So here is the question: Should the court take into account the events of 2005 to 2010 in determining whether the alter ego doctrine should allow the liability to bypass the entity and be imputed to the true wrongdoer? Now, what happened between 20 didn't have anything at all to do with the liability which arose in 2015, but it would be proof of something the courts refer to as the 'unity of ownership and control' between the entity and the true wrongdoer. Then, in 2015 an event giving rise to liability occurred and it was followed by allegations that the entity was simply the alter ego of its owner, and part of the proof was the mismanagement of the entity from 2005 to 2010. But nothing bad happened at the time because of all this, and by 2010 the entity was completely cleaned up. To illustrate this problem, consider that an LLC was created in 2005 and in the first five years of its existence it was managed terribly ⸺ proper records were not kept, personal and business moneys were commingled, and business assets used for personal purposes.

The problem is that there is a second possible answer, which is that the court may look at all the facts and circumstances involving the entity without regard to the time of the events giving rise to the underlying liability. If alter ego liability flows from the underlying liability giving rise to the judgment, then the court should essentially take a 'snapshot in time' which looks at all the relevant facts and circumstances near in time to when the underlying liability arose. Intuitively, the answer seems (to me at least) to be in the affirmative.

Alter ego game relationships