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Pennsylvania Superior Court Refuses to Pierce the Corporate Veil to Hold Beneficiary of Estate Personally Liable for Corporation’s Debts

In Mark Hershey Farms, Inc. v. Robinson, the Superior Court reversed the trial court’s ruling to pierce the corporate veil and hold the executor of an estate personally liable for the debts of the company he was operating on behalf of the estate. 171 .3d 810 (Pa. Super. Ct. 2017).  Robinson was the beneficiary of his father’s estate and after his father’s passing, Robinson operated his fathers’ businesses as the executor of his father’s will. Mark Hersey Farms, Inc. (“Mark Hershey”), a creditor of one of Robinson’s father’s businesses, brought suit for the debt. The trial court pierced the corporate veil and found Robinson, along with the business and estate, personally liable for the debts incurred.

Piercing the corporate veil allows the court to disregard the liability insulation provided by the corporate form and find the shareholders personally liable. In Pennsylvania, there is a strong presumption against not piercing the veil, and courts have only found it necessary when it is clear that the corporate form is merely a pretense to hide the shareholders’ wrongdoing. When deciding whether to pierce the corporate veil, courts are concerned with how the corporate records are kept, how the shareholders, other than the dominate shareholder actually function, and whether the dominant shareholder has used assets of the corporation as if they were his own. Appellee’s argued that Appellant gained personal benefit from the business with the company, and as a result, was unjustly enriched. In order to succeed under unjust enrichment, a plaintiff must establish that (1) a benefit was conferred on the defendant by plaintiff; (2) appreciation of such benefits by defendant; and (3) acceptance and retention of such benefits under the circumstances would be inequitable.

The Court rejected Mark Hershey’s argument because it was not convinced that Robinson received a personal benefit and found that piercing the corporate veil would be without basis. The Court was clear that unjust enrichment does not apply simply because the defendant has received a benefit, and that to succeed on such a claim, Mark Hershey was required to establish that it would be unconscionable for Robinson to retain such benefit.

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