IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO IA PEGGY ANN THORNTON, as Widow of GREGORY THORNTON, DECEASED
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1 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI CAUSE NO IA TAN FIELD ENGINEERING SYSTEMS, INC. APPELLANT VS. PEGGY ANN THORNTON, as Widow of GREGORY THORNTON, DECEASED APPELLEE ON APPEAL FROM THE CIRCUIT COURT OF LAUDERDALE COUNTY, MISSISSIPPI NO.07-CV-132W REPLY BRIEF OF APPELLANT TANFIELD ENGINEERING SYSTEMS, INC. AARON R. EDWARDS, ESQ., BAR ~ DANIEL COKER HORTON & BELL, P.A OLD CANTON ROAD, SUITE 400 POST OFFICE BOX 1084 JACKSON, MISSISSIPPI TELEPHONE: (601) FACSIMILE: (601) Attorney for Appellant, Tanfield Engineering Systems, Inc.
2 TABLE OF CONTENTS TABLE OF CONTENTS.... TABLE OF AUTHORITIES... ii I. SUMMARY OF REPLY BRIEF... I II. REPLY ARGUMENT... 2 A. Buchanan v. Ameristar Casino Vicksburg, Inc. Is Appropriate Precedent... 2 B. Mississippi Does Not Distinguish Between The Alter Ego Standard For Piercing the Corporate Veil And The Alter Ego Theory For Service Of Process... 5 III. CONCLUSION... 5 CERTIFICATE OF SERVICE I -
3 TABLE OF AUTHORITIES STATE CASES Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So.2d 969 (Miss. 2007)... 1,2,3,4 Murdock Acceptance Corp. v. Adcox, 138 So.2d 890 (Miss. 1962)... 3 Johnson & Higgins of Miss., Inc. v. Comm'r of Ins. 321 So.2d 281 (Miss. 1975)... 2,3 - II -
4 I. SUMMARY OF REPLY BRIEF In the Brief for Appellee, Appellee is guilty of the idiom, "speaking out of both sides of your mouth." Initially in Plaintiffs Opposition to Tanfield Engineering System, Inc.'s Motion to Dismiss, Appellee argued the following: Plaintiff would request that the motion to dismiss be held in abeyance until Plaintiff has had the opportunity to do discovery to establish that Tanfield Engineering Systems, Inc., is merely the alter-ego of its foreign parent, Tanfield Group, PLC. See, generally, Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So.2d 969, (Miss. 2007) (setting forth the requirements to establish the alter-ego relationship between a parent and subsidiary corporation). (R. 150). Now, Appellee is making a 180 degree turn and arguing that "Buchanan is inapplicable to the facts of this case." (Appellee's Briefp. 7, ~ 2). As Appellee initially asserted, Buchanan is appropriate precedent. Furthermore, citing no legal authority, Appellee attempts to distinguish between the alter ego standard for piercing the corporate veil and the alter ego standard for service of process. However, under Mississippi law, no such distinguishment exists. Appellee bases her contention that Appellant Tanfield Engineering, Inc. (hereinafter "Appellant Tanfield Engineering") is the alter ego of Tan field Group, PLC on the following two facts: 1) Tanfield Group, PLC, and Appellant Tanfield Engineering share two of the same corporate officers and 2) Tanfield Group, PLC, owns 100 percent of Appellant Tanfield Engineering's stock. However, these two facts do not allow for the disregard of Appellant Tanfield Engineering's corporate identity. The Mississippi Supreme Court in Buchanan held that "ordinarily two or more corporations are separate and distinct entities although the -1-
5 same individuals are the incorporators of, or own stock, in the several corporations, and although such corporations may have the same persons as officers." Buchanan, 957 So.2d at 978. II. REPLY ARGUMENT A. Buchanan v. Ameristar Casino Vicksburg, Inc. Is Appropriate Precedent Appellee attempts to flip-flop her argument in the Brief for Appellee. Appellee now argues that "Buchanan is inapplicable to the facts of this case." (Appellee's Briefp. 7, ~ 2). However, in Plaintiff s Opposition to Tanfield Engineering System, Inc. 's Motion to Dismiss filed with the trial court, Appellee argued the following: Plaintiff would request that the motion to dismiss be held in abeyance until Plaintiff has had the opportunity to do discovery to establish that Tanfield Engineering Systems, Inc., is merely the alter-ego of its foreign parent, Tanfield Group, PLC. See, generally, Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So.2d 969, (Miss. 2007) (setting forth the requirements to establish the alter-ego relationship between a parent and subsidiary corporation). ( R. 150). Therefore, Appellee argued to the trial court that Buchanan set forth the requirements to establish the alter-ego relationship between a parent and subsidiary corporation. As Appellee first argued, Buchanan is appropriate precedent. Appellee's new contention that "Buchanan is inapplicable to the facts of this case" could not be further from the truth. The Buchanan Court held the following: In Johnson & Higgins [321 SO.2d 281 (Miss. 1975)], this Court held: The mere fact that one owns all the stock of the other, or substantially all, is not enough to warrant disregard, in the absence of some fraudulent purpose; nor is the fact that there was an opportunity to exercise control. -2-
