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Date: Sat, 31 Aug 2013 18:15:08 -0400
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From: mark and patricia garrard <mpgarr01@hotmail.com>
Subject: LLC for Insurance - Caution
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As I understand it=2C you & your partner want to insure a Lancair turbine a=
ircraft located in CA.  The only available insurer has determined not to do=
 business in that state.  You propose forming an LLC in NV (presumably maki=
ng the A/C an asset of that LLC=2C at least on paper) in order to get the d=
esired coverage from the company.  Presumably the A/C is in CA and you inte=
nd to base it there or the insurer would not be balking about doing busines=
s in that state.

It's certainly possible the company will ultimately accept your premiums an=
d issue coverage to a newly formed NV entity.  As a retired/reformed lawyer=
=2C however=2C I have concerns about your proposal.  Unless you are truly d=
oing business in NV and have substantial business contacts with that state =
there's a real risk that plaintiff's counsel will attempt to "pierce the co=
rporate veil" in the event of a mishap in CA or any other state apart from =
NV.

Piercing the corporate veil involves holding the owners of an LLC (you and =
your partner) liable for the debts of the company (damages in a mishap).  =
=0A=
Generally=2C piercing the corporate veil can only be done in extreme =0A=
situations such as when the shareholder commits fraud or when the =0A=
corporation is deemed the =93alter ego=94 of the shareholder.   The standar=
d =0A=
for successfully piercing the corporate veil in NV may be stricter =0A=
than in your home state.   However=2C it is important to note that if litig=
ation takes place in your home state or in some other state besides =0A=
NV=2C conflicts of laws principles may cause the law of a state other =0A=
than NV to control whether a piercing the corporate veil action =0A=
would be successful.   In other words=2C judges often have a lot of =0A=
discretion as to which state=92s laws apply in multi-state cases and often=
=0A=
 begin with the assumption that the law of the forum applies unless a =0A=
party can show that another state=92s laws have greater contacts or =0A=
interests in the case.  =20

In fact=2C while NV corporations are often =0A=
promoted as being particularly useful to business owners in CA=2C =0A=
CA has been one of the most aggressive states in applying its =0A=
own corporate laws to businesses incorporated elsewhere but doing =0A=
business in CA. The more serious the mishap=2C the greater the scrutiny you=
r "corp." is going to be subject to.

Recommend you consult CA counsel with a background in aviation law before l=
eaping on this idea.

Cheers=2C Mark (Notre Dame=2C JD=2C 1984)
 		 	   		  =

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<body class=3D'hmmessage'><div dir=3D'ltr'>As I understand it=2C you &amp=
=3B your partner want to insure a Lancair turbine aircraft located in CA.&n=
bsp=3B The only available insurer has determined not to do business in that=
 state.&nbsp=3B You propose forming an LLC in NV (presumably making the A/C=
 an asset of that LLC=2C at least on paper) in order to get the desired cov=
erage from the company.&nbsp=3B Presumably the A/C is in CA and you intend =
to base it there or the insurer would not be balking about doing business i=
n that state.<br><br>It's certainly possible the company will ultimately ac=
cept your premiums and issue coverage to a newly formed NV entity.&nbsp=3B =
As a retired/reformed lawyer=2C however=2C I have concerns about your propo=
sal.&nbsp=3B Unless you are truly doing business in NV and have substantial=
 business contacts with that state there's a real risk that plaintiff's cou=
nsel will attempt to "pierce the corporate veil" in the event of a mishap i=
n CA or any other state apart from NV.<br><br>Piercing the corporate veil i=
nvolves holding the owners of an LLC (you and your partner) liable for the =
debts of the company (damages in a mishap).&nbsp=3B =0A=
Generally=2C piercing the corporate veil can only be done in extreme =0A=
situations such as when the shareholder commits fraud or when the =0A=
corporation is deemed the =93alter ego=94 of the shareholder. &nbsp=3B The =
standard =0A=
for successfully piercing the corporate veil in NV may be stricter =0A=
than in your home state.&nbsp=3B  However=2C it is important to note that i=
f litigation takes place in your home state or in some other state besides =
=0A=
NV=2C conflicts of laws principles may cause the law of a state other =0A=
than NV to control whether a piercing the corporate veil action =0A=
would be successful.&nbsp=3B  In other words=2C judges often have a lot of =
=0A=
discretion as to which state=92s laws apply in multi-state cases and often=
=0A=
 begin with the assumption that the law of the forum applies unless a =0A=
party can show that another state=92s laws have greater contacts or =0A=
interests in the case. &nbsp=3B <br><br>In fact=2C while NV corporations ar=
e often =0A=
promoted as being particularly useful to business owners in CA=2C =0A=
CA has been one of the most aggressive states in applying its =0A=
own corporate laws to businesses incorporated elsewhere but doing =0A=
business in CA. The more serious the mishap=2C the greater the scrutiny you=
r "corp." is going to be subject to.<br><br>Recommend you consult CA counse=
l with a background in aviation law before leaping on this idea.<br><br>Che=
ers=2C Mark (Notre Dame=2C JD=2C 1984)<br> 		 	   		  </div></body>
</html>=

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