East Market Street Square, Inc. v. Tycorp Pizza IV, Inc.

Gilbert Bland (defendant) managed several dozen Pizza Hut restaurants. The restaurants were each owned by one of three wholly owned corporate subsidiaries of a holding company of which Bland was the sole shareholder. Bland sought to open an additional Pizza Hut restaurant and formed Tycorp Pizza IV, Inc. (Tycorp IV) to hold the assets and liabilities associated with the additional restaurant. At all times, Tycorp IV was wholly owned either by Bland himself or by a subsidiary within the aforementioned corporate group. Additionally, Bland was the president and only director of Tycorp IV. To house the new restaurant, Tycorp IV entered into a lease with East Market Street Square, Inc. (East Market) (plaintiff) for a building East Market owned. The building needed extensive renovations before it could operate as a restaurant, and Tycorp IV agreed to perform those renovations. Tycorp IV’s costs both for the renovations and the amounts due under the lease were paid by other entities within the corporate group. While the renovations were still ongoing, the other entities in the corporate group became financially distressed and stopped covering Tycorp IV’s expenses. Tycorp IV stopped payments on its lease and ceased the renovations. The building fell into disrepair, causing the local government to condemn it, and East Market was forced to pay the cost to demolish it. East Market sued Bland in his individual capacity to recover for property damage and financial losses. East Market argued that it should be allowed to pierce the corporate veil to hold Bland personally liable for Tycorp IV’s liabilities. The trial court pierced the veil and ordered Bland to pay damages to East Market. Bland appealed on the grounds that the decision to pierce the corporate veil was in error.