Separate Lawsuit Needed to Pierce the Corporate Veil

Business entities, including properly-formed foundations, are separate legal entities that are distinct from the individuals associated with those entities.  Consequently, there is a "corporate veil" that cannot be breached to impose liability on such an entity unless the elements required to pierce the corporate veil are proven.  In the recent unpublished Appellate Division decision, the court confirmed this premise and found that the John "Jack" Phillips Family Foundation LTD. was not responsible to pay a judgment entered against John Phillips Jr. individually.  In doing so, the court stated, "Like any other person or entity, the Foundation was entitled to due process, which would include the right to have the civil claim against it set forth in a complaint, the right to be personally served with that complaint, the right to file a responsive pleading, the right to discovery, and all the other rights delineated in our court rules prior to the entry of a judgment against it. See Nelson v. Adams, 529 U.S. 460, 465-66 (2000). The proceedings in the trial court short-circuited all these rights. Indeed, it seems as though the mechanism employed in the trial court required that the Foundation disprove its liability rather than requiring plaintiff to prove its entitlement to relief."  Consequently, absent a separate lawsuit and requisite proofs, the only person or entity responsible for the judgment would be the individual defendant who was named in the lawsuit.    (Comegno Law Group, PC v. John Phillips, Jr.)