bus 154 brief 3 - act against the person seeking to...

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Siva v. 1138 LLC 2007 Ohio 4667 FACTS: Ruthiran Siva, a commercial building owner located in 1138 Bethel Road, signed a 5-year lease agreement with a limited liability company called 1138 LLC formed by Richard Hess, Robert Haines, Lisa Hess, Nathan Hess, and Zack Shahin for a monthly rental of $4,000. The company used the building to operate a bar. However after 6 months of lease, Siva filed a complaint against 1138 LLC and Richard Hess for violating the lease agreement to recover damages. The Court did not find Siva’s claim relevant. Siva appealed. ISSUE: Should Richard Hess be personally liable for the debt owed by 1138 LLC to Siva? LAW: Business & Corporation Law under Fraud states that in considering whether control over a corporation by a shareholder to be held personally liable for corporate misdeeds was exercised in such a manner as to commit fraud or an illegal
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Unformatted text preview: act against the person seeking to disregard the corporate entity, the party seeking to pierce the corporate veil must establish that the shareholder exercised complete control over the corporation to commit fraud or other wrongful conduct. In additional to fraud, Ohio courts have found this requirement to be satisfied when “unjust or inequitable” consequences occur. ANALYSIS: Richard Hess should not be personally liable because there was no evidence of Hess forming a limited liability company to avoid paying creditors. In the lease agreement, Siva did not ask the member owners of 1138 LLC to sign the lease to be liable in an individual capacity but as a company as a whole. CONCLUSION: The court of appeals affirmed the trial court’s decision in favor of Richard Hess is not personally liable for the debt owed to Siva....
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