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Opinion issued June 28,=20 2007










=20










In = The

Court of=20 Appeals

For=20 The

First=20 District of Texas


NO. 01-04-00921-CV

__________


MARCIE M.=20 MCCARTHY, Appellant


V.


WANI VENTURE, A.S.,

SUCCESSOR IN=20 INTEREST TO

NORGIPS USA,=20 INC., Appellee



On = Appeal=20 from the 129th District Court

Harris County, Texas

Trial Court=20 Cause No. 2001-21419



O = P I N I O=20 N

Appellee,=20 Wani Venture, A.S., successor in interest to Norgips USA, Inc.=20 (collectively "Norgips") filed a suit on a sworn account against = several=20 defendants, alleging of fraud and seeking to pierce the corporate = veil. As=20 of the time of trial, all of the original defendants had filed = bankruptcy,=20 had been severed out of the case, or had been non-suited, with the = exception of appellant, Marcie McCarthy. Following a jury trial, = the trial=20 court rendered judgment against McCarthy for $669,957.

In six=20 issues, McCarthy argues that (1) the trial court erred in = submitting an=20 incorrect definition of "actual fraud" in the jury charge; (2) = there is no=20 evidence that her company, Triple M Supply LLC, committed an = actual fraud;=20 (3) there is no evidence to support the damages and attorney's = fees award;=20 (4) there is no evidence or insufficient evidence that McCarthy = caused=20 Triple M Supply to be used to perpetrate an actual fraud and did=20 perpetrate an actual fraud upon Norgips, primarily for her own = direct=20 personal benefit; and (5) the trial court erred in finding = McCarthy=20 individually liable for the amounts that the jury found that = Triple M=20 Supply owed Norgips. We affirm. Background =

Triple M=20 Supply's Purchase Order

Norgips, a=20 Florida corporation, manufactures and sells wallboard, also known = as=20 drywall or sheetrock. John Kingston, Norgips's president, = testified that,=20 in 2000, there was a severe shortage of wallboard in the = marketplace, and=20 "people were scrambling to try to find drywall any place in the = world that=20 they could in order to supply the US production." Kingston hired = Steven=20 Klubak to be Norgips's general manager and to monitor the Texas = and=20 Florida markets. Kingston explained that part of the reason that = he hired=20 Klubak was because Klubak told him that "he had this customer in = Texas=20 that was a big player that could help [Norgips] be a major factor = in the=20 Texas market." The "big player" was Triple M Supply, = LLC.

Triple M=20 Supply was a wallboard distributor owned, in three equal parts, by = Anthony=20 Moschella, Michael Moschella (Anthony's brother), and Marcie = McCarthy=20 (Michael's girlfriend). Triple M Supply completed Norgips's = confidential=20 credit application, and it was agreed that Triple M Supply would = be=20 Norgips's sole distributor in the east Texas market. Triple M = Supply=20 prepared a purchase order for Norgips to ship approximately $1.8 = milion of=20 wallboard from Poland to the Port of Houston. Once the shipment = arrived,=20 it was stored in a warehouse in the Port of Houston, and Norgips = would=20 deliver the wallboard incrementally, in response to individual = invoices=20 from Triple M Supply. Kingston testified that it was Norgips's = intention=20 to hold Triple M Supply liable for the full amount of the purchase = order.=20 The first delivery was placed in April 2000. Triple M Supply was = slow in=20 making payments and, in October 2000, its $108,000 check was = returned for=20 insufficient funds. Kingston testified that, after the check = bounced, "the=20 red flag went up and we started having serious concerns as to = whether or=20 not we were going to get the money that was due to us." Kingston = testified=20 that there was "constant communication" between Klubak and Anthony = Moschella regarding Norgips's outstanding bills. After Norgips = received a=20 $66,000 check from Triple M Supply in late October--$42,000 less = than the=20 amount owed from the bounced check, Kingston asked Klubak to meet = with=20 Triple M Supply to review its accounts receivables. Kingston = wanted Klubak=20 to determine what payments were due to Triple M Supply from its = customers=20 and to explore the likelihood of whether it could satisfy its debt = to=20 Norgips.

In December=20 2000, Anthony Moschella provided Klubak with bookkeeping records = of Triple=20 M Supply's accounts receivables.=20 (1) From these records, Kingston discovered that there = were=20 outstanding receivables for more than $500,000. He saw that Triple = M=20 Supply's largest customer was JTMM Construction Company.=20 (2) Based on his review of these records, Kingston = learned that=20 Anthony Moschella, Michael Moschella, and Marcie McCarthy had = another=20 business, Triple M Operating. Triple M Supply had apparently = stopped=20 "invoicing" customers in July 2000, and Triple M Operating had = begun=20 invoicing the customers who purchased Norgips's wallboard. = Kingston=20 testified that he was alarmed to discover that "the people that we = had our=20 contractual relationship with, Triple M Supply, was no longer = distributing=20 our board." Instead, Triple M Operating was distributing the = board. From=20 the accounting records provided to Norgips, there appeared to be = no=20 distinction between the various companies. Kingston testified that = this=20 discovery "immediately raised a flag" because it seemed as though = Triple M=20 Supply, which "owed a lot of money to a lot of people," was = setting up new=20 corporations in order to continue doing business. Kingston was = concerned=20 because handwritten notes on the accounts receivables records led = him to=20 believe that these were old debts that were not going to be paid. = Kingston=20 also discovered that, during the time that it was Norgips's = exclusive=20 distributor, Triple M Supply was actually selling a competitor's = board,=20 while Norgips's board sat in the warehouse.

In January=20 2001, Kingston and Klubak met with Anthony and Michael Moschella = in an=20 attempt to determine whether Norgips was ever going to be paid. = Anthony=20 Moschella again provided a copy of Triple M Supply's bookkeeping = records=20 of its accounts receivables.=20 (3) This second set of records showed that, in the month = since=20 the previous accounts receivables records had been provided to = Norgips,=20 Triple M Supply had collected more than $50,000--none of which had = been=20 used to pay the outstanding balance it owed to Norgips. Kingston = testified=20 that Anthony Moschella reassured him and explained that "he had = $470,000=20 of good receivables there that he would expect to receive payment = on."=20 Anthony Moschella "pledged" the receivables to Norgips. At that = point,=20 Triple M Supply owed Norgips $504,000. Kingston was surprised to = learn=20 from Anthony Moschella at the meeting, however, that Triple M = Supply had=20 collected $150,000 from sales of Norgips's wallboard but had = diverted=20 those funds to Mexico to another of Anthony Moschella's business = ventures.=20

Within a=20 week of the meeting, a $71,170.87 check made out to Norgips from = Triple M=20 Supply was returned for insufficient funds. Norgips's last = delivery of=20 wallboard to Triple M Supply occurred in December 2000. Kingston = testified=20 that Norgips sold $1,047,000 of wallboard to Triple M Supply. = However,=20 Triple M Supply had paid Norgips only $504,800, and still owed = Norgips=20 $541,850.

