LUMMUS CORPORATION APPELLANT v. LIGHTHOUSE TRANSPORTATION SERVICES LLC APPELLEE (2026)

OPINION AFFIRMING

Lummus Corporation appeals the Kenton Circuit Court's judgment after a bench trial imputing to it the liability of its subsidiary, System Solutions of Kentucky, LLC. We hold the corporate veil-piercing doctrine is applicable to limited liability companies and conclude the circuit court's factfinding supports the legal conclusions that System Solutions’ veil should be pierced and that Lummus is liable for System Solutions’ contract breach debt.

BACKGROUND

System Solutions was formed as an LLC in 2003 and Lummus acquired it in 2016, becoming its sole member. The LLC was an installer of package-handling and conveyor systems for logistics companies like United Parcel Service and Federal Express. System Solutions contracted to work on two UPS “superhub projects.” In turn, System Solutions engaged Appellee Lighthouse Transportation Services, LLC, to provide transportation brokerage services.

In 2019, Lighthouse sued System Solutions to collect overdue payments. System Solutions conceded its liability, and the circuit court entered summary judgment awarding Lighthouse $669,100.00, plus costs and interest. After a bench trial in 2023, the court entered judgment imputing System Solutions’ liability to Lummus under a theory of entity veil-piercing. This appeal followed.

Lummus presents three arguments: (1) the plain text of KRS ¹ 275.150 forbids veil-piercing claims against LLCs; (2) the trial court's factual findings do not support veil-piercing; and (3) the trial court's factual findings do not support a finding that Lummus was unjustly enriched.

STANDARD OF REVIEW

When reviewing a judgment after a bench trial, the reviewing court will only set aside findings of fact if they are clearly erroneous, due regard being given to the opportunity of the trial court to judge the credibility of the witnesses. CR ² 52.01. We undertake a de novo review of the trial court's application of the law to facts not found to be clearly erroneous. Hoskins v. Beatty, 343 S.W.3d 639, 641 (Ky. App. 2011). The interpretation of a statute such as KRS 275.150 is purely a question of law subject to de novo review. Spencer County Preservation, Inc. v. Beacon Hill, LLC, 214 S.W.3d 327, 329 (Ky. App. 2007).

ANALYSIS

We begin with Lummus's argument that KRS 275.150 forbids applying the doctrine of piercing the corporate veil to LLCs. Lighthouse says the law “clearly establishes” the contrary. We say, and more significantly the Supreme Court indicates, the law is unclear enough to justify debate.

1. Applying doctrine of veil-piercing to Limited Liability Companies

Our Supreme Court appears to believe our appellate courts have never directly answered the question whether KRS 275.150 permits veil-piercing.³ Nevertheless, the circuit court relied on a Supreme Court opinion, Turner v. Andrew, 413 S.W.3d 272 (Ky. 2013), to conclude that it does. And why not?

The circuit court quoted a portion of Turner, a unanimous Supreme Court opinion, that says: “ ‘Piercing the corporate veil is an equitable doctrine invoked by courts to allow a creditor recourse against the shareholders of a corporation.’ Inter-Tel Technologies, Inc. v. Linn Station Properties, LLC, 360 S.W.3d 152, 155 (Ky. 2012). The doctrine can also apply to limited liability companies.” Turner, 413 S.W.3d at 276–77 (emphasis added). But just four months after Turner, the Supreme Court, for unknown reasons, raised some doubt about this last statement.

