The Colorado Court of Appeals issued its opinion in Swinerton Builders v. Nassi on February 2, 2012.
Attorney Fees—Breach of Contract—Pierce Corporate Veil
Plaintiff Swinerton Builders (Swinerton) appealed the district court’s order denying its motion to recover the attorney fees and costs that it incurred in successfully piercing Beauvallon Corporation’s (Beauvallon) corporate veil. The order was reversed and the case was remanded.
Swinerton entered into a construction contract with Beauvallon in 2001 that contained an arbitration clause and fee-shifting provision. After the construction project was completed, Swinerton filed a demand for arbitration, asserting breach of contract claims against Beauvallon and its president, defendant Craig Nassi, and an unjust enrichment claim against Beauvallon. Ultimately, the arbitrators ordered Beauvallon to pay Swinerton more than $1 million in damages, interest, attorney fees, and costs, and the district court confirmed this award. Thereafter, the district court ruled in favor of Swinerton, concluding that Swinerton could pierce Beauvallon’s corporate veil and hold Nassi personally liable for the arbitration award against Beauvallon.
Swinerton contended that the district court erred in refusing to award it the attorney fees and costs that it incurred in its successful veil-piercing action. A party who prevails in an action to pierce the corporate veil of a corporation may recover the attorney fees and costs incurred in that action if (1) the action was brought to enforce a breach of contract judgment against the corporation; and (2) the contract underlying the judgment authorized an award of fees and costs for enforcing the judgment against the corporation.
Here, Swinerton’s action to pierce the corporate veil was not a separate and independent claim. Rather, it was a procedural mechanism to enforce the arbitration award against Beauvallon in the underlying breach of contract action. Thus, the veil-piercing lawsuit was, in effect, an enforcement action against Beauvallon. When the district court determined that Swinerton could pierce Beauvallon’s corporate veil, Nassi became liable for, among other things, Beauvallon’s contractual obligations under the fee-shifting provision. Accordingly, Swinerton was entitled to recover the reasonable attorney fees and costs incurred in the veil-piercing action. The case was remanded to the district court for a determination and award of the appropriate amount of such fees.