In February=20 2001, Kingston was contacted by Leeland Dykes, a stock broker. = Dykes=20 explained that he had hired a private detective and had learned = that=20 Norgips was owed a lot of money by Triple M Supply. Kingston flew = to=20 Houston to meet with Dykes, and he was told that Klubak, who still = worked=20 for Norgips, and Anthony Moschella had been trying to corner the = wallboard=20 market and drive up the price so that they could sell it at a = premium.=20 Kingston learned that Klubak had been brokering other companies' = wallboard=20 and had sold more than $500,000 of wallboard from Shamrock, a = Norgips=20 competitor, while he was Norgips's general manager. Kingston was = told that=20 Shamrock had been "stiffed" for $105,000 and had obtained a = judgment=20 against Klubak for that amount. As soon as he returned from his = meeting=20 with Dykes, Kingston fired Klubak. Shortly thereafter, Kingston = discovered=20 that there were three UCC filings reflecting that all of the = assets of=20 Triple M Supply, Triple M Operating, and JTMM had been pledged to=20 creditors other than Norgips. These pledges were contrary to = Anthony=20 Moschella's representations that the receivables were pledged to = Norgips=20 and that he would formalize the assignment with a creditor's lien. =

Behind the=20 Scenes

The jury=20 was presented with testimony and evidence at trial regarding = several=20 interrelated companies involved in this case, which were generally = owned=20 by the same people. Based on our review of the record, this = evidence may=20 be summarized as follows:

Full=20 Name Funded Ownership
Caribe Forest=20 Products, Inc. ("Caribe") (record is=20 silent)=20

McCarthy non=20 passive investor

 Marcie=20 McCarthy, President

Michael=20 Moschella, Secretary/Treasurer

Caribe Forest=20 Products, I, Ltd. ("Caribe I") (record is=20 silent) Marcie=20 McCarthy, President

Michael=20 Moschella, Secretary/Treasurer

JTM=20 Supply McCarthy=20 invested $176,000 d/b/a JTMM=20

JTMM=20 Construction, Inc.=20

("JTMM")

 McCarthy=20 invested $150,000 + $215,000 two months later 90%=20 Anthony Moschella

5%=20 Mando Moschella

5% E.=20 Moschella

K=20 Cor Supply, LLC=20

("K=20 Cor")

 (record is=20 silent) 100%=20 Anthony Moschella

M=20 Global Shipping, LLC=20

("M=20 Global")

 (record is=20 silent)

McCarthy non=20 passive investor

 33.34 % Marcie=20 McCarthy

33.33% Anthony=20 Moschella

33.33% Michael=20 Moschella

Triple M=20 Operating, Ltd. opened with=20 $600,000 loan from Isle of Man;

McCarthy non=20 passive investor

 33.34 % Marcie=20 McCarthy

33.33% Anthony=20 Moschella

33.33% Michael=20 Moschella

Triple M=20 Supply, LLC McCarthy=20 invested $391,000;=20

McCarthy is=20 non passive investor

 33.34 % Marcie=20 McCarthy

33.33% Anthony=20 Moschella

33.33% Michael=20 Moschella

WoodPal,=20 Ltd.=20

("WoodPal=20 Ltd.")

 Anthony=20 Moschella testified that McCarthy invested $391,000;

McCarthy is=20 non passive investor

 33.34 % Marcie=20 McCarthy

33.33% Anthony=20 Moschella

33.33% Michael=20 Moschella

WoodPal de=20 Mexico=20

("WoodPal=20 Mexico")

 McCarthy=20 testified that her $391,000 was transferred from Triple M = Supply to=20 Tijuana to form WoodPal Mexico Mexican=20 entity
WoodPal USA,=20 Inc.

("WoodPal=20 USA")

 (record is=20 silent) Anthony=20 Moschella has a majority interest =



The=20 evidence presented to the jury established that the corporate = entities=20 were interrelated, and their history was, at times, complex. With = the=20 exception of JTMM, each of these entities was created in the years = 1999=20 through 2001, the same time period that Norgips was supplying = Triple M=20 Supply with wallboard. With the exception of Caribe and Caribe I, = the=20 entities all shared the same 1000 square foot office space, = telephone=20 system, and computer.

Caribe

The=20 evidence indicated that Caribe, the general partner of Caribe I, = was=20 formed and funded with $150,000 from McCarthy in November 2000 to=20 distribute mulch. McCarthy was a non passive investor of Caribe in = 2001.=20 (4) = At the=20 time of trial, McCarthy and Michael Moschella still worked = together on=20 this enterprise. Although no partnership agreement was executed, = McCarthy=20 and Michael Moschella each owned equal shares, with McCarthy = serving as=20 president and limited partner. McCarthy's trial counsel was the = initial=20 director of Caribe.

Caribe=20 I

Certificate of = Limited=20 Partnership was filed on January 30, 2001. Caribe is the general = partner,=20 and McCarthy and Michael Moschella are limited partners. =

JTM=20

JTM was doing = business as=20 JTMM. On August 17, 1999, $543,105 of inventory was transferred to = the=20 books of Triple M Supply with no evidence of = consideration.

JTMM

JTMM was formed in = 1995 to=20 install drywall. McCarthy claimed to have no involvement in JTMM, = but=20 received $15,000 in "officer draws" and a $2,688 reimbursement for = travel.=20 Anthony Moschella owned 90 percent of JTMM, and his parents owned = the=20 remaining 10 percent. In 1999, after reviewing the financial = statements=20 and the collateral involved, McCarthy hired an attorney to draw up = the=20 paperwork so that she could loan JTMM $150,000. During 1999 to = 2000, she=20 received almost $26,000 in interest payments on her loan. McCarthy = testified that $50,000 of the original loan was never repaid. = Based on his=20 review of the accounts receivable records, Kingston learned that = JTMM owed=20 Triple M Supply $120,000.

K=20 Cor

Anthony=20 Moschella, as sole owner, formed K Cor in 1999 to stock wallboard = in=20 houses. Triple M Supply was K Cor's biggest customer. K Cor would = pick up=20 the wallboard and deliver it to a home. Anthony Moschella = testified that K=20 Cor stopped operating in mid-2000 because "[i]t was not worth the = hassle=20 to do the work and tend to the people." K Cor was still in = existence, but=20 did not do any business.

M=20 Global

M Global was = formed in=20 December 1999 with McCarthy as president and McCarthy was a non = passive=20 investor for 2000 and 2001. It was formed to hire a ship for one = shipment=20 of wallboard for Triple M Supply. There is no proof that the = shipment ever=20 took place, but McCarthy explained that "Michael handled all that = stuff."=20 When asked, McCarthy testified that she did not find it curious = that a=20 company had to be formed to do something for Triple M Supply that = Triple M=20 Supply could have done on its own.

Triple M=20 Operating

Triple M Operating = was=20 formed in March 2000 to distribute wallboard. The Moschellas and = McCarthy=20 also owned Triple M Operating in one-third shares. McCarthy = testified=20 that, despite being 1/3 owner, she was unaware of Triple M = Operating's=20 existence until the filing of this lawsuit. Even after discovering = the=20 entity's existence, she made no inquiries about it. McCarthy was a = non=20 passive investor in 2000.

