Business Law – piercing corporate veil, fraud claims, standing: Daniels v. CDB Bell, LLC (COA 7/17/2009)

Daniels v. CDB Bell, LLC
2007-CA-001608 07/17/2009 2009 WL 2059079
Opinion by Judge Clayton; Chief Judge Combs and Judge Caperton concurred.

In an appeal and cross-appeal, the Court affirmed a trial court order granting a directed verdict in favor of appellants on appellees’ claims for fraud and punitive damages and reversed a judgment imposing personal liability on investors in a corporation pursuant to a jury verdict finding that the corporate veil should be pierced. The Court first held that the trial court erred in submitting the question of whether the corporate veil should be pierced to the jury. The decision to pierce the corporate veil was an equitable one to be decided by the trial court and not a jury. The Court then held that appellees failed to show appellants exercised control or actively participated in harming appellees in order to support an “instrumentality theory” to justify pierce the corporate veil. The Court then held that appellees did not lack standing to pursue a default judgment because they adequately listed the judgment to allow the trustee in bankruptcy to decide not to pursue collection of the debt. The Court finally held that the trial court did not err in granting appellants’ motion for directed verdict on the fraud claims when there was no evidence establishing that appellants had any knowledge of the questionable activities of the corporation’s president in defrauding appellees.

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