As a Plaintiff’s lawyer I’m always concerned about naming the right corporate defendant. People frequently set up numerous corporations and LLC’s to protect them from liability. They often have similar names. If you look at the Cyberdrive website and look up any Corporation you will find numerous ones with similar names. To make matters worse, people who own a lot of rental property typically set up one big LLC with a different sub – LLC for each property. This can make suing the proper defendant very difficult.
This came up in the recent case of Angell vs. Stantefort Family Holdings LLC. In Angell the plaintiff was being shown a mobile home which she was considering purchasing. The defendant had failed to place a grate over a hole in one of the mobile homes. Plaintiff stepped in the hole and was seriously injured. She filed suit, naming Tristar Estates LLC , who owned the ground as the defendant
In its answer the defendant was evasive as to who owned the property. They objected to the allegation as to whether or not they owned the mobile home. Then they indicated that Stanefort Real Estate Group LLC did not manage occupy released the unit . It denied the existence of any leases contracts or similar agreements with regard to the mobile home. Stanefort was owned by an irrevocable trust entitled the Stantefort Family 2012 Irrevocable Trust. Brian Gallagher was the CEO of the defendant company. There were at least eleven companies related to the irrevocable trust. Gallagher was also the chief operating officer of Stantefort Property Management Inc. There was also another company called Midwest Home Eentals LLC which owned the mobile homes and should have been the defendant in the lawsuit.
Defendant would co- mingle the funds of the various corporations. Gallagher was unclear in his deposition as to who actually owned the property. His wife also testified at deposition that repairs on the homes were not done by Stantefort or Midwest.
The defendant filed a motion for summary judgment arguing that Midwest owned the property, which the trial court granted.
The appellate court reversed the trial court. The court found that defendant in Midwest were inextricably linked and the entities function is a single business under the irrevocable trust. The court decided to pierce the corporate veil. The court listed numerous factors applied to the analysis of piercing corporate veil. It seem to be most interested in the fact that those commingling of funds, as Gallagher testified he did not know which Corporation was which.
To me, the strange part of this case was that the plaintiff did not allege misnomer. The plaintiff could have and probably should have filed a motion for leave to amend the complaint and name Midwest as the corporate defendant. Why it didn’t do so is unclear. With a claim of misnomer, plaintiff must show that the person intending to be sued received notice of the suit within the appropriate time limit comma and at the defendant would not be prejudiced by maintaining a defense. Plaintiff also needs to show that person knew or should have known that he was the intended target of the plaintiff suit. In this case, it would seem that all those factors would apply because Gallagher was in charge of all the corporations.
There was a dissent in the case. The dissenting justice felt that the plaintiff did not supply enough information in the record on appeal and felt that the plane if not done its job in researching corporate defendants.
Anyway, this case gives plaintiffs an argument to pierce the corporate veil of a close corporation.
If you have a corporate plaintiffs negligence claim come feel free to contact us. Ackerman Law Office enjoys representing injury victims in complicated personal injury suits.