This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Tropical Flavors, Inc., d/b/a Kokomo's Island Café, et al.,
Filed May 30, 2006
Toussaint, Chief Judge
Timothy and Patricia Buffham, 13000 June Terrace, Minnetonka, MN 55305 (pro se appellants)
Considered and decided by Toussaint, Chief Judge; Hudson, Judge; and Crippen, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellants Timothy and Patricia Buffham challenge the district court’s order joining them as judgment debtors, declaring a transfer of their corporation’s asset void, and piercing the corporate veil to hold them personally liable for the judgment of respondent P. H. T. Systems, Inc. (PHT) against their corporation. PHT moves to strike parts of the Buffhams’ brief and appendix. Because we conclude that the law of the case precludes the Buffhams from challenging the district court’s finding and that the transfer of the corporate asset violated the Uniform Fraudulent Transfer Act and we see no abuse of discretion in the district court’s decision to pierce the corporate veil, we affirm. Because some of the items PHT moves to strike are not part of the record, PHT’s motion is granted in part.
Buffham is chief executive officer and Timothy Buffham is the majority shareholder
of Tropical Flavors, Inc. (Tropical). PHT,
a supplier of kitchen and restaurant equipment, was not paid for equipment it
supplied to Tropical for use in Tropical’s only asset, Kokomo Island Café (
Unable to collect its judgment, PHT
moved to join the Buffhams,
On appeal, the Buffhams challenge these conclusions; they argue in addition that the district court abused its discretion in piercing the corporate veil to join them as judgment debtors and that they were deprived of due process.  PHT moves to strike parts of the Buffhams’ brief and appendix.
D E C I S I O N
1. Law of the Case
In opposing PHT’s motion to join
them as judgment debtors, the Buffhams argued that Tropical could not have
Failure to challenge a court’s
decision results in that decision becoming the law of the case. See,
e.g., In re Welfare of D.T.P., 685 N.W.2d 709, 712 (
In their reply brief, the
Buffhams argue that “whether Tropical owned
Tropical maintained the position
that it owned
2. The Uniform Fraudulent Transfer Act
The district court determined
that the transfer of assets from Tropical to Beachfront was fraudulent under
Minn. Stat. § 513.44(a) (2004).
Whether a statute applies is a question of law that this court reviews
de novo. O’Malley v. Ulland Bros., 549 N.W.2d 889, 892 (
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably equivalent value in exchange for the transfer or obligation. . . .
To determine whether the first criterion is satisfied, actual intent, a court considers whether:
(1) the transfer or obligation was to an insider;
(2) the debtor retained possession or control of the property transferred after the transfer;
(3) the transfer or obligation was disclosed or concealed;
(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(5) the transfer was of substantially all the debtor's assets;
(6) the debtor absconded;
(7) the debtor removed or concealed assets;
(8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
(10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and
(11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.
3. Piercing the Corporate Veil
“In an action for relief against
a transfer . . . a creditor . . . may obtain . . . subject to applicable
principles of equity and in accordance with applicable Rules of Civil Procedure
. . . any other relief the circumstances may require.”
The district court pierced the
corporate veil to join the Buffhams as judgment debtors under Minn. Stat. § 513.47(a)(3)(iii). Persons who have abused the corporate form
may be held personally liable for fraud by piercing the corporate veil. Victoria
Elevator Co. of
Patricia Buffham was CEO of Tropical, the
transferor corporation, and Timothy Buffham was the majority shareholder; she
was both CEO and sole shareholder of Beachfront, the transferee
corporation. The transfer defeated PHT’s
attempts to collect on its judgment against Tropical. Holding the Buffhams personally liable for
Tropical’s fraud in transferring
4. Due Process
argument on this issue is unsupported by legal authority. An assignment of error that is based only on
assertions and unsupported by argument or authority is waived unless
prejudicial error is obvious on mere inspection. State
v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (
No error is obvious. The Buffhams were informed by notice a month before the hearing that PHT would seek to join them and Beachfront. They did not request an evidentiary hearing. At the hearing on PHT’s motion, the Buffhams and Beachfront were represented by counsel separate from the counsel that represented Tropical.
The Buffhams imply that, to hold them liable for Tropical’s judgment debt, PHT should have brought a separate action. At the hearing, counsel for the Buffhams said this explicitly: “[I]f PHT has such a claim against [the Buffhams], they should file a summons and complaint, let there be an answer and counterclaim, let the discovery proceed, and let the evidence be presented to this court in the context of that separate action in an orderly fashion.” Requiring PHT, which had received a judgment against Tropical, to bring a separate action to collect that judgment from the entity to which Tropical had transferred its sole asset would violate Minn. R. Civ. P. 19.01, which mandates joinder of those “in [whose] absence complete relief cannot be accorded among those already parties.” The Buffhams’ due-process argument is without merit.
5. Motion to Strike
PHT moved to strike the Certificate of
Assumed Name included in the appendix to the Buffhams’ brief on the ground that
it was not filed in the trial court. The
record on appeal consists of documents “filed in the trial court.”
Moreover, some applications of
Minn. R. Civ. App. P. 110.01 indicate that the dispositive factor is whether
the material was before the district court, not whether it was filed. See,
e.g., Brett v. Watts, 601 N.W.2d
199, 201 (Minn. App. 1999) (striking medical report not submitted to district
court before entry of summary judgment), review
denied (Minn. Nov. 17, 1999); S.W. v.
Spring Lake Park Sch. Dist. No. 16, 592 N.W.2d 870, 877 (Minn. App. 1999)
(granting motion to strike material because it “was not submitted to the trial
court”) aff’d mem., 606 N.W.2d 61 (Minn.
PHT also moved to strike 30 allegations from the fact section of the Buffhams’ brief on the ground that they are not supported by citations to the record as required by Minn. R. Civ. App. P. 128.03. The Buffhams then provided citations to the record for the 30 allegations, but examination of the record indicates that the cited sources do not provide adequate or complete support for the allegations. Therefore, the motion to strike the 30 allegations is granted.
Affirmed; motion granted in part.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
The district court also concluded that the doctrine of judicial estoppel
precludes the Buffhams and Beachfront from challenging the finding that
Until after the appellate briefs had been filed, the Buffhams, Tropical, and
Beachfront were represented by the same counsel. That counsel then withdrew, and no substitute
counsel was obtained. “[A] corporation
must be represented by an attorney in legal proceedings.” Save O
 We note that none of the materials involved in the motion to strike is particularly relevant, much less essential, to the issues on appeal.