Triple M Operating = took out=20 a $600,000 loan from Associated Enterprises Limited just two days = before=20 the shipment from Norgips cleared U. S. Customs and was delivered = to=20 Triple M Supply. Anthony Moschella testified that $391,000 of the = $600,000=20 was used to reimburse McCarthy for the money that she had loaned = Triple M=20 Supply. He further testified that part of the remaining $209,000 = was used=20 to pay off some of Triple M Supply's debts. Triple M Operating = sold some=20 of the Norgips board that belonged to Triple M Supply. All of = Triple M=20 Operating's accounts receivables were pledged to Associated = Enterprises.=20

Triple M Operating = filed for=20 bankruptcy protection on September 16, 2002. Its petition listed=20 Associated Enterprises as a $600,000 creditor and Norgips as a = $500,000=20 disputed creditor.

Triple M=20 Supply

Triple M Supply = was formed=20 in July 1999 as a wallboard distributor and was owned in one-third = shares=20 by Anthony Moschella, Michael Moschella, and Marcie McCarthy. = Anthony=20 Moschella was principally in charge and held the position of = president.=20 McCarthy was vice-president, and Michael Moschella was=20 secretary-treasurer. McCarthy put $391,000 into Triple M Supply = and she=20 was a non passive investor in 1999, 2000, and 2001. Her testimony = changed=20 from understanding that her investment would be lost if = Triple M=20 Supply did not survive in contrast to her same-day testimony that = she was=20 entitled to interest on the $391,000 loan that she gave = Triple M=20 Supply. Michael Moschella invested $75,000 in Triple M Supply. =

Michael Moschella = testified=20 that McCarthy was "actively involved" in the operations of Triple = M Supply=20 and "very organized" until late 1999 or early 2000. McCarthy = received=20 officer's draws, salary, and health insurance as compensation from = Triple=20 M Supply. In 2000 and 2001, she filed tax returns reflecting a = non-passive=20 involvement in Triple M Supply. JTMM was Triple M Supply's largest = customer.

McCarthy was, at = one time,=20 making $1,000/week from Triple M Supply. She testified that she = questioned=20 "why one company was paying interest that another company owed the = debt=20 on." She would receive her interest payment for the loans to JTMM = and=20 Triple M Supply in one check. Triple M Supply was paying JTMM's = debts.=20 Despite being morally concerned by Anthony Moschella's conduct, = McCarthy=20 testified that she stayed on as an officer and director until = Triple M=20 Supply went out of business. She admitted that she had = check-writing=20 privileges, but never went to the bank to look at the financial = status of=20 the company. She believed that "what you don't see can't hurt = you."=20

Leeland Dykes = testified that=20 he introduced some investors, the Fabrianos, to the Moschellas. = The=20 Fabrianos invested $150,000 in Triple M Supply and got a quick = return on=20 their money. They then reinvested their money with the interest = that they=20 had earned, and it "disappeared."=20 (5)

Triple M=20 Supply pledged its debts to Mid American Capital Resource Group = without=20 any evidence of consideration.

WoodPal Ltd.=20

WoodPal=20 Ltd. was formed in June 2000 as a limited partnership. Its general = partner=20 is WoodPal Materials, Inc. Anthony Moschella testified that he = owned the=20 majority shares and that McCarthy and Michael Moschella were the = limited=20 partners. Anthony testified that WoodPal Ltd. was more active than = WoodPal=20 USA. Anthony Moschella testified that WoodPal was funded by = $391,000 of=20 the $600,000 loan McCarthy made to Triple M Operating. McCarthy = was not=20 reimbursed, and she has no proof that her money was actually = transferred=20 to WoodPal. Anthony testified that the money came to WoodPal Ltd. = after=20 McCarthy had been reimbursed for the $391,000 that she had loaned = to=20 Triple M Supply. WoodPal filed for bankruptcy in September 2001 = and listed=20 Norgips as a "disputed" creditor that was due $500,000.=20 (6) McCarthy was a non passive investor in = 2000.

WoodPal=20 Mexico

McCarthy=20 testified that WoodPal Mexico was a Mexican entity that imported = lumber=20 from Chile to make pallets in Mexico. On January 10, 2000, Anthony = Moschella informed Norgips that he had diverted $150,000 collected = from=20 selling Norgips's wallboard to Mexico for another business venture = in=20 which he was involved--WoodPal Mexico. Klubak loaned WoodPal = $250,000 and=20 feels as though the Moschellas took advantage of him. Anthony = Moschella=20 told him that they were "shutting down" WoodPal because they were = not=20 making money.

WoodPal=20 USA

WoodPal USA=20 was formed in 2000 to "import lumber to make pallets." WoodPal is = equally=20 owned by the Moschellas and McCarthy. It was created to ease the = transfer=20 of money from WoodPal Mexico to the United States. McCarthy = testified that=20 she was told that "the purpose of WoodPal USA being set up was = solely to=20 get back [her] money out of WoodPal Mexico." McCarthy testified = that she=20 invested "a couple hundred thousand more" in WoodPal, but claims = that,=20 despite having invested almost $600,000 in it, she was unaware = that it had=20 filed bankruptcy.

Lawsuit

Norgips=20 brought suit alleging fraud, negligent and intentional = misrepresentation,=20 conversion and violation of the Texas Theft Liability Act, breach = of=20 contract, suit on a sworn account, suit on a guaranty, unfair = competition,=20 tortious interference with contractual and prospective business = relations,=20 and piercing the corporate veil. The suit was brought against = Triple M=20 Supply, LLC, Triple M Operating, Ltd., JTMM Construction, Inc., = Anthony=20 Moschella, Michael Moschella, Marcie McCarthy, Woodpal USA, Inc., = and=20 Woodpal DeMexico, SA de C.V. Before trial, Triple M Supply, Triple = M=20 Operating, the Moschellas,=20 (7) and Woodpal filed for bankruptcy relief, and Norgips = non-suited JTMM. Norgips later added Steve Klubak as a defendant = and=20 received summary judgment against him. The actions against Klubak = and the=20 Moschellas were severed.

The case=20 proceeded to trial against Marcie McCarthy. = During trial,=20 Bryne Liner, a certified public accountant and certified fraud = examiner,=20 testified that a fraud investigation involves looking for, among = other=20 things, the flow of money, the relationship between the parties, a = lot of=20 "red flags," a lot of related party transactions, a lot of self = dealing,=20 and lack of documentation. Liner testified that he found broad = categories=20 of patterns in this case:

Broad=20 patterns. Accounting for inventory issues were all over the place. = Inventory should be positive. They're negative. The movement of=20 inventories between companies. The relationships between the = parties via=20 JTMM, Triple M Supply, Triple M Operating, Woodpal, the movement = of=20 monies, officer's draws. Just a constant common theme between all = the=20 companies with respect to the players inside of those companies. . = . . One=20 of the issues we found in this case is, you know, they talk about = loans or=20 lack of loan documentation and we made a loan but we have nothing = to=20 support it. In some cases I couldn't find support for the loan. = Where did=20 the money go? There is this discussion about $600,000.00 to the = Isle of=20 Man. I didn't see a note nor did I see that $600,000.00 gone. The = fact=20 that $391,000.00 was repaid from one company to another company = just out=20 of the goodness of that company's heart, well, that's not how = companies=20 work. When you give up something you have to have consideration or = value=20 coming back to you. So there is a lot of overlapping lines inside = of these=20 companies and it's hard to distinguish this company from this = company from=20 this company with respect to the inner relationships that are = going on=20 throughout the documents that I looked at.


