Greater Kansas City Roofing (GKC) had been operated as a sole proprietorship owned by Judy Clarke and managed by her husband, Charlie Clarke. Because of numerous violations of the labor laws, the National Labor Relations Board (NLRB) ordered the business to pay a total of $133,742.47. Tina Clarke, Charlie’s sister, began loaning money to GKC to help it out of its financial difficulties. Finally, when the business was unable to pay Tina the more than $38,000 it owed her, she decided to set up a new corporation and run the business herself. Tina Clarke became the sole shareholder, officer, and director of The New Greater Kansas City Roofing Corporation (New GKC). 

She was unaware at the time this corporation was formed that GKC had committed labor law violations and that the NLRB had an outstanding judgment against the business. New GKC basically took over the assets of its predecessor and retained many of its former customers. New GKC’s staff consisted almost exclusively of the former employees of GKC, including Charlie Clarke, who was employed to manage the corporate business. Tina failed to adhere to corporate formalities in her dealings with New GKC. She used a trade name associated with the corporation, as well as its address and telephone number, to establish a credit card collection account and to open a checking account for her escort service, Affaire d’Amour. 

There is no evidence New GKC had bylaws, accounts, stock, or corporate records, or held meetings. When the NLRB attempted to collect its outstanding judgment against GKC, it alleged that New GKC was the alter ego of GKC and that its corporate veil should be pierced so that Tina Clarke could be held personally liable on the claim. Should the court pierce the veil and find Tina Clarke liable on the corporate debt?