Lester Fulmer sold H2O Lifts and Ramps, LLC (H2O), to Hurt-Hoover Investments, LLC (HHI). HHI agreed to pay $550,000 of the price by a note in thirty-six installments. From the installments, HHI deducted offsets, including charges for expenses incurred before the sale. Meanwhile, HHI incurred annual losses.

Its owners, William Hurt and Michael Hoover, contributed funds to keep the firm in business. They followed the statutory business formalities. To collect on the note, Fulmer obtained a judgment in an Arkansas state court against HHI for the unpaid amount. Hurt and Hoover did not dissolve HHI or form another entity to avoid the judgment but offered to pay it when the profits from H2O became sufficient. Should HHI’s corporate veil be pierced to hold Hurt and Hoover liable? Did they conduct their business according to ethical standards? Explain.