761 F. Supp. 2d 789
N.D. Ill.2011Background
- Automotive and Manheim sued Joliet Motors, Inc. (JMI) and Cindy Boliaux to pierce JMI’s corporate veil and hold Cindy personally liable for Will County judgments against EMC Automotive.
- Edward Boliaux, former spouse of Cindy, operated EMC; Cindy owned 51% of EMC before transferring ownership to Edward during a 2005 divorce.
- Automotive had a perfected security interest in EMC collateral; Manheim also had a perfected security interest and financed EMC’s vehicle purchases.
- EMC defaulted on debts; Will County judgments were entered in favor of Automotive and Manheim against EMC and Edward (roughly $647,487 and $410,020 respectively).
- EMC ceased operations around 2008; Joliet Motors and JM Motors signs appeared on the property; Cindy became sole officer and owner of JMI.
- This Court earlier determined JMI had successor liability to EMC; plaintiffs now seek veil piercing to make Cindy personally liable for EMC’s judgments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether JMI is a mere continuation of EMC | Plaintiff argues unity of interest shows a mere façade. | Boliaux contends proper corporate form and control by Cindy negate piercing. | Yes; JMI is JMI as successor and veil pierced. |
| Whether factors show unity of interest (undercapitalization, lack of formalities, commingling) | Plaintiff asserts commingling and misappropriation of funds indicate unity. | Boliaux disputes undercapitalization and formalities as decisive. | Unity of interest established; veil pierced. |
| Whether failure to observe corporate formalities supports piercing | Plaintiff points to lack of corporate ledger, incomplete incorporation knowledge, no board meetings. | Boliaux minimizes need for meetings for a sole proprietorship-style operation. | Court finds formalities ignored and supports piercing. |
Key Cases Cited
- Fontana v. TLD Builders, Inc., 298 Ill. Dec. 654, 840 N.E.2d 767 (2005) (factors to pierce veil; unity and injustice tests)
- Pederson v. Paragon Pool Enters., No. 00 C 2408, 2001 WL 218642 (2001) (reluctant veil piercing; burden on plaintiff)
- Laborers' Pension Fund v. Lay-Com, Inc., 580 F.3d 602, 611 (7th Cir. 2009) (unity-of-interest factors and sham entity concept)
- Int'l Fin. Servs. Corp. v. Chromas Technologies Canada, Inc., 356 F.3d 731, 736 (7th Cir. 2004) (two-prong test for veil piercing)
- Kelsey Axle & Brake Div., Div. of Kelsey-Hayes Co. v. Presco Plastics, Inc., 187 Ill.App.3d 393, 543 N.E.2d 239 (1989) (nonfranchised factors aiding veil piercing)