Article by Daniel Q. Posin
“Piercing the corporate veil” is a dramatic event. When it applies, it allows an aggrieved plaintiff the extreme remedy of penetrating the limited liability of a corporation and reaching the assets of its shareholders. This Article deals with the subject of piercing the corporate veil in general and deals in particular with the aberrational yet exceedingly influential Louisiana First Circuit Court of Appeal case of Green v. Champion Insurance Co. The reason that Green has attracted so much attention is that it has for various reasons confused the Louisiana jurisprudence on piercing the corporate veil.
This confusion is significant not only for Louisiana corporate law but also for Louisiana limited liability company law. It is now well settled in Louisiana that the same standards for piercing the corporate veil apply to piercing the limited liability veil of limited liability companies. Because of its unusual and particular facts, Green is a poor precedent for piercing the corporate veil analysis. The confusion engendered by Green and the interpretation it has been given could substantially inhibit capital formation in Louisiana, making both corporate lawyers and corporate law academics feel a little green themselves. Both in-state investors and potential investors from out of state may hesitate to commit capital to Louisiana commerce and Louisiana corporations, if the standards for piercing the corporate veil are seen to be weaker in Louisiana, based on Green, than in other states. This Article respectfully expresses the hope that the Louisiana Supreme Court will take an opportunity to overrule an appellate court case based on Green and go out of its way to set Louisiana's jurisprudence on this important subject right.
About the Author
Daniel Q. Posin. Judge Rene H. Himel Professor of Law, Tulane University School of Law. The author has served as a consultant and expert witness on a number of Louisiana piercing-the-corporate-veil cases. The author is also a mediator on the panel of Mediation Arbitration Professional Systems, Inc., New Orleans, where he mediates in various areas, including corporate and business problems as well as personal injury and liability issues.
Citation
79 Tul. L. Rev. 311 (2004)