Feb. 23, 2012 SCOKY Minutes

Piercing the corporate veil is an equitable doctrine invoked by courts to allow a creditor recourse against the shareholders of a corporation. In short, the limited liability which is the hallmark of a corporation is disregarded and the debt of the pierced entity becomes enforceable against those who have exercised dominion over the corporation to the point that it has no real separate existence. A successful veil-piercing claim requires both this element of domination and circumstances in which continued recognition of the corporation as a separate entity would sanction a fraud or promote injustice. The leading Kentucky case on piercing, White v. Winchester Land Development Corp., 584 S.W.2d 56 (Ky. App. 1979), like decisions from courts across the country, refers to this two-part test as the “alter ego” test. In recent years, courts and commentators have recognized piercing by using various tests and formulations, most commonly the “alter ego” and “instrumentality” tests, and by identifying common characteristics of corporations which have forfeited the right to separate legal existence, the “equities” assessment referenced in White, 584 S.W.2d at 61. This case requires us to consider this important doctrine in the context of an increasingly common scenario, a creditor’s attempt to collect on debt incurred by a wholly-owned subsidiary where the subsidiary has been deprived of all income and rendered asset-less by the acts of its parent (and in this case also grandparent) corporation. While piercing the corporate veil, asone leading commentator has aptly noted, is a doctrine that can be characterized by “frustrating fluidity,” Stephen B. Presser, Piercing the Corporate Veil 9 (2011), we have no doubt that the case before us presents a clear example of circumstances under which entitlement to the privilege of separate corporate existence should be forfeited.

2.  CRIMINAL LAW.  JUVENILE LAW.  MANDAMUS.
K.R. (A/K/A J.W.), A CHILD
V.
COMMONWEALTH OF KENTUCKY
TO BE PUBLISHED
2010-SC-000076-DG JEFFERSON
OPINION OF THE COURT BY JUSTICE NOBLE – AFFIRMING
MINTON, C.J.; ABRAMSON, CUNNINGHAM, SCHRODER, AND
SCOTT, JJ., CONCUR. VENTERS, J.,CONCURS IN RESULT ONLY.

Questions Presented:
Juvenile. Criminal Law. Issues include the propriety of granting a writ of mandamus to compel transfer of a juvenile to circuit court based upon KRS 635.020(4).

The question presented in this case is whether the family court’s order denying Richard’s motion to modify maintenance divested that court of jurisdiction over Kathleen’s motion for attorney fees. “[W]hether [a] circuit court has jurisdiction—is purely a question of law, which is reviewed de novo.” Kentucky Employers Mut. Ins. v. Coleman, 236 S.W.3d 9, 13 (Ky. 2007) (citing Rehm v. Clayton, 132 S.W.3d 864, 866 (Ky. 2004)).

In this case, Kathleen’s motion for fees was made prior to the family court’s order denying Richard’s motion for modification. It was “counterclaimed” only after the request for modification was filed. Further, there were different facts supporting each motion. The basis for Richard’s motion for modification of maintenance was Kathleen’s attainment of a bachelor’s degree. The basis for Kathleen’s request for attorney fees was the financial disparity of the parties in having to defend against Richard’s motion. Both motions could have been enforced separately, since Kathleen could have been awarded fees under KRS 403.220 even if Richard’s motion was granted. As a result, Kathleen’s motion for attorney fees was not part of Richard’s motion for modification, but was a separate claim or right created by statute.

For the above-mentioned reasons, Richard’s and Kathleen’s motions constituted separate claims for purposes of CR 54.02. Accordingly, the order denying Richard’s motion to modify maintenance did not terminate the family court’s jurisdiction as to Kathleen’s motion for fees and costs. Therefore, we hereby reverse the opinion of the Court of Appeals and remand this case to that court for consideration of the merits of Richard’s appeal of the family court’s order awarding Kathleen attorney fees.