Question

Frank, Christie, & Matt are members of Custom Glass, an LLC. Custom Glass is getting sued by Andy, who has made a motion to have Custom Glass' veil pierced. The court may grant such a motion and pierce Custom Glass' veil if ___________.

Answer 1

To pierce Custom Glass' LLC veil, it must be proven that the members misused the company to justify disregarding the LLC's separate legal existence, often through fraud, commingling of funds, or undercapitalization.

Step-by-step explanation:

The student's question is about the legal concept known as piercing the corporate veil. This occurs when a court allows a plaintiff to seek personal assets from the owners of a company, bypassing the limited liability protection that an LLC typically provides. For the court to pierce Custom Glass' LLC veil, it would need to be proven that Frank, Christie, & Matt have misused the company in a way that justifies disregarding the LLC’s separate legal existence. Common reasons for this include commingling of funds, undercapitalization, fraud, or using the company to evade personal obligations. The specific circumstances under which veil piercing is allowed vary by jurisdiction, but generally require a showing that there was a significant co-mingling of personal and company business and that the LLC was merely a façade for personal dealings.