COMMISSIONER OF ENVIRONMENTAL PROTECTION et al. v. STATE FIVE INDUSTRIAL PARK, INC., et al., SC 18543
Judicial District of Hartford
Corporations; Environmental Protection; Piercing of the Corporate Veil; Whether Court Properly Applied Reverse Veil Piercing to Find one Individual Liable for the Debt of Another. In 2001, the department of environmental protection (DEP) obtained a judgment against Joseph Farricielli and several of his companies requiring them to close two Hamden landfills, including one containing a "tire pond" used for the unauthorized disposal of millions of used tires. The judgment also imposed $3.8 million in civil penalties and ordered that the defendants bear the cost of the environmental remediation of the sites. The DEP subsequently brought this action against State Five Industrial Park, Inc., and Jean Farricielli - the president of State Five and Joseph Farricielli's wife - seeking that they too be found liable for the unsatisfied 2001 judgment. Applying the doctrine of reverse piercing of the corporate veil, whereby a court holds a controlled corporation that has been misused as the instrumentality or alter ego of a shareholder liable for the debts of that shareholder, the trial court found both State Five and Jean Farricielli liable for the 2001 judgment. The court found that State Five was the misused alter ego of both Joseph and Jean Farricielli and therefore that both State Five and Jean Farricielli were responsible for the debts and obligations imposed by the previous judgment. State Five and Jean Farricielli appeal, claiming that the trial court misapplied corporate veil piercing concepts. Jean Farricielli argues that the court wrongly deemed her liable where her conduct in no way hindered the efforts to enforce the 2001 judgment. The defendants also urge the Supreme Court to reject the doctrine of reverse piercing of the corporate veil and claim that, even if the doctrine is upheld, its application here would unfairly prejudice State Five's minority stockholders who were not found to have engaged in any wrongdoing. Finally, Jean Farricielli argues that the trial court wrongly applied what might be deemed successive or triangular veil piercing in holding that liability for the 2001 judgment could flow from Joseph Farricielli through the corporation (State Five) and then to her. She claims there is no precedent in Connecticut law for such successive veil piercing and that, in deeming her liable for her husband's indebtedness, the trial court wrongly disregarded their separate existence as two distinct people under the law.