In recent months, courts in states such as Texas, New York, Pennsylvania and Ohio have issued published opinions regarding whether contractors were entitled to corporate protection after they allegedly failed to properly follow corporate protocols and/or used the corporate entity for nefarious purposes. In those instances when the corporate veil is pierced, the potential personal liability for corporate shareholders and officers is exceptional. Furthermore, corporate entities that are related to the corporation that has had its veil pierced may also be subject to liability. Given the recent spree of acquisitions and consolidations in the deep foundations industry, it becomes even more imperative that each corporation act as separate entity and follow all corporate regulations. Otherwise, a sister company may be ultimately responsible for the alleged debts and actual judgments of a related company.
The following 12 factors are considered by many courts when determining if the corporate form should be discarded and the corporate veil should be pierced and a shareholder should be liable because the shareholder directed and controlled the corporation and used it for an improper purpose:
Common ownership;
Pervasive control;
Confused intermingling of business assets;
Thin capitalization;
Non-observance of corporate formalities;
Absence of corporate records;
No payment of dividends;
Insolvency at the time of the litigated transaction;
Siphoning away of the corporation's funds by its dominant shareholder;
Nonfunctioning of officers and directors;
Use of the corporation for transactions of the dominant shareholders; and
Use of the corporation in promoting fraud.
Roy v. Ne. Pump & Instrument, Inc., 2019 U.S. Dist. Lexis 99431, *9,10 (E.D. Pa.); citing to Kraft Power Corp. v. Merrill, 981 N.E. 2d 671, 681, n. 11 (Mass. 2013).
While the existence of one or even a few of these corporate deficiencies may not automatically prove to be fatal to a contractor's reliance on the corporate form, they should be enough to cause a corporation to seriously examine and then correct the way that it is being operated before its veil is pierced. For example, in the Roy case in Pennsylvania, Northeast Pump & Instrument's sole owner and shareholder was unable to have a veil piercing claim made against him and his company dismissed when he was compelled to admit that his company did not keep meeting agendas or minutes, did not pay him dividends and, perhaps most conspicuously of all, did not have in its possession a copy of its own articles of incorporation or any other corporate documents because they were allegedly being "held by a former attorney... who is not available and has been disbarred." Roy, at 2,3.
Similarly, in a case in Ohio that was decided in May 2019, a court correctly pierced a contractor's corporate veil and held the contractor personally liable for the damages caused by his illegal acts because there was evidence that the contractor's corporate entities were the contractor's alter egos that did not have a separate mind, will, or existence of their own especially when they had one sole member. Furthermore, the illegal acts engaged in by the contractor constituted the "egregious acts" that caused injury or unjust loss to third parties that the doctrine of piercing the corporate veil existed to remedy. Denny v. Breawick, LLC, 2019 Ohio App. Lexis 2129, *1419. Additional findings that led to the piercing of the corporate veil in this instance included, but were not limited to, the fact that the sole member of the corporate entity withdrew funds from the corporate bank account to pay for his personal expenses and the lack of separate bank accounts by the corporation and its single shareholder. Denny at *21.
Each and every PDCA member should regularly evaluate, at least on an annual basis, whether it is properly complying with its corporate obligations. Tasks such as properly conducting corporate meetings and complying with corporate banking requirements while properly documenting the same are very easy to accomplish, but far too often neglected. Creating and maintaining the excellence of an entity's compliance with its corporate obligations is actually quite similar to the constant need for a contractor to maintain and improve upon the excellence of its construction work. If either of these obligations are neglected, the contractor is needlessly assuming considerable risk. t
Alex Filotti can be reached at alexander.filotti@hofstra.edu and Rick Kalson, Esq. can be reached at rkalson@beneschlaw.com.Losing the Protection of the Corporate Shield
August 28, 2019 In recent months, courts in states such as Texas, New York, Pennsylvania and Ohio have issued published opinions regarding whether contractors were entitled to corporate protection after they allegedly failed to properly follow corporate protocols and/or used the corporate entity for nefarious purposes. In those instances when the corporate veil is pierced, the potential personal liability for corporate shareholders and officers is exceptional. Furthermore, corporate entities that are related to the corporation that has had its veil pierced may also be subject to liability. Given the recent spree of acquisitions and consolidations in the deep foundations industry, it becomes even more imperative that each corporation act as separate entity and follow all corporate regulations. Otherwise, a sister company may be ultimately responsible for the alleged debts and actual judgments of a related company.
