In GreenHunter Energy v. Western Ecosystems, under what conditions can a court pierce the LLC veil?

• A. The entity is a separate entity with distinct assets and debts
• B. The owner never commingles funds with the LLC's assets
• C. The LLC is adequately capitalized and follows formalities
• D. The entity and its owner are not truly separate and there is intermingling of operations and finances that would cause injustice

Answer: (D)

Piercing the LLC veil happens when the owner and the LLC are not truly separate. The court looks for a unity of interest and ownership, where control over finances and operations is so intermingled that treating them as distinct would unjustly shield the owner from liability. When there is intermingling of operations and finances and that intermingling would cause injustice, the court may disregard the LLC’s separate status and hold the owner personally liable. This is the situation described here. The other statements describe proper separation—distinct assets and debts, no commingling of funds, adequate capitalization, and adherence to formalities—which would argue against piercing.