Скачать или смотреть Sea-Land Services, Inc. v. Pepper Source (1993) Case Brief Summary | Law Case Explained

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Sea-Land Services, Inc. v. Pepper Source, 993 F.2d 1309 (1993)

A corporation is a separate entity that’s distinct from its shareholders. However, a court may sometimes disregard this separate existence and hold a corporation’s shareholders or owners personally liable for the corporation’s debts by piercing the corporate veil. In Sea-Land Services versus Pepper Source, the Seventh Circuit considered when it’s acceptable to pierce the corporate veil.

Pepper Source contracted with Sea-Land Services, a shipping company, for several deliveries of Jamaican sweet peppers. However, Pepper Source failed to pay Sea-Land for its services.

Sea-Land sued and obtained a default judgment against Pepper Source. However, by that time, Pepper Source was dissolved, and Sea-Land was unable to collect the judgment.

Sea-Land filed another suit against Gerald Marchese, Pepper Source’s owner, and various other business entities owned by Marchese. The suit alleged that Marchese’s businesses were alter egos of each other and of Marchese and were created to defraud creditors. Therefore, Sea-Land sought to pierce Pepper Source’s corporate veil and hold Marchese personally liable for the judgment against Pepper Source and reverse-pierce the veil of Marchese’s other business entities to also access their assets.

At trial, Sea-Land presented evidence that Marchese used Pepper Source’s funds to pay for personal expenses and the expenses of his other business entities. Sea-Land also introduced testimony from multiple accountants that Marchese withdrew corporate funds with the intent of rendering his businesses insolvent and defrauding creditors.

The district court found that Sea-Land had satisfied both requirements for piercing the corporate veil and entered judgment for Sea-Land. Pepper Source appealed to the Seventh Circuit, arguing that Sea-Land didn’t satisfy the second requirement.

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