Walkovszky v. Carlton - Forming Businesses & Governing Corporations Flashcards
Facts
Carlton operated several companies with 2 cabs in each
Walkovszky: got hit by one of the cabs
He sued Carlton for all his 10 companies- trying to pierce the corporate veil
He could have also sued the cab driver- It’s better to sue Carlton- the deeper pockets
Holding & Reasoning
No.
• Law allows for incorporation of a business precisely to allow proprietors to escape personal liability, although there are limits, enforced by allowing veil piercing actions against shareholder. Limits exist where (1) SH operates the corporation as a ”dummy” that is really just alter ego of shareholder, or (2) corps were intentionally undercapitalized.
Here, Carlton followed corporate form, treating the entities as their own persons and not comingling assets. Moreover, he took out the required minimum insurance.
