Alter Ego Theories; Piercing the Corporate Veil

Corporations and limited liability companies are oft-utilized because they generally insulate the owners of the business from business liabilities. A “corporation is regarded as a wholly and separate legal entity, distinct from the members who compose it.” Blanks v. Fluor Corp., 450 S.W.3d 308, 375 (Mo. Ct. App. 2014).

An exception to this rule is an alter ego or piercing the corporate veil claim. This not only applies when one tries to pierce the corporation to reach its owners, but also may be appropriate to pierce one corporation to reach another corporation. This latter form of piercing is increasingly more common because individuals often create multiple business entities in what is basically a single business enterprise.

It is available if one can demonstrate “one corporation exercises such dominion and control over the other corporation such that it creates an alter ego for the principal corporation.” State ex rel. Cedar Crest Apartments, LLC v. Grate, 577 S.W.3d 490, 497 (Mo. 2019).

Three elements must usually be present: (1) control of policy and business practice with respect to the particular transaction attacked so that the corporate entity as to the transaction had no separate will of its own, (2) the control was used to commit fraud, wrongdoing, a legal duty, dishonesty, or an unjust act, and (3) the control and breach of duty proximately caused the complained of injury or loss. Id. at 497-98.

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