## Facts

- In 2007, Ryan Fell Mortimer suffered serious, permanent injuries when an intoxicated driver struck her vehicle shortly after being served at a restaurant.
- The restaurant operated under a management arrangement with 340 Associates, LLC, which held the restaurant’s liquor license.
- The restaurant operated in a building owned by McCool Properties, LLC.
- Andy and Chris McCool owned 340 Associates; Andy, Chris, and their father Raymond owned McCool Properties.
- Mortimer obtained a $6.8 million dram-shop judgment; under the Liquor Code, 340 Associates, as licensee, was jointly and severally liable for the full amount.
- 340 Associates had no meaningful assets beyond the liquor license and carried no liquor liability insurance.
- Mortimer filed follow-on actions seeking to satisfy the judgment by piercing 340 Associates’ veil, including an “enterprise” theory treating 340 Associates and McCool Properties as a single enterprise and seeking liability against the McCool individuals and entities.

## Issues

1. Whether Pennsylvania law permits “enterprise liability” (horizontal veil piercing) allowing affiliated entities under common control to be treated as a single enterprise for liability purposes.
2. If so, whether the relationship and conduct of 340 Associates and McCool Properties justified disregarding their separateness to impose the dram-shop judgment on McCool Properties and/or the McCool individuals.

## Decision

- The Supreme Court of Pennsylvania recognized a narrow form of enterprise liability as a potential veil-piercing remedy between affiliated entities.
- The Court affirmed the judgment for the defendants, holding enterprise liability unavailable on this record.
- The Court left the dram-shop judgment enforceable only against 340 Associates.

## Legal Principles

- Pennsylvania applies a strong presumption against veil piercing; disregarding entity separateness is an exceptional, equitable remedy.
- Traditional veil-piercing considerations include undercapitalization, failure to follow entity formalities, commingling of affairs, and use of the entity form to perpetrate fraud or produce injustice.
- Enterprise liability is a species of veil piercing that may, in rare circumstances, treat affiliated entities as one enterprise when common control and disregard of separateness would otherwise sanction fraud or work an inequitable result.
- A claimant’s inability to collect from the judgment debtor, without proof of misuse of the entity form, does not justify collapsing separate entities merely because an affiliate is solvent.
- Differences in ownership structure and the use of separate entities for legitimate functions (e.g., separating real estate ownership from licensing/operations) weigh against enterprise liability absent proof of abusive manipulation.

## Conclusion

Pennsylvania permits enterprise (horizontal) veil piercing only in a narrow, equitable form, and it will not be applied where related entities maintain legitimate separateness and the plaintiff shows no substantial commingling, sham structure, or manipulation of assets to evade liability, even if the judgment debtor is insolvent.


Mortimer v. McCool, 255 A.3d 261 (Pa. 2021)