337 P.3d 454
Wyo.2014Background
- Western Ecosystems Technology contracted with GreenHunter Wind Energy, LLC (LLC) in 2009 to provide consulting for a Platte County wind project; LLC performed but did not pay, and Western obtained judgments against LLC totaling about $45,800 that could not be satisfied because the LLC lacked assets.
- GreenHunter Energy, Inc. (Appellant) is the sole member and manager of the LLC and the parent that provided intermittent capital transfers to the LLC while retaining control over which creditors were paid.
- Evidence at bench trial showed (largely uncontroverted) that the LLC had minimal or zero operating balances, no separate employees (Appellant’s employees performed LLC work), shared business address and accounting, consolidated tax reporting, and that Appellant claimed the LLC’s losses and deductions on its tax returns.
- The district court pierced the LLC veil, holding Appellant liable for the LLC’s unpaid contract and sanctions; Appellant appealed, arguing the court applied incorrect piercing factors and misapplied facts.
- The Wyoming Supreme Court reviewed de novo legal conclusions and for clear error factual findings; it affirmed, concluding the veil could be pierced under the 2010 Wyoming LLC Act where the LLC ceased to be separate and adherence to separateness would produce injustice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court applied incorrect law/factors to pierce an LLC veil | Western argued Gasstop factors and equity permit piercing where member misused LLC | GreenHunter argued court improperly imported corporate-form factors and ignored §17‑29‑304 protections | Court held district court applied correct law (Gasstop refined under 2010 Act) and did not rely on forbidden formalities failure |
| Whether facts supported piercing (undercapitalization) | Western: LLC was intentionally undercapitalized; Appellant controlled funding and chose which creditors to pay | GreenHunter: start-ups often need capital infusions; undercapitalization alone insufficient | Court held undercapitalization was supported and part of totality—one factor among several, not sole basis |
| Whether intermingling/commingling supported piercing | Western: shared address, accounting, employees, consolidated taxes, pass-through funding, and benefit capture by Appellant | GreenHunter: LLC and Appellant maintained separate bank accounts and ledgers; single-member norms allow overlap | Court held intermingling was extensive and, combined with other factors, supported piercing |
| Whether fraud was proven | Western: Appellant contracted in LLC name knowing LLC would not pay, amounting to fraud or misuse | GreenHunter: no classic fraud—the elements (false representation, reliance, intent) were not proven | Court held classic fraud was not established by clear and convincing evidence, but equitable misuse/constructive unfairness justified piercing under the court’s test |
Key Cases Cited
- Kaycee Land & Livestock v. Flahive, 46 P.3d 323 (Wyo. 2002) (recognizes veil-piercing of LLCs in extraordinary circumstances and stresses fact-intensive inquiry)
- Gasstop Two, LLC v. Seatwo, LLC, 225 P.3d 1072 (Wyo. 2010) (articulated four-factor LLC-piercing framework later refined under 2010 Act)
- Ridgerunner, LLC v. Meisinger, 297 P.3d 110 (Wyo. 2013) (states unity-of-interest/avoidance-of-injustice standard for disregarding corporate entity)
- Dole Food Co. v. Patrickson, 538 U.S. 468 (U.S. 2003) (piercing is a rare equitable exception, evaluated case-by-case)
- Miner v. Jesse & Grace, LLC, 317 P.3d 1124 (Wyo. 2014) (standard of review for district court findings and legal conclusions)
- Amfac Mech. Supply Co. v. Federer, 645 P.2d 73 (Mont. 1982) (discusses fraud/constructive fraud as a basis for veil piercing)