Business Law

Ask a Business Lawyer. Get Business Law Questions Answered ASAP.

Ask a Lawyer,
Get an Answer ASAP!

Business Law

Will you please answer this question for me 17.9 Piercing

Customer Question
Will you please answer this...
Will you please answer this question for me
17.9 Piercing the Corporate Veil M. R. Watters was the majority shareholder of several closely held corporations, including Wildhorn Ranch, Inc. (Wildhorn). All these businesses were run out of Watters’s home in Rocky Ford, Colorado. in Teller County, Colorado. Although Watters claimed that the ranch was owned by the corporation, the deed for the property listed Watters as the owner.Watters paid little attention to corporate formalities, holding corporate meetings at his house, never taking minutes of these meetings, and paying the debts of one corporation with the assets of another. During August 1986, two guests of Wildhorn Ranch Resort drowned while operating a paddleboat at the ranch. The family of the deceased guests sued for damages. Can Watters be held personally liable?
Geringer v. Wildhorn Ranch, Inc., 706 F.Supp. 1442, 1988
U.S.Dist. Lexis 15701 (D. Colo.)

Case 17.9 -- Piercing the Corporate Veil

Can Walters be held personally liable for Wildhorn’s debts and torts? Why or why not?


18.7 Franchise Agreement Libby-Broadway Drive-In, Inc.(Libby), is a corporation licensed to operate a McDonald’s fast-food franchise restaurant by the McDonald’s System, Inc. (McDonald’s). Libby was granted a license to operate a McDonald’s in Cleveland, Ohio, and was granted an exclusive territory in which McDonald’s could not grant another franchise. The area was described as “bound on the north by the south side of Miles Avenue, on the west and south side by Turney Road, on the east by Warrensville Center Road.” In December 1976, McDonald’s granted a franchise to another franchisee to operate a McDonald’s restaurant on the west side of Turney Road. Libby sued McDonald’s, alleging a breach of the franchise agreement. Is McDonald’s liable? Libby-Broadway
Drive-In, Inc. v. McDonald’s System, Inc., 391 N.E. 2d 1, 1979
Ill.App. Lexis 2698 (Ill. App.)

Case 18.7 -- Franchise Agreements

Is McDonalds liable for breaching the franchise agreement with Libby? Why or why not?
Submitted: 8 years ago.Category: Business Law
Show More
Show Less
Ask Your Own Business Law Question
Answered in 13 minutes by:
6/2/2009
Business Lawyer: J.Hazelbaker, Attorney replied 8 years ago
J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4,385
Experience: Experienced and trained in the area of business law.
Verified
A. The elements to consider in "piercing" the "corporate viel" or liability "shield" include:

(1) failing to follow the required formalities in company administration; (2) undercapitalizing the company; (3) using the business to achieve fraud; (4) failing to properly document transactions between the company and its owner(s); and failing to keep separate financial records for the company and its owner(s).

Walters appears to meets several of these elements. Most importantly, the land on which the accident occurred is deeded to him personally. Therefore, unless there is a lease and indemnity agreement between him and the corporation, which is highly unlikely given his habit of not following corporate formalities in other respects of the business, then he will have personal liability for the accident. This is enough to avoid the liability shield, but comingling funds and otherwise ignoring corporate formalities make this is a relatively easy case for shield piercing.

B. No. McDonald's is not liable because they have not breach the agreement. The new franchise was granted on teh "West" of Turney Road, which also serves as the Western boundary for the exlusive territory as defined in the subject franchise agreement. Thus, the new franchise is beyond the exclusive territory as specifically provided for in the agreement.

Please let me know, if you have follow-up questions.

The information is provided for discussion and entertainment purposes only. I believe in helping people and answering their questions and providing information and solutions. To encourage and facilitate this practice, it is understood and agreed by the recipient that by opening, reading, accepting, and viewing this information, no attorney-client relationship has been discussed, agreed to or otherwise established. It is understood that by posting to this site, your information is made public and no attorney-client confidence is created or possible.


In legal matters, time is of the essence. As such, you should contact an experienced lawyer right away to protect your legal rights!


I appreciate your "Accepting" my answer if it has been helpful to you. Doing so allows me to continue helping in this manner. I will be available for follow-up questions should you have them after you click "Accept". Thank you.



J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4,385
Experience: Experienced and trained in the area of business law.
Verified
J.Hazelbaker and 87 other Business Law Specialists are ready to help you
Ask your own question now
Ask J.Hazelbaker Your Own Question
J.Hazelbaker
J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4,385
4,385 Satisfied Customers
Experience: Experienced and trained in the area of business law.

J.Hazelbaker is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Infolawyer

Infolawyer

Attorney

1,823 satisfied customers

Experienced lawyer

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

1,611 satisfied customers

Run my own successful business/contract law practice.

