United States v. Lothringer ( 2021 )

Case: 20-50823 Document: 00516049080 Page: 1 Date Filed: 10/08/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
October 8, 2021
No. 20-50823 Lyle W. Cayce
Clerk
United States of America,
Plaintiff—Appellee,
versus
Arthur Dale Lothringer,
Defendant—Appellant.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:18-CV-373
Before Davis, Elrod, and Oldham, Circuit Judges.
Per Curiam:*
The question presented is whether Arthur Lothringer can be held
personally liable for his corporation’s failure to pay taxes. The district court
said yes. We affirm.
Lothringer formed Pick-Ups, Inc., which ran used-car lots. Lothringer
was the sole director, officer, and shareholder and had complete dominion
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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No. 20-50823
and control over Pick-Ups. The United States sued Lothringer, his wife Janet
Lothringer, and Pick-Ups to collect federal taxes. The Government moved
for summary judgment.
The district court made three relevant determinations—only one of
which is challenged on appeal. First, the court determined that Pick-Ups
owed $1,777,047.98 in federal taxes. Second, the court determined that Pick-
Ups was Lothringer’s alter ego. Third, the court awarded the Government
the proceeds from the sale of Lothringer’s properties and his cabin permit
minus his wife’s homestead interest. On appeal, Lothringer challenges only
the second determination: that Pick-Ups was his alter ego. We reject that
challenge.
Our review is de novo. Morrow v. Meachum, 917 F.3d 870, 874 (5th Cir.
2019). The parties agree that Texas law applies. “Texas law permits courts
to ‘disregard the corporate fiction . . . when the corporate form has been used
as part of a basically unfair device to achieve an inequitable result.’” Ledford
v. Keen, 9 F.4th 335, 339 (5th Cir. 2021) (alteration in original) (quoting SSP
Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 454 (Tex. 2008)).
Such a circumstance includes a corporation that is an alter ego of an
individual. Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986).
“Under Texas law, ‘[a]lter ego applies when there is such unity between
corporation and individual that the separateness of the corporation has
ceased and holding only the corporation liable would result in injustice.’”
Bollore S.A. v. Imp. Warehouse, Inc., 448 F.3d 317, 325 (5th Cir. 2006)
(alteration in original) (quoting Castleberry, 721 S.W.2d at 272). “An alter
ego relationship may be shown from the total dealings of the corporation and
the individual.” Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990).
The district court applied Texas law and concluded there was no
genuine issue of material fact and that the totality of the circumstances
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No. 20-50823
established “such unity between [Pick-Ups] and [Lothringer] that the
separateness of the corporation . . . ceased and holding only the corporation
liable would result in injustice.” Castleberry, 721 S.W.2d at 272. The court
relied on a slew of undisputed facts, including that Lothringer was the sole
shareholder, officer, director and owner of Pick-Ups; exercised complete
dominion and control over Pick-Ups; failed to observe certain corporate
formalities; loaned substantial money to Pick-Ups; and made payments from
the corporate bank account to service personal loans.
We see no error in the district court’s conclusion. Lothringer makes
two arguments that warrant brief discussion. But we reject both.
First, Lothringer argues that the district court improperly relied on his
failure to follow corporate formalities. This is because, Lothringer argues,
Castleberry has been superseded by Texas statute. See, e.g., Tex. Bus.
Orgs. Code Ann. § 21.223. As we have explained, “[t]he amendments
overruled Castleberry to the extent that a failure to observe corporate
formalities is no longer a factor in proving the alter ego theory in contract
claims.” W. Horizontal Drilling, Inc. v. Jonnet Energy Corp., 11 F.3d 65, 68 (5th
Cir. 1994) (Texas law) (emphasis added); see also Flores v. Bodden, 488 F.
App’x 770, 776 n.3 (5th Cir. 2012) (per curiam); Wilson v. Davis, 305 S.W.3d
57, 68 n.5 (Tex. App.—Houston [1st Dist.] 2009, no pet.). Lothringer has
provided no support that tax collection should be treated like a contract claim
and no persuasive reason to deviate from our precedent applying Texas law.
Second, Lothringer argues that the district court improperly granted
summary judgment after acknowledging that some facts were disputed. But
the court determined that those disputed facts were not material. And it is
well-established that “[f]actual disputes that are irrelevant or unnecessary
will not be counted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
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We have considered Lothringer’s other arguments and find them
unpersuasive. For these reasons, and for substantially the same given in the
district court’s thorough opinion, we refuse to disturb the judgment.
AFFIRMED.
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