The following 12 factors are considered by many courts when determining if the corporate form should be discarded and the corporate veil should be pierced and a shareholder should be liable because the shareholder directed and controlled the corporation and used it for an improper purpose:
Common ownership;
Pervasive control;
Confused intermingling of business assets;
Thin capitalization;
Non-observance of corporate formalities;
Absence of corporate records;
No payment of dividends;
Insolvency at the time of the litigated transaction;
Siphoning away of the corporation's funds by its dominant shareholder;
Nonfunctioning of officers and directors;
Use of the corporation for transactions of the dominant shareholders; and
Use of the corporation in promoting fraud.
Roy v. Ne. Pump & Instrument, Inc., 2019 U.S. Dist. Lexis 99431, *9,10 (E.D. Pa.); citing to Kraft Power Corp. v. Merrill, 981 N.E. 2d 671, 681, n. 11 (Mass. 2013).
While the existence of one or even a few of these corporate deficiencies may not automatically prove to be fatal to a contractor's reliance on the corporate form, they should be enough to cause a corporation to seriously examine and then correct the way that it is being operated before its veil is pierced. For example, in the Roy case in Pennsylvania, Northeast Pump & Instrument's sole owner and shareholder was unable to have a veil piercing claim made against him and his company dismissed when he was compelled to admit that his company did not keep meeting agendas or minutes, did not pay him dividends and, perhaps most conspicuously of all, did not have in its possession a copy of its own articles of incorporation or any other corporate documents because they were allegedly being "held by a former attorney... who is not available and has been disbarred." Roy, at 2,3.
Similarly, in a case in Ohio that was decided in May 2019, a court correctly pierced a contractor's corporate veil and held the contractor personally liable for the damages caused by his illegal acts because there was evidence that the contractor's corporate entities were the contractor's alter egos that did not have a separate mind, will, or existence of their own especially when they had one sole member. Furthermore, the illegal acts engaged in by the contractor constituted the "egregious acts" that caused injury or unjust loss to third parties that the doctrine of piercing the corporate veil existed to remedy. Denny v. Breawick, LLC, 2019 Ohio App. Lexis 2129, *1419. Additional findings that led to the piercing of the corporate veil in this instance included, but were not limited to, the fact that the sole member of the corporate entity withdrew funds from the corporate bank account to pay for his personal expenses and the lack of separate bank accounts by the corporation and its single shareholder. Denny at *21.
Each and every PDCA member should regularly evaluate, at least on an annual basis, whether it is properly complying with its corporate obligations. Tasks such as properly conducting corporate meetings and complying with corporate banking requirements while properly documenting the same are very easy to accomplish, but far too often neglected. Creating and maintaining the excellence of an entity's compliance with its corporate obligations is actually quite similar to the constant need for a contractor to maintain and improve upon the excellence of its construction work. If either of these obligations are neglected, the contractor is needlessly assuming considerable risk. t
Alex Filotti can be reached at alexander.filotti@hofstra.edu and Rick Kalson, Esq. can be reached at rkalson@beneschlaw.com.
It Pays to Be Prepared
August 28, 2019
By: Tiffany Harrod
Munsch, Hardt Kopf & Harr P.C.
