December 27, 2007

Use of a product manufacturer's literature in a contract does not establish agency; Employee's use of "we" and "us" may not be used to pierce the veil


Charles Burnette and Imogene Burnette ("Homeowners") allege that their driveway was damaged as a result of the faulty repair work of Concrete Maintenance Specialists ("CMS"), a company that employed, among others, Brian Cupp ("Cupp"). The repairs by CMS made use of a product sold by Fischl Enterprises, Inc., aka Lone Star Epoxies ("Lone Star"). Art Fischl is the principal of this corporation. No defect in the product is alleged, only a faulty installation by employees of CMS. Homeowners sued CMS, Cupp, Lone Star and several others (collectively "Defendants") seeking damages, claiming that CMS is directly liable, Lone Star is liable because CMS was its agent, and Cupp is liable because CMS's corporate veil should be pierced and Cupp is a principal of CMS. Cupp and Lone Star each filed a motion for summary judgment. Cupp argues that he was only an employee of CMS, not a principal, and thus could not be liable even if CMS's corporate veil were pierced. Lone Star argues that CMS was not its agent. The trial court granted both motions. Homeowners appeal, arguing that they successfully demonstrated the existence of material factual disputes regarding the issues pertaining to Cupp and Lone Star, and also that the trial court should not have granted summary judgment before ruling on Homeowners' motion to compel. We affirm.

Opinion may be found at:

"King states that “[m]uch of the technical information and some of the marketing information utilized by CMS were actually Lone Star documents which CMS used replacing the name ‘Lone Star Epoxies’ with the name ‘Concrete Maintenance Specialists’ which gave the impression that the products were actually CMS products.” This statement fails to help Homeowners because it does not allege that Lone Star played any role in altering the documents, which would be necessary to establish that they were representations or conduct of the purported principal rather than of the purported agent. In addition, the foundation of King’s statement is unclear, and she does not allege that the documents were actually used to make representations to Homeowners, only that the documents existed. This is clearly inadequate to create a disputed issue of material fact on the issue of apparent agency." Id.

"The affidavit of Burnette, one of the homeowner plaintiffs, states that he “was informed by Brian Cupp that he managed employees and supervised work such that he gave orders to perform certain work on my driveway[.]” Burnette further quotes Cupp as making various statements about CMS using words like “we” and “our.” To bolster this argument, Homeowners point to a lengthy transcript of a recorded telephone conversation between Burnette and Cupp. Homeowners argue in their brief that Cupp’s statements to Burnette are evidence that Cupp “held himself out as a person with management authority.” This they may be, but they are not evidence that he is a principal of the company. A mere employee may exercise “management authority,” and certainly may refer to his employer as “we” or “us.” An employee may also promise that his employer company will get work done by a date certain, and he may order subordinate employees to do the work. None of these actions suggest principal status. To hold Cupp liable on a veil-piercing theory, Homeowners needed to provide evidence that he is not merely a “person with management authority” of an alleged “joint family venture,” but that he is a principal, shareholder, officer or director of the company, whatever its corporate status. This they have failed to do." Id.