Miles v. CEC Homes, Inc.

Supreme Court of Wyoming · Corporations

CorporationsPiercing the corporate veilConditions precedentAttorney feesPrejudgment interestcorporate veilalter egounity of interest

Facts

Meadowbrook and CEC entered a cost-sharing agreement to develop common street improvements for their adjacent subdivisions, and CEC completed the work and later billed Meadowbrook for its share, which Meadowbrook did not pay. Inberg performed replatting services for Meadowbrook in 1983 and billed $8,203.11, which also went unpaid. Maurice Miles was Meadowbrook's president and majority shareholder, and the record showed poor corporate records, commingling of funds, personal withdrawals and infusions without documentation, and use of the corporation to perform work and transfer assets for his personal benefit. The trial court pierced the corporate veil, awarded CEC the contract amount plus attorney fees, and awarded Inberg its charges plus interest at 1.5 percent per month.

Issue

Whether the evidence was sufficient to disregard Meadowbrook's corporate identity and hold Maurice Miles personally liable, whether Meadowbrook's payment obligation to CEC was excused by nonoccurrence of a condition precedent, and whether the awards of attorney fees and above-statutory prejudgment interest were proper.

Rule

A corporation's separate existence may be disregarded when the corporation is not only influenced and governed by a person, but there is such unity of interest and ownership that separateness has ceased, and adherence to the fiction of separate existence would sanction fraud or promote injustice. Although conditions precedent ordinarily must be complied with, a court may excuse nonoccurrence of a nonmaterial condition when insisting on it would cause disproportionate forfeiture. Attorney fees must rest on an evidentiary basis proved by the party seeking them, and an invoice provision alone does not establish an implied agreement to pay interest above the statutory rate.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Blue Mesa Framing, Inc., a Wyoming corporation in Casper, is owned 92% by Nolan Pierce, who is also president. Nolan regularly pays his home mortgage from the corporate account, deposits his personal consulting income into that same account, keeps no minutes or ledgers other than tax returns, and later transfers the company's skid steer to his brother in exchange for landscaping at Nolan's house. A supplier remains unpaid after Blue Mesa has no meaningful assets left.

If the supplier seeks to hold Nolan personally liable, which is the strongest analysis?

Explanation. The majority rule requires more than ownership and control. The plaintiff must show the corporation was influenced and governed by the individual, that unity of interest and ownership destroyed separateness, and that respecting the entity would sanction fraud or promote injustice. Commingling, lack of records, personal use of corporate assets, and diversion of assets to the detriment of creditors support veil piercing here.