Piercing the Corporate Veil: How to Collect from the Company and the Person Responsible for your Injuries

Ericka Lynn Carter brought a lawsuit against several parties after she was in a car accident in January, 2008: B&B Wholesale, Inc., Praetorian Speciality Insurance Company, Billy Dwayne Brumley, Ancul D. Bland, and the Louisiana Department of Transportation. She alleged that each party was liable for damages. Defendant Brumley moved for summary judgment and argued that he could not be held personally liable since his actions were taken only in his corporate capacity as president of B&B Wholesale. The trial court agreed and dismissed Brumley as a defendant and Ms. Carter appealed.

In a decision last month the Louisiana Court of Appeals agreed with the trial court and affirmed the dismissal.

The accident at issue occurred on U.S. Hwy 84 in DeSoto Parish. Michael Carter, an employee of SWEPCO, was driving his work truck north on La.Hwy. 482. When he approached the intersection at Hwy.84 Brumley, was approaching the same intersection, followed by his employee, Ancul Bland. At the intersection Michael had a stop sign and Bland and Brumley had the right of way. Michael claims he stopped but did not see the tractor trailer Bland was driving and pulled into the intersection to make a right turn and collided with the tractor trailer. Brumley witnessed the accident, but was not physically involved. The police report found that the tractor-trailer was not roadworthy and had defective brakes, steering, and headlights. They also found that Bland did not have a valid Class A Commercial Driver’s License.

Ms. Carter included Brumley in the lawsuit because she claimed he was personally liable because he negligently inspected the tractor trailer and determined it was roadworthy when it wasn’t, negligently instructed his employees to drive the vehicle at night, and negligently entrusted the vehicle to an unqualified driver. On appeal, Ms. Carter claimed that Brumley can be held personally liable because he was acting in the course and scope of his employment when he committed acts of negligence and should not be shielded from liability merely because he is president of B&B Wholesale, and not just an employee. In response, Brumley argued that Ms. Carter is trying to hold Brumley liable for Michael’s negligent act of running a stop sign. He contended that even if he was negligent, he cannot be held liable because his actions were taken in his corporate capacity as president of B&B.

Under La.C.C. Art.2315, “Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it.” La. C. C. Art. 24 defines 2 kinds of persons: natural persons and judicial persons. A judicial person is an entity to which the law attributes personality, like a corporation. It is settled law that a corporation is a distinct legal entity, separate from the individuals who comprise it. By minimizing the liability of shareholders to the corporation itself, business investment is encouraged. Because the corporate concept is beneficial to our society, limited liability should only be disregarded in extreme circumstances. Louisiana courts rarely are willing to hold a shareholder, officer, or director personally liable for corporate acts. There are some situations where a litigant can reach a shareholder personally, however. This is called “piercing the corporate veil” and is appropriate if an officer or an agent of a corporation is at fault for injuring someone else to whom he owes a personal duty. If directors and officers of a corporation do not hold themselves out as individually bound, they also are not personally liable for debts of the corporation, except for in cases of fraud, malfeasance, or criminal wrongdoing. The totality of the circumstances of each case must be viewed to determine if the corporate veil should be pierced.

Here, Brumley is a separate and distinct legal entity from B&B Wholesale. Ms. Carter had the burden to show a genuine issue of fact as to conduct that could cause personal liability on Brumley’s part. There is no evidence to this effect in the record, Ms. Carter merely contends that Brumley’s acts were done in his individual capacity. There is no evidence that Brumley owed Ms. Carter a personal duty or that he purported to bind himself individually for the liability of the corporation. There is also no evidence that Brumley committed fraud, malfeasance, or criminal wrongdoing. Therefore, there are no genuine issues of material fact as to Brumley’s liability and the trial court was correct in granting his motion for summary judgment and dismissing him from the case.
This case provides a great example of how important it is to select the correct parties to name in a lawsuit. If you are injured by the actions of someone else who may have been acting in some corporate capacity, it is very difficult to prove that the individual should be held personally liable, and courts often only allow for collection of damages against the corporation itself. The best attorneys will understand what is required to pierce the corporate veil and be able to assess the likelihood that a court will be able to do so in your case. After all, naming more parties to a lawsuit doesn’t always add up to more success. It is nothing but a waste of time and resources if parties are dismissed at the summary judgment level.