Houston, TX
Chair-Elect, Construction Law Section of the Houston Bar Association
In March 2019, the Social Security Administration (SSA) resurrected "Employer Correction Request Notices" or "No-Match" letters used to notify employers that an employee's name and social security number combination on a filed W-2 do not match SSA records.1 According to the SSA, if you receive a no-match letter, you should: Check your records to see if there is a discrepancy in the records submitted to SSA and notify the SSA of corrections on a Form W-2C within 60 days of receipt of the no-match letter; Instruct the employee to contact the SSA to resolve the discrepancy if the information was reported correctly, and provide the employee a reasonable amount of time to resolve the discrepancy; and Document your efforts to resolve the matter. Employers should carefully document their response to a no-match letter because it is likely the U.S. Department of Homeland Security (DHS) will use the information from no-match letters to perform Form I-9 audits on employers. The United States Immigration and Customs Enforcement (ICE) is the main investigative arm of the DHS and was established to assist the DHS with its mission of ensuring that the U.S. is safe, secure, and protected against terrorism. According to its website, ICE's mission is "to protect America from the cross-border crime and illegal immigration that threaten national security and public safety. In the last few years, ICE has dramatically increased Form I-9 audits of employers to deter the hiring of undocumented workers. During an audit, ICE identifies statutory violations, assesses monetary penalties and decides whether or not to prosecute employers for criminal violations. A routine request in every Form I‑9 audit is for the production of any no‑match letters received by the employer with regard to current employees and previous employees. While the SSA warns against making inferences about an employee's immigration status after the receipt of a no-match letter, many ICE offices consider an employer's receipt of no-match letters to be an indication that an employer might have questionable hiring and record-keeping practices. An employer's failure to show specific action in response to a no‑match letter could, therefore, be considered by ICE as a significant negative factor when determining if enforcement actions, including fines and criminal prosecution, should be taken. The realities: Escalating fines, labor shortages and possible delay damages. Regardless of politics and the availability of labor, knowingly or unknowingly hiring undocumented workers has become costly since ICE has increased fines. Knowingly hiring undocumented workers carries fines between $539 and $4,313 per worker on a first offense. Failing to properly complete the Form I-9 carries a fine of $216 to $2,156 per document. Employers found to engage in a pattern or practice of hiring or recruiting undocumented workers may be penalized up to $3,000 per undocumented worker and receive six months in jail. In the construction industry, immigrant labor represents a significant portion of the workforce. Statistics indicate that foreign-born workers represent 30 percent of the construction trades.4 The reality for construction employers is that without an adequate visa system in place to meet labor shortages, employers in certain industries are left with little to no options when it comes to finding documented workers. The Associated General Contractors of America has long been pushing for an overhaul of the U.S. immigration system in order to help contractors supplement their workforces with temporary workers from abroad. Recent proposed legislation seeks to create an immigrant visa system for non-farm workers which would establish the first-ever visa program for less-skilled construction labor. Current immigration law requires employers to ensure that employment eligibility documents appear to be valid, while federal law prohibits employers from requiring specific types of identification from workers. Currently, employers are required by law to maintain for inspection original Employment Eligibility Verification Forms or I-9 Forms for all current employees.5 In the case of former employees, employers are required to retain all I-9 forms for at least three years from the date of hire or one year after termination, whichever is longer. Being unprepared for a Form I-9 audit could prove costly and interfere with existing construction contracts, resulting in costly delays. When dealing with an I-9 audit, preparation and an experienced employment and immigration attorney are key. Form I-9 Compliance Program Compliance is about making sure to follow the I-9 directions and making sure your business is not letting applicants get by with shoddy documentation, no documentation, or requiring extra proof if they suspect someone is undocumented; while at the same time, not imposing requirements above and beyond what the I-9 requires, which can result in a lawsuit by the government or an applicant. To protect against these issues, funnel I-9 documentation and retention through one person within your organization and make sure that person is trained to properly complete I-9s. The government finds, on average, five errors in each I-9 when it does an audit and each error can result in a fine. Create and maintain an internal I-9 compliance policy and mandate that it be followed by all hiring supervisors to ensure consistency in handling I-9s. Note, there was a new I-9 form issued in 2017. Be sure it is used with all new hires. Also, employers must mandate the re-verification of temporary employment authorizations. Conduct an I-9 self-auditonce a year. It is wise for business owners to conduct an I-9 self-audit annually to be sure their records are in top shape for an audit. This is especially true for business owners who delegate the responsibility to complete I-9s to another employee. A second review will usually find some errors. In addition to examining each form to be sure it is correctly filled out, employers should check whether I-9s on former employees are properly retained, how no-match communication from the government has been handled and whether re-verification procedures are on schedule. If you find any errors, initiate correction procedures immediately. Be prepared for a Form I-9 audit. Audits are conducted both by ICE and, on a cursory level, by the Department of Labor. In either case, employers are entitled to three days' notice before an I-9 audit. If you receive notice of an audit, immediately contact your employment or immigration lawyer. They will protect you from inadvertently making mistakes with the auditor. Then work with your lawyer to conduct an I-9 audit immediately and correct any errors before the audit begins. If ICE appears for a raid, immediately contact counsel and ask them to come to the site. ICE will not wait for your lawyer to arrive if they have a search warrant, so it will be necessary to examine the warrant yourself. If you observe agents exceeding the warrant authority, ask to speak to the agent in charge and raise the issue. If you do not stand up for your rights, you may lose the opportunity. Construction contracts and immigration issues. General contractors should always be aware of applicable provisions in their prime contracts with owners relating to liability associated with delays caused to a project for any reason. General contractors should also be vigilant to protect against liability associated with delays resulting from disruptions caused by a lack of labor due to immigration issues caused by subcontractors and their workforce. General contractors may attempt to draft accordingly within their prime contracts to remove liability in the event of immigration issues being the sole cause of a labor impact and related delay. Additionally, general contractors should contractually require subcontractors to accept as much of the responsibility as possible for labor immigration issues. In reviewing contract terms, subcontractors should make every effort to ensure immigration related delays are not a specifically enumerated breach or event of default. Subcontractors should negotiate to have the ability to cure the impact of a diminished work force by quickly providing new labor, thus avoiding the possibility of termination or liquidated damages. Since subcontractors typically contract with or employ the direct labor on a construction project, to the fullest extent possible they should contractually place the burden of providing accurate information of laborer citizenship status upon the actual laborers or employment agencies involved.
