     Case: 12-20517   Document: 00512373845     Page: 1   Date Filed: 09/13/2013




          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                                  FILED
                                                             September 13, 2013

                                 No. 12-20517                    Lyle W. Cayce
                                                                      Clerk

SPRING STREET PARTNERS - IV, L.P.,

                                           Plaintiff-Appellee,
v.

LONG K. LAM; EN KHA LAM; TEN LAM; VINH NGO,

                                           Defendants-Appellants.



                 Appeals from the United States District Court
                      for the Southern District of Texas


Before STEWART, Chief Judge, and HIGGINBOTHAM and JONES, Circuit
Judges.
CARL E. STEWART, Chief Judge:
      Defendants-Appellants Long K. Lam, En Kha Lam, Ten Lam, and Vinh
Ngo appeal from the district court’s summary judgment in favor of Plaintiff-
Appellee Spring Street Partners - IV, L.P. on its claims for fraudulent transfer
and piercing the corporate veil of a limited liability company. We AFFIRM IN
PART and VACATE AND REMAND IN PART.
                 I. FACTS AND PROCEDURAL HISTORY
A.    The Financial Obligations
      Between 2001 and 2005, Bayou City Fish Company, also known as Bayou
City Fish, Inc. (“Bayou”), incurred debt to SouthTrust Bank, N.A. (“SouthTrust
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                                 No. 12-20517

Bank”). The most significant of these obligations was a promissory note for a
revolving line of credit that eventually grew to the amount of $8.5 million. The
revolving credit note had a maturity date of May 31, 2006. The remainder of the
Notes had a collective principal amount of approximately $1.2 million with
various maturity dates. Douglas Lam, who was the sole owner of Bayou,
personally guaranteed the promissory notes (“Notes”) for all of this debt.
      In May 2006, the $8.5 million in Notes matured and became due and
payable. However, Bayou and Douglas Lam failed to make any payments.
Thus, on November 10, 2006, Wachovia sent Bayou and Douglas Lam a “Notice
of Default and Intent to Accelerate” the Notes (“Default Notice”).
      On December 11, 2006, Wachovia sold the Notes to Spring Street at a
private auction. In January and February of 2007, Spring Street sent at least
three (3) demand letters to Bayou and/or Douglas Lam.
B.    The Lam Entities
      1.    Bayou
      In 1994, Bayou began operating as a retail and wholesale seafood
distributor. From the beginning and through at least 2004, Douglas Lam’s
sister, Ten Lam, worked for Douglas at Bayou as a sales representative, and
Ten Lam’s husband, Vinh Ngo, worked in the warehouse.
      Bayou operated its business out of two locations on the same street in
Houston, Texas: 213 East Hamilton Street (wholesale operations), and 415 East
Hamilton Street (retail operations).
      According to Ten Lam and Ngo, Brian Shernak (“Shernak”), a Bayou
employee who was responsible for bringing in a significant amount of sales from
supermarket chains, constantly advised Douglas Lam that he should fire Ten
Lam and Ngo. Shernak also repeatedly advised Douglas Lam to sell the retail
operation located at 415 East Hamilton because it was too much work and not
profitable, and selling the retail business likely would cause Bayou’s wholesale

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                                  No. 12-20517

business to increase. Douglas Lam found Shernak’s advice persuasive because
of his record of increasing Bayou’s sales. Ten Lam and Ngo also periodically
requested that Douglas Lam sell them Bayou’s retail operation. Finally, in late
2004 or early 2005, Douglas Lam agreed to sell the retail business, which was
spun off into what would become LT Seafood, L.P. (“LT Seafood”).
      2.    LT Seafood
      In February 2005, Ten Lam and Douglas Lam formed LT Seafood. At the
time of LT Seafood’s formation, Douglas Lam owned 49%, Ten Lam owned 50%,
and an entity that Ten Lam owned–LT Seafood Management, L.L.C.–owned 1%.
      After the Lams formed LT Seafood, the restaurant began operating out of
415 East Hamilton Street, although Bayou continued to use that location as its
address as late as August 2007.
      According to Ten Lam and Ngo, a staffer from Bayou was in charge of
moving out Bayou’s property from 415 East Hamilton, and this staffer indicated
that everything was removed other than “some furniture and computers that
were so old that they were abandoned, an ice machine that was fixed to the
structure, and some old trucks that Bayou had replaced in service.” Employees
of Bayou who still worked at 415 East Hamilton moved to Bayou’s other location
at 213 East Hamilton.
      At some point, Wachovia declined to lend Bayou any more money unless
it increased its assets. Thus, for a period of time after the Lams created LT
Seafood, Bayou submitted borrowing base certificates to Wachovia which
combined the assets, finances, receivables, and inventory of LT Seafood and
Bayou in order to guarantee that the bank would continue to extend credit to
Bayou. Douglas Lam has asserted that Wachovia suggested that the entities
combine their assets in this manner.
      3.    DKL&DTL



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      On November 20, 2006–ten days after Wachovia sent the Default Notice
to Bayou and Douglas Lam–Douglas Lam formed the LLC, DKL&DTL, with his
wife, Diane Lam, and two of his siblings, Long K. Lam (“Long Lam”) and En Kha
Lam (“En Lam”).
      4.    Other Relevant Lam Entities
      In 2001, Douglas Lam formed Wells Star Group, Inc. (“Wells Star”). This
entity is involved in some of the transactions that Ten Lam and Ngo allege relate
to their purchase of Douglas Lam’s 49% interest in LT Seafood, discussed infra.
      In May 2007, Ten Lam formed JNT Group, LLC, and served as its sole
member, manager, and president. JNT also was involved in the sale of 415 East
Hamilton, discussed infra.
C.    The Transfers of Assets
      As relevant to the issues on appeal, Spring Street charges that three
particular transfers were fraudulent: (1) Bayou’s transfer of “hard assets” to LT
Seafood when LT Seafood took over Bayou’s retail operations at the 415 East
Hamilton location; (2) Douglas Lam’s transfer of his 49% interest in LT Seafood
to DKL&DTL; and (3) DKL&DTL’s subsequent transfer of this 49% interest to
Ngo. Douglas Lam testified in deposition that, as a result of these transfers, he
has had no source of income and has paid his daily expenses by relying on his
wife and using credit cards.
      1.    Bayou’s Transfer of “Hard Assets” to LT Seafood
      Ten Lam and Ngo assert that LT Seafood agreed to pay $12,000 per month
to lease the 415 East Hamilton location, and LT Seafood eventually paid a total
of $363,000 under this arrangement. They assert that the property that Bayou
“abandoned” when it left the 415 East Hamilton location was included in the
lease, and was worth, at most, $50,000. They also maintain that LT Seafood
paid for the inventory Bayou left at the location, and for various other items,
such as insurance, maintenance, and repairs. Accordingly, Ten Lam and Ngo