In Pannell v. Shannon, another unanimous opinion, the Supreme Court said, “The same fundamental law limiting veil piercing to extraordinary circumstances must apply to limited liability companies as well.” 425 S.W.3d 58, 75 (Ky. 2014). That seems to support Lighthouse's argument and the circuit court's analysis. However, appended to that statement is a lengthy footnote casting the doubt. The footnote says, in part:

This, of course, assumes the doctrine of veil piercing even applies to limited liability companies under Kentucky law. While several decisions have assumed that it does [citation omitted], the question appears to have been raised in only one case, Howell Contractors, Inc. v. Berling, 383 S.W.3d 465, 466 (Ky. App. 2012), which ultimately avoided the question by applying Ohio law, which does allow veil piercing of LLCs. There are, of course, strong arguments for why LLC veil piercing should not be allowed ․ even when corporate veil piercing is viable in the jurisdiction ․

Id. at 75 n.15 (unanimous opinion).⁴

In 2018, this Court rendered Tavadia v. Mitchell. As in pre-Pannell opinions, we presumed without deciding that an LLC's veil could be pierced. 564 S.W.3d 322, 328 (Ky. App. 2018) (citing Inter-Tel, 360 S.W.3d at 155). The parties in Tavadia appear to have made the same presumption, not having made interpretation of KRS 275.150 a direct issue on appeal. We all proceeded based on the presumption. But we are not the only courts to read pre-Pannell jurisprudence as having decided the issue. See Thornton v. Dutch Nats. Processing, LLC, 629 F. Supp. 3d 777, 795 (M.D. Tenn. 2022) (“Kentucky courts have been clear that under Kentucky law, the piercing-the-corporate-veil doctrine applies to limited liability companies.”) (emphasis added) (citing Turner, 413 S.W.3d at 277).

The bottom line is this. Unlike those prior cases whose issues were peripheral to the veil-piercing question, Lummus's argument places the issue squarely before us. Thus, our answer here cannot be read as dicta. We will get this wrong or we will get this right. The import of Pannell’s footnote 15 is that this Court is writing on a blank slate.⁵

These pre-Pannell opinions did not do what we must do—examine the statutory language and history. That is where we begin. And that requires an understanding of: (1) common law concepts of corporate veil-piercing, (2) the codification of those concepts for corporations per se, (3) the enactment of statutes to govern a separate business entity we call the LLC, (4) jurisprudence interpreting those statutes, and (5) the legislative response to that jurisprudence.

Common law corporate veil-piercing concepts

The common law authorized a court “to ignore the corporate fiction and to draw aside the veil of corporate entity where necessary to reach justice ․” Louisville & N.R. Co. v. Carter, 10 S.W.2d 1064, 1068 (Ky. 1927). The issue to be decided before drawing that veil aside was whether an act was a corporate act, or whether shareholders were acting “simply as individuals and with respect to their individual interests” within the corporate shell with “a possible interest to conceal their character when acting in their corporate capacity ․” Id. (emphasis added). That is, whether “the corporation is the mere dummy or alter ego or conduit of individuals or of another corporation ․” C. L. & L. Motor Express Co. v. Achenbach, 82 S.W.2d 335, 339 (Ky. 1935).

Codification of those concepts for corporations

In 1972, when the legislature enacted the Kentucky Business Corporation Act (KBCA), KRS 271B.1-010 et seq., to govern corporations by statute, it retained the distinction between corporate acts on the one hand and, on the other, conduct of individual shareholders acting in their own interest behind the façade of a corporate existence. Reference to that distinction is codified in KRS 271B.6-220(2), derived from Section 6.22(b) of the Model Business Corporation Act (MBCA). In pertinent part, and particularly as italicized here, it says: “a shareholder of a corporation shall not be personally liable for the acts or debts of the corporation except that he or she may become personally liable by reason of his own acts or conduct.” KRS 271B.6-220(2) (emphasis added).

“[T]he MBCA's drafters opine” that Section 6.22(b), and thereby KRS 271B.6-220(2)—“allows personal liability to be ․ involuntarily thrust upon a shareholder under the equitable remedy known as ‘piercing the corporate veil.’ ” Stephen M. Bainbridge, Abolishing Veil Piercing, 26 J. CORP. L. 479, 480 (2001). Our Supreme Court expressed its agreement, stating KRS 271B.6-220(2) “does no more than restate the common law rule.” Smith v. Isaacs, 777 S.W.2d 912 (Ky. 1989) (quoting KRS 271A.125(5) (repealed), the identical language now in KRS 271B.6-220(2)). The Court was more specific when it said the legislature “gave statutory recognition to the veil-piercing doctrine in [KRS] 271B.6–220(2)[.]” Inter-Tel, 360 S.W.3d at 165. Thus, association of this statutory language allowing personal liability of a business entity's owners with the equitable common law doctrine of veil-piercing was jurisprudentially recognized.

