Court Opinion

ID: 2641473
Source: CourtListenerOpinion
Date Created: 2013-11-07 01:04:43.458445+00
Date Added: 2024-06-11T09:55:58.252498
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                September 2013 Term

                                                                 FILED
                                                             November 6, 2013
                                      No. 12-0507               released at 3:00 p.m.
                                                                RORY L. PERRY II, CLERK
                                                              SUPREME COURT OF APPEALS
                                                                  OF WEST VIRGINIA

                                 JOSEPH KUBICAN,
                               Plaintiff Below, Petitioner

                                           V.

             THE TAVERN, LLC d/b/a BUBBA’S BAR AND GRILL,

                       AND HARRY WISEMAN

                     Defendants Below, Respondents

           Certified Question from the Circuit Court of Harrison County

                       Honorable Thomas A. Bedell, Judge

                            Civil Action No. 11-C-231-2

                      CERTIFIED QUESTION ANSWERED

                          Submitted: September 25, 2013

                            Filed: November 6, 2013

Edmund L. Wagoner                                     Gregory H. Schillace
David E. Goddard                                      Schillace Law Office
Goddard & Wagoner                                     Clarksburg, West Virginia
Clarksburg, West Virginia                             Attorney for the Respondent,
Attorneys for the Petitioner                          The Tavern, LLC
                                                      d/b/a Bubba’s Bar and Grill

JUSTICE DAVIS delivered the Opinion of the Court.
                               SYLLABUS BY THE COURT

               1.     “The primary object in construing a statute is to ascertain and give effect

to the intent of the Legislature.” Syllabus point 1, Smith v. State Workmen’s Compensation

Commissioner, 159 W. Va. 108, 219 S.E.2d 361 (1975).

               2.     “When a statute is clear and unambiguous and the legislative intent is

plain, the statute should not be interpreted by the courts, and in such case it is the duty of the

courts not to construe but to apply the statute.” Syllabus point 5, State v. General Daniel

Morgan Post No. 548, Veterans of Foreign Wars, 144 W. Va. 137, 107 S.E.2d 353 (1959).

               3.     “A statute that is ambiguous must be construed before it can be applied.”

Syllabus point 1, Farley v. Buckalew, 186 W. Va. 693, 414 S.E.2d 454 (1992).

               4.     “In the interpretation of statutory provisions the familiar maxim

expressio unius est exclusio alterius, the express mention of one thing implies the exclusion

of another, applies.” Syllabus point 3, Manchin v. Dunfee, 174 W. Va. 532, 327 S.E.2d 710

(1984).

                                                i
               5.     W. Va. Code § 31B-3-303 (1996) (Repl. Vol. 2009) permits the

equitable remedy of piercing the veil to be asserted against a West Virginia limited liability

company.

               6.     “[T]o ‘pierce the corporate veil’ in order to hold the shareholder(s)

actively participating in the operation of the business personally liable . . . , there is normally

a two-prong test: (1) there must be such unity of interest and ownership that the separate

personalities of the corporation and of the individual shareholder(s) no longer exist (a

disregard of formalities requirement) and (2) an inequitable result would occur if the acts are

treated as those of the corporation alone (a fairness requirement).” Syllabus point 3, in part,

Laya v. Erin Homes, Inc., 177 W. Va. 343, 352 S.E.2d 93 (1986).

               7.     To pierce the veil of a limited liability company in order to impose

personal liability on its member(s) or manager(s), it must be established that (1) there exists

such unity of interest and ownership that the separate personalities of the business and of the

individual member(s) or managers(s) no longer exist and (2) fraud, injustice, or an

inequitable result would occur if the veil is not pierced. This is a fact driven analysis that

must be applied on a case-by-case basis, and, pursuant to W. Va. Code § 31B-3-303(b)

(1996) (Repl. Vol. 2009), the failure of a limited liability company to observe the usual

                                                ii
company formalities or requirements relating to the exercise of its company powers or

management of its business may not be a ground for imposing personal liability on the

member(s) or manager(s) of the company.

                                          iii
Davis, Justice:

              This action presents this Court with a certified question from the Circuit Court

of Harrison County asking whether “West Virginia’s version of the Uniform Limited liability

Company Act, codified at W. Va. Code § 31B[-1-101] et seq., afford[s] complete protection

to members of a limited liability company against a plaintiff seeking to pierce the corporate

veil?” After considering the parties’ briefs, their oral arguments and the relevant law, we

answer this certified question in the negative.

                                             I.

                     FACTUAL AND PROCEDURAL HISTORY

              Following an altercation that allegedly took place at Bubba’s Bar and Grill in

Bridgeport, West Virginia, on February 7, 2011, petitioner Joseph Kubican, who is the

plaintiff below (hereinafter “Mr. Kubican”), filed a complaint, on May 27, 2011, naming as

defendants Bubba’s Bar and Grill and Harry Wiseman.1 The complaint asserted three counts

against Bubba’s Bar and Grill: (1) negligence; (2) negligent training and supervision of bar

staff and security personnel; and (3) gross negligence, willful, wanton and reckless

misconduct. Mr. Kubican subsequently learned that Bubba’s Bar and Grill was a fictitious

              1
               Mr. Wiseman allegedly had been involved in the February altercation. Two
counts were asserted against Mr. Wiseman: (1) assault and battery and (2) malicious, willful,
wanton and reckless misconduct. Mr. Wiseman is not participating in this appeal insofar as
none of the issues herein raised pertain to the claims asserted against him.

                                              1

name used for business purposes by the respondent, The Tavern, LLC (hereinafter “The

Tavern”). Additionally, Mr. Kubican learned that James Paugh and Lawson Mangum were

the only members of The Tavern. Following the exchange of written discovery and the

deposition of Lawson Mangum pursuant to Rule 30(b)(7) of the West Virginia Rules of Civil

Procedure, Mr. Kubican sought leave to amend his complaint.2 The purpose of the proposed

amended complaint was to: (1) utilize the proper company name; (2) add as defendants the

individual members of The Tavern, James Paugh and Lawson Mangum (hereinafter “Paugh

and Mangum”); and (3) assert a veil piercing count against Paugh and Mangum. The

proposed amended complaint also reasserted the three negligence counts against the business

entity that had been included in the original complaint.3

              The proposed amended complaint’s veil piercing count against Paugh and

Mangum alleged that Paugh and Mangum: (1) as the only members of The Tavern, exercised

full control over the company and actively participated in its management; (2) held

themselves out to others as the owners of The Tavern d/b/a Bubba’s Bar and Grill; (3) held

themselves out as personally responsible for the debts of the company; (4) commingled

personal funds with those of the company; (5) used the company to conduct personal

business; (6) used the company as a conduit to procure business and services for related

              2
                  See W. Va. R. Civ. P. 15(a).
              3
             The proposed amended complaint likewise reasserted the counts pertaining
to Mr. Wiseman; however, those claims are not relevant to this appeal. See supra note 1.

