Raley v. Beaumier, Jr. et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
In re: 	)
)
DONALD G. BEAUMIER, JR., and 	)
ARIELLE S. BEAUMIER, 	)
) 	Case No. 24-bk-00451
Debtors. 	) 	Chapter 7
___________________________________ 	)
)
KATHY RALEY, 	)
)
Plaintiff, 	)
)
v. 	) 	Adversary No. 24-ap-00018
)
DONALD G. BEAUMIER, JR., and 	)
ARIELLE S. BEAUMIER, 	)
)
Defendants. 	)
____________________________________ )
MEMORANDUM OPINION
Pending before the Court is a second motion to dismiss. 	Donald G. Beaumier, Jr., and
Arielle S. Beaumier (the “Defendants”) seek dismissal of Kathy Raley’s (the “Plaintiff”) Amended
Complaint against them for failure to state a claim upon which relief can be granted. Specifically,
the Defendants contend the Plaintiff has failed to sufficiently allege fraudulent acts attributable to
the Defendants individually to adequately plead a plausible claim for an exception to discharge
under 11 U.S.C. § 523(a)(2) and has failed to sufficiently allege facts to pierce the corporate veil.
In opposition, the Plaintiff argues that the Amended Complaint provides sufficient factual detail
to support the claim of fraud on the part of the Defendants and that the Amended Complaint
contains multiple allegations which accomplish the notion of piercing the corporate veil without
asserting it as a separate count.
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For the reasons stated herein, the Court will grant the Defendants’ Second Motion to
Dismiss.
I. 	STANDARD OF REVIEW
To survive a Rule 12(b)(6) motion, the complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bonds v. Leavitt, 629 F.3d 369, 385 (4th Cir. 2011)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 	“[The] complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). As the
Fourth Circuit has explained, the plausibility standard requires a plaintiff “to articulate facts, when
accepted as true, that ‘show’ that the plaintiff has stated a claim entitling him to relief, i.e., the
‘plausibility’ of ‘entitlement to relief.’” Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009)
(quoting Twombly, 550 U.S. at 557). Finally, when courts evaluate a motion to dismiss, they are
to (1) construe the complaint in a light favorable to the plaintiff, (2) take factual allegations as true,
and (3) draw all reasonable inferences in favor of the plaintiff. 5C Charles Wright & Arthur Miller,
Federal Practice & Procedure § 1357 (4th ed.) (collecting thousands of cases). The court’s role in
ruling on a motion to dismiss is not to weigh the evidence, but to analyze the legal feasibility of
the complaint. See Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998).
II. 	BACKGROUND
On December 1, 2019, the Plaintiff entered a construction contract with Beaumier’s Design
& Remodeling, LLC (“Defendants’ LLC”), a limited liability company formed under Arizona law.
This contract was signed by the Plaintiff and by Donald Beaumier, identified as the owner of the
Defendants’ LLC. The construction project was financed through a draw process administered by
Unison Bank, based upon draw requests made after third-party inspections throughout the progress
of construction. Following a breakdown in the parties’ working relationship, the Plaintiff sought
and obtained an $852,753.38 default judgment jointly and severally against the Defendants and
Defendants’ LLC in the Superior Court of Yavapai County, Arizona (the “State Court”).
Following the entry of judgment, on August 30, 2024, the Defendants filed for Chapter 7
bankruptcy. 	On December 3, 2024, Plaintiff initiated this adversary proceeding through her
Complaint 	alleging 	the 	judgment 	received 	from 	the 	State 	Court 	should 	be 	declared
nondischargeable pursuant to 11 U.S.C. § 523(a)(2), asserting the debt was incurred through fraud.
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After Plaintiff’s original Complaint was dismissed without prejudice1, Plaintiff filed her Amended
Complaint in an attempt to plead her fraud claim with particularity.
III. 	DISCUSSION
The Defendants filed the pending Second Motion to Dismiss asserting that the Amended
Complaint should be dismissed as the Plaintiff has failed to plead fraud as against the Defendants
in their individual capacity and to plead a cause of action to pierce the corporate veil of the
Defendants’ LLC. The Plaintiff opposes the Motion to Dismiss arguing that she has sufficiently
pled fraud as against the Defendants individually and that it is unnecessary for her to specifically
state a cause of action to pierce the corporate veil and that she has sufficiently alleged facts in
support.
A. No Direct Fraud by the Debtors
The Bankruptcy Code offers “broad provisions for the discharge of debts, subject to
exceptions.” Lamar, Archer & Cofrin, LLP v. Appling, 584 U.S. 709, 715 (2018). The exceptions
are limited and accordingly must be narrowly construed to err on the side of giving the debtor a
fresh start. 	Kabuto Tractor Corp. v. Strack (In re Strack), 524 F.3d 493, 497 (4th Cir. 2008)
(quoting Foley & Lardner v. Biondo (In re Biondo), 180 F.3d 126, 130 (4th Cir. 1999)). Some
exceptions to discharge include certain debts that may fall under 11 U.S.C. § 523(a)(2)(A). Section
523(a)(2)(A) excepts from discharge any debt incurred through “false pretenses, a false
representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s
financial condition”. 11 U.S.C. § 523(a)(2)(A).
