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.

An LLC Must be Represented by an Attorney, Except Maybe Not In Louisiana

 An LLC Must be Represented by an Attorney, Except Maybe Not In Louisiana

It is the accepted rule that while a natural person has the right to represent themselves in court, no similar right extends to business organizations, and but for the most narrow of exceptions (e.g., small claims court in Colorado), an LLC must be represented by an attorney.  These rules exist to protect against the unauthorized practice of law by non-attorney managers and owners who might seek to represent their organizations.  The cases as to this rule are collected in Ribstein and Keatinge on Limited Liability Companies section 13:8 (Dec. 2025).

A recent decision from Louisiana has in at least that jurisdiction brought this rule into question. Ela Group, Inc. v. Bradley Murchison Kelly & Shea, LLC, 420 So.3d 680 (La. Oct. 14, 2025).

The facts are somewhat sparse, but it would seem that a construction company, through its nonlawyer president, filed a complaint against the company’s former law firm.  Later the company retained counsel and filed an amended complaint.  The firm, which apparently had objected to the initial complaint, renewed its objection as to a complaint filed by a non-attorney.  Both the trial court and the court of appeals upheld the dismissal of the complaint, determinations reversed by the Louisiana Supreme Court.

After recounting its authority to regulate the legal profession, the Court first observed:

La. R.S. 37:212(B), defining the practice of law, provides that “[n]othing in this Section prohibits any person from attending to and caring for his own business, claims, or demands.” Jurisprudence in our appellate courts has limited the scope of that exception only to natural persons. Considering this Court’s plenary authority to define and regulate the practice of law, and in light of the fiduciary obligation of officers to protect the rights of their corporate entities, we find it appropriate to allow the officers of juridical persons to file time sensitive actions on their behalf.  

To the extent that prior jurisprudence held that the original filing  is vacated solely because it was filed by a corporate officer for a juridical person, those cases are abrogated.  420 So.3d at 681 (footnote omitted). 

From there is was directed that a “corporate entity” should promptly retain counsel to represent it before taking further action in the case. 420 So.3d at 682.

As detailed in footnote 1 to the opinion, decisions abrogated include:

See, e.g., Wholesale Auto Grp., Inc., v. La. Motor Vehicle Comm’n, 17-613 (La. App. 5 Cir. 5/23/18), 247 So. 3d 215, writ denied, 18-1017 (La. 10/8/18), 253 So. 3d 795 (holding a petition filed by a person not licensed to practice law in Louisiana was without legal effect); Bankston v. Tasch, LLC, 2009-1573 (La. App. 4 Cir. 6/2/10), 40 So. 3d 495 (finding answer filed by sole member of legal entity was unauthorized practice of law and had no legal effect). 420 So.3d 680, n. 1.

And then of perhaps the greatest import for the LLC bar, the Court in its second footnote wrote:

A single-member LLC that is a disregarded entity for federal and state tax purposes may be represented by its sole member in the same manner as a natural person under federal regulations. 26 CFR 301.7701-3. Rev. Proc. 2002-69, clarifies that this treatment extends to an LLC managed by a spouse held as community property. We find that these disregarded entities should be treated the same as the underlying natural person for all purposes of La. R.S. 37:212(B).  420 So.3d 680, n. 2.

Tellingly, this sanction of a non-attorney representing a disregarded entity (a tax treatment) in state court is not restricted to filing an initial pleading followed by retaining counsel, but rather would appear to sanction the non-attorney member representing the entity throughout the proceeding. Whether this rule will be extended beyond the SMLLC / Rev. Proc. 2002-79 (spouses in a community property jurisdiction) deemed SMLLC circumstances to MMLLCs remains to be seen. 

The Governor and Company of Merchants of London Trading into the East-Indies

 The Governor and Company of Merchants of London Trading into the East-Indies

      Today constitutes the anniversary of the founding, in 1600, of the company originally chartered as the “Governor and Company of Merchants of London Trading into the East-Indies,” which came to be known as the British East India Company and, at times, simply “the Honorable.” Technically it was a joint stock company rather than a corporation, and its organizational structure continues through to modern business organization law, most notably in the separation of ownership (divided into shares) and management (a board). 

      Originally formed to engage in spice trading, its affairs would ultimately be focused upon India even as it maintained outposts throughout the world. Its operations in India were in effect a private territory of the company where it would maintain a private army exceeding 250,000; at that time, the British Army comprised some 125,000. The size of its fleet is hard to comprehend; at times a ship about one and a half ships docked in England each day.  It was only after the 1856 rebellion that the British government assumed direct control of India.