                                                 2

entities; (7) failed to adhere to legal formalities necessary to maintain limited liability

company status; (8) diverted the company’s assets to their own benefit and use; (9) failed to

maintain records of the company’s corporate and business activities; (10) failed to insure the

company and left it grossly undercapitalized for the reasonable risks of owning and operating

a bar; and (11) operated the company as a mere alter ego of themselves. Based upon these

allegations, Mr. Kubican asserted that the circuit court was entitled to disregard the corporate

fiction and hold Paugh and Mangum personally liable for the debts of The Tavern.

              Defendant, The Tavern, filed a response to Mr. Kubican’s motion to amend the

complaint resisting the same and arguing that the sole purpose for adding Paugh and

Mangum as defendants was to pierce the veil of their West Virginia limited liability company

(hereinafter “LLC”), which, according to The Tavern, is prohibited by West Virginia law.

Relying on W. Va. Code § 31B-3-303 (1996) (Repl. Vol. 2006),4 The Tavern argued that

members of an LLC are not personally liable for any debt, obligation or liability of the

company solely by reason of being or acting as a member or manager. The Tavern pointed

out that Count 6 of the amended complaint, titled “Veil Piercing,” was the only count

purporting to assert a claim against Paugh and Mangum. Thus, no allegations of wrongdoing

on the part of Paugh and Mangum have been asserted by Mr. Kubican. Rather, according to

              4
                The full text of W. Va. Code § 31B-3-303 (1996) (Repl. Vol. 2009), which
is titled “Liability of members and managers,” is quoted in the discussion section of this
opinion. See Section III, infra.

                                               3

The Tavern, the claims are based solely on Paugh’s and Mangum’s status as members and/or

managers of the LLC. Thus, The Tavern argued, the circuit court should refuse the motion

to amend the complaint.

              Mr. Kubican filed a reply to The Tavern’s response to his motion to amend his

complaint. In his reply, Mr. Kubican challenged the defendant’s interpretation of cases it

cited in support of its argument that members of an LLC may not be held liable for any debt,

obligation or liability of the company. According to Mr. Kubican, none of the cases cited by

The Tavern stood for the proposition asserted by the defendant. In addition, Mr. Kubican

noted that, on November 1, 2011, the West Virginia Secretary of State issued a “Certificate

of Administrative Dissolution” certifying that The Tavern had failed to file its annual report

and/or pay the annual report fee as required by West Virginia law. Finally, Mr. Kubican filed

a supplemental reply in support of his motion to amend his complaint wherein he presented

the circuit court with copies of The Tavern’s banking records. Mr. Kubican argued that the

banking records established that The Tavern was a sham company insofar as the records

demonstrated that, throughout The Tavern’s existence, company funds were being used to

purchase personal items, including chiropractic services, and to pay for numerous purchases

at various restaurants. Mr. Kubican further asserted that, although Bubba’s Bar & Grill was

purportedly closed in June 2011, and The Tavern has also ceased to exist, use of The

Tavern’s credit card and bank account have not stopped. Mr. Kubican stated that subpoenaed

                                              4

bank records showed the accounts were still in use in February 2012, the most recent records

he could obtain by subpoena.5 According to Mr. Kubican, those records indicated that in

February 2012 more than 115 transactions were made using the company checking account

at locations such as grocery stores, convenience stores, restaurants, medical providers, hair

stylists, and amusement parks. Mr. Kubican asserted that the records also reflect a trip to

Myrtle Beach, South Carolina.

              Instead of ruling on Mr. Kubican’s motion to amend his complaint, the circuit

court determined that it had been presented with an issue of first impression and, therefore,

certified the following question to this Court by order entered April 12, 2012:

                      Does West Virginia’s version of the Uniform Limited
              Liability Company Act, codified at W. Va. Code § 31B[-1-101]
              et seq., afford complete protection to members of a limited
              liability company against a plaintiff seeking to pierce the
              corporate veil?

The circuit court answered this question in the affirmative based upon its conclusion that

such an answer was in accord with the plain language of W. Va. Code § 31B-3-303.6

              5
                  Mr. Kubican’s supplemental reply appears to have been filed on March 20,
2012.
              6
               For the full text of W. Va. Code § 31B-3-303, see the discussion section of
this opinion. See infra Section III.

                                              5

                                             II.

                               STANDARD OF REVIEW

              We exercise de novo review of the instant certified question: “The appellate

standard of review of questions of law answered and certified by a circuit court is de novo.”

Syl. pt. 1, Gallapoo v. Wal-Mart Stores, Inc., 197 W. Va. 172, 475 S.E.2d 172 (1996).

Furthermore, to the extent that reaching an answer to the question herein certified requires

us to interpret a statutory provision, our review is likewise de novo. “Where the issue on an

appeal from the circuit court is clearly a question of law or involving an interpretation of a

statute, we apply a de novo standard of review.” Syl. pt. 1, Chrystal R.M. v. Charlie A.L.,

194 W. Va. 138, 459 S.E.2d 415 (1995).” Accordingly, we proceed with our plenary

analysis.

                                             III.

                                       DISCUSSION

              Mr. Kubican argues that this Court should answer the certified question in the

negative and conclude that West Virginia’s Uniform Limited Liability Company Act does

not afford complete protection to members of an LLC against a plaintiff seeking to pierce the

corporate veil. Mr. Kubican explains that West Virginia adopted its version of the act from

the 1996 Uniform Limited Liability Company Act (hereinafter “ULLCA”) drafted by the

                                              6

National Conference of Commissioners on Uniform State Laws.7 According to Mr. Kubican,

numerous other jurisdictions that also have adopted the ULLCA have addressed the question

of whether the Act precludes veil piercing. Mr. Kubican submits that “not a single court has

concluded that the act prohibits” veil piercing. Finally, Mr. Kubican opines that adopting a

rule that the LLC business form affords complete protection to LLC members would render

West Virginia a safe haven for corporate irresponsibility and fraud.

              The Tavern8 argues that W. Va. Code § 31B-3-303 expressly provides that

members or managers of West Virginia LLCs are not personally responsible for any liability

              7
               Mr. Kubican submits that W. Va. Code § 31B-3-303, which pertains to
liability of members and managers of limited liability companies, is identical to the
corresponding section of the 1996 Uniform Limited Liability Company Act, § 303, and
nearly identical to the corresponding section of the Revised Uniform Limited Liability
Company Act adopted in 2006 (hereinafter “2006 RULLCA”), which is § 304.

