KAYCEE LAND AND LIVESTOCK V. FLAHTVE
46 P.3d 323 (2002)


PROCEDURAL POSTURE: The District Court of Johnson County, Wyoming, certified for resolution under Wyo. R. App. P. 11 a question whether, in the absence of fraud, the entity veil of a limited liability company (LLC) can be pierced in the same manner as that of a corporation.

FACTS Roger Flahive (D) was the managing member of Flahive Oil & Gas (D), a limited liability company (LLC), which negotiated a lease with Kaycee Land and Livestock (P) for certain real estate. Kaycee (P) contended that Flahive Oil (D) contaminated the property. Kaycee (P) did not allege that Flahive Oil (D)
acted fraudulently, but wanted to pierce Flahive Oil's (D) corporate veil to reach Roger Flahive's (D) personal assets to satisfy the LLC's debt for cleaning up the property.

ISSUE In the absence of fraud, may a court pierce the corporate veil of a limited liability company to reach its members' assets?

RULE The common law doctrine of piercing the corporate veil is not abrogated by the limited liability company act and may be used against limited liability company members in appropriate cases.

HOLDING: In the absence of fraud, is the veil of a Limited Liability Company pierced in the same manner as a corporation? Yes. In the piercing of a corporate veil courts use a fact driven inquiiy to determine if the circumstances justify a piercing. This case is certified in the abstract with little facts. Under this situation, we cannot reach a conclusion and believe it is improvident to prohibit this remedy from applying to unforeseen circumstances in the future. Piercing the corporate veil is an equitable doctrine developed under the common law when such provisions are absent in statutory law. Under the LLC statute it is difficult to read it as intended to preclude courts from deciding to disregard the veil of an improperly used LLC. Our statute is very short and establishes the minimal requirements for creating and operating LLCs. From this statute it seems highly unlikely that the legislature gave any attention to whether piercing the veil should apply to an LLC. Because it lies in equity, the paucity of statutory authority should not be read as a barrier to application of the
doctrine to LLCs. It is instructive to note that every state enacting LLC law has chosen to follow corporate law standards and not develop separate LLC standards.