JAMES D. PISTER, SKYRAD MEDICAL IMAGING, INC., and NORTHWEST MEDICAL IMAGING, INC., Appellants,
STATE OF ALASKA, DEPARTMENT OF REVENUE, Appellee.
Appeal from the Superior Court of the State of Alaska No. 1JU-08-00847 CI, First Judicial District, Juneau, Louis J. Menendez, Judge.
Appearances: James D. Pister, M.D., pro se, Federal Way, Washington, and William M. Bankston, Bankston Gronning O'Hara, P.C., Anchorage, for Appellants.
Christopher Peloso, Assistant Attorney General, and Michael C. Geraghty, Attorney General, Juneau, for Appellee.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.
FABE, Chief Justice.
The State seeks to hold the sole shareholder, director, and employee of a closely held Washington corporation personally liable for the corporation's unpaid tax debts. The superior court pierced the corporation's corporate veil, ruled that the shareholder's successor corporation was liable for the tax debt, voided two contract transfers as fraudulent conveyances, and ruled that the shareholder had breached fiduciary duties to the corporation and the State as the corporation's creditor. The shareholder and corporation appeal the superior court's decision to pierce the corporate veil, arguing that the superior court erred by not barring the State's suit under the principle of res judicata, by applying Alaska rather than Washington veil-piercing law, and by making clear factual errors. The shareholder and corporation also appeal the superior court's finding that two contracts were fraudulently conveyed.
We conclude that res judicata does not bar the State from seeking to pierce the corporation's corporate veil to collect a corporate tax debt established in an earlier case. We further conclude that the corporation's corporate veil was properly pierced under both Alaska and Washington law. And although the superior court's fraudulent conveyance determination contained errors of fact, they are unlikely to affect the relief the State seeks. We therefore affirm the superior court's decision in part, reverse it in part, and remand for further proceedings only to the extent necessary.
II. FACTS AND PROCEEDINGS
Dr. James Pister has practiced radiology in Alaska since 1977. In 1988 he incorporated his radiology business as a Washington corporation, Northwest Medical Imaging, Inc. (Northwest Medical). Washington administratively dissolved Northwest Medical in 1990, although Pister was apparently not aware of this until 1998. Pister wound up the affairs of Northwest Medical from late 1998 into early 2001, and he incorporated a new Washington corporation, Skyrad Medical Imaging, Inc. (Skyrad), in 2000.
In 1997 the Alaska Department of Revenue assessed Northwest Medical for unpaid taxes, penalties, and interest for improper deductions between 1992 and 1995. In the ensuing litigation, the Office of Tax Appeals twice decided that the State could not assess corporate income taxes against Northwest Medical post-dissolution, "apparently relying in part on the notion that Dr. Pister could be held personally liable for the actions of the dissolved corporation." The superior court twice reversed this determination, and in Northwest Medical Imaging, Inc. v. State, Department of Revenue, we agreed that Northwest Medical was responsible for unpaid corporate taxes because it had "continued to contract and provide services under its corporate name" after its administrative dissolution.
Our decision addressed one theory of personal liability for Pister. We disagreed with the Office of Tax Appeals's determination that Pister was necessarily personally liable for post-dissolution actions, and instead determined that under Washington law "the imposition of personal liability requires actual knowledge that there was no incorporation." Under this framework, "Dr. Pister would not be personally liable for the debts of Northwest Medical because he did not know that the corporation had been dissolved." Thus, to avoid the inequitable result of no party being liable for the taxes, and to follow our decision in University of Alaska v. Thomas Architectural Products, Inc.,  we held that Northwest Medical was liable for the assessed taxes.
On remand in August 2007, the Office of Tax Appeals entered judgment against Northwest Medical for $123, 118. In September 2008 the State filed a complaint in the superior court against Pister and Northwest Medical, seeking to collect that judgment from Pister personally under theories of piercing the corporate veil, successor liability, and fraudulent conveyance.
In July 2012 Superior Court Judge Louis J. Menendez issued an order that resolved several preliminary issues. The order rejected Pister and Northwest Medical's argument that the State was either precluded or estopped from piercing Northwest Medical's corporate veil. The superior court applied issue preclusion law  and found that our holding in Northwest Medical that Pister was not personally liable for Northwest Medical's tax debts was a determination of the issue of personal liability for post-dissolution debts, "a distinct issue from whether [Northwest Medical's] corporate veil could potentially be pierced, once [Northwest Medical's] legal existence as a corporation was established." The latter issue had not been actually litigated, and so the superior court determined that it was not precluded. The superior court similarly refused to find that the State was estopped from pursuing its veil-piercing claim based on its prior litigation positions, both because the State's argument in Northwest Medical was not fatally inconsistent with its argument that Northwest Medical's corporate veil should be pierced, and because the State explicitly reserved the right to seek to pierce Northwest Medical's corporate veil in its briefing in the earlier case.
The superior court's July 2012 order also resolved a dispute over which state's law applies to veil-piercing claims against foreign corporations. The superior court noted that the answer to this question was not clear particularly in light of some authorities suggesting that because veil piercing relates to a corporation's "internal affairs, " such affairs are governed by the law of the state of incorporation. But the superior court ruled that the veil-piercing claim was controlled by Alaska law because, in its assessment, we had repeatedly applied Alaska law to veil-piercing claims against foreign corporations and because Alaska might have a more significant relationship with the transaction under the analysis in section 309 of the Restatement (Second) of Conflict of Laws.
In September the parties tried the case to the court. In April 2013, after the bench trial, the superior court issued an order holding both Pister and Skyrad liable for Northwest Medical's tax debts and nullifying certain contract transfers. The order contained five legal determinations: (1) that Northwest Medical's corporate veil could be pierced under Alaska's mere instrumentality standard, (2) that Northwest Medical's corporate veil could be pierced under Alaska's misconduct standard, (3) that Skyrad was liable as a successor corporation, (4) that two contracts were fraudulently conveyed, and (5) that Pister breached his fiduciary duties of care and loyalty to Northwest Medical and the State as a corporate creditor.
Pister, Northwest Medical, and Skyrad appeal the superior court's decision to pierce Northwest Medical's corporate veil and to void the transfer of two contracts as fraudulent conveyances. They do not appeal Skyrad's liability as a ...