             For a full copy of the 1996 ULLCA, see:
http://www.uniformlaws.org/shared/docs/limited%20liability%20company/ullca96.pdf (last
visited October 24, 2013).
              8
             The Tavern first responds that the circuit court correctly refused to allow the
amendment of the complaint as the claims in the amendment against the members of The
Tavern would not have permitted the presentation of the merits of the action.

              It should be noted that this case is before this Court on a certified question and
not an appeal from a ruling of the circuit court denying a motion to amend the complaint.
Thus, this argument asserted by The Tavern is not relevant to the issue before the Court.
Furthermore, it does not appear that the circuit court has ruled on the motion to amend the
complaint. Presumptively, such a ruling would be made only after the herein certified
question has been answered by this Court. Otherwise, this Court’s endeavor to answer the
certified question would be an act of futility.

                                               7

of the company. Therefore, The Tavern contends, a plain reading of the statute supports the

position that piercing the veil of an LLC is not allowed.

              In the LLC context, the purpose of piercing the corporate veil would be to hold

members and/or managers of the LLC personally liable for the wrongful actions of the

business.9 Cf. 18 C.J.S. Corporations §14, at 319 (2007) (“‘Piercing the corporate veil’ is

the judicial act of imposing personal liability on otherwise immune corporate officers,

directors, and shareholders for the corporation’s wrongful acts.” (footnote omitted)). Thus,

we first must determine whether West Virginia law allows an LLC member or manager to

be held liable in this manner.

              We begin our analysis with an examination of W. Va. Code § 31B-3-303, the

provision of the West Virginia Uniform Limited Liability Act that addresses the liability of

LLC members and managers. In doing so, we recognize that “[t]he primary object in

construing a statute is to ascertain and give effect to the intent of the Legislature.” Syl. pt.

              9
                This type of liability is distinguishable from holding an LLC member or
manager personally liable based upon his or her own tortious actions. See 51 Am. Jur. 2d
Limited Liability Companies § 16, at 848 (2011) (“Whereas managers of limited liability
companies may not be held liable for the wrongful conduct of the companies merely because
of their manager status, they may nonetheless be held accountable for their personal
participation in tortious or criminal conduct, even when performing their duties as manager.”
(footnote omitted)).

                                               8

1, Smith v. State Workmen’s Comp. Comm’r, 159 W. Va. 108, 219 S.E.2d 361 (1975). The

initial step in ascertaining the intent of the Legislature is to consider the language of the

statute at issue. “When a statute is clear and unambiguous and the legislative intent is plain,

the statute should not be interpreted by the courts, and in such case it is the duty of the courts

not to construe but to apply the statute.” Syl. pt. 5, State v. General Daniel Morgan Post No.

548, Veterans of Foreign Wars, 144 W. Va. 137, 107 S.E.2d 353 (1959). Nevertheless, “[a]

statute that is ambiguous must be construed before it can be applied.” Syl. pt. 1, Farley v.

Buckalew, 186 W. Va. 693, 414 S.E.2d 454 (1992). In other words, “‘[a] statute is open to

construction only where the language used requires interpretation because of ambiguity

which renders it susceptible of two or more constructions or of such doubtful or obscure

meaning that reasonable minds might be uncertain or disagree as to its meaning.’” Mace v.

Mylan Pharms., Inc., 227 W. Va. 666, 673, 714 S.E.2d 223, 230 (2011) (quoting Hereford

v. Meek, 132 W. Va. 373, 386, 52 S.E.2d 740, 747 (1949)).

               With the foregoing canons in mind, we turn now to the particular language of

W. Va. Code § 31B-3-303, which states in part:

                      (a) Except as otherwise provided in subsection (c) of this
               section, the debts, obligations and liabilities of a limited liability
               company, whether arising in contract, tort or otherwise, are
               solely the debts, obligations and liabilities of the company. A
               member or manager is not personally liable for a debt,
               obligation or liability of the company solely by reason of being
               or acting as a member or manager.

                                                 9

                      ....

                      (c) All or specified members of a limited liability
               company are liable in their capacity as members for all or
               specified debts, obligations or liabilities of the company if:

                      (1) A provision to that effect is contained in the articles
               of organization; and

                      (2) A member so liable has consented in writing to the
               adoption of the provision or to be bound by the provision.

W. Va. Code § 31B-3-303. The language of this provision is unambiguous insofar as it

declares that, with the exception noted in subsection (c), “[a] member or manager is not

personally liable for a debt, obligation or liability of the company solely by reason of being

or acting as a member or manager.” The key language relevant to the issue presented in the

instant action, which is italicized in the foregoing quote, proscribes liability “solely by reason

of being or acting as a member or manager.”10 By proscribing liability on the sole basis of

being a member or manager of an LLC, the Legislature implicitly has left intact the prospect

               10
                To be clear, liability based solely on being or acting as a member or manager
of an LLC is subject to the exception set out in subsection (c) of W. Va. Code § 31B-3-303.
Pursuant to that exception, a manager or member of an LLC is personally liable “solely by
reason of being or acting as a member or manager” when:

                      (1) A provision to that effect is contained in the articles
               of organization; and

                      (2) A member so liable has consented in writing to the
               adoption of the provision or to be bound by the provision.

W. Va. Code § 31B-3-303 (emphasis added).

                                               10

of an LLC member or manager being liable on grounds that are not based solely on a

person’s status as a member or manager of an LLC. Our reasoning is supported by the

maxim expressio unius est exclusio alterius: “In the interpretation of statutory provisions the

familiar maxim expressio unius est exclusio alterius, the express mention of one thing

implies the exclusion of another, applies.” Syl. pt. 3, Manchin v. Dunfee, 174 W. Va. 532,

327 S.E.2d 710 (1984). See also State ex rel. Riffle v. Ranson, 195 W. Va. 121, 128, 464
S.E.2d 763, 770 (1995) (“Expressio unius est exclusio alterius (express mention of one thing

implies exclusion of all others) is a well-accepted canon of statutory construction.” (citations

omitted)). Furthermore, this conclusion is in accord with the manner in which other courts

have interpreted similar statutes. See Bowen v. 707 On Main, No. CV020282643S, 2004 WL
424501, at *3 (Conn. Super. Ct. Feb. 24, 2004) (“The principle of piercing the corporate

veil . . . also is applicable to limited liability companies and their members. General Statutes

§ 34-133.” (quotations and citations omitted));11 Kaycee Land & Livestock v. Flahive, 46

              11
                   Similar to the West Virginia statute, Connecticut’s limited liability statute
states:
                      “(a) Except as provided in subsection (b) of this section,
              a person who is a member or manager of a limited liability
              company is not liable, solely by reason of being a member or
              manager, under a judgment, decree or order of a court, or in any
              other manner, for a debt, obligation or liability of the limited
              liability company, whether arising in contract, tort or otherwise
              or for the acts or omissions of any other member, manager,
              agent or employee of the limited liability company.”