The Company was dissolved in 1874.  The Company-State, by Philip J. Stern, is an excellent review of its activities. HERE IS A LINK to the text of the original charter.

Will No One Rid Me of This Turbulent Priest?

 Will No One Rid Me of This Turbulent Priest?

      Today marks the anniversary of the murder in 1170 of Saint Thomas Becket.  This murder has always been the most serious stain upon the reign of King Henry II

     Of Norman descent (the movie Becket inaccurately has Henry referring to Becket as a Saxon), Becket rose to be appointed Lord Chancellor of England.  While Chancellor Henry nominated Becket (who at this time was not a priest) to the position of Archbishop of Canterbury, clearly hoping that Becket would use his power as primate of England to mold ecclesiastical policy in favor of royal interests.  Becket failed to do so, rather becoming an ascetic and placing the interests of the Church over those of the crown.  Eventually he was forced to resign as Lord Chancellor.

     The contest of wills between Henry and Becket over the Constitutions of Clarendon, they seeking to increase the power of the civil state over the Church and its constituents, led to a final break in the relationship, with Becket even fleeing England for France.  Eventually he would return to Canterbury.

      While in France and likely well into his cups, Henry made a statement (exactly what was said is lost to history – there are conflicting accounts) that was interpreted by four knights as a direction to kill Becket.  They crossed the Channel and challenged Becket in Canterbury Cathedral, there killing him.  Becket was canonized barely three years later, and the four assassins were excommunicated and ordered to go on pilgrimage to the Holy Land (at least one of them thereafter became a Templar).  Henry would later do public penance at Becket’s shrine in Canterbury Cathedral.

            There is a passing reference to Becket in The Lion in Winter.

Is An Assignment a Means of Avoiding the Rule an LLC Must be Represented by an Attorney?

Is An Assignment a Means of Avoiding the Rule an LLC Must be Represented by an Attorney?

The rule is that artificial legal bodies such as corporations and LLCs may appear in court only through a licensed attorney; with only vanishingly small exceptions such as some small claims courts a corporation or LLC cannot appear in court “pro se” through an officer or manager.  It has as well long been the rule that an organization cannot assign its claim to an individual in order to circumvent that rule. A recent decision from South Dakota brings the application of that rule into question.

 In Thomas Mattson v. Rosebud Elec. Cooperative, 2025 WL 3208889 (D.S.D. Nov 17, 2025), after the LLC’s previous action was dismissed for lack of personal jurisdiction and a declaration that the LLCs must be represented by attorneys, the LLCs assigned their claims to the apparent sole member, who then filed this action. While this action would be on the merits dismissed , as to pro se representation the court wrote:

In federal court, corporations and LLCs must be represented by counsel and may not proceed pro se. “While 28 U.S.C. § 1654 protects parties rights to plead and conduct their own cases, that right has never been interpreted to allow an individual to appear for a corporation pro se.”  A non-lawyer who seeks to represent the interests of a corporation or an LLC “constitutes the unauthorized practice of law and results in a nullity.”  An assignment does not alter this rule: “Federal courts have refused to countenance circumvention of the requirement that a corporation be represented by counsel through the corporation’s assignment of a claim to a non-lawyer.”  Id., *23 (citations omitted).

But then the court stated:

Prelude’s alleged assignment of its claims to Mattson at least in this instance does not circumvent “the requirement that a corporation be represented by counsel through the corporation’s assignment of a claim to a non-lawyer.” Mattson cannot bring Prelude’s claims pro se and is not purporting to do so. The motion to strike is denied, but for reasons explained above, the case must be dismissed. Id.

On what basis the court would have allowed the non-attorney to prosecute those assigned claims when it had already stated the rule “An assignment does not alter this rule” is unclear.

 

Choice of Forum Clause Compels Remand of Case to State Court

                   Choice of Forum Clause Compels Remand of Case to State Court

The specific wording of a choice of forum provision in an agreement may dictate whether or not the suit may (or may not) be removed to federal court. In this case, that is what happened. Grand Isle Shipyard, L.L.C. v. Siroco, LLC, 2025 WL 3157572 (E.D. La. Nove. 11, 2025).

This dispute arose out of computer services contract; Grand Isle filed suit against Siroco for a breach whose nature is not revealed in this decision. Siroco removed the action to federal court. In turn Grand Isle sought to remand the action to the Louisiana state court on the basis that (i) diversity jurisdiction was not present and (ii) the contract at the center of the suit preluded the removal. The court would address only the second argument. 