MShore Law

MShore Law

Attorney

1,233 satisfied customers

Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

RGMacEsq

RGMacEsq

Attorney

750 satisfied customers

Licensed Texas General Practice Attorney

Barrister

Barrister

Attorney

643 satisfied customers

17 years practicing attorney, JD, BA, MBA

Ely

Ely

Attorney

573 satisfied customers

Counselor at Law.

J.Hazelbaker

J.Hazelbaker

Attorney

4,385 satisfied customers

Experienced and trained in the area of business law.

< Previous | Next >

Related Business Law Questions
Is there a rule which requires that a corporation (or LLC)
Is there a rule which requires that a corporation (or LLC) must have a lawyer in a civil case?… read more
Damien Bosco
Damien Bosco
3,111 satisfied customers
We have an s corporation. In the shareholder agreement there
We have an s corporation. In the shareholder agreement there is a provision that the corporation must repurchase shares from minority shareholder when offered. Shareholder Agreement further states tha… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
933 satisfied customers
Looking a the corporate practice of medicine in Illinois
Looking a the corporate practice of medicine in Illinois what are the ownership requirements, can a chiropractor own a medical practice … read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,823 satisfied customers
If a corporation, like Lowes contracts a person to do my
if a corporation , like Lowes contracts a person to do my work and the contractor messes it up do I sue the company, the contractor, or both? … read more
P. Simmons
P. Simmons
Attorney
Doctoral Degree
35,079 satisfied customers
If I start a Corp with a few shareholders and then form an
If I start a Corp with a few shareholders and then form an LLC with the corp as a member with another person as the other member, will the corp have liability protection from lawsuits against the LLC … read more
KJL LAW
KJL LAW
Juris Doctorate
1,678 satisfied customers
My brother and I inherited an Oklahoma corporation whose
My brother and I inherited an Oklahoma corporation whose only asset is a 500 crypt mausoleum with approximately 200 crypts still available for purchase; however, both of us live out-of-state and neith… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,823 satisfied customers
Can you close an 1120S corporation and still have the
Can you close an 1120S corporation and still have the benefits of a 1033 exchange pass through to the shareholders? … read more
WiseOwl58
WiseOwl58
JD Honors Graduate
3,624 satisfied customers
Piercing the corporate veil question I have a one person S
Piercing the corporate veil questionI have a one person S corp. Within this financial year I paid my personal car payment (last three months) from business checking account for sake of convenience (my… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
Business/corporate/NPO: do I really need 2 different
For Tina, business/corporate/NPO: do I really need 2 different entities for this? I want to start an NPO that helps handicapped and disadvantaged people travel around the country, sometimes using comm… read more
dkennedy
dkennedy
Attorney
Juris Doctorate
27 satisfied customers
Can a corporation (s-corp) registered in California have a
Can a corporation (s-corp) registered in California have a general business purpose (e.g. something like "to be involved in any lawful activity for which corporations may be organized under the Genera… read more
socrateaser
socrateaser
1,031 satisfied customers
Converting my llc business to a c corporation and looking
Converting my llc business to a c corporation and looking for a lawyer to sign the paperwork … read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,689 satisfied customers
Do all shareholders, ( 3 shareholder corporation) have the
Do all shareholders, ( 3 shareholder corporation) have the right to inspect the bank accounts? (florida corporation) … read more
Dwayne B.
Dwayne B.
Juris Doctor
28,570 satisfied customers
Is there a benefit to having a corporation own multiple
Is there a benefit to having a corporation own multiple LLCs? Or is one corporation doing multiple businesses a better way?… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
933 satisfied customers
My family and i have a corporation it is a s corporation we
my family and i have a corporation it is a s corporation we had a family issue in which there was a 50 50 split one member from the other side sold her shares to the other side breaking the time so th… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,823 satisfied customers
Is shareholder approval required to move a corporation out
Is shareholder approval required to move a corporation out of Nevada? We did a conversion to Colorado before our new annual list of officers and directors and business license was due. I think that is… read more
Ray
Ray
Lawyer
Doctoral Degree
30,487 satisfied customers
Can a corporate board require shareholder participation in,
can a corporate board require shareholder participation in, and personal guaranty of, future corporate loans against the wishes of the individual shareholder… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
Piercing the corporate veil, how can this happen? what is
piercing the corporate veil, how can this happen? what is considered intermingling personal with business? Im in the state of TN.would using personal credit cards for travel and company expenses and s… read more
LawGuy
LawGuy
Juris Doctor
123 satisfied customers
Could a company attempt to pierce the corporate veil of
could a company attempt to pierce the corporate veil of another company that they sued and won against with only the following items listed below being brought up in court by said company or trustee/c… read more
LegalGems
LegalGems
Juris Doctorate
10,370 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x