Props. Dev. Corp. v. Hinds

Citations

• 2019 COA 102

Syllabus

1950 Logan, LLC (1950 Logan) was a single-member, single-purpose LLC created for the sole purpose of building the Tower on the Park condominium building and selling the units in that building. Hinds is a disabled person who uses a wheelchair and owns a unit in the building. In 2013, the Colorado Civil Rights Commission (Commission) sued 1950 Logan, claiming that it violated Hinds's rights as a disabled person by selling the building's handicapped parking spaces to non-handicapped buyers years before Hinds bought his condominium unit. Hinds intervened in the suit. Both the Commission and Hinds obtained default judgments against 1950 Logan. By the time Hinds sought to collect on the judgment, 1950 Logan had wound down operations and no longer had any assets. Hinds filed a garnishment proceeding seeking to pierce the corporate veil of 1950 Logan to recover the judgment from Sedgwick, a developer services company that was hired under a contract to manage 1950 Logan and to oversee the development and marketing of the project. The district court entered judgment against Sedgwick. On appeal, Sedgwick argued that its procedural due process rights were violated because it did not receive adequate notice of Hinds's attempt to pierce the corporate veil to reach Sedgwick's assets. Nothing in Colorado law prohibits a judgment creditor from asserting a claim to pierce the corporate veil in a garnishment proceeding to collect on the judgment. No due process violation arises from such a procedure because a garnishment proceeding adequately allows the garnishee to contest the garnishment. The proceedings adequately protected Sedgwick's due process rights. Sedgwick also argued that the district court erred in piercing the corporate veil and holding it responsible for 1950 Logan's debts. To determine whether it is appropriate to pierce the corporate veil, a court must first determine whether the corporate entity is the alter ego of the person or entity at issue. A court determining wh