Opinion ID: 1676519
Heading Depth: 1
Heading Rank: 2

Heading: Veil Piercing

Text: Clearly, statutory liability under KRS 350.990(9) and common law piercing liability complement each other. Morgan v. O'Neil, Ky., 652 S.W.2d 83 (1983), stands for the proposition that shareholders may be liable for a corporate debt either by piercing the corporate veil or by statutory authorization. Natural Resources and Environmental Protection Cabinet v. Williams, Ky., 768 S.W.2d 47 (1989), provides for the imposition of liability pursuant to KRS 350.990(9). Williams recognizes that both remedies are available and does not in any way indicate that the statutory remedy is the exclusive method which the Cabinet must follow. It should be observed that the statute does not include shareholders but rather addresses the liability of officers, directors and agents of the corporation. In contrast, common law piercing specifically rests on shareholder liability. Cf. Morgan, supra, at 85. KRS 350.990(9) does not repeal the common law. Consequently, such a remedy is still available to the Cabinet. Thus, the Court of Appeals was in error when it in effect imposed a doctrine of statutory exclusivity on the Cabinet. Any repeal of common law must be clear and expressed. Benjamin v. Goff, Ky., 314 Ky. 639, 236 S.W.2d 905 (1951). Section 233 of the Kentucky Constitution provides that the common law remains in effect until repealed or clearly altered by a specific legislative act. Nothing in our analysis of the case before us limits the judicial branch in its interpretation and development of the mutable body of the common law to meet the demands of changing times. Cf. City of Louisville v. Chapman, Ky., 413 S.W.2d 74 (1967). The authority cited by the Court of Appeals, Triple M Mining Company, Inc. v. NREPC, Ky.App., 906 S.W.2d 364 (1995), did not directly hold that the common law doctrine is superseded by the statute. The holding in Triple M Mining, supra , was that the circuit court had based its decision in that case on KRS 350.990(9) and not on common law piercing as the owner of the company contended. The case does not reach the issue of whether common law piercing is superseded by a statute. We find no authority to support the position of Neace in such regard. The circuit court was correct when it found that the purported sale of N.W. by Neace was a sham that subverted public policy and held Neace liable for the regulatory obligations of N.W. under the common law doctrine of corporate veil piercing. There is an adequate basis for the imposition of individual liability either under the common law theory used by the trial judge or by the statute. KRS 350.990(9).