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assert that, between 2005 and early 2007, LT Seafood overpaid Bayou by
$73,729.78 for these various items.
      Meanwhile, Spring Street asserts that Bayou transferred property in the
form of “hard assets,” with an estimated value of $150,000, to LT Seafood when
LT Seafood was formed. These hard assets included trucks and computers,
among other things.
      2.     Douglas Lam’s Transfers to DKL&DTL
      In December 2006, Douglas Lam transferred his interests in the following
entities to DKL&DTL1:
             a.    49% interest in LT Seafood
             b.    Port Arthur Camellia Estate, L.P.
             c.    Camellia Plaza, L.P.
             d.    DHL Development, L.P.
             e.    DHL International, L.P.
             f.    Sea Farm Enterprise, L.P.
             g.    VLC Kuykendahl Venture, L.P. (“VLC Kuykendahl Venture”)

Douglas Lam received no consideration from DKL&DTL for any of these
transfers. Rather, he testified in deposition that he set up DKL&DTL to protect
the interests of his mother and children, and that he effectuated the foregoing
transfers as a “gift” to them.
      Douglas Lam has stated that out of the 28 or more companies he owned,
only four have been profitable since 2005, including LT Seafood, Bayou, VLC
Kuykendahl Venture, and Wells Star.
      3.     DKL&DTL’s Transfer of the 49% Interest in LT Seafood to Ngo
      In November 2007, DKL&DTL subsequently transferred the 49% interest
in LT Seafood to Ngo.




      1
         We will refer to the limited partnerships listed collectively as “the Limited
Partnerships” herein, not including LT Seafood.

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      Ten Lam and Ngo assert that Ngo paid Douglas Lam for this 49%. They
maintain that, in November 2007, they purchased the 415 East Hamilton
location and the 49% interest in LT Seafood in a single transaction. Ten Lam
and Ngo maintain that they obtained $1 million in financing from Golden Bank,
and borrowed approximately $250,000 from friends and family to finance this
single transaction. Ten Lam and Ngo further assert that the 415 East Hamilton
property was only worth about $600,000. Additionally, according to Randall Joe
Mayer, the accountant who reviewed LT Seafood’s financial statements to
determine its value, this 49% interest was worth approximately $382,000.
Therefore, by subtracting $600,000 from $1.25 million, Ten Lam and Ngo assert
that Ngo paid Douglas Lam $625,000 for the 49% interest in LT Seafood, while
the true value of this interest was much less ($382,000).
      Spring Street asserts that there is no competent evidence demonstrating
that Ngo paid for this interest. It maintains that all of the evidence Tem Lam
and Ngo rely on demonstrate a real estate purchase between an entity that
Douglas Lam controlled, Wells Star, and an entity that Ten Lam controlled,
JNT, and that neither DKL&DTL nor Ngo were involved in this transaction.
D.    Procedural History
      1.    Relevant District Court Proceedings
      On January 8, 2008, Spring Street instituted this suit against Bayou and
Douglas Lam to recover on the defaulted Notes. On April 23, 2009, Spring
Street filed an amended complaint naming as additional defendants DKL&DTL,
LT Seafood, Ten Lam, and Ngo. In this amended complaint, Spring Street
brought additional claims for: 1) single business enterprise / joint venture / joint
enterprise / partnership against LT Seafood and Bayou; and 2) fraudulent
transfers under the Texas Uniform Fraudulent Transfer Act (“TUFTA”), Tex.
Bus. & Comm. Code §§ 24.005(a)(1), 24.005(a)(2), and 24.006, against
DKL&DTL, LT Seafood, Ten Lam, and Ngo. On December 21, 2009, the district

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                                  No. 12-20517

court granted Spring Street’s motion for interlocutory, partial summary
judgment on Douglas Lam’s guaranties, holding him personally liable for the
Notes. While Douglas Lam filed a motion for a “new trial,” which the district
court denied, he has not appealed the district court’s summary judgment finding
him personally liable for the $8.5 million note, among other debt.
      On February 3, 2010, LT Seafood, Ten Lam, and Ngo filed a motion for
summary judgment on Spring Street’s claims for: 1) fraudulent transfers, 2)
single business enterprise, and 3) partnership / joint venture principles. On
February 26, 2010, Spring Street filed an opposition to this motion for summary
judgment, and it filed its own cross-motion for summary judgment on its claims
for fraudulent transfers. Various defendants also filed counter-claims against
Spring Street.
      In DKL&DTL’s March 26, 2010 response to Spring Street’s motion for
summary judgment, it stated for the first time that its corporate charter had
expired seven (7) months earlier, on August 7, 2009, due to its failure to file an
annual tax report with the state of Texas. DKL&DTL asserted that Spring
Street’s action against it thus “appear[ed] to be moot.” In response, Spring
Street obtained leave of the court to file a Second Amended Complaint naming
all of the individual DKL&DTL members as additional defendants–Long Lam,
En Lam, and Diane Lam, who were co-owners of DKL&DTL with Douglas Lam.
Spring Street filed this Second Amended Complaint on October 26, 2010.
      In its summary judgment opinion on December 17, 2011, and its amended
final judgment on March 12, 2012, the district court made the following
pertinent rulings on summary judgment:
            1.    LT Seafood is jointly liable for the nearly $8
                  million debt (plus post-judgment interest), as it
                  had “represent[ed] to Wachovia that it and Bayou
                  were the same entity by combining their financial
                  statements and maintaining the same address.”


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             2.     The following defendants are jointly and
                    severally liable to Spring Street for $382,0002
                    (plus post-judgment interest) for fraudulent
                    transfers relating to the 49% interest in LT
                    Seafood:
                          1.    DKL&DTL
                          2.    Douglas Lam
                          3.    Diane Lam
                          4.    En Lam
                          5.    Long Lam
                          6.    Ngo

             3.     Ten Lam and Ngo are jointly and severally liable
                    to Spring Street for $150,000 (plus post-judgment
                    interest) for the fraudulent transfer of the hard
                    assets from Bayou to LT Seafood.