Liner was=20 concerned about numerous inconsistencies between the bank records, = financial records, and tax returns. He testified that the records = indicate=20 that Triple M Operating was receiving Norgips's wallboard from = Triple M=20 Supply without giving any consideration in return. He was = surprised to see=20 on JTMM's ledger that McCarthy received $15,000 in officer draws = despite=20 not being listed as an officer and despite her asserted lack of=20 involvement in JTMM. He testified that it was curious that = McCarthy=20 received director's fees from Triple M Supply despite her refusal = to=20 attend the board meetings. Liner questioned, "What's the value = being=20 traded?" Liner further testified that it was "very important" to = note=20 that, on her taxes, McCarthy was designated as a non passive = investor in=20 several of her companies. He explained that IRS literature = outlines 12=20 factors to consider when designating an investor as a non passive = one. One=20 such factor is whether the investor has 500 hours of involvement = in the=20 company. This level of involvement alerts the IRS that the = investor is=20 involved in the affairs of the business. A CPA is required to = explore this=20 designation before attesting to its inclusion on a tax return. =

McCarthy's=20 tax returns indicate that she was a non passive investor for = Triple M=20 Supply in 1999 and a non passive investor for Triple M Supply, = Triple M=20 Operating, M Global Shipping, and Woodpal, Ltd. in 2000. McCarthy=20 testified that she was unaware of Triple M Operating's existence = until=20 this case was filed--this, despite the fact that, one year = earlier, her=20 tax returns reflected that she was a non passive investor in that = very=20 company. In 2001, McCarthy was a non passive investor of Triple M = Supply,=20 M Global Shipping, and Caribe Forest Products.

Liner=20 testified that he was concerned about money going in and out of = companies=20 on the same day. "There is no real boundaries between these = entities. Even=20 though they're different legal entities, it's sort of like an = invisible=20 checkbook." Looking at the financials, Liner testified that "it = has the=20 appearance as though it's one big pile of money." Liner summarized = his=20 findings as follows:

You've got=20 multiple companies that are intermingling. You've got monies = coming in,=20 monies coming out. You have a lack of documentation. You've got a = lack of=20 supporting information. So it becomes an accounting nightmare to = say is=20 this a legitimate transaction or not because of the condition or = the lack=20 of documentation. You've got transfers between parties. You've got = a lot=20 of red flags. You've got monies coming in, monies coming out, same = day,=20 same transfer. You are kind of, what in the world is going on? = You've got=20 inventories that are being shifted and moved.


When Liner=20 was asked if this was all evidence of a fraudulent scheme, he = responded,=20 "I think with respect to the finding of fraud, that's something = for the=20 jury to decide." The jury was asked only two questions: (1) did = McCarthy=20 cause Triple M Supply to be used to perpetrate an actual fraud and = did=20 perpetrate an actual fraud upon Norgips, primarily for her own = direct=20 benefit and (2) what sum of money would compensate Norgips for the = conduct=20 found in answer one for unpaid Norgips wallboard invoices and = attorney's=20 fees. The jury affirmatively answered the first question and found = that=20 Norgips was entitled to $541,850.32 for unpaid wallboard invoices = and=20 $52,000 for attorney's fees.

Charge Error=20

In issue=20 one, McCarthy argues that the trial court erred in submitting an = incorrect=20 definition of "actual fraud" in the jury charge.=20



Standard of=20 Review

In all jury=20 cases, the trial court must submit instructions and definitions to = properly enable the jury to render a verdict. Tex. R. Civ. P. 277. = A valid=20 instruction must: (1) assist the jury, (2) accurately state the = law, and=20 (3) find support in the pleadings and evidence. Union Pac. = R.R. v.=20 Williams, 85 S.W.3d 162, 166 (Tex. 2002). The trial court has = considerable discretion in deciding what instructions are = necessary and=20 proper in submitting issues to the jury. State Farm Lloyds v.=20 Nicolau, 951 S.W.2d 444, 451 (Tex. 1997). Therefore, we will = not=20 disturb the trial court's decision on which instructions to submit = to the=20 jury absent an abuse of discretion. Id. at = 452.

Actual Fraud=20

The trial=20 court's charge included the following question to the jury that = included=20 each element of the "veil piercing" provision in article 2.21, = section=20 A(2) of the Texas Business Corporation Act:

Did=20 Marcella McCarthy cause Triple M Supply, LLC to be used to = perpetrate an=20 actual fraud, and did perpetrate an actual fraud upon Norgips, = primarily=20 for her own direct personal benefit?



Answer:=20 [Yes]



The charge=20 also included the following definition of "actual = fraud":


For the=20 purposes of this charge, "actual fraud" occurred if:



  1. Triple M Supply concealed or failed to disclose a material = fact=20 within the knowledge of Triple M Supply;



2. Triple M=20 Supply knew that Norgips was ignorant of the fact and did not have = an=20 equal opportunity to discover the truth;

3. Triple M=20 Supply intended to induce Norgips to take some action by failing = to=20 disclose the fact; and



4. Norgips=20 suffered injury as a result of acting without knowledge of the = undisclosed=20 fact.



See Tex.=20 PJC =A7 105.4.

On appeal,=20 McCarthy complains that the language concerning actual fraud = contained in=20 the charge was defective because it did not require a finding of a = material misrepresentation.

The trial=20 court overruled McCarthy's objection and stated as = follows:

The=20 objection to PJC 105.4 of the fraud instruction, I am overruling = the=20 objection based on the discussions I've had with Counsel = off the=20 record prior to the final charge conference in which = Plaintiffs=20 elect to proceed on a theory of active concealment of material = facts which=20 the Pattern Jury Charge tells me may also be actionable as false=20 statements. I believe that comports with the = requirement.


We agree=20 with the trial court that actual fraud can be the concealment of = material=20 facts or the failure to disclose a material fact. See = Custom=20 Leasing, Inc. v. Texas Bank & Trust Co., 516 S.W.2d 138, = 142=20 (Tex. 1974). Accordingly, the trial court did not abuse its = discretion by=20 submitting a definition in accordance with the theory of = Norigips's case.=20

Duty to=20 Disclose

We construe=20 McCarthy's issue on appeal as arguing that the definition of fraud = submitted to the jury was incorrect because it is only appropriate = when=20 there is a legal duty to disclose. As a general rule, a failure to = disclose information will constitute fraud when there is a duty to = disclose the information. Bradford v. Vento, 48 S.W.3d = 749, 755=20 (Tex. 2001). Thus, silence may be equivalent to a false=20 representation when the particular circumstances impose a duty on = the=20 party to speak and he deliberately remains silent. Id. = Whether a=20 duty exists is a question of law. Id. Several courts of = appeals=20 have held that a general duty to disclose information may arise in = an=20 arm's-length business transaction when a party makes a partial = disclosure=20 that, although true, conveys a false impression. See, e.g., = Citizens=20 Nat'l Bank v. Allen Rae Invs., 142 S.W.3d 459, 476-77 (Tex.=20 App.--Fort Worth 2004, no pet.); Hoggett v. Brown, 971 = S.W.2d=20 472, 487 (Tex.App.-- Houston [14th Dist.] 1997, no writ); = Ralston=20 Purina Co. v. McKendrick, 850 S.W.2d 629, 636 (Tex.App.--San = Antonio=20 1993, writ denied).

