Piercing the corporate Vail.

[James McAvoy]

Jurisdiction

North Carolina

Hi, hired a landscaping company LLC to do landscaping work. Was a breach of contract. And I'm suing him in district court.
His office and Home are the same address and stores as equipment on his property next to his house.
His business registration says that he is the owner of the LCC, not the president.
Could I use this information? How would i gather More information to Pierce, the corporate Vale?

 

[Red Kayak]

1) The word you're looking for is "veil", like what brides wear. Not "vale", which is a valley (although I am a fan of "The Vale", goose dropping aside, a lovely setting for a formal event). Nor "Vail", which is a fine place to visit in Colorado if you like skiing.

2) Yes, you can use this information. It's in the public domain. I don't know why you think it would be otherwise. All the landscapers I've known are small family operations that operate out of their home.

3) Your issue it with the "breach of contract". The relevant info is in your contract. If you don't have a lawyer, start getting some referrals, and have an initial consult with at least 3. If you already have a lawyer, then I'm concerned by you post here.

 

[Tax Counsel]

Hi, hired a landscaping company LLC to do landscaping work. Was a breach of contract. And I'm suing him in district court.
His office and Home are the same address and stores as equipment on his property next to his house.
His business registration says that he is the owner of the LCC, not the president.
Could I use this information? How would i gather More information to Pierce, the corporate Vale?

His office being at his home and storing equipment is not a factor for piercing the corporate veil. Millions of self-employed do the same thing. The test for piercing is in his relationship with the LLC. He needs to make sure that he respects the separate existence of the LLC. That means doing things like a having a separate bank account for the business, following the state LLC statute, properly papering distributions of money or property he makes out of the LLC to himself, having the contracts between the LLC and customer rather instead of making himself the party to the contract etc.

LLCs are not corporations, though the LLC statutes provide limited liability protection for LLCs much like they do for corporations. Stating that he is the owner of the LLC is a true statement and that statement doesn't conflict with representations he's made that the business is organized as a LLC you're not going to get much traction there either. LLC owners are called members in the LLC statutes but the statute does not dictate what titles the LLC gives the persons who manage the company. The title of president or chief operating officer is more closely associated with a corporation than a LLC.

You may include both LLC and the owner of the LLC in your lawsuit complaint, and make sure you serve each properly. The burden will be on you to make the case for piercing the corporate veil. Note that if the LLC has plenty of assets with which any judgment you win can be collected that is also a problem with piercing the corporate veil. The whole point of the concept of piercing the corporate is to enable a creditor to go after the owners when they commit fraud or some other wrong, and that act is the proximate cause of the breach of contract.

The rules for piercing the corporate veil are found the state case law (appellate court decisions). That's what you'll need to research to find out what you need to prove to make your case. I'll give you a start that gives a reasonably good overview of those rules.

Nevertheless, for the purpose of achieving uniformity and predictability in this critical area of jurisprudence, this Court has previously adopted the 'instrumentality rule.' " Ridgeway at 440, 666 S.E.2d at 113 (quoting Glenn v. Wagner, 313 N.C. 450, 454, 329 S.E.2d 326, 330 (1985)). In Glenn, our Supreme Court "enumerated three elements which support an attack on [a] separate corporate entity under the instrumentality rule[.]" Glenn, 313 N.C. at 454, 329 S.E.2d at 330. The Court described these elements as follows:

(1) Control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; and

(2) Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiff's legal rights; and
(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
Id. at 455, 329 S.E.2d at 330 (internal quotation omitted). The Court also set out circumstances that have proven useful in determining whether it is appropriate to pierce the corporate veil in a specific case:
Factors which heretofore have been expressly or impliedly considered in piercing the corporate veil include:
1. Inadequate capitalization[.] ...
2. Non-compliance with corporate formalities. ...
3. Complete domination and control of the corporation so that it has no independent identity. ...
4. Excessive fragmentation of a single enterprise into separate corporations. ...
Glenn at 455, 329 S.E.2d at 330–31 (citations omitted). These factors may be weighed differently in a case in which the business entity in question is an LLC rather than a corporation.

