Henry J. Mills Company v. Crawfish Capitol Seafood, Inc.

Court of Appeal of Louisiana, Third Circuit · 1990 · Corporations

569 So. 2d 1108 (1990)

Updated August 22, 2026

CorporationsPiercing the corporate veilShareholder liabilityAlter egocorporate veilshareholder non-liabilitytotality of circumstancescommingling

Facts

Crawfish Capitol Seafood, Inc. was incorporated in September 1985 by Champagne, Peltier, and Melancon to operate a seafood processing business. The corporation expected permanent state financing, obtained interim bank financing of $160,000, and had its own bank account; it apparently processed seafood only once or twice before becoming defunct after financing failed. Corporate funds were used to renovate a restaurant leased by Melancon individually, and Melancon briefly operated a restaurant there, but the trial court found no significant commingling of assets. The corporation was never formally dissolved, and no shareholder received money generated by the limited operations.

Issue

Whether the circumstances surrounding Crawfish Capitol Seafood's formation and operations justified piercing the corporate veil and imposing personal liability on shareholders Champagne and Peltier for the corporation's debt to Mills. More specifically, did the shareholders disregard the corporate entity so completely that the corporation ceased to be distinguishable from them?

Rule

Corporations are separate legal entities, and shareholders are generally not personally liable for corporate debts. A limited exception permits piercing the corporate veil when the corporation fails to conduct business on a corporate footing and becomes the alter ego of its shareholders. In deciding whether to pierce the veil, courts examine the totality of the circumstances, including possible commingling of funds, failure to follow statutory formalities, undercapitalization, failure to maintain separate bank accounts and bookkeeping records, and failure to hold regular shareholder or directors' meetings. When fraud or deceit is absent, the circumstances must be so strong as to clearly indicate that the corporation and shareholder operated as one.

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Bayou Harvest Foods, Inc. was formed in Lafayette to package specialty sauces. It filed articles of incorporation, opened a corporate bank account, and its three shareholders met frequently but kept no minutes. During a startup delay, one shareholder, Dana Romero, used a warehouse corner improved with corporate funds for her personal pop-up food stall for ten days, with no evidence she paid herself from corporate funds or diverted corporate sales.

A supplier sues Dana personally for Bayou Harvest's unpaid invoice and asks the court to pierce the corporate veil. Under the majority rule, what is the strongest conclusion?

Explanation. Shareholders are generally not liable for corporate debts. Veil piercing is a limited exception requiring proof that the shareholders disregarded the corporation so thoroughly that it ceased to be distinguishable from them. Absent fraud or deceit, the circumstances must clearly indicate the corporation and shareholder operated as one. Here, the corporation observed key formalities, had its own bank account, and the personal use was brief and not shown to involve diversion of corporate funds or operations. Under the majority's reasoning, such limited use would be insignificant rather than enough to justify piercing. (Derived from Henry J. Mills Company v. Crawfish Capitol Seafood, Inc. (1990).)