The jury=20 was not instructed about whether McCarthy had a duty to disclose. = However,=20 McCarthy's issue on appeal regarding her duty to disclose was not = properly=20 preserved at trial. See Tex. R. App. P. 33.1. McCarthy's = attorney=20 objected to the proposed definition of actual fraud and the = omission of a=20 question concerning McCarthy's duty as follows:

In question=20 Number 1 the Court requests whether or not Marcie McCarthy caused = Triple M=20 Supply to be used to perpetrate actual fraud and the definition is = for=20 concealment or failure to disclose material facts. The evidence is = clear=20 that Triple M Supply has no duty. It's not a fiduciary or has any = other=20 duty and therefore this is an incorrect charge. Actual fraud = should be=20 defined as actual fraud contained in the Pattern Jury Charge.=20



I = object to=20 the charge [on] concealment because there is no duty to disclose. = In=20 addition, there is no question to the jury concerning fiduciary = duty or=20 establishing a duty to disclose under the statutes or common law.=20



A = party is=20 required to request and tender to the trial court a substantially = correct=20 instruction in writing when the trial court omits the instruction = from the=20 jury charge. Tex. R .Civ. P. 278; Yellow Cab and Baggage Co. = v.=20 Green, 277 S.W.2d 92, 93 (Tex. 1985). If a party fails to do = so, any=20 error by the trial court in not submitting the instruction to the = jury is=20 waived. Jarrin v. Sam White Oldsmobile Co., 929 S.W.2d = 21, 25=20 (Tex. App.--Houston [1st Dist.] 1996, writ denied). Although she = objected=20 to the omission of a duty instruction in the charge, McCarthy did = not=20 submit a written instruction regarding duty for the trial court's=20 consideration. Rule 278 of the Texas Rules of Civil Procedure = provides, in=20 part:

Failure to=20 submit a definition or instruction shall not be deemed a ground = for=20 reversal of the judgment unless a substantially correct definition = or=20 instruction has been requested in writing and tendered by the = party=20 complaining of the judgment.



Tex. R.=20 Civ. P. 278.

We hold=20 that the trial court did not abuse its discretion in submitting = the=20 definition of actual fraud in the jury charge. Accordingly, we = overrule=20 issue one.

Sufficiency=20 of the Evidence

In issues=20 two, three, and six, McCarthy contends that the evidence was = legally=20 insufficient to support the jury's findings that (1) Triple M = Supply=20 committed an actual fraud, (2) Norgips suffered $541,850 in = damages as a=20 result Triple M Supply's and McCarthy's conduct, and (3) Norgips = incurred=20 reasonable and necessary attorney's fees in attempting to collect = payment=20 from Triple M Supply. In issue five, McCarthy argues that the = evidence was=20 legally and factually insufficient to support the jury's finding = that she=20 caused Triple M Supply to be used to perpetrate an actual fraud, = and did=20 perpetrate an actual fraud upon Norgips, primarily for her own = direct,=20 personal benefit.

Standard of=20 Review

In=20 reviewing a "no evidence" issue, we must view the evidence in a = light that=20 tends to support the finding of the disputed fact and disregard = all=20 evidence and inferences to the contrary. Weirich v. = Weirich, 833=20 S.W.2d 942, 945 (Tex. 1992). If more than a scintilla of evidence = exists=20 to support a finding, a no-evidence challenge fails. KMG=20 Kanal-Muller-Gruppe Deutschland GMBH & Co. KG v. Davis, = 175=20 S.W.3d 379, 393 (Tex. App.--Houston [1st Dist.] 2005, no pet.). = More than=20 a scintilla of evidence exists if the evidence furnishes some = reasonable=20 basis for differing conclusions by reasonable minds about a vital = fact's=20 existence. Id.

In=20 reviewing a factual sufficiency complaint, we must first examine = all of=20 the evidence. Lofton v. Texas Brine Corp., 720 S.W.2d = 804, 805=20 (Tex. 1986). Having considered and weighed all the evidence, we = should set=20 aside the verdict only if the evidence is so weak, or the finding = is so=20 against the great weight and preponderance of the evidence, that = it is=20 clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, = 176 (Tex.=20 1986). We cannot merely substitute our opinion for that of the = trier of=20 fact and determine that we would reach a different conclusion.=20 Hollander v. Capon, 853 S.W.2d 723, 726 (Tex. = App.--Houston [1st=20 Dist.] 1993, writ denied). Actual=20 Fraud

In issue=20 two, McCarthy contends that the evidence was legally insufficient = to=20 support a finding that Triple M Supply: (1) concealed a material = fact=20 within its knowledge, (2) knew that Norgips was ignorant of the = fact and=20 did not have an equal opportunity to discover the truth, (3) = intended to=20 induce Norgips to take some action by failing to disclose the = fact, and=20 (4) caused injury to Norgips as a result. We hold that there is = legally=20 sufficient evidence to support the jury's implied affirmative = finding.=20 (8)

Triple M=20 Supply misrepresented to Norgips that a lien on Triple M Supply's=20 receivables could and would be executed to ensure that Norgips = would get=20 paid. At the time that Triple M Supply made this = misrepresentation, all of=20 its receivables and stock were already pledged to other creditors. = One=20 such creditor was McCarthy, who was pledged JTMM's assets. Klubak=20 testified about a meeting during which Anthony Moschella promised = to=20 pledge the receivables to Norgips. Triple M Supply also did not = disclose=20 to Norgips that only the older accounts, which were least likely = to be=20 collected, were held by Triple M Supply, while all the paying = accounts had=20 been transferred to Triple M Operating.

Norgips was=20 not told that, starting in July 2000, Triple M Supply stopped = invoicing=20 its customers who bought Norgips wallboard. Nor was it told that = all of=20 Triple M Supply's assets had been transferred to Triple M = Operating. No=20 one from Triple M Supply disclosed this information to Norgips.=20

Norgips was=20 not informed of and did not have an opportunity to discover these = material=20 facts about the way Triple M Supply was operating. There was no = UCC filing=20 done to put others on notice of the $600,000 loan before Norgips = cleared=20 the shipment with U.S. Customs. The loan was arranged through an = entity in=20 the Isle of Man.=20 (9) Norgips also could not verify the truth of Triple M = Supply's=20 aging reports that were presented by the Moschellas. These reports = appeared to show performing accounts whose payments should have = been used=20 to pay Norgips's debt, but were not. Triple M Supply also did not = disclose=20 and Norgips had no opportunity to discover that Triple M Operating = had=20 begun distributing its wallboard and was the entity to whom all of = the=20 performing accounts had been transferred.