Adoption of statutes to govern a separate business entity we call the LLC

More than twenty years after the KBCA became law, “Kentucky became the forty-first state to provide for the formation of these relatively new business structures” known as limited liability companies. Thomas E. Rutledge & Lady E. Booth, The Limited Liability Company Act: Understanding Kentucky's New Organizational Option, 83 KY. L.J. 1, 4 (1995). The heart of the law is the liability limitation for LLC members, managers, employees, and agents stated in KRS 275.150. When enacted, the statute had no subsections. It read somewhat simply and as pertinent here as follows:

Except as otherwise specifically set forth in this chapter, no member [or] manager ․ shall be personally liable by reason of being a member [or] manager ․ under a judgment, decree, or order of a court ․ for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise. The status of a person as a member [or] manager ․ shall not subject the person to personal liability for the acts or omissions, including any negligence, wrongful act, or actionable misconduct, of any other member, manager, agent, or employee of the limited liability company.

1994 Kentucky Laws Ch. 389, § 30 (S.B. 184) (enacted as KRS 275.150 (1994)). The statute's liability limitation was broad, and the only exceptions were those “specifically set forth in this chapter” 275.⁶

At first, commentators were unsure about the statute's scope and whether it prohibited veil-piercing. Rutledge & Booth, 83 KY. L.J. at 17 n.73 (“An issue to be considered is the degree to which the common law doctrine of piercing the corporate veil should apply to LLCs.”). Some advocates urging greater liability protection noted KRS 275.150 lacked the personal liability language associated with veil-piercing in KRS 271B.6-220(2). But some time would pass before the issue made its way to Kentucky's appellate courts. Early jurisprudence interpreting Chapter 275

In the decade following enactment of our LLC law, the courts of many states struggled with this veil-piercing question. In some states, “the traditional law of piercing the corporate veil [was] applied to LLCs, and [even Kentucky saw] the expansion of statutory exceptions to the rule of limited liability.” Allan W. Vestal & Thomas E. Rutledge, Disappointing Diogenes: The LLC Debate That Never Was, 51 ST. LOUIS U.L.J. 53, 78–79 (2006) (footnotes omitted). See, e.g., KRS 138.448(1), 139.185, 141.340(3) (imposing member-manager liability for gasoline, sales and use, and withholding taxes). The specific question whether a Kentucky LLC's “corporate” veil could be pierced reached critical mass in 2008 with this Court's rendering of Barone v. Perkins.

In Barone, this Court affirmed the trial court's ruling that “KRS 275.150(1) insulates members of limited liability companies from any liability of the company whether arising in contract, tort or otherwise and unlike KRS 271B.6–220(2), contains no language which exempts any acts of the members as individuals ․” Barone v. Perkins, No. 2007-CA-000838-MR, 2008 WL 2468792, at *2–3 (Ky. App. Jun. 20, 2008) (emphasis added). We concluded that, “[b]ecause [the defendants] were acting in their capacities as members of the LLC, they are entitled to the immunity provided by KRS 275.150.” Id. at *4. For good measure, we also rejected the appellants’ public policy argument for piercing the LLC's veil, explaining “that it is the Legislature's duty to declare public policy[.]” Id.

Although Barone was not published and not precedent, the legislature still took note and then took action in the 2010 legislative session.

