Posted on October 24, 2022 in
Organization Regulation, Enterprise Litigation, Company Legislation, Company Litigation
The Colorado Supreme Court docket has made pointless confusion concerning the burden of proof when a litigant seeks to pierce the corporate veil.
In 1972, the legislature enacted § 13-25-127, C.R.S., which supplies, “(1) Any provision of the legislation to the contrary notwithstanding and except as offered in subsection (2) of this portion, the burden of evidence in any civil action shall be by a preponderance of the evidence. The provisions of this subsection (1) shall not use to the stress of evidence required in pinpointing the validity of any legislative enactment.”
In Phillips, 139 P.3d 639 (Colo. 2006), the court docket held, “A claimant looking for to pierce the corporate veil must make a very clear and convincing displaying that just about every consideration has been satisfied.” Citing, Contractors Heating & Supply Co., 432 P.2d 237 (1967). The Phillips court docket did not focus on § 13-25-127, C.R.S.
In McCallum Household L.L.C. v. Winger, 221 P.3d 69 (Colo. App. 2009), the courtroom of appeals held that the keeping in Phillips regarding the stress of evidence was “dictum.” Citing § 13-25-127(1), C.R.S., the court of Appeals held that the burden of proof on 1 trying to find to pierce the company veil is by a preponderance of the proof.
In Swinerton Builders v. Nassi, 272 P.3d 1174 (Colo. Application. 2012), the courtroom of appeals, citing Phillips, held that the stress of evidence is by crystal clear and convincing proof. The Swinerton choice did not point out the McCallum circumstance.
In Griffith v. SSC Pueblo Belmont Running Organization LLC, 381 P.3d 308 (Colo. 2016), the supreme court docket concluded Phillips was dictum, and held that the burden of evidence is by a preponderance of proof.
But, then, in Stockdale v. Ellsworth, 2017, 407 P.3d 571 (Colo. 2017), citing Phillips, the Colorado Supreme Courtroom dominated that the load of evidence is by clear and convincing evidence. The Stockdale view produced no point out of § 13-25-127(1), C.R.S.
Most recently, in Sedgwick Attributes Enhancement Corporation v. Hinds, 456 P.3d 64 (Colo. Application. 2019), certiorari denied, 2020 WL 301645, the Court of Appeals concluded the keeping in Stockdale was dictum, and held that the load of evidence for creating a claim to pierce the corporate veil is by a preponderance of the proof. The Petition for Certiorari did not explicity declare that the court docket of appeals had utilized the incorrect load of proof.
A imaginative attorney might argue that § 13-25-127(1), C.R.S. does not use to veil piercing statements because piercing the corporate veil is an equitable solution instead than a claim for relief. Good Neck Plaza, L.P. v. Le Peep Places to eat, LLC, 37 P.3d 485 (Colo. Application. 2001) Equinox Enterprises, Inc. v. Affiliated Media Inc., 730 SW2d 872 (Tex. Application. 1987). Nonetheless, § 13-25-127(1) helps make no point out of “claims for aid.” What’s more, at the very least one particular determination has held the statute also applies to motions. In re Marriage of Durie, 456 P.3d 463 (Colo. 2020).
The greater check out is that the burden of proof on just one seeking to pierce the corporate veil is by a preponderance of the evidence. The statute is crystal clear and consists of only a person exception. In statutory design, the expression of one detail is the exclusion of a further. Garman v. Conoco, Inc., 886 P.2d 652 (Colo. 1994). As the legislature chose to generate only 1 exception, there are no other exceptions to the standard rule.