Bowen v. 707 On Main, No. CV020282643S, 2004 WL 424501, at *2 n.4 (Conn. Super. Ct.
                                                                     (continued...)

                                                11
P.3d 323, 325-26 (Wyo. 2002) (“[W]e are asked to broadly pronounce that there are no

circumstances under which this court will look through a failed attempt to create a separate

LLC entity and prevent injustice. We simply cannot reach that conclusion and believe it is

improvident for this court to prohibit this remedy [of piercing the veil] from applying to any

unforeseen circumstance that may exist in the future.”).12 See also Filo Am., Inc. v. Olhoss

Trading Co., L.L.C., 321 F. Supp. 2d 1266, 1269 (M.D. Ala. 2004) (observing that

“commentators who have discussed the issue as a nationwide matter have concluded that the

‘veil-piercing’ doctrine applies to LLCs. . . . Further, the courts in other States that have

considered whether the ‘veil-piercing’ doctrine applies to LLCs have concluded that it does,”

and collecting authorities). Accordingly, we hold that W. Va. Code § 31B-3-303 permits the

              11
               (...continued)
Feb. 24, 2004) (quoting Connecticut General Statutes § 34-133(a)).
              12
                   The relevant Wyoming statute provides that:

                      “Neither the members of a limited liability company nor
              the managers of a limited liability company managed by a
              manager or managers are liable under a judgment, decree or
              order of a court, or in any other manner, for a debt, obligation or
              liability of the limited liability company.”

Kaycee Land & Livestock v. Flahive, 46 P.3d 323, 326 (Wyo. 2002) (quoting Wyo. Stat. Ann.
§ 17–15–113 (LexisNexis 2001)). In support of finding the foregoing language allowed for
piercing the veil of an LLC, the Kaycee court expressed its agreement that “‘[i]t is difficult
to read statutory § 17–15–113 as intended to preclude courts from deciding to disregard the
veil of an improperly used LLC.’” Kaycee, 46 P.3d at 326 (quoting Harvey Gelb, Liabilities
of Members and Managers of Wyoming Limited Liability Companies, 31 Land & Water
L. Rev. 133 at 142 (1996)). In 2010, Wyoming repealed this statute and adopted the 2006
RULLA. The current Wyoming statute addressing the liability of LLC members and
managers is Wyo. Stat. Ann. § 17-29-304.

                                              12

equitable remedy of piercing the veil to be asserted against a West Virginia Limited Liability

Company.

              Although the language employed by the Legislature has preserved the ability

to pierce the veil of an LLC to hold a member or manager liable, the Legislature has failed

to identify the circumstances under which the imposition of such liability is proper. Thus,

in this regard, W. Va. Code § 31B-3-303 is ambiguous and must be interpreted. Subsection

(b) of W. Va. Code § 31B-3-303 does provide a starting point for our analysis by specifying

that “[t]he failure of a limited liability company to observe the usual company formalities or

requirements relating to the exercise of its company powers or management of its business

is not a ground for imposing personal liability on the members or managers for liabilities of

the company.” (Emphasis added). Thus, while is it clear that the failure of a limited liability

company to observe “usual company formalities” is not sufficient grounds upon which to

pierce the LLC veil and hold its members personally liable, we must, nevertheless, endeavor

to identify those grounds upon which the veil of an LLC may be pierced in order to fully

answer the certified question presented in this action. Because this is a novel question in

West Virginia, we find it helpful to consider the criteria used by other courts to determine

when it is appropriate to pierce the veil of an LLC.

                                              13

               The State of Illinois has enacted statutory provisions identical to those

contained in W. Va. Code § 31B-3-303. See 805 ILCS 180/10–10 (a), (c), & (d) (West

2008). In Seater Construction Company, Inc. v. Deka Investments, LLC, No. 2–12–1140,

2013 WL 3272487, at *8 (Ill. Ct. App. June 24, 2013), the Appellate Court of Illinois

acknowledged that “no Illinois case has held that the doctrine of piercing the corporate veil

applies to an Illinois limited liability company (LLC).” Nevertheless, the court observed that

“‘while the [Illinois Limited Liability Company] Act provides specifically that the failure to

observe the corporate formalities is not a ground for imposing personal liability on the

members of an LLC, it does not bar the other bases for corporate veil piercing, such as alter

ego, fraud or undercapitalization.’” Seater, 2013 WL 3272487, at *8 (quoting Westmeyer

v. Flynn, 382 Ill. App. 3d 952, 960 (2008)).

               In determining whether to pierce the veil of an LLC, the Seater court applied

the existing Illinois two-prong analysis for piercing the veil of a corporation. The two-part

test considered: (1) unity of interest and ownership and (2) fraud, injustice or inequitable

consequences. Observing that numerous factors are applicable to an analysis pertaining to

the unity of interest and ownership prong of the test, but also noting that several of the factors

are inapplicable to piercing the veil of an LLC, the Seater court commented:

                      Ordinarily, in determining whether the “unity of interest
               and ownership” prong of the piercing-the-corporate-veil test is
               met, a court considers many factors, including: (1) inadequate
               capitalization; (2) failure to issue stock; (3) failure to observe

                                               14

              corporate formalities; (4) nonpayment of dividends; (5)
              insolvency of the debtor corporation; (6) nonfunctioning of the
              other officers or directors; (7) absence of corporate records; (8)
              commingling of funds; (9) diversion of assets from the
              corporation by or to a stockholder or other person or entity to the
              detriment of creditors; (10) failure to maintain arm’s-length
              relationships among related entities; and (11) whether, in fact,
              the corporation is a mere facade for the operation of the
              dominant stockholders. Fontana[ v. TLD Builders, Inc.], 362
              Ill. App. 3d [491,] 503 [(2005)]. Several of the factors are
              inapplicable to piercing the veil of an LLC, because they deal
              with adherence to corporate formalities.              805 ILCS
              180/10–10(c) (West 2008).

Seater, 2013 WL 3272487, at *8. Based upon the arguments presented to the Seater court

by the appellant, the court addressed factors (1), (8), (9) and (10) to ultimately conclude that

grounds did not exist to warrant piercing the veil of the LLC at issue under the facts

presented in that case.

