Piercing the Veil in Indiana – Alter Ego / Instrumentality

                               Piercing the Veil in Indiana – Alter Ego / Instrumentality

A recent decision from Indiana applied that state’s laws as to the alter ego approach to piercing the veil.  Tomich v. White, 267 N.E.3d 1161 (Aug. 29, 2025) (table), opinion at 2025 WL 2487968.

This decision arose out of the trial court’s grant of summary judgment to the plaintiff, so the factual record is somewhat sparse.  Michaline Tomich, on behalf and as a member of MIYO, LLC, signed and delivered a promissory note to Aimee White.  Needless to say it was not satisfied, and White brought suit to compel payment. Some partial payments were made but not by MIYO, LLC; rather those payments were made by MIYO, Inc. and Mixdesign, Inc., companies controlled by Tomich.

After a helpful review of Indiana’s law on piercing, including the caution against piercing as it sets aside the generally applicable rule of limited liability, including among the participants in a group/ company hierarchy, it writing:

The corporate alter ego doctrine allows courts to “disregard the separateness of affiliated corporate entities when they are not operated separately” but are instead “managed as ‘one enterprise through their interrelationship to cause illegality, fraud, or injustice or to permit one economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.’ Our Supreme Court has delineated an additional four factors to be considered when faced with a claim under the corporate alter ego doctrine: “(1) similar corporate names were used; (2) the corporations shared common principal corporate officers, directors, and employees; (3) the business purposes of the [organizations] were similar; and (4) the corporations were located in the same offices and used the same telephone numbers and business cards.” Moreover, “[t]hese ‘single business enterprise’ corporations may be identified by characteristics such as ‘the intermingling of business transactions, functions, property, employees, funds, records, and corporate names in dealing with the public.’ ”  (¶ 18, citations omitted)

 Then the court considered the facts before it and found that piercing was justified in that Tomich used the assets of MIYO, Inc. and Mixdesign, Inc. to pay the obligation of MIYO, LLC:

White’s designated evidence, when considered in the light most favorable to Defendants, shows that Tomich through MIYO Inc. and Mixdesign, Inc. made payments on the Promissory Note despite not being parties thereto; MIYO Inc. and Mixdesign, Inc. share the same principal office address; and Tomich is the President of both MIYO Inc. and Mixdesign, Inc. as well as a purported member of MIYO, LLC. Furthermore, MIYO Inc. and MIYO, LLC share similar corporate names. Based on this designated evidence, White has made a prima facie showing that Tomich’s control of all three of these business entities and her use of MIYO Inc. and Mixdesign, Inc. to pay MIYO, LLC’s debts lead to the conclusion that Tomich managed these businesses as one enterprise rather than as separate but affiliated entities. That is, White has made a prima facie case that these three businesses were merely an instrumentality of Tomich, and to allow Tomich to use them as a shield to protect herself from liability under the Promissory Note would constitute a fraud or promote injustice in this case. (¶ 20)

Perhaps there would have been a different outcome if Tomich had caused each of these organizations to lend funds to the borrower and it had then made payments in its own name.

There is a curious issue mentioned but not resolved in the case, namely whether MIYO, LLC actually exists as a business entity.  It does not appear the plaintiff put to record evidence that it does not exists, and the defendant did not demonstrate that in fact it does.

First, considering White’s designated evidence in the light most favorable to Defendants, we cannot say that MIYO, LLC is a nonentity; after all, the Promissory Note states that MIYO, LLC is an entity that received funds. We do note, however, that Defendants did not designate any evidence demonstrating that MIYO, LLC does, in fact, exist. ¶ 19.

Had that point been resolved, and it been shown that MIYO, LLC does not exist, Tomich could have been found personally responsible on the promissory note at issue under principles of agency law and specifically the rule that a purported agent on behalf of a non-existent principal is personally responsible in the contract at issue. That would have been a cleaner treatment than recourse to the extraordinary remedy of piercing.

It does not appear that any appeal was filed.