After reviewing Fifth Circuit law as to whether and how the right of removal may be made, the court recited the applicable terms of the contract, namely:

13. APPLICABLE LAW and Exclusive Venue. The Contract Documents shall be governed by the general maritime laws of the United States to the maximum extent permitted by law. If the general maritime law is held inapplicable, the Contract Documents shall be governed by the laws of the State of Louisiana regardless of any conflict of law provisions. The Parties hereto agree that the sole and exclusive venue with respect to any claim or controversy arising under or governed by this [sic] Contract Documents shall only be proper in the United States Federal District Court of the Eastern District of Louisiana located in New Orleans, Louisiana, regarding general maritime claims and the Louisiana Seventeenth Judicial District Court located in Thibodaux, Louisiana, regarding any claim not governed by the general maritime laws of the United States. Id., *2.

Applying the law as to waiver, the court wrote, “[F]or Plaintiff’s motion to remand to be successful, the above provision must represent an exclusive or mandatory venue clause. After reviewing a member of other cases addressing whether particular language vested exclusive jurisdiction in a particular court to the exclusion of any other, including a federal court to which removal might be sought, found:

Because Plaintiff and Defendant clearly demonstrated their intent to make jurisdiction exclusive in one of two courts, depending on the type of claim at issue, the parties have waived their right to remove claims that are not governed by the general maritime laws of the United States, which claims must be litigated in the 17th Judicial District Court located in Thibodaux, Louisiana. Id., *3.

The court then disposed of Siroco’s argument that the state court exclusivity provision applies only if and after there has been determination that the dispute is not maritime in nature.

On the facts that the contract did not involve any “maritime nexus,” it wrote “While the Court acknowledges that there might be ‘close’ cases when determining whether a contract is maritime, this is not one of them.” Id. *4.

Grand Isle’s request for remand was granted.

Who Is a Member and Diversity Jurisdiction?

 Who Is a Member and Diversity Jurisdiction?

            It is black letter law that for purposes of Federal diversity jurisdiction (28 U.S.C. § 1332) an LLC has the citizenship of each of its members. One implication of this role is that in a suit by an LLC against one of its members there will never be diversity jurisdiction; the plaintiff LLC and the defendant member will always share the latter’s citizenship. But who is a member?, that being a question addressed in a recent decision from Texas. Edge Communications Solutions, LLC v. Werthamer, 2025 WL 3298312 (E.D. Tx. Nov. 26, 2025).

            Edge filed suit in Texas state court against its former employees Heide Werthamer and Marima Willis alleging what appear to be garden variety claims of theft of business secrets and as to Werthamer breach of a noncompete. The defendants removed the action to Federal court, and this decision addressed Edge’s motion to remand to state court on the basis that in fact diversity was not present.

            For purpose of this discussion the status of Werthamer as a member of Edge was the crux question. There was no dispute that she had been a member, and if she remained a member there would be no diversity. Werthamer alleged that upon the end of her employment by Edge she ceased to be a member. Edge maintained she remained a member notwithstanding ceasing to be an employee.

            The Court looked to the Delaware LLC Act, pursuant to which Edge was organized, and particularly the provisions addressing termination of member status, writing:

A member of a Delaware LLC may only resign “at the time or upon the happening of events specified in a limited liability company agreement and in accordance with the limited liability company agreement.” 6 Del. C. § 18-603. “[U]nless a limited liability company agreement provides otherwise, a member may not resign from a limited liability company prior to the dissolution and winding up of the limited liability company.” Id. Other than resignation, an individual can cease to be a member of an LLC upon assignment of all of the member’s limited liability company interest. 6 Del. C. § 18-702(b)(3).  2025 WL 3298312, *6.

            On the basis that Werthamer (she bearing the burden of showing diversity to exist) had not shown either on assignment of her interest in Edge or that her membership had been otherwise terminated, combined with the fact that Edge alleged she remained a member, the court found diversity to be lacking. Further, and building upon the fact that Werthamer bore the burden, it was noted by the court she could have as a member of Edge sought its membership list and avoided “any confusion.” 6 Del. Code § 18-305. For myself I’m a bit confused by this part of the opinion; Werthamer’s claim was that she is not a member and attempting to assert a member’s right would be antithetical to her petition. Still, if the LLC had responded with “you are not a member” it would have supported her position. In contrast if Edge had produced its list of members including Werthamer the situation would have been more clear.

            The decision is otherwise a useful primer on how to carry burden of showing diversity via proving the citizenship of the parties and their constituents.