The rules regarding piercing the corporate veil.

In Florence Cement Co v Vettriano, __ Mich App __ (#295090, 5/3/2011) the Court of Appeals held that defendants used their corporation as a mere instrumentality for themselves as individuals, and did not treat the corporation as an entity separate from themselves.  Such a failure is a hallmark of a claim for piercing the corporate veil. Essentially, where members do not treat an artificial entity as separate from themselves, neither will the Court.

The rules regarding piercing the corporate veil are applicable in determining whether to pierce the corporate veil of a limited liability company Lakeview Commons Limited Partnership v Empower Yourself, LLC, ___ Mich App ___ (2010).  While “there is no single rule delineating when a corporate entity may be disregarded, the entire spectrum of relevant facts form the background for such an inquiry, and the facts are to be assessed in light of the corporation’s economic justification to determine if the corporate form has been abused.”  In order for a court to order a corporate veil to be pierced, the corporate entity (1) must be a mere instrumentality of another individual or entity, (2) must have been used to commit a wrong or fraud, and (3) there must have been an unjust injury or loss to the plaintiff Rymal v Baergen, 262 Mich App 274, 293-294 (2004) (internal citations omitted); see also RDM Holdings, Ltd v Continental Plastics Co, 281 Mich App 678 (2008).