Tiffany Harrod is an attorney at Munsch Hardt Kopf & Harr P.C. in Houston, Texas, and the chair-elect of the Construction Law Section of the Houston Bar Association.
References: From 1993 through 2012, the SSA sent out no-match letters to employers (and third-party payroll companies) who submitted Form W-2s containing name and Social Security Number (SSN) combinations that did not match the agency's records. The practice was stopped in 2012 due to various complaints and lawsuits from labor unions, immigrant advocates, and the business community. https://www.ssa.gov/employer/notices.html; https://faq.ssa.gov/en-us/Topic/article/KA-10008 https://www.ice.gov/overview https://www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=260375; https://www.bls.gov/news.release/forbrn.nr0.htm/Labor-Force-Characteristics-of-Foreign-Born-Workers-Summary https://www.ice.gov/factsheets/i9-inspection
The Man of Steel
August 28, 2019
Chris Ragan is no unfamiliar face in the driven pile industry more specifically, he's spent his career specializing in structural steel.
Since 1975, he's held sales positions in the steel market and in 2003, found himself at Copperweld Corporation as HSS territorial manager. He was promoted to the piling sales manager role in 2005. It was at that point that the management team at Copperweld gave Ragan an opportunity that shaped his career.
"My manager asked for suggestions for new product lines or services [he was looking for] out-of-the-box ideas," said Ragan. "I proposed getting into the driven pile market on sizes from 12.75-inch to 20-inch OD. I was given 30 days to compile a proposal and presentation and contacted PDCA and DFI members for input."
The presentation, as it happens, went well.
"After my presentation, I walked out of the room with a new responsibility and a new product line to market and was challenged to make it successful within one year," said Ragan. "I walked directly over to Marilyn Poindexter and asked if she wanted to join me in this high-risk, high-reward venture. She immediately said yes, and we embarked on putting Copperweld, now Atlas Tube, into the market in North America."
When Atlas Tube acquired Copperweld later in 2005, Ragan became the product manager for piling products and has held that position for the past 14 years.
Ragan and Poindexter had to start their journey in the driven pile market from ground zero, but their partnership was a seamless one with skills that complemented one another.
"Marilyn handles the inside sales, order processing, customer service requests and more," said Ragan. "My responsibilities include outside sales, traveling, conferences, marketing and business development. As we found our core customers, many of those same companies are still with us today. Marilyn and I share all of the success we have experienced."
One of the biggest assets for Ragan and Poindexter was having a 20-inch OD mill in Chicago and a 16-inch OD mill in Harrow, Ont. that allowed them to drop in piling projects with very short lead time. Once word spread to PDCA members, the pair was busy quoting projects from coast to coast; a separate strategic partnership allowed them to offer direct shipping to job sites for customers.
Throughout his career, Ragan has shipped steel to 44 different states for DOT projects and has supplied steel for many National Football League and Major League Baseball stadiums.
"As an ardent football and baseball fan, I enjoy visiting these stadiums to watch games, but I find myself walking the concourses knowing my steel piles are underneath," said Ragan.
Ragan reflects on his career fondly and with an unparalleled passion for the market.
"Who would not love this job?" he said. "I've dealt with projects for Home Depots, college buildings, bridges, elevated highways, famous landmarks like the Jefferson Memorial in Washington, D.C., airports, military bases and more, just to name a few. Each project has had its gang of characters truck drivers, project managers, geotechnical engineers and purchasing managers, each with their own list of instructions to follow."
