Jones & Trevor Marketing, Inc. v. Lowry
2012 UT 39
| Utah | 2012Background
- J & T Marketing sues FDS owners Lowry and Kinsella based on alter ego theory, seeking to pierce the corporate veil for contract and tort claims; district court grants summary judgment on these alter ego-based theories.
- FDS and Esbex become insolvent and are dissolved; J & T Marketing amends to assert claims against Lowry and Kinsella personally.
- Utah Court of Appeals affirms, applying Colman’s eight factors to conclude insufficient evidence to support alter ego liability.
- J & T Marketing petitions for certiorari to challenge the use of Colman factors and the sufficiency of the alter ego proof.
- Utah Supreme Court adopts Colman factors as non-exclusive guidelines and holds that there is no fixed number of factors required; the entire relationship must be evaluated, and no genuine facts preclude summary judgment here.
- Court concludes J & T Marketing failed to produce affirmative evidence that corporate funds were improperly accounted for, so summary judgment in favor of Lowry and Kinsella is affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adoption of Colman factors as guidelines | J & T Marketing argues Colman factors are applicable to pierce the veil and should guide analysis. | Lowry argues Colman factors are non-exclusive guidelines and not mandatory elements. | Colman factors adopted as useful guidelines, not mandatory elements. |
| Number of factors required to defeat summary judgment | Even one factor could be sufficient to raise a genuine issue of material fact. | There is no fixed number of factors; material facts determine liability. | There is no required minimum number of factors; the entire relationship must be evaluated for genuine issues. |
| Existence of genuine material facts precluding summary judgment | Evidence shows personal use of corporate funds by Lowry and Kinsella creates a triable issue. | Record shows withdrawals were accounted for; no improper accounting proven. | No genuine disputes of material fact; summary judgment properly granted in favor of Lowry and Kinsella. |
Key Cases Cited
- Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028 ((Utah 1979)) (two-prong test for piercing the corporate veil)
- Colman v. Colman, 743 P.2d 782 ((Utah Ct.App. 1987)) (eight factors to aid veil piercing; factors are non-exclusive)
- James Constructors, Inc., 761 P.2d 47 ((Utah 1988)) (fairness/principle guidance in veil piercing)
- Messick v. PHD Trucking Serv., Inc., 678 P.2d 791 ((Utah) (formalities and piercing the corporate veil considerations)
- Orvis v. Johnson, 177 P.3d 600 ((Utah 2008)) (summary judgment burden-shifting framework in Utah)
- Celotex Corp. v. Catrett, 477 U.S. 317 ((1986)) (burden-shifting standard for summary judgment)
- Transamerica Cash Reserve, Inc. v. Dixie Power & Water, Inc., 789 P.2d 24 ((Utah 1990)) (equitable piercing considerations in veil cases)