             4.     DKL&DTL must transfer back to Douglas Lam
                    its interests in the following entities:
                    1.     Port Arthur Camellia Estate, L.P.
                    2.     Camellia Plaza, L.P.
                    3.     DHL Development, L.P.
                    4.     Sea Farm Enterprise, L.P.
                    5.     VLC Kuykendahl Venture

The district court subsequently denied various defendants’ motions for a “new
trial,” and it dismissed all counterclaims that the parties had filed.
      On behalf of themselves only, i.e., not on behalf of their various entities,
Long Lam and En Lam, jointly, and Ten Lam and Ngo, jointly, appeal.
      2.     Relevant Bankruptcy Court Proceedings for Bayou
      On August 30, 2008, Bayou filed a voluntary Chapter 7 bankruptcy
petition in the United States Bankruptcy Court for the Southern District of
Texas (the “bankruptcy court”).         Ronald J. Sommers (the “Trustee”) was

      2
          For the purposes of calculating damages on summary judgment, Spring Street
stipulated that the 49% interest in LT Seafood was $382,000, the amount that LT Seafood’s
expert determined.

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appointed as the trustee of Bayou’s bankruptcy estate. The Trustee later
intervened as a plaintiff in the instant suit because some of Spring Street’s
causes of action became the property of Bayou’s bankruptcy estate, subject to the
exclusive control of the Trustee.     On June 2, 2011, the bankruptcy court
approved a settlement between the Trustee and Spring Street under which the
Trustee assigned all of the bankruptcy estate’s claims to Spring Street. See In
re Bayou City Fish, Inc., No. 08-35703 (Bankr. S.D. Tex. June 1, 2011) (Order
Granting Trustee’s Motion to Compromise with Spring Street).             Bayou’s
bankruptcy case was then closed.
      3.    Spring Street’s Dual Role in the Proceedings
      Due to the parallel proceedings in the district court and in the bankruptcy
court, it is helpful to keep in mind that Spring Street thus “wear[s] two hats” in
this litigation: 1) creditor for Douglas Lam, and 2) successor-in-interest to the
bankruptcy Trustee. First, as a creditor for Douglas Lam, who is personally
liable for the $8.5 million Note, Spring Street is asserting a right to the 49%
interest in LT Seafood that Douglas Lam transferred to DKL&DTL. As noted,
DKL&DTL then transferred this interest to Ngo. Second, as the successor-in-
interest to the Bayou bankruptcy Trustee, Spring Street seeks the value of the
assets that Bayou transferred to LT Seafood.
                                       II.
      We review a district court’s grant of summary judgment de novo, applying
the same standards as the district court. Garcia v. LumaCorp, Inc., 429 F.3d
549, 553 (5th Cir. 2005) (citations omitted). “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). “An issue is material if its resolution could affect the outcome
of the action.” Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir.
2001) (citation omitted). “In deciding whether a fact issue has been created, the

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court must view the facts and the inferences to be drawn therefrom in the light
most favorable to the nonmoving party.” Id. (citation omitted). “We resolve
factual controversies in favor of the nonmoving party, but only where there is an
actual controversy, that is, when both parties have submitted evidence of
contradictory facts.” Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540
(5th Cir. 2005) (citation omitted).
                                        III.
       Defendants-Appellants raise three sets of challenges to the district court’s
summary judgment in Spring Street’s favor. First, Long Lam and En Lam
argue, as a threshold matter, that the district court erred by entering judgment
against them without prior notice or an opportunity to respond to Spring Street’s
motion. Second, all Appellants challenge their liability on Spring Street’s
fraudulent transfer claims. Third, Long Lam and En Lam argue that the
reinstatement of DKL&DTL’s corporate charter precludes finding them
individually liable for the fraudulent transfers due to Spring Street’s piercing of
the corporate veil. We address each set of challenges in turn.
A.     The District Court’s “Sua Sponte” Summary Judgment Against
       Long Lam and En Lam

       Long Lam and En Lam argue on appeal that the district court committed
reversible error by entering summary judgment against them because they were
added as individual defendants after the parties had filed their respective
motions for summary judgment, and the parties conducted no additional
discovery. Spring Street had added Long Lam and En Lam as defendants in its
Second Amended Complaint on October 26, 2010 after DKL&DTL asserted that
the lapse in its corporate charter precluded Spring Street from suing the LLC as
an entity. This amended complaint was filed eight months after the pre-existing
parties filed their respective summary judgment motions in February 2010.
There were no renewed motions for summary judgment after Long Lam and En

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                                  No. 12-20517

Lam were added to the suit; the defendants only filed answers to the Second
Amended Complaint. Without prior notice of its intent to do so as to Long Lam
and En Lam, the district court ruled in Spring Street’s favor on the motions for
summary judgment over a year after the motions were filed, in December 2011.
      Federal Rule of Civil Procedure 56 provides, in part, that “[a]fter giving
notice and a reasonable time to respond, the court may . . . grant the motion on
grounds not raised by a party[] or . . . consider summary judgment on its own
after identifying for the parties material facts that may not be genuinely in
dispute.” Fed. R. Civ. P. 56(f)(2)–(3). “We review for harmless error a district
court’s improper entry of summary judgment sua sponte without notice.” Atkins
v. Salazar, 677 F.3d 667, 678 (5th Cir. 2011) (citations omitted).
      We conclude that, even if the district court erred by granting summary
judgment against Long Lam and En Lam without prior notice or an opportunity
to respond, they have waived this argument by failing to pursue it before the
district court. See Celanese Corp. v. Martin K. Eby Constr. Co., Inc., 620 F.3d
529, 531 (5th Cir. 2010) (citation omitted). At the January 25, 2012 hearing
during which the district court sought to ascertain the value of the various
interests for Spring Street’s judgment, Long Lam and En Lam lodged no
objection to their lack of notice of the district court’s summary judgment ruling.
They subsequently filed a motion for a new trial in which they objected to the
court’s conclusion that they were individually liable in spite of the reinstatement
of DKL&DTL’s corporate charter, and to Spring Street’s ability to pierce the
corporate veil of DKL&DTL. They lodged no objection to their lack of advance
notice of the district court’s summary judgment. Moreover, Long Lam and En
Lam had several opportunities following the summary judgment ruling to raise
this issue and contest their liability generally during subsequent proceedings
below; thus any error was harmless. See Atkins, 677 F.3d at 678 (citations



