a. What type of remedy is piercing the corporate veil?
b. What is piercing the corporate veil designed to do?
c. What were some of the corporate formalities that Steven ignored?
Auto Collection, Inc. (Auto) operated a used car dealership that sold luxury vehicles to buyers in Eastern Europe. Steven Lever owned 90 percent of Auto; his wife and their son, Joshua, each owned 5 percent. Steven controlled Auto's finances, including its bank accounts, checkbook, and bookkeeping records. While Steven generally maintained appropriate, separate corporate records, the address listed on Auto's bank account was his personal address, not Auto's place of business.
Steven initially capitalized Auto with a few thousand dollars, but afterwards was not sure of the exact amount because he contributed funds as needed. He also claimed to have loaned $900,000 to Auto, but there was no documentation. He deposited and withdrew money from Auto's bank account at his sole discretion.
At one point, Auto stopped delivering cars, even ones that were paid for. Customers began demanding refunds. Meanwhile, Joshua started work for his father. During his year at Auto, he was paid $474,850, at a time when the company owed significant funds to its customers.
AZTE, Inc. and the other plaintiffs paid more than $500,000 for several cars they never received. The plaintiffs filed suit against Auto, Steven, and Joshua.