Legislative response to early LLC jurisprudence

In that session, “a series of amendments were adopted across the business entity laws in response to and for the purpose of legislatively overriding portions of the Kentucky Court of Appeal[s’] ruling in Barone v. Perkins.” Thomas E. Rutledge, The 2010 Amendments to Kentucky's Business Entity Laws, 38 N. KY. L. REV. 383, 383 (2011). Whether Barone’s “differentiation” between Chapter 271B.6-220(2) and KRS 275.150 can “stand up to scrutiny” can always be debated, but the legislature's response cannot. Id. at 386. That response met the Court on the ground we chose—finding distinction for purposes of veil-piercing in the absence of personal liability language in KRS 275.150.

Even though Chapter 275 already “expressly incorporate[d] ‘the principles of law and equity,’ [KRS 275.003(1),] which includes the law of agency[,]” id., the legislature decided to double down.

In response to the Barone court's attempts to differentiate between the limited liability provided by [Chapter 271B] and the LLC Act, and its reliance upon the express statutory language incorporating the general rule set forth in agency law, the 2010 Amendments revised the limited liability provision of the LLC Act to incorporate Section 7.01 of the Restatement (Third) of the Law of Agency, as embodied in KRS § 271B.6-220(2).

Id. at 387 (footnote omitted). That part of the Restatement is the source of the language in KRS 271B.6-220(2) we faulted the legislature for failing to include in KRS 275.150. Id.

The original iteration of the statute already had been numbered subsection (1) before language was added in the 2010 legislative session that mirrors the language in KRS 271B.6-220(2), thereby eliminating the distinction the trial court in Barone found controlling on the issue and opening the way for courts to apply the veil-piercing doctrine. The new subsection of KRS 275.150 reads:

(3) Subsection (1) of this section shall not affect the liability of a member, manager, employee, or agent of a limited liability company for his or her own negligence, wrongful acts, or misconduct.

2010 Kentucky Laws Ch. 133, § 31 (S.B. 150) (codified as KRS 275.150(3)).

Doctrine of piercing the corporate veil can be applied to LLCs

Now the issue is squarely before this Court and we hold, consistently with the intent of the General Assembly, that the equitable doctrine of “piercing the veil” and the jurisprudence articulating that doctrine is applicable to entities established under the Kentucky Limited Liability Act.

Given the legislative amendment in response to Barone, the appellate courts were always right after 2010 to presume the veil-piercing doctrine applies to LLCs. However, caution must be taken when applying the doctrine to LLCs rather than corporations because certain provisions of Chapter 275 may negate factors considered part of the analysis when applied to corporations organized under KRS 271B.010 et seq.⁷

For these reasons, we are unpersuaded by Lummus's first argument.

2. Factfinding supports piercing the LLC veil of System Solutions

Because Lummus does not challenge the circuit court's factfinding, we review the judgment, specifically alert to legal error. After thoroughly vetting Lummus's argument, we find no legal error in the court's application of the veil-piercing doctrine to these facts. In fact, we conclude we can do little to improve upon the circuit court's—Judge Patricia Summe's—legal reasoning.

After acknowledging the limitation of liability found in KRS 275.150(1), Judge Summe turned to Tavadia v. Mitchell, supra, where we said, if certain grounds can be proved, a separate legal entity's debt is “enforceable against those who have exercised dominion over the corporation to the point that it has no real separate existence.” Record (R.) 1147 (Judgment) (quoting Inter-Tel, 360 S.W.3d at 155). The judge here previewed her decision, stating that, “[a]fter reviewing the record and testimony at trial,” the court was convinced Lighthouse “produced sufficient evidence to satisfy both elements set forth in Inter-Tel Technologies to justify piercing the limited liability company's corporate veil.” Id. (paraphrasing Tavadia, 564 S.W.3d at 330). The judgment continues, as follows:

The Supreme Court of Kentucky has held that the corporate veil of an entity may be pierced, and the members of the entity may be reached for liability purposes, if there exist: “two dispositive elements: (1) domination of the corporation resulting in loss of corporate separateness and (2) circumstances under which continued recognition of the corporation would sanction fraud or promote injustice.”

