Kaycee Land & Livestock v. Flahive case brief summary
2002 WY 73
SYNOPSIS: The District Court of Johnson County, Wyoming, certified for resolution under Wyo. R. App. P. 11 a question whether, in the absence of fraud, the entity veil of a limited liability company (LLC) can be pierced in the same manner as that of a corporation.
FACTS:
-Plaintiff contracted with Flahive Oil & Gas to use the surface of the land to raise Plaintiff’s livestock.
-Plaintiff alleged that Flahive Oil & Gas contaminated the surface area, rendering it useless for Plaintiff’s needs.
-Flahive Oil & Gas did not have any assets, and was controlled by the Defendant.
-Therefore, Plaintiff wanted to use general corporate veil-piercing principles to hold Defendant personally liable for damages that the LLC could have been held responsible for.
-Defendant argued that although the legislature passed a statute for piercing the corporate veil as pertaining to corporations, the legislature was silent on LLC’s, and therefore there was no express intention to allow for the remedy.
-The question presented was limited to whether, in the absence of fraud, the remedy of piercing the veil was available against a company formed under the Wyoming Limited Liability Company Act (Act).
-Because each case involving the disregard of the separate entity doctrine was governed by the special facts of that case, the court was reluctant to reach a conclusion that the equitable doctrine of piercing the veil could never be employed in the LLC context.
ANALYSIS:
-The court first reviewed the development of the piercing the veil doctrine in the corporate context and then reviewed the legislative history of the Act in Wyoming.
-The court concluded that nothing in the Act's history indicated a legislative intent to prevent application of the doctrine in the LLC context.
-However, because the issue was presented as a certified question in the abstract with little factual context, the court determined that a remand was appropriate to allow the district court to complete a fact intensive inquiry and exercise its equitable powers to determine whether piercing the veil was appropriate under the circumstances of the instant case.
HOLDING:
The court determined that the equitable remedy of piercing the veil was an available remedy under the Wyoming Limited Liability Company Act.
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2002 WY 73
SYNOPSIS: The District Court of Johnson County, Wyoming, certified for resolution under Wyo. R. App. P. 11 a question whether, in the absence of fraud, the entity veil of a limited liability company (LLC) can be pierced in the same manner as that of a corporation.
FACTS:
-Plaintiff contracted with Flahive Oil & Gas to use the surface of the land to raise Plaintiff’s livestock.
-Plaintiff alleged that Flahive Oil & Gas contaminated the surface area, rendering it useless for Plaintiff’s needs.
-Flahive Oil & Gas did not have any assets, and was controlled by the Defendant.
-Therefore, Plaintiff wanted to use general corporate veil-piercing principles to hold Defendant personally liable for damages that the LLC could have been held responsible for.
-Defendant argued that although the legislature passed a statute for piercing the corporate veil as pertaining to corporations, the legislature was silent on LLC’s, and therefore there was no express intention to allow for the remedy.
-The question presented was limited to whether, in the absence of fraud, the remedy of piercing the veil was available against a company formed under the Wyoming Limited Liability Company Act (Act).
-Because each case involving the disregard of the separate entity doctrine was governed by the special facts of that case, the court was reluctant to reach a conclusion that the equitable doctrine of piercing the veil could never be employed in the LLC context.
ANALYSIS:
-The court first reviewed the development of the piercing the veil doctrine in the corporate context and then reviewed the legislative history of the Act in Wyoming.
-The court concluded that nothing in the Act's history indicated a legislative intent to prevent application of the doctrine in the LLC context.
-However, because the issue was presented as a certified question in the abstract with little factual context, the court determined that a remand was appropriate to allow the district court to complete a fact intensive inquiry and exercise its equitable powers to determine whether piercing the veil was appropriate under the circumstances of the instant case.
HOLDING:
The court determined that the equitable remedy of piercing the veil was an available remedy under the Wyoming Limited Liability Company Act.
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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