In Florence Cement Company v. Vittraino, Florence sought to pierce Shelby's corporate veil and hold the principals personally liable by claiming Shelby mixed personal and business transactions and had engaged in fraud in a loan application. The appeals court held that

A) the veil could be pierced.

B) Shelby was liable for the $114,557 owed to Florence.

C) Florence had an opportunity to mitigate damages.

D) piercing the corporate veil was not warranted

Question

Business

Carolyn Reilly

29 October, 18:38

In Florence Cement Company v. Vittraino, Florence sought to pierce Shelby's corporate veil and hold the principals personally liable by claiming Shelby mixed personal and business transactions and had engaged in fraud in a loan application. The appeals court held that

A) the veil could be pierced.

B) Shelby was liable for the $114,557 owed to Florence.

C) Florence had an opportunity to mitigate damages.

D) piercing the corporate veil was not warranted

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Answers (1)

Know the Answer?

Beef · Answer 1

A

Explanation:

The Court of Appeals of Michigan reversed the trial court's decision and ruled in favor of Florence on the issue of piercing the corporate veil. The court took a tour of Shelby's company history, there was every indication that the principals treated their own liabilities as Shelby's liabilities and vice versa and intentionally undercapitalized Shelby, this caused Shelby to continually be insolvent, including at the time it contracted with Florence. Essad sworn statement was falsified in the final loan draw request to the bank, and this constituted use of Shelby for fraudulent purposes. Therefore, Florence satisfied the elements for piercing the corporate veil.