              Other courts similarly have applied the same basic analysis to piercing the veil

of an LLC that would be applied in the context of piercing the corporate veil, but with the

acknowledgment that some factors may not apply. In Filo America, Inc. v. Olhoss Trading

Co., L.L.C., 321 F. Supp. 2d 1266, the United States District Court concluded that,

              under Alabama law, it is possible to “pierce the veil” of an LLC
              in some situations. The factors that Alabama courts consider in
              deciding whether it is appropriate to “pierce the veil” of a
              corporation are: (1) inadequacy of capital; (2) fraudulent
              purpose in conception or operation of the business; (3) operation
              of the corporation as an instrumentality or alter ego. Culp v.
              Economy Mobile Homes, Inc., 895 So. 2d 857, [859-60,] 2004
WL 541818 (Ala.) (internal citations omitted). While some of

                                              15

              these factors may not apply to LLCs in the same way they apply
              to corporations, see [Bradley J. Sklar and W. Todd Carlisle, The
              Alabama Limited Liability Company Act, 45 Ala. L. Rev. 145,
              202 (1993)] (“Inadequacy of capital should provide less of a
              basis for piercing the LLC veil than the corporate veil”), a
              fraudulent purpose in the conception or operation of an LLC
              should certainly be a valid reason for “piercing” the LLC’s
              “veil.” Eric Fox, Note, Piercing the Veil of Limited Liability
              Companies, 62 Geo. Wash. L. Rev. 1143 (1994) (“If it is in the
              public interest to disregard the legal fiction when those
              benefitting from that fiction commit fraudulent conduct, it
              should not matter to the court whether the legal fiction is used
              by corporate shareholders or LLC members”).

Filo Am., Inc., 321 F. Supp. 2d at 1269-70.13

              13
                   In reaching this conclusion, the district court reasoned that

              [b]ecause the LLC borrows its limited liability characteristics
              from the law applicable to corporations, the “veil-piercing”
              exception applicable to corporations should also apply to LLCs.
              In other words, since a stockholder or owner of a corporation
              can be held liable for the debts and obligations of the
              corporation in the rare case in which “piercing the corporate
              veil” is appropriate, a member of an LLC should be similarly
              liable when it is appropriate for the “veil” of the LLC to be
              “pierced.” See [Bradley J. Sklar and W. Todd Carlisle, The
              Alabama Limited Liability Company Act, 45 Ala. L. Rev. 145,
              200 (1993)] (stating that corporate precedents on veil piercing
              will probably apply to LLCs in Alabama).

Filo Am., Inc. v. Olhoss Trading Co., L.L.C., 321 F. Supp. 2d 1266, 1269 (M.D. Ala. 2004).

                                                16

              The Court of Appeals of Utah also applied a corporate veil piercing analysis

to an LLC in d’Elia v. Rice Development, Inc., 147 P.3d 515 (Utah Ct. App. 2006). The

d’Elia court observed that,

                       [i]n Ditty v. CheckRite, Ltd., 973 F. Supp. 1320 (D. Utah
              1997), a federal district court determined that under Utah law
              the corporate veil piercing doctrine equally applies to Utah
              liability companies. See id. at 1335 (noting that although “there
              is little case law discussing veil piercing theories outside the
              corporate context, most commentators assume that the doctrine
              applies to limited liability companies” and citing a number of
              commentators).

d’Elia, 147 P.3d at 521 n.5. Accordingly, the d’Elia court applied the same analysis it would

have used to determine whether a non-LLC corporate entity’s veil should be pierced and

ultimately concluded that “[t]he record reveals that substantial evidence exists to support the

trial court’s decision not to pierce the corporate veil.” 147 P.3d at 523 (emphasis added).

              Thus, it appears that most courts addressing the question of whether to pierce

the veil of an LLC apply the same test used to analyze piercing the corporate veil. See, e.g.,

Thomas v. Bridges, 120 So. 3d 338, 342 (La. Ct. App. 2013) (applying “five-factor test [for

piercing corporate veil] supplied by the Louisiana Supreme Court in Riggins v. Dixie Shoring

Co., Inc., 590 So. 2d 1164, 1168 & n.5 (La. 1991)” to an LLC; elements of five factor test

“include, but are not limited to: 1) commingling of corporate and shareholder funds; 2)

failure to follow statutory formalities for incorporating and transacting corporate affairs; 3)

undercapitalization; 4) failure to provide separate bank accounts and bookkeeping records;

                                              17

and 5) failure to hold regular shareholder and director meetings, Riggins, 590 So. 2d at

1168.”).14 These courts, however, often recognize that certain elements of the test may not

apply at all, while other elements may apply to an LLC in a different manner than they would

apply to a corporation.

               Some courts additionally have cautioned that a veil piercing analysis is a fact

driven analysis that must be engaged on a case-by-case basis. For example, in Kaycee Land

               14
                   For examples of other tests applied by courts deciding whether to pierce the
veil of an LLC, see Restaurant of Hattiesburg, LLC v. Hotel & Rest. Supply, Inc., 84 So. 3d
32, 39 (Miss. Ct. App. 2012) (holding that “to pierce the veil of an LLC the complaining
party must prove LLC membership as well as (a) some frustration of contractual
expectations, (b) flagrant disregard of LLC formalities by the LLC members, and (c) fraud
or misfeasance by the LLC member”); Thomas & Thomas Court Reporters, L.L.C. v. Switzer,
283 Neb. 19, 27-28, 810 N.W.2d 677, 685 (2012) (“[T]he individual members and managers
of a limited liability company are generally not liable for a debt, obligation, or liability of the
company. And a court will disregard such a company’s identity only where the company has
been used to commit fraud, violate a legal duty, or perpetrate a dishonest or unjust act in
contravention of the rights of another. The company’s identity as a separate legal entity will
be preserved, as a general rule, until sufficient reason to the contrary appears. And a plaintiff
seeking to impose liability on an individual member or manager has the burden of proving
that the company’s identity should be disregarded to prevent fraud or injustice to the
plaintiff.” (footnotes omitted)). But see White v. Longley, 358 Mont. 268, 280 n.2, 244 P.3d
753, 761 n.2 (2010) (“Some commentators and courts have advocated application to LLCs
of the rules regulating piercing the corporate veil to impose individual liability. See[,] e.g.[,]
[Steven C. Bahls, Application of Corporate Common Law Doctrines to Limited Liability
Companies, 55 Mont. L. Rev. 44, 59–66 (1994)]. Because § 35–8–304, MCA, clearly does
not establish blanket liability protection for members of LLCs, and because the intent of that
section is to allow liability in a situation in which the member acting individually would be
liable, it is not necessary to engraft the veil piercing law from the corporate arena to resolve
this issue.”).

