Lexis Nexis - Case Brief

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Law School Case Brief

Kaycee Land & Livestock v. Flahive - 2002 WY 73, 46 P.3d 323

Rule:

The equitable remedy of piercing the veil is an available remedy under the Wyoming Limited Liability Company Act, Wyo. Stat. §§ 17-15-101 to -144 (LexisNexis 2001)

Facts:

Flahive Oil & Gas, LLC (Flahive) was a Wyoming Limited Liability Company with no assets at the time. Plaintiff Kaycee Land and Livestock (Kaycee) entered into a contract with Flahive allowing Flahive to use the surface of its real property. Defendant Roger Flahive was the managing member of Flahive  at all relevant times. Kaycee alleged that Flahive caused environmental contamination to its property located in Johnson County, Wyoming. Kaycee sought to pierce the corporate veil and disregard the LLC entity of Flahive, and hold Roger Flahive individually liable for the contamination. There was no allegation of fraud. The certified question, which sought to determine whether the entity veil of a limited liability company (LLC) can be pierced in the same manner as that of a corporation, was presented by the state district court before the Supreme Court of Wyoming.

Issue:

In the absence of fraud, was the remedy of piercing the corporate veil available against a company formed under the Wyoming Limited Liability Company Act (Act), Wyo. Stat. Ann. §§ 17-15-101 to -144?

Answer:

Yes.

Conclusion:

The Supreme Court of Wyoming first reviewed the development of the piercing the veil doctrine in the corporate context and then reviewed the legislative history of the Act in Wyoming. The Court concluded that nothing in the Act's history indicated a legislative intent to prevent application of the doctrine in the LLC context. However, because the issue was presented as a certified question in the abstract with little factual context, the Court determined that a remand was appropriate to allow the state district court to complete a fact intensive inquiry and exercise its equitable powers to determine whether piercing the veil was appropriate under the circumstances of the instant case.

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