752 S.E.2d 299
W. Va.2013Background
- Kubican sued Bubba’s Bar and Grill and Harry Wiseman for negligence claims arising from a February 7, 2011 incident.
- Kubican later learned Bubba’s Bar and Grill operated as Bubba’s d/b/a and The Tavern, LLC; Mangum and Paugh were The Tavern’s members.
- Kubican sought to amend to name The Tavern’s members and add a veil-piercing count against them.
- The circuit court certified a certified question asking if WV’s LLC act provides complete protection against veil piercing.
- The circuit court answered the question in the affirmative; the WV Supreme Court granted plenary review de novo.
- The Court held that WV Code § 31B-3-303 permits piercing the LLC veil and that piercing requires unity of interest and fraud/inequity, evaluated case-by-case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does WV’s LLC act provide complete protection against veil piercing? | Kubican: act does not preclude piercing | The Tavern: statute precludes personal liability | No; veil piercing may be proper |
| What standard governs piercing an LLC veil in WV? | Kubican: classic corporate-veil test applies | The Tavern: statutory protection forecloses piercing | A two-prong, case-by-case unity/ownership plus fraud injustice test applies |
| May liability be imposed on LLC members solely by status as members? | Kubican: possible under certain provisions | The Tavern: prohibited by §31B-3-303 | Liability solely by status is not automatic; exceptions require express provision and written consent |
Key Cases Cited
- Laya v. Erin Homes, Inc., 177 W. Va. 343, 352 S.E.2d 93 (1986) (two-prong test for piercing (unity of interest; inequitable result))
- Sanders v. Roselawn Mem’l Gardens, Inc., 152 W. Va. 91, 159 S.E.2d 784 (1968) (unity-of-interest doctrine in corporate veil context)
- Southern Elec. Supply Co. v. Raleigh Cnty. Nat’l Bank, 173 W. Va. 780, 320 S.E.2d 515 (1984) (corporate veil presumption and case-by-case look-through)
- State v. General Daniel Morgan Post No. 548, Veterans of Foreign Wars, 144 W. Va. 137, 107 S.E.2d 353 (1959) (statutory interpretation governs when unambiguous)
- Smith v. State Workmen’s Comp. Comm’r, 159 W. Va. 108, 219 S.E.2d 361 (1975) (primary objective is to ascertain legislative intent)