6 Furthermore the fact that the shareholders ofthe two corporations are the same is not of itself sufficient to treat the two corporations as one. Fletcher [(1 W. Fletcher, Cyclopedia of the Law of Private Corporations 43 at 210 (Perm. Ed. 1974»]. [Further citations omitted]. Buchanan argues that Ameristar-Las Vegas is the alter ego of Ameristar-Vicksburg. To support her position, Buchanan relies upon the alter ego factors used by the federal courts. At the time of the summary judgment motion, Buchanan argued that Ameristar-Las Vegas was the parent company and owned all of the capital stock its subsidiary, Ameristar-Vicksburg. Ameristar-Las Vegas did not deny this relationship between the two companies. In his affidavit, Peter Walsh (Walsh), the senior vice-president, general counsel, and assistant secretary of Ameristar-Las Vegas, admitted that Ameristar-Las Vegas was the parent company of six subsidiaries, one of them being Ameristar-Vicksburg. According to the documents submitted in Buchanan's response in opposition to the motion for summary judgment, Ameristar-Las Vegas and Ameristar-Vicksburg shared some common directors and officers. However, Ameristar-Las Vegas was incorporated in Nevada and had at least six directors and seven officers. In contrast, Ameristar-Vicksburg was incorporated in Mississippi, and had only one director and five officers. Craig H. Neilsen was the president and one of six directors of Ameristar-Las Vegas and the president and sole director of Ameristar-Vicksburg. In addition, Thomas M. Steinbauer was the senior vice-president offmance, chief financial officer, treasurer, and secretary for Ameristar-Las Vegas. Steinbauer was a vice-president of finance, treasurer and secretary of Ameristar-Vicksburg. Other than Neilsen and Steinbauer's positions, no other officer or director was the same for the two corporation. Ameristar-Las Vegas did not deny that the two corporations had common directors or officers. As this Court has held, corporations are considered to be separate and distinct entities even if "the same individuals are the incorporators of, or own stock, in the several corporations, and although such corporations may have the same persons as officers." MurdockAcceptance, 138 So.2d 896; Johnson & Higgins, 321 So.2d at 285. Therefore, we find that the corporate veil should not be pierced merely because there was a commonality of ownership and directors or officers of Ameristar-Las Vegas and Ameristar-Vicksburg. Buchanan v. Ameristar Casino Vicksburg, Inc., 957 So.2d 969, (Miss. 2007). -3-
7 The Buchanan Court found Plaintiff failed to demonstrate that Ameristar-Las Vegas was the alter ego of Ameristar-Vicksburg. Just as in the Buchanan case, Appellee in the case at hand is arguing that Tanfield Group, PLC, is the alter ego of Appellant Tanfield Engineering based on the facts that Tanfield Group, PLC, owns all stock of Appellant Tanfield Engineering and Tanfield Group, PLC, and Appellant Tanfield Engineering share two common corporate officers I. As the Buchanan Court set forth, "[t]he mere fact that one owns all the stock of the other, or substantially all, is not enough to warrant disregard, in the absence of some fraudulent purpose; nor is the fact that there was an opportunity to exercise control." Buchanan, at 979. "Furthermore the fact that the shareholders of the two corporations are the same is not of itself sufficient to treat the two corporations as one." ld., at 979. Appellee has not met Appellee's burden of making a prima facie showing of an alter ego theory; therefore, the trial court erred in its determination that Appellant Tanfield Engineering was the alter ego of its parent company, Tanfield Group, PLC. I See Tanfield Engineering Systems, Inc.'s Appellant's Brief, page 12, '1. Again, Appellee incorrectly asserts that Appellant, Tanfield Engineering Systems, Inc., and Tanfield Group, PLC, do not observe corporate formalities. As set forth in Tanfield Engineering Systems, Inc.'s Appellant's Brief, each entity observes corporate formalities. (R. 277). In the trial court's Memorandum Opinion and Order, the trial court apparently made a clerical error in its assertion that the "two corporations share corporate formalities." (R. 277). Appellant believes this was an clerical error by the trial court because the documents on which the trial court relied were the Interrogatories of Charles Brooks and the Response to Interrogatory No.5 which clearly states that the two corporations observe corporate formalities. (R. ISO). -4-
8 B. Mississippi Does Not Distinguish Between The Alter Ego Standard For Piercing the Corporate Veil And The Alter Ego Theory For Service Of Process. Appellee argues that the alter ego standard for piercing the corporate veil is not the same alter ego standard for service of process. However, Appellee cites no legal authority for such contention. As discussed above, the alter ego standard applied in Mississippi state court is set forth in Buchanan. III CONCLUSION For the reasons stated herein, Tanfield Engineering Systems, Inc. requests this Court to reverse the decision ofthe trial court denying it's Motion to Dismiss and dismiss all claims against it for the reason that the Appellee failed to effectuate service on Appellant Tanfield Engineering within the requisite 120 days as outlined in Miss. R. Civ. P. 4(h). #_ AARON R. EDWARDS- BAR DANIEL COKER HORTON & BELL, P.A OLD CANTON ROAD, SUITE 400 POST OFFICE BOX 1084 JACKSON, MISSISSIPPI TELEPHONE: (601) FACSIMILE: (601) Respectfully Submitted, TANFIELD ENGINEERING SYSTEMS, INC. o?t:i:r-- BY -5-
9 CERTIFICATE I, Aaron R. Edwards, of counsel for Tanfield Engineering Systems, Inc., do hereby certify that I have this day served by United States mail a true and correct copy of the above and foregoing pleading to: Benjamin L. Lochlar, Esq. Beasley, Allen, Crow, Methvin, Portis & Miles, PC 218 Commerce Street Montgomery, AL Britt V. Bethea, Esq. Greene & Phillips SO North Florida Street Mobile, Alabama Honorable Lester F. Williamson Circuit Court Judge Post Office Box 86 Meridian, MS THIS, the H~ day of January, i~ AARON R. EDWARDS -6-
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