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                                    No. 12-20517

omitted). We therefore decline to reverse the district court’s judgment on this
basis.
B.       Spring Street’s Fraudulent Transfer Claims
         In its Second Amended Complaint, Spring Street brought claims against
Long Lam, En Lam, Ten Lam, and Ngo for what it alleges were fraudulent
transfers by which Douglas Lam and Bayou placed assets outside of their
creditors’ reach. As we have noted, three transfers, involving two assets, are at
issue on appeal.3 As to the first transfer, Long Lam and En Lam’s liability arises
from their partial ownership of DKL&DTL, to which Douglas Lam transferred
his 49% interest in LT Seafood. Regarding the second transfer, DKL&DTL
subsequently transferred this 49% interest in LT Seafood to Ngo. This second
transfer is one of the two bases for Ngo’s liability. As to the third transfer,
Spring Street has asserted claims against Ten Lam and Ngo based on their joint
ownership of LT Seafood and Bayou’s “transfer” of $150,000 worth of “hard
assets” to LT Seafood.
         Accordingly, after outlining the applicable law relating to fraudulent
transfers, we address each of these transfers in turn.
         1.    Applicable Law
         In general, a determination of liability under TUFTA is a two-step process:
first, a finding that a debtor committed an actual, fraudulent transfer, TUFTA
§ 24.005(a)(1), or a constructive, fraudulent transfer, id. § 24.005(a)(2)); and,
second, recovery of that fraudulent transfer, or its value, from the transferees,
id. §§ 24.008–24.009.
         The actual fraud prong provides:

               [a] transfer made or obligation incurred by a debtor is
               fraudulent as to a creditor, whether the creditor’s claim

         3
       Neither the Lams nor DKL&DTL appeal the district court’s order directing
DKL&DTL to transfer back to Douglas Lam his prior interests in the Limited Partnerships.

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               arose before or within a reasonable time after the
               transfer was made or the obligation was incurred, if the
               debtor made the transfer or incurred the obligation:

               (1) with actual intent to hinder, delay, or defraud any
               creditor of the debtor[.]

TUFTA § 24.005(a)(1). TUFTA also supplies a “non-exclusive list of eleven
factors, commonly known as ‘badges of fraud,’ that courts may consider in
determining whether a debtor actually intended to defraud creditors under
TUFTA.”4 In re Soza, 542 F.3d 1060, 1066 (5th Cir. 2008) (citing TUFTA §
24.005(b)).
       The constructive fraud prong states:
               [a] transfer made or obligation incurred by a debtor is
               fraudulent as to a creditor, whether the creditor’s claim
               arose before or within a reasonable time after the
               transfer was made or the obligation was incurred, if the
               debtor made the transfer or incurred the obligation . . .

               (2) without receiving a reasonably equivalent value in
               exchange for the transfer or obligation, and the debtor:

                      (A) was engaged or was about to engage in
                      a business or a transaction for which the
                      remaining assets of the debtor were

       4
             Specifically, TUFTA provides that, “[i]n determining actual intent under [§
24.005(a)(1)], consideration may be given, among other factors, to whether”: (1) “the transfer
or obligation was to an insider”; (2) “the debtor retained possession or control of the property
transferred after the transfer”; (3) “the transfer or obligation was concealed”; (4) “before the
transfer was made or obligation was incurred, the debtor had been sued or threatened with
suit”; (5) “the transfer was of substantially all the debtor’s assets”; (6) “the debtor absconded”;
(7) “the debtor removed or concealed assets”; (8) “the value of the consideration received by the
debtor was reasonably equivalent to the value of the asset transferred or the amount of the
obligation incurred”; (9) “the debtor was insolvent or became insolvent shortly after the
transfer was made or the obligation was incurred”; (10) “the transfer occurred shortly before
or shortly after a substantial debt was incurred”; and (11) “the debtor transferred the essential
assets of the business to a lienor who transferred the assets to an insider of the debtor.”
TUFTA § 24.005(b).


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                   unreasonably small in relation to the
                   business or transaction; or

                   (B) intended to incur, or believed or
                   reasonably should have believed that the
                   debtor would incur, debts beyond the
                   debtor’s ability to pay as they became due.
TUFTA § 24.005(a)(2).
      The statute further provides:
             [a] transfer made or obligation incurred by a debtor is
             fraudulent as to a creditor whose claim arose before the
             transfer was made or the obligation was incurred if the
             debtor made the transfer or incurred the obligation
             without receiving a reasonably equivalent value in
             exchange for the transfer or obligation and the debtor
             was insolvent at that time or the debtor became
             insolvent as a result of the transfer or obligation.

Id. § 24.006(a).
      TUFTA defines “reasonably equivalent value” as “includ[ing] without
limitation, a transfer or obligation that is within the range of values for which
the transferor would have sold the assets in an arm’s length transaction.” Id. §
24.004(d).
      Among the remedies available to a creditor under the statute is “avoidance
of the transfer or obligation to the extent necessary to satisfy the creditor’s
claim.” Id. § 24.008(a)(1). Subject to certain exceptions and to the extent a
transfer is voidable, the creditor may recover the value of the asset transferred,
and judgment may be entered against:
               (1) the first transferee of the asset or the
               person for whose benefit the transfer was
               made; or

                   (2) any subsequent transferee other than a
                   good faith transferee who took for value or
                   from any subsequent transferee.


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Id. § 24.009(b). If the judgment is based upon the value of the transferred asset,
“the judgment must be for an amount equal to the value of the asset at the time
of the transfer, subject to adjustment as the equities may require.” Id. §
24.009(c)(1).
      The statute also provides a good faith defense: “[a] transfer or obligation
is not voidable . . . against a person who took in good faith and for a reasonably
equivalent value or against any subsequent transferee or obligee.”             Id.
§ 24.009(a).
      Finally, the statute mandates that a creditor generally must bring an
action to recover a transfer, or the value thereof, within four years of the
transfer, subject to certain exceptions not relevant here.            See id. §
24.010(a)(1)–(2).
      2.       The Alleged Fraudulent Transfers at Issue on Appeal
               a.   Douglas Lam’s Transfer of His 49% Interest in LT Seafood
                    to DKL&DTL ($382,000)
      Long Lam, En Lam, Diane Lam, and Douglas Lam created DKL&DTL ten
days after Wachovia delivered its Notice of Default on the $8.5 million Note to
Douglas Lam and Bayou. Additionally, it is undisputed that Douglas Lam
received no consideration in exchange for his transfer of his 49% LT Seafood
interest to DKL&DTL two weeks after receiving the Notice of Default. Instead,
he transferred this interest purportedly as a “gift” to his mother and children.
The uncontroverted evidence thus supports the conclusion that this transfer is
fraudulent as to Spring Street because Douglas Lam made the transfer “with
actual intent to hinder, delay, or defraud” Spring Street. TUFTA § 24.005(a)(1).
Notably, the transfer evidences several of the “badges of fraud,” including: the
transfers were to insiders; Douglas Lam and Bayou received a threat of suit
right before this transfer; and Douglas Lam retained partial control over the



