Corporate officers and directors may seem untouchable when it comes to legal actions. If the corporation you are suing is a corporation or LLC, then it can be challenging to hold the officers accountable. The doctrine of “piercing the corporate veil” can allow a court to hold officers liable in certain situations. However, there are legal theories that suggest you can still sue them as third-party defendants. To do so, you must provide evidence that the officer was directly involved in the situation that caused your injury or damages.
What is “piercing the corporate veil”?
Piercing the corporate veil means holding a company’s directors, officers, or shareholders personally liable for the company’s debts or actions. When a creditor can pierce the corporate veil, it can recover from those individuals. Piercing the veil is an important legal concept to creditors seeking to collect a claim against an LLC or corporation. To pierce the corporate veil, you’d have to show some sort of wrongdoing on behalf of those individuals — fraud or concealment of corporate affairs.
Piercing the corporate veil can be very difficult
It’s very difficult to pierce the corporate veil. However, there are legal liability theories defined by each state that could provide the ability to hold officers accountable without piercing the corporate veil.
Alter ego allegations and legal liability theories
Alter ego allegations and legal liability theories suggest that if you can prove the corporate officer’s direct involvement with the tort or fraud, you may be able to hold that officer liable even if the corporate veil has not been lifted.
For example, let’s say you signed a contract with a corporation that ended up being a bogus contract that resulted in you losing money. Then, the corporation denies ever sending you this contract and there’s no record in their files. If you have the original contract with the signatures or you have an email from a corporate officer asking you to sign the contract, you may be able to prove their liability as a third party or co-defendant.
How does an investigation help prove individual liability?
It can be difficult to prove that a corporate officer is liable for fraud or judgment without piercing the corporate veil. It’s very difficult to pierce the corporate veil and some attorneys may be skeptical about proving liability. An investigation into your case by a private investigator can help your chances of proving the individual liability of corporate officers. With the evidence that your investigator uncovers, your attorney can use that to effectively prosecute your case.
A private investigator can conduct an investigation to help uncover the evidence you need. This seeks to identify those individuals involved in committing fraud or causing an accident, determine their assets and employment history, and examine their level of involvement in other companies or ventures.
In many cases, it’s not enough to simply prove that a company was negligent or committed fraud. It’s even more important to identify those individuals involved in committing fraud or causing an accident, determine their assets and employment history, and examine their level of involvement in other companies or ventures. Your private investigator will conduct interviews with witnesses, employees, and managers at all levels of the company including suppliers and vendors to learn more about business relationships between defendants and plaintiffs as well as other key players involved in transactions.
