United States District Court, E.D. Kentucky, Central Division, Lexington
MICHAEL W. DICKINSON, INC., Plaintiff,
KEENELAND ASSOCIATION, INC., Defendant.
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE
matter is before the Court on defendant Keeneland
Association, Inc.'s motion to dismiss plaintiff Michael
W. Dickinson, Inc.'s complaint. (DE 11). For the
following reasons, Keeneland's motion is DENIED.
case is an attempt by Dickinson to collect on the judgment it
obtained in an earlier action against Martin Collins Surfaces
& Footings, LLC. See Michael W. Dickinson, Inc. v.
Martin Collins Surfaces & Footings, LLC, No.
5:11-cv-281-JMH, 2012 WL 5868903, at *1 (E.D. Ky. Nov. 20,
a Maryland corporation, holds a patent entitled “Sport
and Recreational Surface, ” which is intended for use
in the design of synthetic equestrian surfaces. (DE 1, Compl.
¶ 2). Martin Collins was a Kentucky limited liability
company, wholly owned by Martin Collins International, Ltd.,
and Keeneland Ventures PT, LLC, by and through Keeneland. (DE
1, Compl. ¶ 2-4). Keeneland, the defendant in this
action, operates a thoroughbred horse racing business and
owns a sales complex and racing facility in Lexington,
Kentucky. (DE 1, Compl. ¶ 3).
previous action between Dickinson and Martin Collins arose
out of a non-exclusive patent license agreement between the
parties, which settled a dispute regarding the terms by which
Martin Collins and its customers, including Keeneland, could
use Dickinson's patented product. (DE 1, Compl. ¶
8-15). Dickinson filed suit against Martin Collins for breach
of that agreement. (DE 1, Compl. ¶ 11).
after Dickinson filed the previous action, Martin Collins
dissolved. Upon the dissolution of Martin Collins, Central
Bank & Trust Company acquired a first-priority lien on
all of the dissolved company's assets based on a loan
Central Bank had made to Martin Collins. (DE 1, Compl. ¶
12-13, 27, 32). That loan was guaranteed by Keeneland. (DE 1,
Compl. ¶ 27).
result of the earlier action, Dickinson obtained a judgment
against Martin Collins for breach of contract in the amount
of $395, 874.18, plus interest. (See DE 1, Compl.
¶ 1). Because Dickinson could not collect from Martin
Collins, it sought post-judgment discovery from several third
parties, including Keeneland Ventures and Keeneland. See
Dickinson, 2012 WL 5868903, at *1.
denying Dickinson's request for discovery from third
parties, U.S. District Judge Joseph M. Hood stated that
Dickinson was attempting “to engage in a fishing
expedition under the guise of post-judgment discovery to
determine if a basis exist[ed] to pierce the corporate veil,
even though no facts currently suggest[ed] that piercing
[was] appropriate.” Dickinson, 2012 WL
5868903, at *4.
case is Dickinson's attempt to do what it could not do
before-collect on its judgment. Through its current
complaint, Dickinson seeks to pierce Martin Collins'
corporate veil, claiming Martin Collins is the alter-ego and
sham corporation of Keeneland. (DE 1, Compl. ¶ 1). In
support of its claim, Dickinson offers the declaration of
Anthony Paul James, a former employee of Martin Collins
responded to Dickinson's complaint with a motion to
dismiss, arguing: first, that Dickinson failed to state a
claim upon which relief can be granted under Federal Rule of
Civil Procedure 12(b)(6), and second, that Dickinson failed
to join required parties under Rule 12(b)(7).
Failure to state a claim under Rule 12(b)(6)
new action, Dickinson attempts to collect on its judgment
from Keeneland by asserting that Martin Collins is the sham
corporation and alter ego of Keeneland. Keeneland argues that
Dickinson has failed to state a claim upon which relief can
argument is governed by Rule 12(b)(6). That rule provides
courts with a mechanism to enforce Rule 8, which governs the
sufficiency of a complaint. In determining whether a
plaintiff's complaint can withstand a motion to dismiss,
the Court will assume the veracity of well-pleaded factual
allegations and then determine whether they plausibly give
rise to an entitlement to relief. Ashcroft v. Iqbal,
556 U.S. 662, 679 (2009).
has filed its complaint along with the declaration of James,
former employee of Martin Collins International, one of
Martin Collins' parent entities. The Court can consider
James' declaration without converting Keeneland's
motion to dismiss into one for summary judgment. See
Gavitt v. Born, 835 F.3d 623, 640 (6th Cir. 2016)
(“[A] court may consider exhibits attached to the
complaint, public records, items appearing in the record of
the case, and exhibits attached to defendant's motion to
dismiss, so long as they are referred to in the complaint and
are central to the claims contained therein, without
converting the motion to one for summary judgment.”).
argues that its complaint and James' declaration present
sufficient evidence to state a plausible claim to pierce
Martin Collins' corporate veil to reach Keeneland. In its
reply to its motion to dismiss, Keeneland aptly described the
issue for the Court to resolve:
Plaintiff's current effort to pierce [Martin
Collins'] corporate veil, therefore, rises or falls with
whether the Declaration provided by James provides new
factual evidence or allegations that would raise
Plaintiff's right to relief against Keeneland above the
(DE 15, Reply at 4).
Court recognizes that piercing the corporate veil is an
equitable doctrine that may be invoked to allow a creditor
recourse against the shareholders of a corporation.
Inter-Tel Techs., Inc. v. Linn Station Props., LLC,
360 S.W.3d 152, 155 (Ky. 2012). “In short, the limited
liability which is the hallmark of a corporation is
disregarded and the debt of the pierced entity becomes
enforceable against those who have exercised dominion over
the corporation to the point that it has no real separate
existence.” Id. Courts will treat
“limited liability companies the same as corporations
for purposes of liability analysis.” Pro Tanks
Leasing v. Midwest Propane & Refined Fuels, LLC, 988
F.Supp.2d 772, 788 (W.D. Ky. 2013).
Kentucky law,  the test for whether a Court should pierce
an entity's corporate veil is two-fold, and “[t]he
burden of proof to demonstrate grounds for piercing the
corporate veil is on the party seeking to impose liability on
the parent corporation.” Id. at 783 (citing
Corrigan v. U.S. Steel Corp., 478 F.3d 718, 724 (6th
the Court must find “domination of the corporation
resulting in a loss of corporate separateness.”
Inter-Tel, 360 S.W.3d at 165. Second, the Court must
find “circumstances under which continued recognition
of the corporation would sanction fraud or promote
injustice.” Id. The test is conjunctive, and
both prongs must be met. See id.
pleading stage, the plaintiff must put forth sufficient facts
to state a plausible claim on both elements. See Arapahoe
Res., LLC v. Prof l Land Res., LLC, No. 15-10-ART, 2015
WL 4887321, at *3, *5 (E.D. Ky. Aug. 17, 2015).
Domination of the corporation resulting in a loss of
the first prong of the veil-piercing analysis, the Court
considers a host of equitable factors in determining whether
domination of the corporation has resulted in a loss of
corporate separateness. These factors include:
(1) Inadequate capitalization;
(2) Failure to issue ...