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                                     No. 12-20517

entity receiving the transfer, i.e., DKL&DTL, through his 25% ownership in the
LLC. See In re Soza, 542 F.3d at 1066 (citing TUFTA § 24.005(b)).
      Based on the foregoing, the district court’s determination that Douglas
Lam’s transfer of his 49% interest in LT Seafood to the newly-formed DKL&DTL
constituted a fraudulent transfer is AFFIRMED. As we discuss infra, this
determination affects the liability of Long Lam and En Lam as two of the four
owners of the LLC, in light of Spring Street’s seeking to pierce the corporate veil
of DKL&DTL to impose individual liability on its owners.5
             b.     DKL&DTL’s Subsequent Transfer of the 49% Interest in LT
                    Seafood to Ngo ($382,000)

      Spring Street’s theory of Ngo’s liability as to this transfer is that he was
a “subsequent transferee other than a good faith transferee”under TUFTA §
24.009(b)(2).
      Ten Lam and Ngo essentially argue that there are genuine disputes of fact
regarding whether Ngo is entitled to the good faith defense under TUFTA §
24.009(a). Specifically, they assert that Ngo paid for Douglas Lam’s 49% interest
in LT Seafood in the same transaction in which he and Ten Lam purchased the
415 East Hamilton property, for a total of $1.2 million. Ten Lam and Ngo assert
that this property was only worth about $600,000, and they rely on Ngo’s
affidavit stating that the property was worth only about $600,000, and a
document from the Harris County Appraisal District (“HCAD”), which reflects
a property value of $552,000. Thus, Ngo avers that he paid Douglas Lam the
difference between the $1.25 million and $600,000, or $625,000 for the 49%
interest. Further, because the CPA estimated that this 49% interest was worth
much less, i.e., $382,000, Ten Lam and Ngo assert that Ngo overpaid for it.


      5
        We do not address herein the liability of the other two owners of DKL&DTL–Douglas
Lam and Diane Lam–since Douglas did not appeal the district court’s judgment and Diane’s
appeal was dismissed for want of prosecution.

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                                 No. 12-20517

Douglas Lam likewise avers that the real estate transaction involving the sale
of 415 East Hamilton included the sale of his 49% interest in LT Seafood to Ngo.
      Importantly, the transactions that Ngo relies on to demonstrate that he
paid consideration for the 49% interest actually reflect a transaction between an
entity Ten Lam wholly owned, JNT, and an entity Douglas Lam owned, Wells
Star. Ngo relies on: 1) an incomplete settlement statement, dated November 7,
2007, relating to the purchase of the 415 East Hamilton property, which
identifies JNT as the borrower and Wells Star as the seller; 2) a promissory note
from JNT to Golden Bank for the financing of the 415 East Hamilton property;
and 3) a special warranty deed and vendor’s lien which JNT granted in favor of
Wells Star on the 415 East Hamilton property. Ngo has also relied on Wells Star
bank records reflecting two payments from Ngo for $350,803, as well as various
other checks from Ngo to Wells Star and others. The only document that
actually reflects the transfer of the 49% interest in LT Seafood from DKL&DTL
to Ngo, however, is the “Assignment of and Sale of Limited Partnership
Interests” (“Assignment”), which recites “fair and valuable consideration in an
amount not less than ten dollars.” This document, which the DKL&DTL
members signed in November 2007, does not reference any of the other
aforementioned transactions.
      We agree with the district court’s conclusion that the promissory note,
Wells Star bank statements, checks, and settlement statement:
            do not prove that [Ngo] paid [DKL&DTL] or that JNT
            paid Wells [Star] for the 49% interest. Rather, they
            establish that Golden Bank agreed to loan JNT $1
            million for the purchase of the East Hamilton property
            and that JNT paid Wells [Star] $1.25 million for it. At
            most, this is a transaction between Douglass [sic], Ten
            [Lam], and [Ngo] to purchase the property [, i.e., 415
            East Hamilton].




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                                      No. 12-20517

Thus, based on the summary judgment evidence, Ngo has failed to raise a
genuine dispute that he paid “reasonably equivalent value,” or any value, in
exchange for the 49% interest.
       Alternatively, even if Ngo paid a “reasonably equivalent value” for the 49%
interest, he is still not entitled to TUFTA protection because he was not a “good
faith transferee.” TUFTA § 24.009(b)(2). Ngo and Ten Lam are closely related
to Douglas Lam and they are familiar business partners6; therefore, Ngo would
have been aware of Douglas Lam’s financial predicament and maneuvering
tactics. Moreover, this transfer took place in the midst of Spring Street’s
attempts to collect on the $8.5 million Note. Spring Street’s predecessor-in-
interest, Wachovia, sent the first Notice of Default in November 2006, and
Spring Street sent additional demands for payment in early 2007. Thus,
certainly by November 2007, this debt was well overdue. As Douglas Lam was
one of the four members of DKL&DTL who assigned the 49% interest to Ngo,
Spring Street’s fraudulent claim satisfies TUFTA’s actual fraud prong–that
Douglas Lam made the transfer “with actual intent to hinder, delay, or defraud”
Spring Street. TUFTA § 24.005(a)(1). Several badges of fraud are apparent here
as well, including the transfer to an insider; the lack of consideration paid for the
transfer; the fact that Douglas Lam was without assets and essentially
judgment-proof following the transfer; and the fact that DKL&DTL failed to
disclose the transfer for over a year during this litigation. See In re Soza, 542
F.3d at 1066 (citing TUFTA § 24.005(b)).
       We therefore conclude that Spring Street should prevail on its fraudulent
transfer claim as to this particular transfer, as Ngo has raised no genuine




       6
        In fact, the district court concluded that Ten Lam and Ngo operated LT Seafood as
essentially the same entity as Douglas Lam’s Bayou, a ruling that neither they nor LT Seafood
has appealed.

