Legal Question in Business Law in California

The piercing of the corporate value can occur if the owner is an LLC, a corporation, or anything else. You would not be able to pierce beyond that, however, if the commingling is only between the two LLCs.

Piercing is not automatic even if the owner commingles his funds with the business's. The court must evaluate all the facts and decide whether the equities favor piercing. Commingling of funds is an important factor, but if it was minor in nature it won't necessarily result in piercing.

More importantly, in California, veil-piercing only works in one direction. It can make an owner liable for the debts of his corporation, but cannot make a corporation liable for the debts of its owner. See Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1522. Your question asks whether a business would be protected from its owner's liability, which suggests that the original debtor is the owner. Piercing is not available in those circumstances.

Where a court does pierce the veil, it should pierce only the veils which the owners did not respect. So if Smith owns X Corp which, in turn, owns Y Corp, piercing the veil between X Corp and Smith will not pierce the veil between Y Corp and X Corp. The plaintiff would have to prove that both veils should be pierced.