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Piercing The Corporate Veil

On Behalf of | Dec 26, 2011 | Business Disputes

Many small contract claims are litigated before the local district courts which are now part of the circuit court system in New Hampshire. The local district courts can hear non-jury trial if the controversy is $25,000 or less. However the district courts do not have jurisdiction to hear general equitable cases. They can only hear cases on an equity basis for which they have specific statutory authorities, such as landlord / tenant eviction actions.

The New Hampshire Supreme Court recently addressed in a contract action that the district court could not pierce the corporate veil of a corporate defendant to get to the individual who owned the shares in that corporation. Piercing of a corporate veil is an equitable remedy the Courts use when the reality is that the corporation is the alter ego of the individual and he is using it for his own purposes. The piercing of the corporate veil leaves the debt owed by the corporation as an obligation of the shareholder.

On December 14, 2011, in the case of Holloway Automotive Group v. Goran Lucic, the Court specifically reversed the Manchester District Court’s decision finding Mr. Lucic personally liable for his corporation’s breach of contract finding that the district court lacked jurisdiction to hear the equitable request for piercing the corporate veil to get to Mr. Lucic individually liable for the corporation’s breach of contract. The jurisdiction for such a claim would be exclusive to the New Hampshire superior courts. Therefore, if you are considering a smaller monetary court claim and are looking to hold the individual shareholder of a corporation or member of a limited liability company personally liable, this case states that the district court cannot rule on that claim and it must be brought in the superior court.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].