Question

Lawrence Small formed Seatwo LLC to operate a Burger King restaurant in Wyoming. Seatwo was capitalized by $500 of contributions from its three members: Small, $500; his wife, $125; one of their children, $125. Gasstop Two LLC owned real property, which it leased to Seatwo beginning June 2000. The payments would total almost $1 million over the term of the lease. Seatwo also borrowed $350,000 to obtain furniture and equipment for the new Burger King operation and had a $15,000 line of credit. Unfortunately, Seatwo never turned a profit and ceased operations in October 2003 due to its poor location and lack of customers. Despite operating at a loss, Seatwo had made rental payments to Gasstop until it ceased business in 2003. Gasstop sued Small and his wife for the remaining $237,000 payments under the lease, arguing that the veil should be pierced between the LLC and the Smalls. What grounds did Gasstop use to argue for piercing the veil? Did the court agree with Gasstop?



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  • CreatedJuly 16, 2014
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