Id. (quoting Inter-Tel, 360 S.W.3d at 165).

Addressing the first element—domination by the member resulting in a loss of corporate separateness—Judge Summe set out the 11 factors the Supreme Court said should be considered. As noted in footnote 7, supra, the last factor may be excluded by KRS 275.150(4). It was not a factor at play in this case, but more than half the remaining factors were. The court then held: “Lummus clearly dominated System Solutions to the extent of erasing its corporate separateness.” R. 1148 (Judgment). We find no legal error in that conclusion.

Next the circuit court considered the second element—“whether circumstances exist which would promote injustice in the continued recognition of [System Solutions] as a separate entity ․” Id. Notable among others are the circuit court's findings that Lummus not only “swept” System Solutions’ accounts and sold System Solutions’ assets “for payment of Lummus creditors,” Lummus applied a payment priority system that “worked to the detriment of Lighthouse, as its invoices were classified as low priority ․” R. 1149 (Judgment). Lummus also “caused System Solutions to continue utilizing the services of Lighthouse thereby incurring additional liabilities to that company knowing full well that they would be unable to pay them while at the same time concealing that fact from Lighthouse.” Id.

The court then held: “[T]he evidence in the record clearly supports a determination that the corporate veil must be pierced in this case to achieve a just result.” Id. We see no legal error in that conclusion.

3. Factfinding supports a finding of unjust enrichment

In one sense, the unjust enrichment claim is redundant. As System Solutions’ alter ego, Lummus is vicariously liable for this debt.

This case starts with the “fundamental corporate law that a shareholder [or LLC member] is not liable for a debt of the corporation unless extraordinary circumstances exist to impose liability.” Smith, 777 S.W.2d at 913 (emphasis added) (quoting Morgan v. O'Neil, 652 S.W.2d 83, 85 (Ky. 1983)). Our Supreme Court continued:

The key element in this quote, overlooked to this point, is that it pertains to liability “for a debt of the corporation.”

This rule governs the vicarious liability of a shareholder [or member] for the debts of a corporation [or LLC]. It protects a shareholder from liability for the corporate debt except upon proof of circumstances that justify “piercing the corporate veil[.]”

Id. at 913.⁸

Once the circuit court concluded that the facts of this case justified piercing the corporate veil, Lummus became vicariously liable for the debt owed to Lighthouse by its alter ego, System Solutions.

As in Isaacs, the vicarious nature of Lummus's liability for System Solutions’ debt has been “overlooked to this point,” apparently in favor of measuring that liability in terms of Lummus's unjust enrichment.

However, we find no error in the circuit court's analysis of Lighthouse's unjust enrichment claim. The court applied the proper three-element standard stated in Jones v Sparks, 297 S.W.3d 73, 78 (Ky. App. 2009), and calculated Lummus's enrichment as equal to System Solutions’ outstanding debt.

Lummus's main argument is that because an unjust enrichment claim is based in equity and this action is controlled by contract law, the claim was never available. But this case is not controlled by contract law. Arguing that “law trumps equity” fails here. Appellant's Br. at 31 (internal quotation marks and citation omitted) (quoting Superior Steel, Inc. v. Ascent at Roebling's Bridge, LLC, 540 S.W.3d 770, 778 (Ky. 2017)). The landscape of this case is equity. The path Lummus urges us to follow does not traverse that landscape. The trip through contract law was completed when System Solutions and Lummus acknowledged the breach, and amount of the debt. The judgment we review here is pure equity.

Pursuing the equity claim of unjust enrichment was simply how Lighthouse elected to calculate its damages. The sum yielded by that calculation was the same as it would have been if the circuit court applied vicarious liability under Isaacs. We find no fault in couching the argument for damages either way.

CONCLUSION

For the foregoing reasons, we affirm the January 18, 2024, Judgment of the Kenton Circuit Court.

