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The concept of piercing the corporate veil is applied in Georgia to remedy injustices which arise where a party has overextended his privilege in the use of a corporate entity in order to defeat justice, perpetrate fraud or to evade contractual or tort responsibility. Because the cardinal rule of corporate law is that a corporation possesses a legal existence separate and apart from that of its officers and shareholders, the mere operation of corporate business does not render one personally liable for corporate acts. Sole ownership of a corporation by one person or another corporation is not a factor, and neither is the fact that the sole owner uses and controls it to promote his ends. There must be evidence of abuse of the corporate form. Plaintiff must show that the defendant disregarded the separateness of legal entities by commingling on an interchangeable or joint basis or confusing the otherwise separate properties, records or control.
Soerries was the sole shareholder of Chickasaw Club, Inc., which operated a popular nightclub in Columbus for 23 years until it closed in 1999. At approximately 11:45 p.m. on July 31, 1996, 18-year-old Aubrey Lynn Pursley was intoxicated when she entered the Chickasaw Club. Although a Columbus ordinance prohibits individuals under 21 years old from entering nightclubs, it is undisputed that club employees did not check Pursley's identification to establish her age. A friend testified that Pursley already was intoxicated when she arrived at the club. Even so, friends testified that Pursley drank additional alcohol at the club and was visibly intoxicated when she left at approximately 3:00 a.m. on August 1, 1996. Security videotapes showed that she left the club with a beer in her hand. Shortly thereafter, Pursley was killed when she lost control of her car and struck a tree. Joseph Dancause, Pursley's stepfather, sued Chickasaw Club, Inc. and Soerries individually for the cost of the car and for punitive damages. Following a trifurcated jury trial, the trial court entered judgment on the jury's verdict, which pierced the corporate veil and found Soerries jointly liable with the corporation for $ 6,500 in compensatory damages and solely liable for $ 187,500 in punitive damages. Soerries appealed from this judgment.
Was the evidence presented sufficient to support the jury's decision to pierce the corporate veil?
The appellate court found that Soerries commingled individual and corporate assets by personally assuming the corporation's financial liabilities, waiving corporate rental payments, and using corporate funds to directly pay his personal mortgage notes and other expenses. Therefore, the appellate court ruled that the trial court could disregard the corporate entity and that there was evidence to sustain the verdict.