In this case, the Court finds that the Plaintiff’s allegations primarily involve conduct
undertaken by the Defendants’ LLC. The subject contract was executed “by and among Donald
Beaumier and Arielle Beaumier, owners of Beaumier’s Design & Remodeling LLC – Beaumier’s
Construction DBA, an Arizona Limited Liability Company,” and the Plaintiff, Kathy Raley. See
Exhibit 1 to Plaintiff’s Response to Defendants’ Second Motion to Dismiss. While Plaintiff argues
that the Defendants personally contracted with her, the agreement consistently identifies the
contractor as the Defendants’ LLC and lists the Defendants solely in their representative capacity
as owners of the entity. The contract bears a signature line for “Contractor,” which was executed
1 The original Complaint was dismissed on January 29, 2025, for failure to adequately plead a plausible claim for an
exception to discharge under 11 U.S.C. § 523(a)(2) and Fed. R. Civ. P. 9(b), Fed. R. Bankr. P. 7009. The Court
granted the Plaintiff leave to amend the Complaint to comply with the heightened pleading requirements for fraud
under Fed. R. Civ. P. 9(b).
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by Donald Beaumier, but does not clearly indicate whether he was signing individually or on behalf
of the Defendants’ LLC. 	Notably, the Plaintiff does not allege that either Donald or Arielle
Beaumier made independent, extracontractual representations outside the scope of their roles with
Beaumier’s LLC.
Moreover, the facts reflected in the record underscore the Defendants’ LLC’s central role
in the project. The draw requests for construction funds were submitted by the Defendants’ LLC
to Unison Bank and were supported by independent third-party inspection reports, which verified
the stage of completion prior to fund disbursement. See Exhibit 3 to Defendants’ Second Motion
to Dismiss. These funds were not disbursed directly to the Defendants as individuals, but to the
Defendants’ LLC as the business entity engaged in the construction. Additionally, records from
the Arizona Registrar of Contractors indicate that the license number associated with the project
(ROC 312249) was held by the Defendants’ LLC, not the individual Defendants. See Exhibit 2 to
Defendants’ Second Motion to Dismiss. These facts, viewed together, support the conclusion that
the Plaintiff's allegations arise out of the contractual and operational conduct of the Defendants’
LLC. 	The Amended Complaint fails to allege with particularity any fraudulent conduct by the
individual Defendants that would be sufficient to transform the Defendants’ LLC’s contractual
obligations into personal liability under 11 U.S.C. § 523(a)(2)(A). Allegations of the Defendants’
LLC’s incomplete work or its contractual noncompliance do not rise to the level of “actual fraud”
under § 523(a)(2)(A) on behalf of the individual Defendants absent specific misrepresentations
made by Donald or Arielle Beaumier with intent to deceive and obtain funds. 	The Amended
Complaint fails to identify any such specific acts attributable to either individual Defendant.
Allegations that the Defendants’ LLC acted fraudulently do not automatically impose liability on
its owners unless a basis for imputed liability or veil piercing is appropriately alleged. 	Here,
neither has been sufficiently or properly alleged.
B. Failure to Allege Veil Piercing
In accordance with well-established principles of conflicts of law in both federal and state
courts, courts are to apply the law of the state of incorporation or organization in determining
whether to pierce the corporate veil. 	The Restatement (Second) of Conflict of Laws § 309
provides: “[t]he local law of the state of incorporation will be applied to determine the existence
and extent of a director’s or officer’s liability to the corporation, its creditors and shareholders
[…]”. Restatement (Second) of Conflict of Laws § 309 (1971).
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Here, Beaumier’s Design & Remodeling, LLC, was registered in Arizona and was licensed
and operated under Arizona law via the Arizona contractor license. The construction contract was
executed with a business that explicitly identified itself as an Arizona LLC. As such, Arizona law
applies. 	Arizona law requires a high standard to pierce the corporate veil as it is “more easily
stated than applied”. Chapman v. Field, 602 P.2d 481, 483 (Ariz. 1979) (quoting Dietel v. Day,
492 P.2d 455, 457 (1972)). 	A plaintiff must show “a sufficient showing that the unity of the
interest of the incorporators with the corporation was such that the corporation had lost its separate
identity, Dietel, supra, or had, in fact, ceased to exist.” Chapman at 484.
The Amended Complaint contains no separate cause of action for veil piercing, contains
no factual allegations sufficient to satisfy Arizona’s veil-piercing standard, and fails to name the
Defendants’ LLC as a party to the adversary proceeding. While Plaintiff attempts to argue that
the contract was ambiguous and that the Defendants’ LLC was used as a conduit to perpetrate
fraud, these assertions are conclusory and unsupported by particularized facts.
The Supreme Court’s decision in Bartenwerfer v. Buckley, 598 U.S. 69 (2023), is
inapposite here. Bartenwerfer involved imputed fraud between partners in a general partnership,
not a situation where a plaintiff seeks to impose individual liability for corporate acts absent veil
piercing. 	Arizona law clearly provides that members of an LLC are not personally liable for
company obligations absent veil piercing. In short, in this context where the corporate veil was
not pierced, the Plaintiff must demonstrate that the Defendants committed fraud in their individual
capacity to except her judgment from discharge under 11 U.S.C. § 523(a)(2)(A). Here, the Plaintiff
has failed to do so.
IV. 	CONCLUSION
For the foregoing reasons, the Court finds it appropriate to grant the Defendants Donald G.
Beaumier, Jr., and Arielle S. Beaumier’s Second Motion to Dismiss. Consistent with Fed. R. Civ.
P. 58, made applicable by Fed. R. Bankr. P. 7058, the Court will enter an order stating as much.
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