Sunday, February 24, 2013

Kaycee Land & Livestock v. Flahive case brief

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.

-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.

-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.

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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