Amalgamation Does Not Include Individuals

• Published date: 21 December 2021
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Arbitration & Dispute Resolution, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Haynsworth Sinkler Boyd
• Author: Ms Sarah P. Spruill

The South Carolina Supreme Court recently provided additional guidance about the application of the doctrine of amalgamation/single business enterprise theory in Stoneledge at Lake Keowee Owners' Assoc., Inc. v. IMK Dev. Co., linked here.

The Court formally adopted amalgamation (or single business enterprise theory) in Pertuis v. Front Roe Restaurants, Inc., 423 S.C. 640, 817 S.E.2d 273 (2018). There, the Court stated:

We formally recognize today this single business enterprise theory, and in doing so, we acknowledge that corporations are often formed for the purpose of shielding shareholders from individual liability; there is nothing remotely nefarious in doing that. For this reason, the single business enterprise theory requires a showing of more than the various entities' operations are intertwined. Combining multiple corporate entities into a single business enterprise requires further evidence of bad faith, abuse, fraud, wrongdoing, or injustice resulting from the blurring of the entities' legal distinctions.

In Pertuis, the Court found that the party seeking to amalgamate corporate interests had not met his burden because there was not evidence of 'bad faith, abuse, fraud, wrongdoing, or injustice resulting from the blurring of the entities' legal distinctions.'

Stoneledge frames the test from Pertius as follows:

a party seeking to impose the existence of a single business enterprise must show both (1) the intertwining of the...