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                                  No. 12-20517

dispute of material fact either that he paid consideration for the interest or that
he was a good faith tranferee.
              c.   Bayou’s Alleged Transfer of Hard Assets to LT Seafood/ Ten
                   Lam and Ngo ($150,000)

      We conclude, as a matter of law, that Spring Street has failed to carry its
burden of demonstrating that Ten Lam and Ngo are jointly and severally liable
for $150,000 as the value of the hard assets that Bayou allegedly transferred to
LT Seafood.
      Spring Street contends that Ten Lam and Ngo are liable under TUFTA §
24.009(b)(1), which permits recovery from “the first transferee of the asset or the
person for whose benefit the transfer was made.” Specifically, according to
Spring Street, Douglas Lam transferred assets from Bayou to LT Seafood. At
that time, Ten Lam was the majority owner of LT Seafood. By November 2007,
Ngo had taken ownership of the remaining 49% share of LT Seafood, via “a
two-step fraudulent transfer through DKL&DTL.” Spring Street argues that the
district court properly found that the transfer of Bayou’s hard assets to LT
Seafood was made for the benefit of Ten Lam and Ngo as joint owners of the
entity. Id. Notably, Spring Street pursues this transfer as the successor-in-
interest to the bankruptcy Trustee.
      Ten Lam and Ngo argue that the district court erred in determining that
they were jointly and severally liable for the value of Bayou’s “hard assets” that
were “transferred” to LT Seafood despite the existence of genuine fact issues as
to 1) the value of the subject property, 2) the question of whether the property
actually was transferred to LT Seafood, and 3) the question of whether LT
Seafood’s overpayment to Bayou compensated Bayou for the property.
Specifically, Ten Lam and Ngo assert that the “hard assets” Spring Street refers
to actually was “abandoned property” that was included in the lease for the 415
East Hamilton location, in the amount of $12,000 per month. They further

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                                    No. 12-20517
argue that Spring Street has failed to show how they personally were the
beneficiaries of the transfer.
      The district court rejected Ten Lam and Ngo’s claim that they paid value
for Bayou’s assets through LT Seafood’s rental payments to Wells Star for the
use of Bayou’s former site at 415 East Hamilton, or through checks LT Seafood
wrote for inventory purchases from Bayou. Importantly, Ten Lam and Ngo’s
contention also appears to contradict the Trustee’s declaration and exhibit
relating to the transfer of assets from Bayou to LT Seafood, which the Trustee
produced in consultation with Douglas Lam and Bayou’s controller, Glen Huang.
[See R. 1323–26.] In the declaration, the Trustee states as follows:
             I questioned Mr. Lam and Mr. Huang in detail about
             [the Debtor, Bayou’s] relationship with LT Seafood. I
             requested that [Bayou] produce to me a listing of all
             “hard” assets transferred by [Bayou] to LT Seafood with
             the four years prior to the filing of the Bankruptcy
             Case, including any consideration paid by LT Seafood
             to [Bayou] in exchange for those assets.

[R. 1323.] Attached to this declaration was an exhibit itemizing these hard
assets and reflecting a value of approximately $150,000. The exhibit also
showed no consideration flowing from LT Seafood to Bayou. [See R. 1326.]
Among these assets were several trucks, with an estimated total value of
$83,672; computers and related equipment with an estimated value of $7,258;
an ice machine with a value of $54,931; miscellaneous other equipment valued
at $2,300; office furniture and equipment valued at $4,036; and a “sliding door”
with a value of $805. The trucks were valued at their original costs, with
purchase dates between 2002 and 2005. This aforementioned document is the
basis for the $150,000 for which the district court found Ten Lam and Ngo to be
jointly and severally liable.
      Below and on appeal, Ten Lam and Ngo have challenged the admissibility
and reliability of this exhibit as sufficient to prove their liability to Spring Street

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                                  No. 12-20517
as a matter of law. Specifically, in response to Spring Street’s motion for
summary judgment below, Ten Lam and Ngo “ask[ed] the Court to strike” the
exhibit, as they “object[ed] to this document for its hearsay character, its
internal contradictions and its unsupported opinion of ownership and values.”
[R. 1383]. They highlighted the fact that the document does not demonstrate
the existence of any liens on the vehicles or equity, and no titles for any of the
vehicles were produced. They also pointed out that the document indicates
Bayou acquired the 2000 Nissan UD on April 21, 2005, but that the document
shows that the transfers to LT Seafood were made on March 7, 2005, before
Bayou would have had acquired this vehicle. [Id.]. Additionally, Ten Lam
attested to contrary value and ownership of these items. In her affidavit, she
opines that “the values of these items is [sic] much lower than what they
originally cost”:
             For example, the furniture, office equipment, and
             computers were in fair condition, at best, as were the
             forklift, scales, and pallet jacks and refrigerator. The
             trucks had high mileage and required frequent
             repairs. . . . Together, in my opinion, all of these items
             did not exceed $50,000 in value in the Spring of 2005.
             The ice machine is mentioned on Plaintiff’s Exhibit was
             a built-in unit that was attached to the ceiling. To
             remove it would have destroyed it.

[R. 1404]
      Spring Street’s sole reliance on this document to prove both the fact that
assets were transferred and their value is problematic. For example, if Ten
Lam’s assertion is correct that the ice machine constituted a fixture to the 415
East Hamilton property, then the value of this machine, which is not
insignificant, may have been improperly included in the $150,000 figure.
Further, the exhibit indicates the original cost of the enumerated items, which
were acquired years before the alleged transfer in some cases. Thus, Spring


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                                        No. 12-20517
Street has not proffered values of these assets on the date of the transfer. See
TUFTA § 24.009(c)(1) (“[T]he judgment must be for an amount equal to the value
of the asset at the time of the transfer, subject to adjustment as the equities may
require.”). While Ten Lam’s affidavit is arguably “self-serving,” as Spring Street
contends, it is based on her personal knowledge of the items she used for her
business.7 On the other hand, the Trustee merely attests to the fact that Bayou
provided the estimated costs to him; thus, the exhibit itself likely would
constitute inadmissible hearsay. See Fed. R. Civ. P. 56(c)(2) (“A party may object
that the material cited to support or dispute a fact cannot be presented in a form
that would be admissible in evidence.”); Fed. R. Civ. P. 56(c)(4) (“An affidavit or
declaration used to support or oppose a motion must be made on personal
knowledge, set out facts that would be admissible in evidence, and show that the
affiant or declarant is competent to testify on the matters stated.”). Moreover,
Ten Lam and Ngo rely on personal property records from the Harris County
Appraisal District showing that at least two of the vehicles itemized in the
exhibit were taxed to Bayou on December 31, 2005, after the alleged transfer to
LT Seafood earlier that year. [See R. 1383, 1494-99].
       Our detailed record review of the summary judgment record fails to reveal
any determinative piece of evidence that corroborates Spring Street’s assertion
that it is entitled to the $150,000 based on the exhibit. Construing the facts in
the light most favorable to the non-movants–Ten Lam and Ngo–we conclude that
Ten Lam’s contrary attestation and supporting submissions, combined with the
lack of contemporaneous values of the assets in the exhibit, render summary



       7
         See Daniel R. Coquillette et al., Moore’s Federal Practice § 56.94[3], at 56-225 (3d ed.
2013) (“Affidavits or declarations of parties that set forth only conclusory and unsupported
assertions are sometimes described disparagingly as ‘self-serving’ affidavits, as if the
‘self-serving’ nature of a document renders it automatically insufficient. However, there is
nothing wrong with self-serving affidavits and declarations, provided they are supported by
the facts in the record[.]” (footnote and citations omitted)).

