VII. "single-business Enterprise Theory"

• Library: South Carolina Limited Liability Companies (SCBar) (2020 Ed.)

VII. "Single-Business Enterprise Theory"

South Carolina lawyers should also be aware of another theory that gives an injured plaintiff more recourse than just going against the assets of the entity whose employee, member or manager injured him. The plaintiff may be able to seek recourse from a related entity. However, the South Carolina Supreme Court made it more difficult for a plaintiff to pursue what historically may have been referred to as "joint enterprise" or an "amalgamation" theory.

In Pertuis v. Front Roe Restaurants, Inc., [423 S.C. 640, 817 S.E.2d (2018)], the South Carolina Supreme Court declined to ignore the corporate form of a party and "amalgamate" three sibling corporations solely on the basis of a blurring of corporate identities. Instead, the court adopted a new two-part test for determining when to disregard the corporate form and impose liability on corporations so connected as to render them a single[-]business enterprise. The court held that the single-business enterprise theory (formerly known as amalgamation) requires not only an intertwining of operations among corporations but also evidence of fraud or fundamental unfairness as a result of the corporations' connectedness. This new test strengthens corporate protections by submitting single-business enterprise theory to the bedrock principle that courts can only ignore the corporate form if there is a substantial showing of injustice or fundamental unfairness.
Thus, Pertuis modified existing standards derived from South Carolina case law permitting horizontal veil[ ]piercing among corporations where there was merely blurring of corporate activities.⁷⁶

The basic concept is that if one owner (or a few owners) control a number of interrelated corporations or entities, a judgment...