Owner Can't Sue Shell Corporation's President

July 31, 2003

A corporate tenant signed a restaurant lease, but never moved in or paid rent. The owner sued the corporation and was awarded over $37,000 in damages. But the owner couldn't collect from the corporation because it had no assets, bank accounts, or income. So the owner claimed that the corporation was a shell corporation, and asked the court to let it “pierce the corporate veil—that is, sue the entities or officers behind the corporation, which in this case was the corporation's president.

A corporate tenant signed a restaurant lease, but never moved in or paid rent. The owner sued the corporation and was awarded over $37,000 in damages. But the owner couldn't collect from the corporation because it had no assets, bank accounts, or income. So the owner claimed that the corporation was a shell corporation, and asked the court to let it “pierce the corporate veil—that is, sue the entities or officers behind the corporation, which in this case was the corporation's president.

A Florida court ruled that the owner couldn't sue the corporation's president. The court recognized that the corporate tenant was a shell corporation. But without proof that the corporation's president had organized or used the shell corporation to evade creditors, the mere use of a shell corporation to sign the lease wasn't enough to justify piercing the corporate veil and suing the corporation's president, the court said [Geigo Properties, LLP v. R.J. Gators Real Estate Group, Inc.].

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