                                                18

& Livestock v. Flahive, 46 P.3d 323, the Supreme Court of Wyoming addressed a certified

question asking:

                       In the absence of fraud, is a claim to pierce the Limited
               Liability entity veil or disregard the Limited Liability Company
               entity in the same manner as a court would pierce a corporate
               veil or disregard a corporate shield, an available remedy against
               a Wyoming Limited Liability Company under Wyoming’s
               Limited Liability Company Act, Wyo. Stat. §§ 17–15–101
               through 17–15–144 (2000)?

Id. at 324.15 The Kaycee court observed that “Wyoming courts, as well as courts across the

country, have typically utilized a fact driven inquiry to determine whether circumstances

justify a decision to pierce a corporate veil.” Id. at 325 (citation omitted). Because the case

had come “as a certified question in the abstract with little factual context,” the court opined

that “[i]t would be inadvisable in this case, which lacks a complete factual context, to attempt

to articulate all the possible factors to be applied to LLCs in Wyoming in the future.” Id. at

325 & 328.16

               15
               “Wyoming was the first state to enact LLC statutes.” Kaycee Land &
Livestock v. Flahive, 46 P.3d 323, 326. The language of the particular statute at issue in
Kaycee is quoted supra at note 12.
               16
                 Nevertheless, as with the other cases cited earlier in this opinion, the Kaycee
court indicated that most courts have, in general, applied to LLCs the existing common law
factors for piercing the veil in the corporate context. The court in Kaycee also recognized
that, “[c]ertainly, the various factors which would justify piercing an LLC veil would not be
identical to the corporate situation for the obvious reason that many of the organizational
formalities applicable to corporations do not apply to LLCs.” Kaycee Land & Livestock v.
Flahive, 46 P.3d 323, 328. Nevertheless, a subsequent Wyoming case provided some
guidance as to the general factors that would be relevant to an LLC veil piercing analysis by
observing that
                                                                                   (continued...)

                                               19

             New Jersey has agreed with the analysis utilized by the Wyoming court in

Kaycee Land & Livestock. After favorably discussing the Kaycee opinion, the Superior

Court of New Jersey commented that

             the particular standard [for piercing the veil of an LLC] should
             be developed over time, as courts address concrete cases. It is
             not for this court, solely on the facts presented to it in this case,
             to formulate a generally-applicable standard. It is sufficient for
             this court to conclude that in this case, Borne’s failure to
             scrupulously identify the entity through which he was acting, his
             dominion and control of Esplanade L.L.C., and the entity’s
             undercapitalization should not loom as large as it might were the
             entity a corporation.

D.R. Horton Inc.-New Jersey v. Dynastar Dev., L.L.C., No. MER-L-1808-00, 2005 WL
1939778, at *36 (N.J. Super. Ct. Law Div. Aug. 10, 2005).17 The New Jersey court

             16
              (...continued)

             “[t]he LLC veil piercing factors used from the corporate arena

             can be reduced to four categories:

                       1. Fraud;

                       2. Inadequate capitalization;

                       3. Failure to observe company formalities; and

                    4. Intermingling the business and finances of the
             company and the member to such an extent that there is no
             distinction between them[.]”

Gasstop Two, LLC v. Seatwo, LLC, 225 P.3d 1072, 1077 (Wyo. 2010) (quoting Phillip L.
Jelsma and Pamela Everett Nollkamper (Phillip P. Whynott), The Limited Liability Company,
§ 11-130 (2009)).
             17
                  The New Jersey LLC statute provides, in relevant part:
                                                                                     (continued...)

                                              20

ultimately applied the common law test for piercing the veil of a corporation, tempered by

the fact that the business at issue was an LLC, and concluded that the circumstances

presented did not warrant piercing the LLC veil:

             under the . . . two-part test, Horton NJ must prove that (1)
             Esplanade L.L.C. was a mere instrumentality or alter ego of
             Borne; and (2) Borne abused the business form to perpetrate a
             fraud, injustice, or otherwise circumvent the law. Particularly
             given the lesser weight assigned to the formalities, and
             dominion-and-control factors, Horton NJ has failed to prove the
             first prong. Moreover . . . the court finds no injustice or
             circumvention of law, notwithstanding that Esplanade L.L.C.
             ultimately lacked sufficient capital to fulfill its obligations.

D.R. Horton Inc., 2005 WL 1939778, at *36. Notably, however, the New Jersey court

cautioned that

             persuasive authorities indicate that corporate veil-piercing
             doctrine should not be mechanically applied to cases involving
             limited liability companies. In particular, a court should view in

             17
               (...continued)
                     “Except as otherwise provided by this act, the debts,
             obligations and liabilities of a limited liability company, whether
             arising in contract, tort or otherwise, shall be solely the debts,
             obligations and liabilities of the limited liability company; and
             no member, manager, employer or agent of a limited liability
             company shall be obligated personally for any such debt,
             obligation or liability of the limited liability company, or for any
             debt, obligation or liability of any other member, manager,
             employee or agent of the limited liability company, by reason of
             being a member, or acting as a manager, employee or agent of
             the limited liability company.”

D.R. Horton Inc.-New Jersey v. Dynastar Dev., L.L.C., No. MER-L-1808-00, 2005 WL
1939778, at *31-32 (N.J. Super. Ct. Law Div. Aug. 10, 2005) (quoting N.J.S.A. § 42:2B-23).

                                             21

            a different light the factors of adherence to corporate
            formalities, and scrutiny of owners’ dominion and control.

                   ....

                     . . . [C]ourts that have expressly considered the
            differences between the two business forms have concluded that
            veil-piercing doctrine should be molded to accommodate the
            differences. . . .

                   ....

                    As noted by the Wyoming Supreme Court, adherence to
            formalities is one factor that should weigh differently in the case
            of a limited liability company. Kaycee Land and Livestock v.
            Flahive, supra, 46 P.3d at 328. Vandervoort concurs for two
            reasons. [J. Vandervoot, Piercing the Veil of Limited Liability
            Companies: The Need For A Better Standard, 3 DePaul Bus. &
            Com. L.J. 51, 68-70 (2004)]. First, a small-business owner’s
            failure to adhere to formalities may simply reflect disregard of
            formalities “irrelevant to their actual operation”, and lack of
            funds to hire lawyers and others to keep track of statutory
            obligations. None of that may evidence misuse of the statute.
            Ibid. Second, “LLC’s [sic] have relatively few statutorily
            mandated formalities and have a considerable amount of
            freedom and flexibility as to the management structure of the
            entity.” This informality, encouraged by statute, should not then
            be a basis to avoid statutory limited liability. Ibid. See [David
            L. Cohen, Theories of the Corporation and the Limited Liability
            Company: How Should Courts and Legislatures Articulate Rules
            for Piercing the Veil, Fiduciary Responsibility and Securities
            Regulation for the Limited Liability Company?, 51 Okla. L. Rev.
            427, 457 (2004)] (“[T]o allow piercing for disregarding LLC
            formalities . . . will make the promise of limited liability for
            LLCs empty by definition.”).