Triple M=20 Supply, with assistance from Klubak, concealed this information = because it=20 was trying to "corner the market" for wallboard in Texas. In the = summer of=20 2000, with Klubak's assistance and despite having one-half a = shipload of=20 wallboard remaining from the Norgips shipment, Triple M Supply was = also=20 buying wallboard from a west coast supplier. Texas was = experiencing a=20 shortage of wallboard, and Triple M Supply wanted to buy more = wallboard=20 and sell it at a premium. Kingston terminated Klubak's employment = when he=20 learned of these transactions and of his divided loyalties. =

As a result=20 of Triple M Supply's concealment of these material facts, Norgips = was=20 induced to manufacture and transport an entire shipload of = wallboard to=20 Houston based on Triple M Supply's purchase order, and it = continued to=20 make periodic deliveries of wallboard to Triple M Supply, for = which it was=20 never fully compensated. Viewing the evidence in a light that = tends to=20 support the implied finding of actual fraud, we hold that there is = legally=20 sufficient evidence to support the jury's implied affirmative = finding. As=20 such, we overrule issue two.

Damages

In issue=20 three, McCarthy contends that the evidence was legally = insufficient to=20 support a finding that Norgips suffered $541,850 in damages as a = result of=20 the fraud of Triple M Supply or the conduct of McCarthy. We hold = that=20 there is legally sufficient evidence to support the jury's=20 finding.

With regard=20 to the damages sustained by Norgips, the trial court's charge = included the=20 following instruction:

Consider=20 the following elements of damages, if any and none = other.


(1) The=20 difference between the value of the Norgips wallboard that Triple = M=20 Supply, L.L.C. received and the amount of money that Triple M = Supply=20 L.L.C. paid to Norgips for that wallboard.

. = . .=20 .



Do not add=20 an amount for interest on damages, if any.


Answer in=20 dollars and cents for damages, if any, for the

following=20 elements only:



(1) Unpaid=20 Norgips wallboard invoices:



Answer:=20 $(541,850.32)

Kingston=20 testified that the total value for the wallboard sold to Triple M = Supply=20 was $1,047,000. Of that amount, Triple M Supply only paid = $504,800,=20 leaving an unpaid balance of $541,850.=20 (10) At trial, and as noted by McCarthy in her briefing = to this=20 Court, Anthony Moschella agreed that "Triple M Supply has not paid = to=20 Norgips the amount of $541,850.32 and that amount is owed to = Norgips."=20 Furthermore, Klubak testified that he was aware that the = Moschellas=20 received and used Norgips's board without paying for it. =

We hold=20 that there was legally sufficient evidence to support the finding = that=20 Norgips was owed $541,850.32 in unpaid wallboard invoices. = Accordingly, we=20 overrule issue three.

Attorney's=20 Fees

In issue=20 six, McCarthy contends that the evidence was legally insufficient = to=20 support the jury's finding that Norgips incurred $52,000 as its=20 "reasonable and necessary attorney's fees . . . in attempting to = collect=20 payment from Triple M Supply, Inc." We hold that there is legally=20 sufficient evidence to support the jury's finding.

Norgips's=20 attorney testified that Norgips incurred $39,000 in attorney's = fees and=20 slightly less than $15,000 in expenses from the time that Norgips=20 initiated this suit until Triple M Supply filed for bankruptcy. = McCarthy=20 complains, however, that Norgips's attorney "gave no testimony on = the=20 issue of reasonable and necessary attorney's fees expended 'in an = attempt=20 to collect payment from Triple M Supply' as Question No. 2 = requested."=20 McCarthy further argues that, because there were numerous = defendants=20 before the various bankruptcy filings, non-suit, and summary = judgment, the=20 charge question should have segregated "attorney's fees to the = various=20 Defendants."

Norgips's=20 attorney testified that his fees were reasonable and necessary. He = explained that, "[i]t's a fairly complicated situation, as you've = come to=20 learn in the past few days, and it took a while for us to unravel = and=20 begin to understand the interrelationships of these entities." On=20 cross-examination, McCarthy's attorney questioned him regarding = the actual=20 fees that would have been incurred had Triple M Supply been the = only=20 defendant. Norgips's attorney responded, "that's sort of a = factually=20 intensive . . . question. Every circumstance is a little = different."=20 During the charge conference, McCarthy objected to the submitted = charge,=20 and the following exchange occurred:

McCarthy: I=20 object to Question Number 2 - 2 - subpart 2 on the reasonable and=20 necessary expenses Norgips expended in attempting to collect as = Counsel in=20 his testimony did not segregate the attorney's fees between = collecting=20 from Triple M, Inc. and the other six Defendants that were sued in = the=20 original petition in this case. As a result that question should = not be=20 asked and there is no evidence to support same.


Court:=20 Response, Counsel?



Norgips:=20 Your Honor, we, under our theory of the case, are presenting = attorney's=20 fees as a component of the fraud damage question being submitted = to the=20 jury, the fraud committed by Ms. McCarthy that we allege is part = of a=20 fraudulent scheme involving all of these entities. As a result, we = don't=20 believe we had a duty to segregate and isolate our claims, only as = to=20 Triple M Supply. Even had we done so, the fees were so intertwined = as to=20 become indistinguishable one from the other. And the testimony, = finally,=20 supported that under [McCarthy's] theory. Had we proceeded to = obtain a=20 summary judgment only against Triple M Supply and no other entity, = we=20 would still have gone through the same amount of labor and expense = in=20 order to reach that result given that it would have required = taking the=20 deposition at a minimum of Anthony Moschella.


Court: I'm=20 going to overrule the objection. I believe the question as phrased = permits=20 both parties to present their arguments to the jury on that--on = that issue=20 and I believe that's where the responsibility for determining = what, if=20 any, attorney's fees were reasonable and necessary as incurred by = Norgips,=20 I believe that responsibility lies with the jury.


We agree=20 with the trial court that, in this case, the jury was responsible = for=20 determining the amount of reasonable and necessary attorney's = fees. Based=20 on the record presented, we hold that there is legally sufficient = evidence=20 to support the jury's award of attorney's fees, and we overrule = issue=20 six.

Piercing the=20 LLC Veil

In issue=20 four, McCarthy argues that there was legally and factually = insufficient=20 evidence to support the jury's finding that she caused Triple M = Supply to=20 be used to perpetrate an actual fraud and did perpetrate an actual = fraud=20 upon Norgips, primarily for her own direct personal benefit. As a = result=20 of this finding, Norgips was able to pierce the LLC veil around = Triple M=20 Supply and recover damages from McCarthy, individually.

