Question

CASE SUMMARY 15.1 Miner v. Fashion Enterprises, Inc., 794 N.E.2d 902 (2003) PIERCING THE CORPORATE VEIL Karen Lynn, Inc. (Lynn Corporation), was a wholly owned subsidiary of Fashion Enterprises, Inc. This meant that the sole shareholder of Lynn Corporation was the corporate entity of Fashion Enterprises, Inc. Lynn Corporation entered into a 10-year lease for retail space in Chicago with Miner, providing neither per- sonal guarantees nor any guarantee by Fashion Enter- prises. The company defaulted on the lease by not making rental payments, and Miner obtained a court judgment against Lynn Corporation. The corporation was without assets, and Miner asked the com pierce the corporate veil and allow the judgment to be enforced against its sole shareholder, Fashion Enter prises, Inc. The trial court dismissed the suit, hold- ing that Miner was entitled to only the assets of Lynn Corporation. Miner appealed. CASE QUESTIONS 1. Who prevails and why? 2. What factors would the court weigh in deciding whether to pierce the veil? CASE SUMMARY 15.2 Goldman v. Chapman and Region Associates, 44 A.3d 938 (N.Y. 2007)

Answer 1

Fashion Enterprises Inc is the sole shareholders of Lynn Corporation ; It has considerable influence over Lynn corporation.

Factors considered by court in deciding whether to pierce the veil:

When the company’s actions are wrongful & enraged in fraudulent matters & not following rules as per respective laws & regulations

When the creditors suffered unwanted cost for the company

When one individual or group had complete control over company

When no real separation in between owners of the company & company

Here ,

Even though Fashion Enterprises has considerable influence  they have a real separation between sole shareholder & subsidiary company in books of accounts ,so fashion enterprises prevails over miner.