Kaycee Land and Livestock v. Flahive

Brief Fact Summary. Plaintiff, Kaycee Land and Livestock, wanted to hold Defendant, Roger Flahive, personally liable for damages stemming from an agreement made Defendant’s LLC, Flahive Oil & Gas. The District Court of Johnson County presented a certified question to the Supreme Court of Wyoming to determine if Defendant could be held personally liable.

Synopsis of Rule of Law. For the purposes of piercing the corporate veil, there is no law or policy that would require treating limited liability companies (LLC’s) different from corporations.

Facts. Plaintiff contracted with Flahive Oil & Gas in order to use the surface of the land to raise Plaintiff’s livestock. Plaintiff alleges that Flahive Oil & Gas contaminated the surface area, rendering it useless for Plaintiff’s needs. Flahive Oil & Gas does not have any assets, and is controlled by Defendant. Therefore, Plaintiff wants to use general corporate veil-piercing principles to hold Defendant personally liable for damages that the LLC could be held responsible for. Defendant argued that although the legislature passed a statute for piercing the corporate veil as pertaining to corporations, they have been silent on LLC’s, and therefore there is no express intention to allow for the remedy.

Issue. The issue is whether corporate veil-piercing principles can be applied to a limited liability company.

Held. There is no statute or common law that expressly prohibits veil-piercing to be inapplicable to LLC’s. Although the legislature has not expressly provided for veil-piercing to apply with LLC’s, piercing the corporate veil has traditionally been a judicially created remedy to avoid an otherwise unjust result. As a matter of public policy, it would be illogical to allow persons to abuse LLC’s in a manner that has been prohibited for corporations.

Discussion. The court notes that every other jurisdiction that has looked at veil-piercing as applied to LLC’s has decided to allow the remedy against LLC’s. The factors determining whether an LLC should be pierced are similar to corporate veil-piercing factors.