The=20 evidence showed that McCarthy had contributed $391,000 to Triple M = Supply=20 as a start-up business. McCarthy was aware of the fraudulent = business=20 practices of Anthony Moschella, including using one entity to pay=20 another's bills. She did nothing to stop these practices. = Furthermore, she=20 accepted interest payments on her loan and ultimately received = repayment=20 in full, at the expense of Norgips and other creditors. The = evidence=20 presented at trial showed that the fraudulent operation of Triple = M Supply=20 simply would not have been possible without McCarthy's = contributions.=20

McCarthy=20 testified that her involvement in the daily affairs of Triple M = Supply=20 stopped in late 1999 or early 2000. She did not regularly attend = board=20 meetings and claimed to be unaware of Triple M Supply's purchase = agreement=20 with Norgips and the existence of Triple M Operating until after = this suit=20 was instituted. She received her last officer's check in April = 2000,=20 shortly before Triple M Supply took delivery of Norgips's = wallboard.=20

McCarthy=20 was an equal participant and director in most of the entities that = participated in defrauding Norgips. The fraudulent conduct would = not have=20 been possible without McCarthy's infusion of capital into Triple M = Supply.=20 Triple M Supply was organized as a Texas Limited Liability Company = ("LLC")=20 about six weeks after McCarthy's contribution of "seed money." = There was=20 no evidence that Triple M Supply executed a promissory note or = that this=20 was, in fact, a capital contribution. Triple M Operating borrowed=20 $600,000--$391,000 of which was used to repay McCarthy's "loan." = Even=20 though the repayment to McCarthy was diverted through another = entity,=20 McCarthy was made whole at the expense of Norgips, who was owed = more than=20 $540,000 by Triple M Supply. McCarthy received health insurance, a = salary,=20 officers' draws, and interest payments as compensation for being = an owner=20 of Triple M Supply. Furthermore, McCarthy was aware of the = fraudulent=20 manner in which Triple M Supply was being managed. She admitted = that she=20 knew Triple M Supply was paying the debts of other companies. = McCarthy=20 willingly received substantial interest payments on her loans = despite her=20 knowledge of Anthony Moschella's fraudulent business practices.=20

Because=20 there was legally and factually sufficient evidence to support the = jury's=20 finding, we overrule issue four.

Individual=20 Liability

In issue=20 five, McCarthy argues that the trial court erred in finding her = liable for=20 Triple M Supply's debt because, pursuant to the Texas Limited = Liability=20 Company Act ("TLLCA"), a member = of a Texas=20 limited liability company ("LLC") is liable in very limited = circumstances=20 and, specifically, not for a debt. Tex. Rev. Civ. Stat. Ann. art. = 1528n, =A7=20 4.03(A) (Vernon 2006). McCarthy argues that because the = TLLCA does not = address=20 whether or under what circumstances a litigant may "pierce" the = veil of an=20 LLC for corporate debt, the veil is impenetrable. We disagree. = Generally,=20 members are not individually liable for the debts of the LLC.=20 (11) The TLLCA provides in pertinent part that: "Except = as and=20 to the extent the regulations specifically provide otherwise, a = member or=20 manager is not liable for the debts, obligations or liabilities of = a=20 limited liability company including under a judgment decree, or = order of a=20 court." Tex. Rev. Civ. Stat. Ann. art. 1528n, =A7 4.03(A) = (Vernon=20 2006). The = TLLCA does=20 not address whether or under what circumstances a litigant may = "pierce"=20 the corporate veil of an LLC in order to hold a member liable for = a debt=20 of the LLC. Id.

However, Texas = courts and=20 other jurisdictions, have applied to LLCs the same state law = principles=20 for piercing the corporate veil that they have applied to = corporations.=20 See e.g. Pinebrook Props., Ltd. v. Brookhaven Lake Prop. = Owners'=20 Ass'n, 77 S.W.3d 487, 499 (Tex. App.--Texarkana 2002, pet. = denied)=20 (applying corporate alter ego veil piercing precedent in analyzing = plaintiff's attempts to pierce veil of LLC); In re Secs. Inv. = Prot.=20 Corp. v. R.D. Kushnir & Co., 274 B.R. 768, 775-76 (Bankr. = N.D.=20 Ill. 2002) (concluding that, while Illinois LLC Act precludes = piercing on=20 basis of failure to follow formalities, nothing in statute bars = piercing=20 LLC veil on other grounds applicable to corporations); = Hamilton v. AAI=20 Ventures, L.L.C., 768 So.2d 298, 302 (La. App. 2000) = (applying=20 corporate veil piercing principles in upholding trial court's = piercing of=20 LLC veil to hold member liable on LLC contract); Kaycee Land = &=20 Livestock v. Flahive, 46 P. 3d. 323, 327 (Wyo. 2002) (holding = that,=20 while Wyoming LLC Act was silent as to veil piercing, there was no = policy=20 or legal reason to treat LLCs different from corporations in this = regard;=20 when LLC has caused damage and has inadequate capitalization, = co-mingled=20 funds, diverted assets, or used LLC as a mere shell, individual = members=20 are immune from liability. Legislative silence cannot be stretched = to=20 condone such an illogical result.). McCarthy has not offered, nor = can we=20 find, any judicial support for the proposition that existing state = law=20 doctrines of piercing the corporate veil should not be applied to=20 LLCs.

Texas courts have=20 disregarded the corporate fiction and pierced the corporate veil = when the=20 corporate form has been used as part of an unfair device to = achieve an=20 inequitable result. See Castleberry v. Branscum, = 721=20 S.W.2d 270, 272 (Tex. 1986), superseded in part = by=20 statute, Tex. Bus. Corp. Act Ann. art. 2.21(Vernon Supp. = 2005).=20 Specifically, courts have disregarded the corporate form when it = is used=20 as a sham for perpetrating a fraud. Id.

Here, the trial = court did=20 not err in its application of law. The jury found that McCarthy = used an=20 LLC as a sham to perpetrate a fraud, and the trial court applied = this=20 finding to pierce the corporate veil of the LLC. The jury found = that=20 McCarthy used Triple M Supply LLC to perpetrate actual fraud and = did=20 perpetrate actual fraud upon Norgips primarily for McCarthy's own = direct=20 personal benefit.=20 (13)=20

As shown above, there was = evidence=20 presented at trial that McCarthy and her two partners (1) used = Triple M=20 Supply as a front to borrow funds and order wallboard on credit = from=20 Norgips and others; (2) diverted to themselves and to entities in = which=20 McCarthy had either an ownership and/or financial interest, = proceeds due=20 to Triple M Supply through the use of complex and undocumented = financial=20 transactions and the commingling of inventory and bank accounts; = and (3)=20 left Triple M Supply undercapitalized and unable to pay its=20 creditors.

McCarthy had a direct = ownership and/or=20 financial interest in each of the entities that benefitted from = sums due=20 to Triple M Supply: JTMM, M Global, Triple M Operating, and = Woodpal. Funds=20 and inventory of these companies were intermingled without = documentation,=20 as evidenced by Anthony Moschella's frequent financial transfers = among the=20 various entities. Funds from Triple M Supply were being used to = pay the=20 debt of JTMM. Triple M Operating was paying the debts of Triple M = Supply.=20 After a checking account for Triple M Supply was opened, large = sums of=20 money were transferred out of Triple M Supply's bank account to = several=20 related businesses including K-Cor Supply and JTMM. Additionally, = over=20 $500,000 of inventory was switched "on the books" from JTMM Supply = to=20 Triple M Supply without any further documentation between the two=20 companies. Triple M Supply was then loaded with debt and = subsequent=20 creditors, including Norgips, were not paid back. McCarthy, = however, was=20 paid. This was the case even though significant deposits were made = to=20 Triple M Supply from customer payments from the sale of Norgips's=20 wallboard. As a result of these acts, Triple M Supply was left=20 undercapitalized and without sufficient funding to pay its debts.=20

Accordingly, we hold that the = trial=20 court did not err in finding McCarthy liable on Triple M Supply's = debt. As=20 such, we overrule issue five.

