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61 S.M.U. L. Rev. 1663 (2008)
Piercing the Veil of a Texas Limited Liability Company: How Limited is Member Liability?

handle is hein.journals/smulr61 and id is 1677 raw text is: PIERCING THE VEIL OF A TEXAS LIMITED LIABILITY COMPANY: How LIMITED IS MEMBER LIABILITY? Natalie Smeltzer* I. INTRODUCTION J N the world of business entities, the limited liability company (LLC) is emerging as a popular choice, combining the attractive tax advantages of a partnership with the limited liability protection of a corporation for all of its members. Texas enacted the Texas Limited Liability Company Act (TLLCA) in 1991.1 The TLLCA provides that a member or manager is not liable for the debts, obligations or liabilities of a limited liability company.'2 Further, the statute says that [a] mem- ber of an [LLC] is not a proper party to proceedings by or against a[n] [LLC], except where the object is to enforce a member's right against or liability to the [LLC].''3 The theory of piercing the corporate veil (PCV) is well-developed by both the courts and statutes in Texas. Article 2.21 of the Texas Business Corporation Act (TBCA) specifically addresses corporate veil pierc- ing.4 However, the concept of piercing the veil in other forms of Texas business entities, such as the LLC, is not as well developed. The TLLCA does not speak to whether or under what circumstances one may pierce the LLC veil, as does the TBCA in Article 2.21. Although the TLLCA does not address veil piercing, courts in Texas have been presented with the issue of piercing the veil of the LLC and * J.D. Candidate 2009, SMU Dedman School of Law; B.B.A. in Accounting, summa cum laude, Harding University; Certified Public Accountant, State of Texas. This article was written as of February 2008. 1 would like to thank my family for their love and sup- port. I would also like to give a special thanks to Katrina Smeltzer and Kayla Haynie for their writing guidance over the years. 1. TEX. REV. CIV. STAT. ANN. art. 1528n (Vernon Supp. 2008); TEX. Bus. ORGS. CODE ANN., tit. 3, § 101 (Vernon Supp. 2008). Effective January 1, 2006, all LLCs formed in Texas will be governed by the Texas Business Organizations Code (TBOC) Chapter 101. Unless electing otherwise, existing LLCs will governed by the TLLCA until January 1, 2010, when all LLCs in Texas will be subject to the TBOC. Throughout this paper, references will be made to the TLLCA. Unless otherwise noted, the portions of the TLLCA cited to are substantially the same as those under TBOC Chapter 101. 2. Art. 1528n, § 4.03A; see also TEX. Bus. ORGS. CODE ANN. § 101.114 (Vernon Supp. 2008). 3. Art. 1528n, § 4.03C; see also TEX. Bus. ORGS. CODE ANN. § 101.113 (Vernon Supp. 2008). 4. TEX. Bus. CORP. Acr ANN. art. 2.21 (Vernon 2003). 1663

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