Corporate Veil Piercing in Florida Information
Courts pierce the corporate veil when: the entity is a mere instrumentality (the owner treats the entity as a personal extension rather than a separate legal entity), the alter ego doctrine applies (the entity has no separate existence from the owner: no separate accounts, records, or formalities), and the entity is used to perpetrate fraud or injustice (the owner uses the entity to: evade legal obligations, defraud creditors, or circumvent the law). Factors the court considers: commingling of funds (the owner mixes personal and entity funds), failure to observe formalities (no meetings, no minutes, no resolutions), undercapitalization (the entity has insufficient capital to meet its foreseeable obligations), and use of the entity for personal purposes (the owner uses entity funds for personal expenses).
Florida Legal Definition
Veil piercing in Florida is governed by: Florida common law. Under Florida case law: the court will pierce the corporate veil when: the shareholder or member dominated and controlled the entity (the entity had no separate mind, will, or existence of its own), the control was used to: commit fraud, perpetrate a dishonest or unjust act, or violate the law, and the domination and control proximately caused the plaintiff's injury. Under §605.0304 (Florida Revised LLC Act): the standards for piercing the veil of an LLC are the same as for a corporation (a member may be held liable when the LLC is used as a mere instrumentality). Under Florida practice: veil piercing is an extraordinary remedy (courts are reluctant to pierce; the burden of proof is on the party seeking to pierce).
How It's Used in Practice
Attorneys pursue and defend veil piercing claims. For plaintiffs seeking to pierce, the attorney: investigates the entity's operations (identifying: commingling, lack of formalities, undercapitalization, and personal use), pleads the alter ego or instrumentality theory, presents evidence of: domination, improper purpose, and causation, and seeks personal liability against the owner. For entity owners defending against piercing, the attorney: demonstrates the entity's independence (separate accounts, records, meetings, and minutes), shows adequate capitalization (the entity had sufficient capital for its operations), shows the entity was used for legitimate purposes, and argues the extraordinary nature of the remedy. The attorney advises: the best defense against veil piercing is prevention; maintain: separate accounts, proper formalities, adequate capitalization, and clear separation between personal and entity affairs.
Key Takeaways
- Veil piercing: court disregards entity; holds owner personally liable.
- Factors: commingling, no formalities, undercapitalization, and personal use.
- §605.0304: same standards for LLCs as corporations.
- Extraordinary remedy; high burden on party seeking to pierce.
- Prevention: maintain separate accounts, formalities, and adequate capital.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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