Conclusion

We affirm the trial court's=20 judgment.

George C. Hanks, = Jr.

Justice


Panel consists of Justices = Jennings,=20 Hanks, and Higley.



Justice Jennings,=20 dissenting.









1. These = accounting=20 records were admitted into evidence with the limiting instruction = that=20 they were not offered to prove the truth of the information = contained=20 therein, but simply to show what Anthony Moschella had provided = the=20 records to Norgips at the meeting.=20

2. Anthony Moschella owned 90 percent of = JTMM, and his=20 parents owned the remaining 10 percent.=20

3. The same evidentiary restriction was = placed on the=20 jury's consideration of this second set of records--accounts=20 receivables--they were not admitted to prove the truth of the = information=20 contained therein.=20

4. McCarthy represented on her personal tax = returns=20 that she was a "non-passive" investor in various business entities = alleged=20 to have been involved in the fraud against Norgips. To be = classified as a=20 "non-passive" investor, a person must represent to the Internal = Revenue=20 Service, among other things, that they spent more than 500 hours = working=20 in the business during the tax year.=20

5. Dykes = testified that=20 the Fabrianos sued him, and he was found liable for their $150,000 = investment.=20

6. Norgips was also listed as a $500,000 = creditor on=20 Anthony Moschella's personal bankruptcy filing.=20

7. Michael Moschella filed for bankruptcy = the morning=20 of trial.=20

8. The court's charge did not ask the jury = to make a=20 separate finding of actual fraud. However, the jury's affirmative = answer=20 to question number one, by which Norgips was able to pierce the = LLC veil=20 as to Triple M Supply, implies a finding of actual fraud on the = part of=20 that company. See Tex. R. Civ. P. 276.=20

9. Liner testified that he read an article = prepared by=20 the FBI explaining that the Isle of Man has a reputation "for = being a tax=20 haven or a place to money launder transactions."=20

10. The exact numbers submitted to the jury = by way of=20 exhibit were as follows: sales of $1,046,652.16; collected = $504,801.84;=20 leaving a balance of $541,850.32.=20

11. A limited = liability=20 company is any company organized and in existence in conformity = with the=20 TLLCA. Tex. Rev. Civ. Stat. Ann. art. 1528n, =A7 = 1.02(A)(3) (Vernon=20 2005).=20 (12)=20

12. Until = 2010, the=20 Texas Limited Liability Company Act ("the Act") governs a domestic = LLC=20 formed prior to January 1, 2006.(CITE) =

13. Article = 2.21, which=20 is specifically applicable to traditional corporations, provides = for=20 piercing the corporate veil where there is a finding that = the = shareholder=20 "caused the corporation to be used for the purpose of perpetrating = and did=20 perpetrate an actual fraud on the obligee primarily for the direct = personal benefit of the" shareholder. See Tex.=20 Bus. Corp. Act Ann. art. 2.21(A)(3) (Vernon Supp. = 2005). =





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FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: = normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; = TEXT-DECORATION: none } A.SiteMenu { FONT-WEIGHT: bold; TEXT-DECORATION: none } A.SiteMenu:hover { COLOR: blue } .SiteBase { FONT-WEIGHT: bold; FONT-SIZE: 9pt; COLOR: #000099; LINE-HEIGHT: normal; = FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; = TEXT-DECORATION: none } A.SiteBase { FONT-WEIGHT: bold; COLOR: maroon; FONT-FAMILY: Tahoma, Arial, = Helvetica, sans-serif; TEXT-DECORATION: none } A.SiteBase:hover { COLOR: blue } .ErrorNormal { FONT-WEIGHT: normal; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: red; = FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif } .ErrorSmall { FONT-WEIGHT: normal; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: red; = FONT-FAMILY: Arial Narrow } .SystemMSG { FONT-WEIGHT: bold; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: white; = FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; BACKGROUND-COLOR: = navy } .SystemErrorMSG { FONT-WEIGHT: bold; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; COLOR: white; = FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; BACKGROUND-COLOR: red } .buttonUnused { PADDING-RIGHT: 1pt; PADDING-LEFT: 1pt; FONT-WEIGHT: normal; FONT-SIZE: = 9pt; PADDING-BOTTOM: 1pt; MARGIN: 1pt; COLOR: #fff5d7; PADDING-TOP: 1pt; = BACKGROUND-COLOR: #576a9d; font-face: Tahoma, Arial, Helvetica, = sans-serif } .buttonTanUnused { PADDING-RIGHT: 1pt; PADDING-LEFT: 1pt; FONT-WEIGHT: normal; FONT-SIZE: = 9pt; PADDING-BOTTOM: 1pt; MARGIN: 1pt; COLOR: #576a9d; PADDING-TOP: 1pt; = BACKGROUND-COLOR: #fff5d7; font-face: Tahoma, Arial, Helvetica, = sans-serif } .TextLargeBlue { FONT-WEIGHT: bold; FONT-SIZE: 12pt; COLOR: #000099; LINE-HEIGHT: = normal; FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, = sans-serif; TEXT-ALIGN: left } .DocketHeaderTitle { FONT-WEIGHT: bold; FONT-SIZE: 14pt; COLOR: black; LINE-HEIGHT: normal; = FONT-FAMILY: Tahoma, Arial, ' Helvetica', sans-serif; TEXT-ALIGN: center } .TextLargeBlack { FONT-WEIGHT: bold; FONT-SIZE: 11pt; COLOR: black; LINE-HEIGHT: normal; = FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; = TEXT-ALIGN: left } .TextLargeBlackcenter { FONT-WEIGHT: bold; FONT-SIZE: 11pt; COLOR: black; LINE-HEIGHT: normal; = FONT-STYLE: normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; = TEXT-ALIGN: center } .TextBlue { FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: = normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif } A.TextBlue { FONT-WEIGHT: normal; FONT-SIZE: 10pt; COLOR: #000099; LINE-HEIGHT: = normal; FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif; = TEXT-DECORATION: none } .TextRed { FONT-WEIGHT: normal; FONT-SIZE: 12pt; COLOR: red; LINE-HEIGHT: normal; = FONT-FAMILY: Tahoma, Arial, Helvetica, sans-serif } .TextHidenGray { FONT-SIZE: 0pt; COLOR: #ebebe1; LINE-HEIGHT: normal; FONT-FAMILY: = Tahoma, Arial, Helvetica, sans-serif; TEXT-ALIGN: left } .Time { FONT-WEIGHT: bold; FONT-SIZE: 10px; COLOR: red; LINE-HEIGHT: 4em; = FONT-FAMILY: Arial, Helvetica, sans-serif; TEXT-ALIGN: center } ------=_NextPart_000_000E_01C7BE56.B48C31A0--