A Bucks County Court of Common Pleas judge awarded a packaging company more than $138,000 in compensation against a limited liability company, and allowed the plaintiffs to pierce the corporate veil to recoup the money. Plaintiff, Power Line Packaging Inc., is a small, family-owned manufacturing and repackaging company focusing on personal care products. Judge Gary Gilman awarded plaintiff money after finding that Defendnats Hermes Calgon/THG Acquisition LLC and its principals intentionally made misrepresentations to plaintiff and were unjustly enriched.
Hermes Calgon was formed as a limited liability company by previous executives of a company that owned several personal care product brands. Hermes Calgon approached Power Line to develop a line of products for Shoppers Drug Mart, which is a large retailer in Canada. The defendants claimed that Shoppers Drug Mart had already placed orders with the company. Based on the representations, Power Line bought materials to create the product line, and developed product line formulas at the defendants’ request.
Power Line was never told payment was contingent on the placement of purchase orders or payments from Shoppers. Shoppers advised the defendants that the company needed to review the product pricing strategy, but defendants did not notify Power Line of Shoppers’ position. In June 2009, the defendants were told that Shoppers would not purchase the products. Power Line sued the defendants, arguing that the defendants repeatedly reassured Power Line they would pay for the purchase and storage of materials related to developing the product line.
“The court held that if you’re going to form an LLC, you need to follow the formalities of that company, and if those formalities are not followed, the individuals forming the LLC may be subject to liability[.]”
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