Tuesday, August 24, 2021

Pennsylvania Supreme Court Rejects Effort by Plaintiff To Pierce Corporate Veil

In the case of Mortimer v. McCool, No. 37 MAP 2020 (Pa. July 21, 2021)(Maj. Op. by Wecht, J.)(Concurring Op. by Donohue, J.), the Pennsylvania Supereme Court addressed the doctrine of piercing the corporate veil to impose liability in a personal injury matter.

This matter arose out of an accident during which the Plaintiff was injured when a drunk driver hit her car.  A Dram Shop claim was pursued against multiple defendants.  

After the Plaintiff secured a substantial verdict, her attorney took steps in an effort to pierce the corporate veil of certain Defendants in an effort to realize a monetary recovery on the verdict.

In this regard, the Plaintiff sought to utilize a doctrine known as "singe-entity," "enterprise," or "horizontal" liability.  Generally speaking, the doctrine holds that, just as a corporation's owner may be held liable for judgments against the corporation when justice so requires, so may affiliate or sister corporations be held liable for each other's judgments where those various corporations have a shared ownership or engage in a single commercial enterprise.

The Pennsylvania Supreme Court ruled that the application of the enterprise liability theory to pierce the corporate veil of the defendant was not precluded per se under Pennsylvania law.  However, the Court found that the attempt to pierce the corporate veil in this case under that theory was rejected when the entities lacked identical ownership.

The Court also noted that, if the Plaintiff was allowed to invoke enterprise liablity in this case, an innocent Defendant would have been exposed.  The Court noted that piercing the corporate veil may only occur when the rights of innocent parties are not prejudiced.

Anyone wishing to review a copy of the Majority Opinion by Justice Wecht in this case may click this LINK.  The Concurring Opinion by Justice Donohue may be viewed HERE.

Source: “Court Summaries” by Timothy L. Clawges. Pennsylvania Bar News (August 16, 2021).

Source of image: Photo by Yan Krukov from Pexels.com.

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