Question

George Lucas contracted with Stormtrooper Builders, Inc. to build the Millennium Falcon. Stormtroopers is owned solely by Palpatine. Palpatine estimated the cost of building the spaceship would be approximately $500,000. George paid more than $1,500,000 to Stormtroopers. He sued Stormtroopers in Tattooine state court. After obtaining a judgment in the amount of $1,000,000, George discovered that Stormtroopers was unable to pay the judgment. He seeks to collect the judgment from Palpatine. The court determined that Palpatine commingled his funds with Stormtroopers’ accounts, Stormtroopers had sham corporate minutes, and Stormtroopers failed to properly account for the expenses and payments made for the construction of the Falcon. Will George be able to collect his judgment from Palpatine?

Answer 1

George Lucas may be able to collect the judgment from Palpatine personally because the court found evidence of wrongful actions like commingling of funds and sham corporate minutes, which can lead to piercing the corporate veil.

Step-by-step explanation:

Based on the details provided, George Lucas may be able to collect the judgment from Palpatine through a legal doctrine known as piercing the corporate veil. This doctrine applies when a shareholder, usually of a closely held corporation, abuses the corporate form to perpetrate a fraud or other wrong. Factors such as commingling funds, inadequate corporate formalities, and use of the corporation to shield illegal or improper conduct can lead a court to hold a shareholder personally liable for corporate debts.

In this case, the court has already found evidence of commingling, sham corporate minutes, and failure to account for expenditures. These facts suggest that Palpatine did not respect the separate entity of the corporation and used it for personal gains. Given these circumstances, the court may decide that Palpatine is personally liable for the judgment against Stormtroopers Builders, Inc., allowing George to collect his debt from Palpatine's personal assets.