D.R. Horton Inc., 2005 WL 1939778, at *33-35.

                                            22

             Similarly, in Bowen v. 707 On Main, 2004 WL 424501, the Superior Court of

Connecticut explained that

             “[T]he determination of whether to pierce the corporate
             veil . . . to disregard the protections afforded a limited liability
             company requires the same analysis [as that of a corporate
             entity].” KLM Industries, Inc. v. Tylutki, 75 Conn. App. 27, 28
             n.2, 815 A.2d 688, cert. denied, 263 Conn. 916, 821 A.2d 770
             (2003).

                       ....

                     “The concept of piercing the corporate veil is equitable
             in nature and courts should pierce [it] only under exceptional
             circumstances.” (Internal quotation marks omitted.) Hershey v.
             Lonrho, 73 Conn. App. 78, 87, 807 A.2d 1009 (2002). Such
             exceptional circumstances would include instances “where the
             corporation is a mere shell, serving no legitimate purpose, and
             used primarily as an intermediary to perpetuate fraud or promote
             injustice.” (Internal quotation marks omitted.) SFA Folio
             Collections, Inc. v. Bannon, 217 Conn. 220, 230, 585 A.2d 666,
             cert. denied, 501 U.S. 1223, 111 S. Ct. 2839, 115 L. Ed. 2d 1008
             (1991).

Bowen, 2004 WL 424501, at *2.18 Finally, the court noted that

             18
                  The Bowen court described the test for piercing the corporate veil as follows:

                    “When determining whether piercing the corporate veil
             is proper, our [courts have] endorsed two tests: the
             instrumentality test and the identity test. The instrumentality
             rule requires . . . proof of three elements: (1) Control, not
             merely majority or complete stock control, but complete
             domination, not only of finances but of policy and business in
             respect to the transaction attacked so that the corporate entity as
             to this transaction had at the time no separate mind, will or
             existence of its own; (2) that such control must have been used
                                                                                    (continued...)

                                               23

            “One of the principal reasons to use an L.L.C. is that the owners
            and managers, if the owners so elect, have limited liability from
            contract and tort claims of third parties. M. Pruner, A Guide to
            Connecticut Liability Companies, § 3.1.1, p. 9 (1995).” Stone
            v. Frederick Hobby Assoc. II, Superior Court, judicial district of
            Stamford/Norwalk at Stamford, Docket No. CV 00 0181620
            (July 10, 2001, Mintz, J.). . . .

                   “No hard and fast rule, however, as to the conditions
            under which the entity may be disregarded can be stated as they
            vary according to the circumstances of each case.” (Internal
            quotation marks omitted.) Angelos Tomasso v. Armor
            Construction & Paving, Inc., 187 Conn. 544, 555-56, 447 A.2d
406 (1982).

            18
              (...continued)
            by the defendant to commit fraud or wrong, to perpetuate the
            violation of a statutory or other positive legal duty, or a
            dishonest or unjust act in contravention of the plaintiff’s legal
            rights; and (3) that the aforesaid control and breach of duty must
            proximately cause the injury or unjust loss complained of.”
            (Internal quotation marks omitted.) [Mountview] Plaza, Inc. v.
            World Wide Pet Supply, Inc., [76 Conn. App. 627,] 633-34[, 820
A.2d 1105, 1110 (2003)]. “The identity rule has been stated as
            follows: If a plaintiff can show that there was such a unity of
            interest and ownership that the independence of the corporations
            had in effect ceased or had never begun, an adherence to the
            fiction of separate identity would serve only to defeat justice and
            equity by permitting the economic entity to escape liability
            arising out of an operation conducted by one corporation for the
            benefit of the whole enterprise.” (Internal quotation marks
            omitted.) Litchfield Asset Management Corp. v. Howell, [70
Conn. App. 133,] 156[, 799 A.2d 298, 315, cert. denied, 261
Conn. 911, 806 A.2d 49 (2002)].

Bowen, 2004 WL 424501 at *2.

                                            24

Bowen, 2004 WL 424501, at *4. See also Martin v. Freeman, 272 P.3d 1182, 1184

(Colo. App. 2012) (“To pierce the LLC veil, the court must conclude (1) the corporate entity

is an alter ego or mere instrumentality; (2) the corporate form was used to perpetrate a fraud

or defeat a rightful claim; and (3) an equitable result would be achieved by disregarding the

corporate form. . . . The third prong, in particular, recognizes that veil piercing is a

‘fact-specific’ inquiry.” (internal citation omitted)).

              Based upon the foregoing authority, this Court will consider West Virginia

common law standards for piercing the corporate veil in order to establish guidance for lower

courts deciding whether to pierce the veil of an LLC. In doing so, we are mindful that the

analysis necessarily is fact based and must be applied to LLCs on a case-by-case basis. See

Southern Elec. Supply Co. v. Raleigh Cnty. Nat’l Bank, 173 W. Va. 780, 787, 320 S.E.2d
515, 523 (1984) (“[D]ecisions to look beyond, inside and through corporate facades must be

made case-by-case, with particular attention to factual details.” (footnote omitted)).

              With regard to corporate veil piercing in general, this Court has held that “[t]he

law presumes . . . that corporations are separate from their shareholders.” Syl. pt. 3, in part,

Southern Elec. Supply Co., 173 W. Va. 780, 320 S.E.2d 515. Nevertheless,

                      “[w]hile, legally speaking, a corporation constitutes an
              entity separate and apart from the persons who own it, such is a
              fiction of the law introduced for purpose of convenience and to
              subserve the ends of justice; and it is now well settled, as a

                                               25

              general principle, that the fiction should be disregarded when it
              is urged with an intent not within its reason and purpose, and in
              such a way that its retention would produce injustices or
              inequitable consequences.” Syl. pt. 10, Sanders v. Roselawn
              Mem’l Gardens, Inc., 152 W. Va. 91, 159 S.E.2d 784 (1968).

Syl. pt. 2, Laya v. Erin Homes, Inc., 177 W. Va. 343, 352 S.E.2d 93 (1986). More

specifically, we held in Laya that

              to “pierce the corporate veil” in order to hold the shareholder(s)
              actively participating in the operation of the business personally
              liable . . . , there is normally a two-prong test: (1) there must be
              such unity of interest and ownership that the separate
              personalities of the corporation and of the individual
              shareholder(s) no longer exist (a disregard of formalities
              requirement) and (2) an inequitable result would occur if the
              acts are treated as those of the corporation alone (a fairness
              requirement).

