No Legal Theory to Extend Piercing the Corporate Veil Theory to Hold Estate Beneficiary Liable For Estate Debt
The trial court erred in finding appellant beneficiary and executor of estate personally liable for bill for animal feed delivered to farm business owned by estate because there was no legal theory to justify extending piercing the corporate veil to hold an estate beneficiary responsible for estate debts and appellant was not liable under a theory of unjust enrichment because there was no evidence to show that he directly benefited from the feed.
Appellee delivered animal feed to the dairy farm operated by appellant’s father. The father was the sole shareholder of the corporation that owned and operated the farm. After father died owing money to appellee, appellant became the executor and beneficiary of father’s estate and the estate continued to operate the farm and buy feed from appellee. Appellee sued farm and appellant over money due for delivered feed and asserted breach of contract and unjust enrichment. Prior to trial the parties stipulated that all defendants except for appellant in his individual capacity were liable for the entire $410,000 owed. At trial, the trial court pierced the corporate veil and found appellant individually liable and personally liable in his capacity as the sole beneficiary of father’s estate and liable on the alternate basis of unjust enrichment. Appellant appealed.
Appellant argued the trial court had no jurisdiction because the issues concerned the administration of an estate. The trial court had found that the orphan’s court lacked jurisdiction because the case was a contract claim and not related to the administration of the estate. The court agreed with the trial court that the complaint was based on breach of contract and did not directly raise any issues of estate administration.
The court agreed with appellant that there was no legal basis to extend the theory of piercing the corporate veil to hold an estate beneficiary personally liable for estate debts. The trial court erroneously focused on appellant’s failure to carry through the administration of father’s estate and his alleged desire to shield himself from liability. A process existed to force appellant to transfer the ownership interest in the farm business from the estate by filing a surcharge or petition to remove the executor. Appellee did not use that remedy and the trial court could not treat the transfer as having occurred.
Appellant also argued that the trial court erred in finding him liable under a theory of unjust enrichment because he derived no benefit from the delivery of the feed and that there was a valid and enforceable contract for the delivery of the feed to the farm. The court found that appellee failed to show that it was appellant himself and not the farm business that directly received the benefit of the feed.
Reference: Mark Hershey Farms, Inc. v. Robinson PICS Case No. 17-1566 (Pa. Super. Sept 22, 2017), Digest of Recent Opinions, Pennsylvania Law Weekly, 40 PLW 962, October 17, 2017
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