Estate Of Countryman v. Farmers Cooperative Association

679 N.W.2d 598 (2004)

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Nature of the Case

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Facts

An explosion leveled the home of Jerry Usovsky. Seven people who had gathered in the home to celebrate the Labor Day holiday died from the explosion. Six others were injured, some seriously. The survivors and executors of the estates of those who died (Ps) eventually filed a lawsuit seeking monetary damages against a host of defendants. Ps alleged negligence, breach of warranty, and strict liability. Ds included Iowa Double Circle, L.C. (Double Circle), and Farmers Cooperative Association of Keota (Keota). Double Circle is an Iowa limited liability company. It delivered propane to Usovsky's home prior to the explosion. Double Circle is an Iowa limited liability company. It delivered propane to Usovsky's home prior to the explosion. Keota is one of two members in Double Circle. It owns a ninety-five percent interest in the company. The other member is Farmland Industries, Inc. (Farmland Industries), a regional cooperative. Keota is a farm cooperative. It is a member of Farmland Industries and is managed by Dave Hopscheidt. Keota provides managerial services to Double Circle, pursuant to a management agreement between Keota and Double Circle. Keota's duties under the agreement include 'human resource and safety management.' Hopscheidt oversees the daily operations of both Keota and Double Circle. Keota and Double Circle operate as separate entities and maintain separate finances. Keota moved for summary judgment claiming the limited liability structure of Double Circle protected it from liability for any tortious acts of Double Circle based on its ownership interest and membership in Double Circle, or its management. The operating agreement providing that no member of the company would be liable for any tort solely by reason of being a member of the company. The attached documents also included a written agreement requiring Keota to provide management assistance and consulting services to Double Circle. Ps claimed Keota, through Hopscheidt, was negligent in failing to provide proper warnings to propane users, including the failure to warn users to install a gas detector and to properly design the odorant added to the propane. Ps also sought to impose liability against Keota by piercing the corporate veil. The court found Ps failed to produce any facts to show that Keota engaged in conduct separate from its duties as director or manager of Double Circle. It held that Keota was protected as a matter of law from personal liability for claims of wrongful conduct attributable to Double Circle. It also concluded there was insufficient evidence as a matter of law to pierce the corporate veil. Ps appealed.