Opinion ID: 835369
Heading Depth: 3
Heading Rank: 1

Heading: The Amfac Test

Text: The lower courts and the parties all rely on this court's decision in Amfac Foods v. Int'l Systems, 294 Or. 94, 108-09, 654 P.2d 1092 (1982), where we discussed the elements required to pierce the corporate veil: When a plaintiff seeks to collect a corporate debt from a shareholder by virtue of the shareholder's control over the debtor corporation rather than on some other theory, the plaintiff must allege and prove not only that the debtor corporation was under the actual control of the shareholder but also that the plaintiff's inability to collect from the corporation resulted from some form of improper conduct on the part of the shareholder. This causation requirement has two implications. The shareholder's alleged control over the corporation must not be only potential but must actually have been exercised in a manner either causing the plaintiff to enter the transaction with the corporation or causing the corporation's default on the transaction or a resulting obligation. Likewise, the shareholder's conduct must have been improper either in relation to the plaintiff's entering the transaction or in preventing or interfering with the corporation's performance or ability to perform its obligations toward the plaintiff. (Footnote omitted.) Although Amfac involved a corporate parent and a wholly owned subsidiary, this court's cases make it clear that veil piercing also may apply to claims against affiliated corporations. See Abbott v. Bob's U-Drive et al, 222 Or. 147, 161-62, 352 P.2d 598 (1960) (It is well established that where corporate affairs are confused with those of the stockholders, a subsidiary or an affiliate corporation the corporate veil may be lifted to protect persons whose rights have been jeopardized by the corporate device. (Emphasis added.)). This court's decision in Amfac requires a plaintiff seeking to pierce the corporate veil to prove that another entity actually controlled (or was under common control with) the corporation, that the other entity used its control over the corporation to engage in improper conduct, and that, as a result of the improper conduct, the plaintiff was harmed. [16] As this court recognized in Amfac, the test that the case established and that is quoted above, although easily stated, may not be easily applied. Amfac, 294 Or. at 111 n. 18, 654 P.2d 1092. Indeed, each part of the test  control, wrongful conduct, and causation  can present close legal and factual questions that must be considered in reaching the ultimate equitable determination as to whether the corporate veil can be pierced. See Fletcher Cyclopedia of the Law of Corporations § 41.10, 149-50 (2006 revised volume) (Because there is no single factor that alone justifies piercing the corporate veil, a careful review of the entire relationship between various corporate entities and their directors and officers may reveal that such an equitable action is warranted. (Footnote omitted.)).