Miller v. Brass Rail Tavern, Inc.

702 A.2d 1072, 1997 WL 688721
CourtSuperior Court of Pennsylvania
DecidedOctober 21, 1997
DocketNo. 350; Nos. 903 and 956
StatusPublished
Cited by19 cases

This text of 702 A.2d 1072 (Miller v. Brass Rail Tavern, Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Miller v. Brass Rail Tavern, Inc., 702 A.2d 1072, 1997 WL 688721 (Pa. Ct. App. 1997).

Opinion

CERCONE, President Judge Emeritus.

These are appeals from the judgment entered following a bench trial in the Court of Common Pleas of Clinton County. We vacate that judgment and remand this matter for further proceedings.

In 1989, Ronald A. Miller, Sr. (Miller), as Administrator of the Estate of Ronald A. Miller, Jr. (decedent), commenced this action against the Brass Rail Tavern, Inc. and its sole shareholder, Thomas E. McMaster. Miller alleged that the Brass Rail wrongfully had served alcoholic beverages to decedent who visibly was intoxicated. After leaving the Brass Rail, decedent was killed in a one-vehicle accident.

In 1992, at the original trial in this matter, the court determined that the Brass Rail had served decedent while he visibly was intoxicated. Nevertheless, the court found that Miller failed to prove that this negligence was a substantial factor in bringing about decedent’s death because Miller had not established that the accident occurred close enough in time after the Brass Rail had served the visibly intoxicated decedent. On appeal, a panel of this Court affirmed the trial court’s determination. See Miller v. Brass Rail Tavern, Inc., 434 Pa.Super. 383, 643 A.2d 694 (1994) (with one judge, Wieand, J., dissenting). However, our Supreme Court granted allocatur and reversed this Court’s decision; the matter was remanded for a new trial. See Miller v. Brass Rail Tavern, Inc., 541 Pa. 474, 664 A.2d 525 (1995).

On remand, the parties agreed that trial would be limited to when the accident and decedent’s death occurred, and the court incorporated the evidence and findings from the previous trial, except for evidence relating to the time of death. Following a non-jury trial, the court rendered a verdict in favor of Miller and against the Brass Rail in the amount of $210,000. Also, with respect to Miller’s claim against McMaster as sole [1075]*1075stockholder of the Brass Rail, the court refused to pierce the corporate veil, finding in favor of McMaster.

Miller filed a motion for delay damages and a motion for post-trial relief. The Brass Rail also filed a motion for post-trial relief. By order dated September 11, 1996, the court awarded Miller approximately $100,-000.00 in delay damages. In separate orders dated November 5, 1996, the court denied the post-trial motions filed by Miller and the Brass Rail. On November 12, 1996, judgment was entered reflecting the court’s initial damage forward against the Brass Rail as well as its award of delay damages.

On November 18, 1996, Miller filed a notice of appeal. The Brass Rail later filed a cross-appeal. We will treat these appeals separately, addressing Miller’s appeal first. Initially, however, we note that

[t]he role of an appellate court reviewing the trial court’s final judgment is to determine whether the findings of the trial court are supported by competent evidence and whether the trial court committed error in the application of law. The findings of the trial judge in a non-jury case must be given the same weight and effect on appeal as a verdict of a jury and will not be disturbed on appeal absent error of law or abuse of discretion. When this court reviews the findings of the trial judge, the evidence is viewed in the light most favorable to the victorious party below and all the evidence and proper inferences favorable to that party must be taken as true and all unfavorable inferences rejected.

Guttman Oil Co. v. Pennsylvania Insurance Guaranty Association, 429 Pa.Super. 523, 527-28, 632 A.2d 1345, 1347 (1993), appeal denied, 537 Pa. 663, 644 A.2d 1200 (1994) (citations omitted).

Miller’s Appeal Docketed at No. 903 Harrisburg, 1996

Miller presents this Court with the following three questions, which we have renumbered for review purposes:

1.Did the trial court abuse its discretion by finding the [Brass Rail] was adequately capitalized[?]
2. Is gross undercapitalization of a corporation owned by one stockholder sufficient reason to pierce the corporate veil[?]
3. Did the trial court abuse its discretion in failing to find the [Brass Rail] and [Mr. McMaster] intermingled their interests[?]

Brief for Appellant Miller, at 5.

Each of these claims relates to Miller’s attempt to pierce the corporate veil of the Brass Rail and hold McMaster liable for the Brass Rail’s negligence. In Pennsylvania, there is a strong presumption against piercing the corporate veil. Lumax Industries, Inc. v. Aultman, 543 Pa. 38, 41, 669 A.2d 893, 895 (1995). The Lumax Court recognized that the following factors should be considered when determining whether to disregard the corporate form: undercapitali-zation; failure to adhere to corporate formalities; substantial intermingling of corporate and personal affairs; and the use of the corporate form to perpetrate a fraud. Id. at 42, 669 A.2d at 895.

First, Miller complains that the court abused its discretion by finding the Brass Rail to be capitalized adequately. The evidence showed that the Brass Rail was incorporated in April 1987, with McMaster as its sole shareholder. N.T. 5/12/92, at 95-96. He paid $1,000 for ten shares of stock in the Brass Rail. N.T. 5/14/92, at 96. McMaster paid a total purchase price of $100,000 for the licensed establishment and additional real estate. N.T. 5/12/92, at 98. This purchase price can be broken down as follows: $44,000 for the building housing the tavern; $6,000 for land; $25,500 for an apartment building located on an adjoining lot; $8,500 for inventory; $13,000 for the liquor license; and $3,000 for goodwill. Id. Thus, the real estate involved in the transaction comprised $75,500 of the purchase price. The Brass Rail received the assets that comprised the balance of the purchase price. In exchange, a note for $24,500 was given by the Brass Rail to McMaster. Id. at 107. This $24,500 was treated as a loan from McMaster to the Brass Rail. N.T. 5/15/92, at 31. McMaster and the Brass Rail then executed a lease agreement whereby McMaster leased the premises housing the tavern to the Brass [1076]*1076Rail for $400 per month. N.T. 5/12/92, at 108.

The record further reflected that, because of the nature of the tavern business, the Brass Rail operated on a cash basis; credit is not available for tavern owners to purchase liquor. N.T. 5/15/92, at 34-35; N.T. 5/12/92, at 38. The capital needs of a tavern are low. N.T. 5/15/92, at 35; N.T. 5/12/92, at 381 Capital is needed to obtain the initial inventory for the tavern, but as that inventory is sold, the tavern should have sufficient cash to replenish it. N.T. 5/15/92, at 35.

Gregory Dwulet, a certified public accountant, testified as an expert in accounting. N.T. 5/14/92, at 31, 34. Mr. Dwulet rendered business advice to both McMaster and the Brass Rail. Id. at 36. Mr. Dwulet opined that the Brass Rail was capitalized adequately for purposes of its operation. Id. at 38-39, 82.

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Bluebook (online)
702 A.2d 1072, 1997 WL 688721, Counsel Stack Legal Research, https://law.counselstack.com/opinion/miller-v-brass-rail-tavern-inc-pasuperct-1997.