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                                  No. 12-20517
judgment in Spring Street’s favor on this claim inappropriate. We therefore
conclude that Ten Lam and Ngo have a raised a genuine dispute of fact as to
both which “hard assets” Bayou transferred to LT Seafood and the value of those
assets on the date of the transfer. Accordingly, we VACATE the district court’s
judgment against these defendants on this basis, and REMAND for further
proceedings.
                                        IV.
A.     May Spring Street Pierce the Corporate Veil of DKL&DTL and Sue
       Individual LLC Members?
       As we have determined that both Douglas Lam’s transfer of his 49%
interest in LT Seafood to DKL&DTL and and DKL&DTL’s subsequent transfer
of that interest to Ngo constituted fraudulent transfers, we now address Spring
Street’s attempt to pierce the corporate veil of DKL&DTL to hold its owners
individually liable, on a joint and several basis, for the value of these transfers,
i.e., $382,000.
       1.    Limited Liability of Corporations and LLCs
       Under Texas law, the shareholder of a corporation,
             may not be held liable to the corporation or its obligees
             with respect to . . . any contractual obligation of the
             corporation or any matter relating to or arising from
             the obligation on the basis that the holder, beneficial
             owner, subscriber, or affiliate is or was the alter ego of
             the corporation or on the basis of actual or constructive
             fraud, a sham to perpetrate a fraud, or other similar
             theory[.]

Tex. Bus. Orgs. Code § 21.223(a)(2). This statute provides an exception to this
exemption from liability “if the obligee demonstrates that the holder, beneficial
owner, subscriber, or affiliate caused the corporation to be used for the purpose
of perpetrating and did perpetrate an actual fraud on the obligee primarily for
the direct personal benefit of the holder, beneficial owner, subscriber, or

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                                   No. 12-20517
affiliate.” Id. § 21.223(b). “Actual fraud” is defined as “involv[ing] dishonesty of
purpose or intent to deceive.” Tryco Enters., Inc. v. Robinson, 390 S.W.3d 497
(Tex. App.–Houston [1 Dist.] 2012, writ dism’d) (citation omitted). Courts may
deduce fraudulent intent from all of the facts and circumstances. See Matter of
Chastant, 873 F.2d 89, 91 (5th Cir. 1989) (citations omitted). Further, the
liability of the corporation’s shareholder/owner or an affiliate of that
shareholder/owner “for an obligation that is limited by Section 21.223 is
exclusive and preempts any other liability imposed for that obligation under
common law or otherwise.” Tex. Bus. Orgs. Code § 21.224.
      Similarly, a member or manager of an LLC “is not liable for a debt,
obligation, or liability of a limited liability company, including a debt, obligation,
or liability under a judgment, decree, or order of a court,” except to the extent
that “the company agreement specifically provides otherwise.” Tex. Bus. Orgs.
Code § 101.114.
      2.     Piercing the Corporate Veil of a Corporation or LLC
      Due to the limited liability that corporations and LLCs offer to their
owners, a plaintiff seeking to impose individual liability on an owner must
“pierce the corporate veil.” Under Texas law, “an assertion of veil piercing or
corporate disregard does not create a substantive cause of action[;] . . . such
theories are purely remedial and serve to expand the scope of potential sources
of relief by extending to individual shareholders or other business entities what
is otherwise only a corporate liability.” In re JNS Aviation, LLC, 376 B.R. 500,
521 (Bankr. N.D. Tex. 2007), aff’d, 395 F. App’x 127, 128 (5th Cir. 2010)
(intervening procedural history and citation omitted). Veil-piercing and “alter
ego” principles apply equally to corporations and LLCs. See id. at 530–31.
      In a landmark decision, the Texas Supreme Court held in Castleberry v.
Branscum that the limitation on liability that the corporate structure affords can
be ignored “when the corporate form has been used as part of a basically unfair

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                                  No. 12-20517
device to achieve an inequitable result.” See 721 S.W.2d 270, 271–72, 273 (Tex.
1986), superseded on other grounds by former Bus. Corp. Act art. 2.21, re-codified
at Tex. Bus. Orgs. Code § 21.223 (citations omitted). Further, “constructive
fraud is the breach of some legal or equitable duty which, irrespective of moral
guilt, the law declares fraudulent because of its tendency to deceive others, to
violate confidence, or to injure public interests.” Id. at 273 (quoting Archer v.
Griffith, 390 S.W.2d 735, 740 (Tex. 1965) (citations omitted)).
      Under the doctrine of constructive fraud, “[n]either fraud nor an intent to
defraud need be shown as a prerequisite to disregarding the corporate entity; it
is sufficient if recognizing the separate corporate existence would bring about an
inequitable result.” Id. at 272–73 (alteration in original) (citations omitted).
“Examples [of an inequitable result] are when the corporate structure has been
abused to perpetrate a fraud, evade an existing obligation, achieve or perpetrate
a monopoly, circumvent a statute, protect a crime, or justify wrong.” SSP
Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 451 (Tex. 2008)
(emphasis added) (citing Castleberry, 721 S.W.2d at 272). The Castleberry court
also stated that, “[t]o prove there has been a sham to perpetrate a fraud, tort
claimants and contract creditors must show only constructive fraud.” 721
S.W.2d at 273.
      In SSP Partners, the Texas Supreme Court later clarified: “[i]n
Castleberry, we held that the corporate structure could be disregarded on a
showing of constructive fraud, even without actual fraud. The Legislature has
since rejected that view in certain cases.” 275 S.W.3d at 455 (emphasis added)
(citation omitted).   Specifically, the Legislature subsequently enacted the
aforementioned sections of the Texas Business Organizations Code relating to
limited liability in some contexts, unless, inter alia, the complainant proves
“actual fraud” relating to “any contractual obligation of the corporation.” See
Tex. Bus. Orgs. Code §§ 21.223(a)(2), (b).

