.
- Clark Farms began work, but in 2011 it abandoned the project after Clark concluded the company had underbid the subcontract, leaving work incomplete.
- Woodruff sued Clark Farms for breach of contract and obtained a judgment (September 2014) for $410,066.83 plus interest; Clark Farms did not pay the judgment.
- Woodruff filed a separate suit (June 2015) seeking to pierce Clark Farms’ corporate veil and collect the judgment from Clark personally (Woodruff also sought other equitable remedies, but on appeal pursued only veil piercing).
- Evidence at trial showed Clark Farms had been administratively dissolved and reinstated three times for failure to file biennial reports.
- Clark Farms produced few corporate records beyond tax-related filings; it did not produce bylaws, a minutes book, or a shareholder ledger.
- The bookkeeper testified Clark did not keep separate books and wrote many corporate checks for Clark’s personal expenses and for his other businesses, in addition to Clark Farms’ expenses.
- After Woodruff initiated litigation, records reflected purported “loans” in the hundreds of thousands of dollars between Clark and Clark Farms; the bookkeeper described the corporation as loaning money to Clark, while tax records reflected a loan of over $500,000 from Clark to the corporation.
- The asserted loan funds did not reach Clark Farms’ account and were likely used to pay notes Clark owed or had personally guaranteed for other businesses.
- Records showed Clark used Clark Farms funds to pay interest on multiple notes, whether or not Clark Farms was the obligor.
- The bookkeeper calculated Clark owed Clark Farms $665,422, and Clark testified he would not make any effort to repay debts to the corporation because he owned it.
- Although Clark Farms still had equipment that could be subject to collection efforts, Clark started a new limited-liability company doing the same type of work while Clark Farms became dormant and was unable to satisfy Woodruff’s judgment.
- After a bench trial, the district court denied Woodruff’s request to pierce the corporate veil; Woodruff appealed.

## Issues

1. Whether the veil-piercing claim should be reviewed on appeal de novo as an equitable action or for correction of errors at law.
2. Whether Clark Farms’ corporate veil should be pierced to hold Clark personally liable for Woodruff’s unsatisfied judgment against Clark Farms.

## Decision

- The Court of Appeals treated veil piercing in this case as an equitable action and applied de novo review.
- The court reversed the district court’s refusal to pierce the corporate veil.
- The court held Woodruff established grounds to disregard Clark Farms’ separate existence because Clark treated the corporation as his alter ego and recognition of the corporate form would work an injustice to Woodruff.
- The case was remanded for further proceedings consistent with imposing personal liability on Clark for the corporate judgment.

## Legal Principles

- A corporation is ordinarily a separate legal entity, but a court may disregard that separateness in exceptional circumstances.
- Veil piercing turns on the totality of the circumstances; no single fact is controlling.
- Courts consider whether the shareholder dominated the corporation and treated it as an instrumentality rather than a distinct entity (including failures of corporate recordkeeping and repeated administrative dissolutions and reinstatements).
- Commingling corporate and personal finances—such as paying personal obligations with corporate checks or using corporate funds for other businesses—supports treating the corporation as the shareholder’s alter ego.
- Undocumented or contradictory intercompany “loans,” especially where funds do not flow through the corporate account and appear to serve the shareholder’s individual obligations, may show misuse of the corporate form.
- A shareholder’s stated refusal to repay substantial debts owed to the corporation because he owns it is evidence of disregard for corporate separateness.
- Veil piercing may be warranted when honoring limited liability would leave a judgment creditor without a meaningful remedy and would work an inequitable result.

## Conclusion

The Court of Appeals of Iowa reversed and remanded because Clark’s control of Clark Farms, lack of meaningful corporate formalities, extensive commingling, and use of corporate funds for personal and other-business obligations showed Clark Farms functioned as Clark’s alter ego; leaving Woodruff with an unpaid $410,066.83 judgment under these circumstances would be unjust.


Woodruff Construction, LLC v. K.W. “Casey” Clark, 924 N.W.2d 534 (2018)