In a huge win for homeowners seeking to recover damages against a construction company arising from the company rendering services at the homeowners’ real estate residence, the Court allowed the homeowners to pierce the corporate veil and pursue their judgment against the individual shareholder of the company.
In the case of Irvine v. Raven Industries Inc., the plaintiff homeowners sued the defendant construction company and obtained a judgment for $187,690.55. The company however was insolvent and the homeowners could not collect their judgment against the company. After serving a restraining notice on the company, the company’s owner transferred ownership of a truck which was owned by the company to the owner, individually. The court found that this transfer was deemed a civil contempt and a fraudulent transfer which was not made for any reason other than to avoid the homeowners’ judgment. By doing so, the Court also found that the company was so dominated by its owner that it allowed the piercing of the corporate veil and to hold the owner personally liable for the full judgment in favor of the homeowners.
According to Peter Moulinos, a real estate attorney, this decision was important in that it allowed a plaintiff the opportunity to collect a judgment which would have been worthless and uncollectable against the construction company. Decisions such as this one allow homeowners to pursue claims against contractors who may be tempted to liquidate a company in order to avoid enforcement of a judgment.