Syl. pt. 3, in part, id.19 Although the Laya test was applied in the context of a breach of

contract, a subsequent case has made clear that the test applies in other contexts as well. See

St. Peter v. Ampak-Div. of Gatewood Prod., Inc., 199 W. Va. 365, 484 S.E.2d 481 (1997)

(addressing veil piercing analysis in connection with retaliatory discharge and discrimination

claims).

              19
                 We do not perceive the characterization of the first element of the Laya test
as a “disregard of formalities requirement” to be identical to the “usual company formalities
or requirements” that are prohibited as a grounds for personal liability of an LLC member
under W. Va. Code § 31B-3-303. While some considerations of these two types of
formalities may be the same or similar, we find the Laya test to be more broad. The broader
application of the Laya test is demonstrated by the non-exclusive list of factors that may be
considered in conducting a veil piercing analysis under Laya. Those factors are quoted infra
in this opinion.

                                              26

              In reaching the foregoing holding in Laya, we set out a non-exhaustive list of

factors that might be relevant in determining whether to pierce a corporate veil. Those

factors included:

                    (1) commingling of funds and other assets of the
              corporation with those of the individual shareholders;

                    (2) diversion of the corporation’s funds or assets to
              noncorporate uses (to the personal uses of the corporation’s
              shareholders);

                     (3) failure to maintain the corporate formalities necessary
              for the issuance of or subscription to the corporation’s stock,
              such as formal approval of the stock issue by the board of
              directors;

                     (4) an individual shareholder representing to persons
              outside the corporation that he or she is personally liable for the
              debts or other obligations of the corporation;

                    (5) failure to maintain corporate minutes or adequate
              corporate records;

                     (6) identical equitable ownership in two entities;

                     (7) identity of the directors and officers of two entities
              who are responsible for supervision and management (a
              partnership or sole proprietorship and a corporation owned and
              managed by the same parties);

                    (8) failure to adequately capitalize a corporation for the
              reasonable risks of the corporate undertaking;

                     (9) absence of separately held corporate assets;

                     (10) use of a corporation as a mere shell or conduit to
              operate a single venture or some particular aspect of the
              business of an individual or another corporation;

                                              27

                   (11) sole ownership of all the stock by one individual or
              members of a single family;

                    (12) use of the same office or business location by the
              corporation and its individual shareholder(s);

                     (13) employment of the same employees or attorney by
              the corporation and its shareholder(s);

                      (14) concealment or misrepresentation of the identity of
              the ownership, management or financial interests in the
              corporation, and concealment of personal business activities of
              the shareholders (sole shareholders do not reveal the association
              with a corporation, which makes loans to them without adequate
              security);

                     (15) disregard of legal formalities and failure to maintain
              proper arm’s length relationships among related entities;

                      (16) use of a corporate entity as a conduit to procure
              labor, services or merchandise for another person or entity;

                      (17) diversion of corporate assets from the corporation by
              or to a stockholder or other person or entity to the detriment of
              creditors, or the manipulation of assets and liabilities between
              entities to concentrate the assets in one and the liabilities in
              another;

                      (18) contracting by the corporation with another person
              with the intent to avoid the risk of nonperformance by use of the
              corporate entity; or the use of a corporation as a subterfuge for
              illegal transactions;

                     (19) the formation and use of the corporation to assume
              the existing liabilities of another person or entity.

Laya, 177 W. Va. at 347-48, 352 S.E.2d at 98-99. See also St. Peter, 199 W. Va. at 372-73,

484 S.E.2d at 488-89 (“‘Decisions to “pierce” involve multifarious considerations, including

                                             28

inadequacy of capital structures, whether personal and corporate funds have been

commingled without regard to corporate form by a sole shareholder, whether two

corporations have commingled their funds so that their accounts are interchangeable; whether

they have failed to follow corporate formalities, siphoning funds from one corporation to

another without regard to harm caused either entity, or failed to keep separate records. Other

reasons to disregard the structure are: total control and dominance of one corporation by

another or a shareholder; existence of a dummy corporation with no business activity or

purpose; violation of law or public policy; a unity of interest and ownership that causes one

party or entity to be indistinguishable from another; common shareholders, common officers

and employees, and common facilities.’” (quoting Southern Elec. Supply Co., 173 W. Va. at

788, 320 S.E.2d at 523)).

              While many of the foregoing factors, among others, may be relevant to a court

deciding whether to pierce the veil of an LLC, we hesitate to adopt a test that sets out specific

factors insofar as this Court and others have cautioned that such an analysis must be applied

on a case-by-case basis considering the particular facts presented therein. Consequently, we

establish a more general test following the lead of the Court in Laya, and hold that, to pierce

the veil of a limited liability company in order to impose personal liability on its member(s)

or manager(s), it must be established that (1) there exists such unity of interest and ownership

that the separate personalities of the business and of the individual member(s) or managers(s)

                                               29

no longer exist and (2) fraud, injustice, or an inequitable result would occur if the veil is not

pierced. This is a fact driven analysis that must be applied on a case-by-case basis and,

pursuant to W. Va. Code § 31B-3-303(b), the failure of a limited liability company to observe

the usual company formalities or requirements relating to the exercise of its company powers

or management of its business may not be a ground for imposing personal liability on the

member(s) or manager(s) of the company.20

              The certified question presented in this cases asks whether “West Virginia’s

version of the Uniform Limited liability Company Act, codified at W. Va. Code § 31B[-1­

101], et seq., afford[s] complete protection to members of a limited liability company against

a plaintiff seeking to pierce the corporate veil?” Applying our foregoing analysis to this

question, we answer in the negative.

                                              IV.

                                       CONCLUSION

              For the reasons set out above, we answer the question certified to this Court

by the Circuit Court of Harrison County in the negative and hold that W. Va. Code

§ 31B-3-303 (1996) (Repl. Vol. 2009) permits the equitable remedy of piercing the veil to

              20
                Because we are addressing a certified question, we do not apply our holding
to the case sub judice to determine whether the LLC veil should be pierced in this instance.
Such a determination must be made by the circuit court.

                                               30

be asserted against a West Virginia limited liability company. Furthermore, to pierce the veil

of a limited liability company in order to impose personal liability on its member(s) or

manager(s), it must be established that (1) there exists such unity of interest and ownership

that the separate personalities of the business and of the individual member(s) or managers(s)

no longer exist and (2) fraud, injustice or an inequitable result would occur if the veil is not

pierced. This is a fact driven analysis that must be applied on a case-by-case basis, and,

pursuant to W. Va. Code § 31B-3-303(b), the failure of a limited liability company to observe

the usual company formalities or requirements relating to the exercise of its company powers

or management of its business may not be a ground for imposing personal liability on the

member(s) or manager(s) of the company.

                                                                Certified Question Answered.

                                              31