FOOTNOTES

1.   Kentucky Revised Statutes.

2.   Kentucky Rules of Civil Procedure.

3.   See, infra, Pannell v. Shannon, 425 S.W.3d 58, 75 n.15 (Ky. 2014).

4.   The Supreme Court in Pannell cites Turner, supra, but not for the statement that the doctrine of piercing the corporate veil “can also apply to limited liability companies.” Turner, 413 S.W.3d at 277. Rather Pannell quotes Turner to point out “the common law of business entities has largely been abrogated by the adoption of the various statutes, like ․ the Kentucky Limited Liability Company Act” and that “ ‘‘limited liability companies are creatures of statute,’ controlled by Kentucky Revised Statutes (KRS) Chapter 275,’ Turner v. Andrew, 413 S.W.3d 272, 275 (Ky. 2013) (quoting Spurlock v. Begley, 308 S.W.3d 657, 659 (Ky. 2010)), not primarily by the common law.” Pannell, 425 S.W.3d at 68.

5.   We note Schneider v. Buttermilk Shopping Center, LLC, addresses statutory exceptions to KRS 275.150 but not the equitable doctrine of piercing the corporate veil. No. 2024-CA-1036-MR, 2025 WL 2679049, at *3 (Ky. App. Sep. 19, 2025) (finality Dec. 18, 2025).

6.   See, e.g., KRS 275.095 (“All persons purporting to act as or on behalf of a limited liability company, knowing there has been no organization under this chapter, shall be jointly and severally liable for all liabilities created while so acting.”); KRS 275.230(1) (“A member or manager who votes for or assents to a distribution in violation of an operating agreement or Section 45 of this Act shall be personally liable to the limited liability company ․”).

7.   Rutledge and Booth note:some of the rationales utilized in Kentucky to pierce the corporate veil appear inapplicable to LLCs. These provisions include the failure to follow organizational formalities which are not mandated by the LLC Act. See, e.g., White v. Winchester Land Dev. Corp., 584 S.W.2d 56, 62 (Ky. Ct. App. 1979) (holding that the “failure to observe the formalities of corporate existence” could constitute a factor in support of piercing the corporate veil) [overruled on other grounds by Inter-Tel, 360 S.W.3d at 164, expanding the list of factors beyond the five White identified that included, and still includes, this factor, stated as the question: “Are the formal legal requirements of the subsidiary not observed?”]․ [KRS] 275.185(4) ․ provides that the failure to maintain the corporate records of an LLC will not constitute a basis for imposing personal liability on the members and managers.Rutledge & Booth, 83 KY. L.J. at 121 n.73.

8.   The Sixth Circuit Court of Appeals further explained that when it comes to “whether a litigant may use veil piercing to consolidate a debtor and its alter ego into a single entity—the cases fall into two camps.” In re Howland, 674 Fed. App'x 482, 486 (6th Cir. 2017).The first camp ․ deem[s] a corporation and its alter ego to be a single entity․ [with] an equitable interest in the assets of its alter ego․The second camp employs veil piercing as a form of vicarious liability, shifting liability from the debtor to its alter ego․ Efforts to pierce the corporate veil ask a court to hold A vicariously liable for B’s debt․ Under this approach, [t]he doctrine of alter ego ․ simply fastens liability upon the individual who uses the corporation merely as an instrumentality in the conduct of his own personal business․Kentucky falls into the second camp․ Such extraordinary liability may be imposed ․ by “piercing the corporate veil.” Morgan v. O'Neil, 652 S.W.2d 83, 85 (Ky. 1983) ․ According to the Kentucky Supreme Court, corporate veil piercing “governs the vicarious liability of a shareholder for the debts of a corporation.” Id.; see also Inter-Tel Techs., Inc. v. Linn Station Props., LLC, 360 S.W.3d 152, 155 (Ky. 2012) (“[T]he debt of the pierced entity becomes enforceable against those who have exercised dominion over the corporation.”).Id. (internal quotation marks and citations omitted).

ACREE, JUDGE:

ALL CONCUR.