Sea-Land Services Inc. v. Pepper Source

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Plaintiff

Sea Land Services

Defendant

Pepper Source

Facts

The plaintiff shipped some goods for the defendant. The defendant never paid the bill. Plaintiff sued but when it tried to claim the judgment, the defendant had been dissolved.

The defendant was owned by Marchese (who also owned several other companies).

Plaintiff argument

The plaintiff argues that all of Marchese's corporations are alter egos of each other and that their sole purpose is to defraud creditors. Further they claim that he should personally be on the hook because he used the corporation for his personal use.


Discussion

The court rules that there is a two part test to pierce the veil of limited liability:

  1. "Unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist"
  2. "Adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice"

The court runs through a number of facts to show that both of these standards were in fact met.