Carr was a real estate developer who formed several corporations to develop and sell residential real estate parcels called Village at Camelback. The owners of the real estate parcels formed a homeowners’ association, and a dispute developed between Carr and the property owners. Eventually the association sued Carr’s development corporations. However, since the development corporations were at the end of their existence, the corporations had little or no assets. The homeowners’ association asked the court to hold Carr liable individually alleging that he was the alter ego of the development corporation. They pointed to intermingling of Carr’s personal funds with corporate funds, that Carr was a sole shareholder with a nonfunctioning board of directors, and that he failed to follow corporate formalities. Carr moved to be dismissed from the suit as an individual asserting that each development entity was properly incorporated and all agreements of sale were in the name of the corporation.

CASE QUESTIONS

1. Which factors weigh in favor of the court piercing the corporate veil?
2. Should Carr be able to avoid liability even if he was the sole shareholder?