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                                  No. 12-20517
      Then, in 2011, the Texas legislature added a new section 101.002 to Title
3 of the Texas Business Organizations Code, which specifies, inter alia, that the
code provisions regulating and restricting veil piercing of corporations, Tex. Bus.
Orgs. Code §§ 21.223 and 21.224, also apply to LLCs, their members, and their
managers. See Act of Apr. 20, 2011, 82d Leg., R.S., ch. 25, §§ 1–2, 2011 Tex.
Gen. Laws 45, 45 (identifying an effective date of September 1, 2011).
      In Shook v. Walden, a Texas appeals court addressed the standard for
piercing the corporate veil of an LLC that was incorporated prior to September
1, 2011, the effective date of the aforementioned statutory amendments. 368
S.W.3d 604, 613–14 (Tex. App.–Austin 2012, pet. denied) (citations omitted).
The Shook court held that a plaintiff seeking to pierce the veil of LLCs that are
not covered by the amendments must meet the same requirements as if the
entity were a corporation, i.e., a claimant must prove that the individual used
the LLC form to perpetrate actual fraud for the individual’s direct personal
benefit. See id. 621–22 (citation omitted). Notably, the Shook suit concerned the
LLC member’s liability for the LLC’s contractual obligations. See id. at 611.




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                                         No. 12-20517
       The Shook court discussed the foregoing progression of Texas law relating
to veil-piercing,8 and explained that the Legislature’s actions evidenced a
balancing of policy interests relating to economic regulation:

                This balancing in part reflects a distinction, also
                reflected in pre-Castleberry cases, between the
                perceived relative equities of veil-piercing claimants
                who are asserting tort theories of recovery versus those
                suing in contract. The basic notion was that contract
                claimants, unlike most third parties suing in tort, had
                voluntarily chosen to deal with the corporation and,
                “[a]bsent some deception or fraud,” would have had the
                opportunity to apportion, through negotiated contract
                terms, the risk that the entity would be unable to meet
                its obligations.

See id. at 619–20 (alteration in original) (citations omitted).
       3.       Parties’ Arguments
       The parties dispute whether Spring Street must prove “actual fraud” or
merely “constructive fraud” in order to pierce DKL&DTL’s corporate veil.
       Long Lam and En Lam contend that Spring Street must prove actual
fraud for Long Lam and En Lam’s direct benefit in order for Spring Street to

       8
           The Shook court observed:

                At the time the Texas Supreme Court decided Castleberry, in
                1986, the Legislature had not yet expressed its views through
                statute regarding the appropriate balancing of [policy interests
                concerning matters of economic regulation]. Within a few years
                thereafter, the Legislature spoke through the 1989 amendments
                to former Business Corporation Act article 2.21, and again
                through subsequent amendments. In so doing, the Legislature
                struck a balance that differed markedly from that of the
                Castleberry court with respect to veil piercing to impose
                individual liability for corporate contractual obligations—a
                claimant must prove that the individual used the corporate form
                to perpetrate actual fraud (i.e., that characterized by deliberately
                misleading conduct) for the individual’s direct personal benefit.

Shook, 368 S.W.3d at 620 (citations omitted).

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                                  No. 12-20517
pierce the corporate veil of DKL&DTL. They argue, “Shook requires [Spring
Street] to prove that the individual member of the LLC used the company to
perpetrate an actual fraud for the direct personal benefit of the member.” They
further assert: “the plaintiff has pled constructive fraud on creditors; and, having
selected that cause of action, forfeits the right to pursue the individual members
because the statutory cause of action against individual members is exclusive as
to all other causes of action, including constructive fraud.”
      Spring Street first points out that “fraudulent transfers of assets” is a tort
under Texas law. Accordingly, Spring Street maintains that the “actual fraud”
standard that Long Lam and En Lam urge does not apply in this case. Rather,
according to Spring Street, if a case does not involve a “contractual obligation of
the corporation or any matter relating to or arising from the obligation,” Tex.
Bus. Orgs. Code § 21.223(2) does not apply, and the common-law rules of
veil-piercing, as set forth in Castleberry, govern. Spring Street further argues
that, “under Castleberry, only a showing of constructive fraud is required to
pierce the corporate veil.” Lastly, Spring Street asserts that its evidence meets
either the actual fraud or the constructive fraud standard.
      4.    Discussion
      We need not resolve whether the standard is invariably that of
constructive fraud where fraudulent transfers have occurred, because Spring
Street has offered ample evidence to demonstrate Long Lam and En Lam’s
actual fraud here. Spring Street has summarized this evidence as follows: (1)
they “formed an LLC ten days after their brother Douglas Lam received notice
that his debts were being accelerated”; (2) they “paid no consideration for a 25%
interest each in his assets”; (3) they “personally signed a paper transferring one
of those assets to another family member for no consideration”; (4) they “failed
to disclose this fact for over a year while their entity was involved in [this]
litigation”; (5) they “tried to evade company liability under TUFTA by allowing

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                                        No. 12-20517
the company charter to lapse”; and (6) they “then tried to evade individual
liability by claiming the charter had been reinstated.” Long Lam and En Lam,
along with the other DKL&DTL members, acted for their direct personal benefit,
they had no other interest to serve.
       Based on these actions, we conclude that Spring Street may pierce
DKL&DTL’s corporate veil on the basis of fraud and impose individual liability
on the LLC members.9 Accordingly, we AFFIRM the district court’s judgment
on this ground.
                                               V.
       For the foregoing reasons, we AFFIRM the district court’s judgment in all
respects, except as to Spring Street’s fraudulent transfer claim against Ten Lam
and Ngo for the amount of $150,000. We VACATE this judgment on this latter
basis, and REMAND for further proceedings.




       9
         As we conclude that Spring Street may pierce the corporate veil, we need not reach
Long Lam and En Lam’s argument that the purported reinstatement of DKL&DTL’s corporate
charter relates back to the filing of this suit and precludes finding them individually liable for
the transfers here. See Bluebonnet Farms, Inc. v. Gibraltar Sav. Ass’n, 618 S.W.2d 81, 85
(Tex. Civ. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.) (holding that, “[o]nce [a]
corporation pays the delinquent taxes and is reinstated, this subsequent payment will relate
back and revive whatever rights the corporation had at the time the suit was instituted.”).

                                               29
