UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

CHAPEL RIDGE INVESTMENTS, L.L.C., )

)

Plaintiff, )

)

v. ) 1:13-CV-146

)

PETLAND LEASEHOLDING COMPANY, )

INC., an Ohio corporation; THE UNKNOWN )

OFFICERS, DIRECTORS, AND )

SHAREHOLDERS OF PETLAND LEASING )

COMPANY, INC.; and PETLAND, INC., an )

Ohio corporation; )

)

Defendants. )

ORDER

This case involves the alleged breach of a lease entered into between Plaintiff Chapel

Ridge Investments and Petland Leaseholding Company. Chapel Ridge also named the parent

company of Petland Leaseholding – Petland, Inc. – as a defendant in an attempt to pierce the

corporate veil. Petland, Inc. responded to the Complaint by filing a Rule 12(b)(6) motion to

dismiss on the theory that the veil-piercing allegations in the complaint were inadequate to

satisfy the pleading requirements of either Rule 8(a) or Rule 9(b). (Petland, Inc. believes the

latter rule applies to actions involving veil piercing.) 

The briefing on Petland, Inc’s motion was completed earlier this week, but I think the

parties may have looked past a potentially important issue. Both sides assume that Indiana law

applies. The Seventh Circuit has stated, however, that “[e]fforts to ‘pierce the corporate veil’ are

governed by the law of the state of incorporation.” Stromberg Metal Works v. Press Mechanical,

77 F.3d 928 (7th Cir. 1996). The Complaint alleges that both Petland Leaseholding and Petland,

Inc. are Ohio corporations. So, on my reading at least, the parties should be analyzing the veil
piercing issue under Ohio law, not Indiana law. This conclusion might be slightly complicated

by the fact that there is a choice-of-law provision in the lease between Chapel Ridge and Petland 

Leaseholding that indicates Indiana law is to apply, but for various reasons I don’t think that

provision trumps the Seventh Circuit’s statement. See, e.g., Secon Serv. Sys., Inc. v. St. Joseph

Bank & Trust Co., 855 F.2d 406, 412-13 (7th Cir. 1988) (noting that “in the vast majority of

situations, the law of the state of incorporation governs attempts to disregard the corporate

entity” and holding that a choice of law provision governed only the interpretation of the

underlying contract and not independent veil piercing issues) (internal citation omitted); Kalb,

Voorhis & Co. v. Am. Fin. Corp., 8 F.3d 130, 132-33 (2d Cir. 1993) (stating that “choice of law

provisions . . . are irrelevant” when it comes to veil piercing because “[t]he law of the state of

incorporation determines when the corporate form will be disregarded and liability will be

imposed on shareholders: Because a corporation is a creature of state law whose primary purpose

is to insulate shareholders from legal liability, the state of incorporation has the greater interest

in determining when and if that insulation is to be stripped away”) (internal quotation marks and

citation omitted); Dassault Falcon Jet Corp. v. Oberflex, Inc., 909 F. Supp. 345, 348 (M.D.N.C.

1995) (stating that “a choice of law provision in a contract is not binding on what law to apply

for piercing the corporate veil... [because] the issue of piercing the corporate veil is collateral to

and not part of the parties’ negotiations or expectations with respect to the contract”).

Consequently, each side is hereby ORDERED to submit additional briefing by July 26,

2013 addressing two issues: 1) whether Ohio law applies to this action instead of Indiana law

and 2) if Ohio law does apply, whether and to what extent that changes the arguments already

made in the briefing. 

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SO ORDERED.

Entered: July 12, 2013.

 s/ Philip P. Simon

PHILIP P. SIMON, CHIEF JUDGE

UNITED STATES DISTRICT COURT

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