Throughout his career, Ragan has seen major changes to the industry, and keeping up with those changes has always excited him.
"Technology [is one area of major change]," he said. "Proficiency at the mill has greatly increased. I appreciate that I work for a company that has invested heavily in equipment and technology."
He also mentions that the amount of paperwork and documentation has increased over the years.
"When I first started, everything was through word of mouth, a phone call, a handshake," he said. "Now, each step of the process must be signed off by several individuals."
Associating with PDCA
"This has never been a job; it's always been a career," said Ragan. "My whole career, since graduating from college, has been in the steel industry."
He says that one of the pillars of his success has been membership in PDCA.
"The PDCA membership tutored me in the driven pile industry PDCA 101!" he said. "I like getting to know the members and hearing their stories, learning from them. By going to different regions in the country, I've been able to get a wide, unique perspective."
He also acknowledges how fortunate he feels to have been able to work at Atlas.
"Our owner, Barry Zekelman, and president, Tom Muth, have a management style where you are given goals, and then they get out of the way so you can do your job," he said. "I've always felt that I had their backing."
Looking forward to retirement
Ragan is set to retire in the near future, but many of his associates will say that they've been hearing that sentiment for quite some time.
"I never show all my cards!" laughed Ragan. He says that Atlas has a new mill coming in 2021, and a new size range offering of 28-inch OD pipe with one-inch wall. Despite the excitement he has regarding that announcement, Ragan maintains that he will be retiring... for the most part.
"The company has allowed me to assist in hand-picking a replacement who shares the same passion for the industry and the company that I have," he said. "I got it to here, but it will be his [responsibility] to take us to the next level. But I will always be by my phone if he needs help or just wants to talk."
Ragan and his wife, Dee, purchased a picturesque property on Table Rock Lake in southern Missouri and are currently building a retirement home for themselves and their family, which includes seven, but soon-to-be eight grandchildren. The back porch has a view of more than a mile of water.
"And if you're wondering, the house sits on Atlas Pipe Piles!" said Ragan.New PDCA Store Now Live Online
August 22, 2019
Educational Material, Logo Items Available in New PDCA Store
Jacksonville, FL (August 22, 2019): Offering a diverse mix of proprietary best practices guides and unique logo merchandise, The PDCA Store is now live online with 24-hour availability. The newly-conceived Association retail endeavor supports the 2019 Strategic Plan plank that calls for increased visibilty, it provides the non-profit organization another revenue stream and it makes available an inventory of useful items for businesses involved in deep foundation construction.
Some of the noteworthy items available in The PDCA Store including three proprietary Guides to steel sheet piling (Installation, Corrosion and Retaining Wall Cost Comparison), a Commemorative 2019 Annual Conference stainless steel coaster trimmed in leather, logo shirts and hats, and an Arctic Mug among other things. See the full store with pricing at the following link:
https://secure.piledrivers.org/shop/
The PDCA Store debuted at the 2019 Annual Conference in a physical space (pictured). Since that time, a similar version of the store has travelled to PDCA Chapter events. In August, it became live online offering convenience to shoppers. Watch for announcements from the Association that give you the chance to win PDCA Bucks, redeemable at the online store. And don't forget to include #PDCADriven on your social media posts to be awarded these coupons in random, monthly drawings.
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Gulf Coast Presents Free Engineering Seminar October 24th
August 15, 2019The Pile Driving Contractors Association of the Gulf Coast has announced that it will be conducting the "PDCA Engineers Conference" on October 24, 2019 at Parc 73 in Prairieville, LA. The day-long event begins READ MORE
South Carolina Chapter Board Seats Available
August 9, 2019
(Charleston, SC): The nomination process is now open as the PDCA South Carolina Chapter works to fill vacancies on its Board of Directors for the calendar year 2020. Interested parties are encouraged to contact Chapter President John King to learn how to obtain a seat on this voluntary, yet critical leadership position within the local pile driving industry. All 65 attendees at the Chapter's 3rd Quarter Dinner Meeting were made aware of the openings and asked to consider an elevated level of participation.
This was the 64th consecutive quarterly meeting, as noted by [PLEASE VISIT WEBPAGE TO FINISH READING: http://www.piledrivers.org/chapters/south-carolina/south-carolina-chapter-news/ ]
A Pile of News - August 2019
August 1, 2019
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