Commission imposes personal liability for LLC owners

Claimant was hired in 2005 to perform heating, air and electrical work on new construction for a building and fractured his left elbow when he fell from a ladder while?installing duct work.? The uninsured company, an LLC, argued claimant was an independent contractor.? The Commission found claimant was an employee, and pierced the corporate veil to impose personal liability on the owners (Mr. and Mrs. Lile) resulting in an award of over $72,000 with open medical.? Guinnip v Bannister Electric, 2012 Mo WCLR Lexis 149 (July 27, 2012). The Second Injury Fund was ordered to pay the medical bills

The ALJ found the employer was less credible because of "inconsistent, vague and evasive" testimony and found liability conflicting evidence whether on not Mrs. Lile was a co-owner.? Mrs. Lile did not file an appeal on the award and the appeal?on her behalf?filed by her husband was dismissed as unauthorized practice of law.? The employer operated its business out of a personal residence under several fictitious entities.

The statute required claimant to have only 1 employee to be subject to the Act because it was performing construction work.
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"Missouri Courts have also recognized that the corporate veil could be pierced in a workers' compensation case where in essence the corporation was not a separate legal entity from its owners." In order to "pierce the corporate veil", the employee had to show 1) control, and not merely majority or complete stock control, but complete domination, not only of finances, but of policy and business practices in respect to the transaction attacked so that the nominal company had at the time of the injury no separate mind, will or existence of its own; 2) such control must have been used to commit fraud or wrong, to perpetuate the violation of a statutory duty, or constitute a dishonest and unjust act in contravention of the employee's legal rights; and 3) the aforesaid control and breach of duty must have proximately caused the injury or unjust loss complained of."
"In Claimant's case, there was a complete domination of the LLC by Steve and Melissa Liles, as the owners of the LLC.? The Liles' exercised complete domination of the finances, policies and business practices of the LLC. They used the LLC's income for their own personal use. Out of the LLC's income, the Liles' paid their home mortgage payments, paid their home's utility bills, paid their personal vehicle loans, paid a Direct TV television bill, bought clothing for the family, paid a dental bill for Mr. Liles, paid their personal credit card bills, paid their personal health insurance premiums and paid other personal bills. That was clearly indicative of a complete domination of the finances of the LLC by the Liles'.

The Liles' also dominated the business policies and practices of the LLC. The LLC clearly had no separate mind, will or existence of its own. The Liles' chose not to purchase workers' compensation insurance for the LLC on the alleged basis that Clamant and the other workers were subcontractors when the evidence clearly showed that Claimant was an employee and not a subcontractor. The Liles' chose not to? allow the LLC to pay its debt to Claimant and instead chose to allow the LLC to pay for their own personal living expenses such as their mortgage payments, house payments, credit card payments and other expenses."

Source: http://huckhowe.blogspot.com/2012/08/commission-imposes-personal-liability.html

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