## Facts

- Greg Gantt operated a packaging and supply business as a sole proprietorship and later incorporated it as AlaPak, Inc., transferring the proprietorship’s assets and liabilities to the corporation.
- After incorporation, AlaPak entered financing arrangements with third-party lenders.
- Co-Ex Plastics, Inc. sold plastic goods to AlaPak on open account from mid-1985 to early 1986; the account became overdue by about $35,000.
- Co-Ex sued AlaPak and Gantt; it obtained a money judgment against AlaPak and sought to hold Gantt personally liable by piercing the corporate veil.
- Evidence supporting veil-piercing included: inability to produce a stock certificate; continued use of a pre-incorporation bank account and checks bearing the old trade name; checks not signed in a representative capacity; and inconsistent use of business names.

## Issues

1. Whether the evidence required disregarding AlaPak’s corporate existence and imposing personal liability on Gantt under an alter-ego/instrumentality theory to prevent fraud or injustice.

## Decision

- The Supreme Court of Alabama affirmed the judgment declining to pierce the corporate veil.
- The court held the record did not compel a finding that AlaPak was a sham or that recognizing the corporation would sanction fraud or produce inequitable consequences.
- The court relied on deference to the trial court’s factual findings after a non-jury trial.

## Legal Principles

- A corporation is presumptively a separate legal entity; shareholders are generally not liable for corporate debts.
- Veil-piercing is an exceptional remedy requiring proof that the corporation is an alter ego or mere instrumentality and that respecting the corporate form would sanction fraud or promote injustice.
- Majority (or sole) ownership and control, standing alone, does not justify disregarding the corporate entity.
- Informal corporate practices (e.g., missing stock certificate, use of prior trade name, and non-representative check signatures) are relevant but insufficient without evidence tying them to misuse of the corporate form causing fraud or inequitable consequences.
- Appellate review of veil-piercing determinations following ore tenus proceedings is highly deferential; reversal requires clear error.

## Conclusion

Because Co-Ex did not prove fraud, gross undercapitalization, or other misuse of the corporate form producing inequitable consequences, the court upheld the corporate separateness of AlaPak and declined to impose personal liability on Gantt.


Co-Ex Plastics, Inc. v. AlaPak, Inc., 536 So. 2d 37 (Ala. 1988)