S. Shores Realty Servs., Inc. v. Miller, 251 N.C. App. 571, 584–85, 796 S.E.2d 340, 351–52 (2017).

 

[James McAvoy]

1) The word you're looking for is "veil", like what brides wear. Not "vale", which is a valley (although I am a fan of "The Vale", goose dropping aside, a lovely setting for a formal event). Nor "Vail", which is a fine place to visit in Colorado if you like skiing.

2) Yes, you can use this information. It's in the public domain. I don't know why you think it would be otherwise. All the landscapers I've known are small family operations that operate out of their home.

3) Your issue it with the "breach of contract". The relevant info is in your contract. If you don't have a lawyer, start getting some referrals, and have an initial consult with at least 3. If you already have a lawyer, then I'm concerned by you post here.

Thank you for your reply. I do not have an attorney. I don't have the money for one because the landscaper took it. The information that I'm seeking is whether i can hold the individual responsible and LLC.

 

[James McAvoy]

Thank you for your reply. I do not have an attorney. I don't have the money for one because the landscaper took it. The information that I'm seeking is whether i can hold the individual responsible and LLC.

 

[welkin]

Hi, hired a landscaping company LLC to do landscaping work. Was a breach of contract. And I'm suing him in district court.
His office and Home are the same address and stores as equipment on his property next to his house.
His business registration says that he is the owner of the LCC, not the president.
Could I use this information? How would i gather More information to Pierce, the corporate Vale?

What you do in a case like is to file suit against the LLC (assuming the contract is in that name) and in the name of the owner of the LLC. You do not worry about piercing the corporate at this point. It will be up to the owner to file a motion to dismiss the suit against himself. That is when you try to pierce the vail.

What do you allege the LLC did that was a breach of contract? How is that in any way a result of the owner's actions separate from the LLC's actions?

Getting a judgement against a privately owned LLC is virtually the same as getting it against the owner.

 

[Zigner]

Getting a judgement against a privately owned LLC is virtually the same as getting it against the owner.

No, it is not. Not at all.

 

[adjusterjack]

I don't have the money for one because the landscaper took it.

Which is why you NEVER pay a contractor of any kind until the job is satisfactorily completed. Or pay in phases as each phase is satisfactorily completed. But never in advance.

 

[Tax Counsel]

Getting a judgement against a privately owned LLC is virtually the same as getting it against the owner.

That's not the case. A LLC is a separate entity from the owner. A judgment against the LLC allows the creditor to attach non exempt assets of the LLC, nothing more. If the LLC has few assets but the owner has sufficient assets from which to collect the judgment then only a judgment against the owner will reach those other assets. That's why it's important to think about how you might prove a piercing of the corporate veil case in any situation you are suing a small limited liability entity, like a corporation, LLC, LLP, etc.

 

[Michael Wechsler]

I don't know whom you sued and whether you sued both the corporation and him personally or you just sued the corporation. It sounds like the latter is what you may have done.

@Tax Counsel provides good insight. You have two different issues. One, you need to win the case first in order for collection to become meaningful. I do understand that nobody wishes to invest good money after thin air, but you're already in District Court. The second issue, piercing the corporate veil, matters only if you can win the case. Commingling of funs may not make a difference as to whether the defendant is found liable. However, it is possible that the owner of the business may have been acting in a personal capacity and not in the guise of the corporation.

 

[zddoodah]

hired a landscaping company LLC to do landscaping work. Was a breach of contract. And I'm suing him in district court.

If your contract was with an LLC, what do you mean that you're suing "him"? If you meant that you are suing the owner of the LLC, did you also sue the LLC?

His office and Home are the same address and stores as equipment on his property next to his house.
His business registration says that he is the owner of the LCC, not the president.
Could I use this information?

None of this information, without a lot more, would be useful in an effort to sue the LLC's owner under an alter ego theory. Single member LLC's are routinely operated out of the owner's home. I'm not sure what the sentence about business registration is supposed to mean. LLCs often don't have officers. For example, the owner of a single-member LLC might be the manager or the managing member.

How would i gather More information to Pierce, the corporate Vale?

*Veil

Through the discovery process.

The information that I'm seeking is whether i can hold the individual responsible and LLC.

We have no way of knowing.

Getting a judgement against a privately owned LLC is virtually the same as getting it against the owner.

That's not even remotely correct.