Opinion ID: 1135245
Heading Depth: 2
Heading Rank: 1

Heading: the claim to pierce the corporate veil is barred.

Text: In this case, in its first claim, Magic Valley seeks to hold Helen and Margaret's estate liable for the judgment entered against PBS by piercing the corporate veil. This claim is premised on the allegations that Helen and Margaret created PBS as a sham to shield themselves from any liability to Magic Valley, that Helen and Margaret intentionally undercapitalized PBS, and that PBS was the alter ego of Helen and Margaret. This claim arose out of the same transaction that was the basis for Magic Valley's action in Magic Valley I and II  the liability of Helen and Margaret personally for the breach of the contractual arrangement to bill for Magic Valley's services. Although the theory of this liability and the evidence necessary to prove the liability are different here than they were in Magic Valley I and II, the transaction is the same. Therefore, this claim against Helen and Margaret's estate is barred by res judicata (claim preclusion). Construed narrowly, Kawai Farms applies only where a party makes successive claims for fraud. Arguably the decision there could apply to all cases in which res judicata (claim preclusion) is an issue. Even applying the analysis employed by the Court in Kawai Farms to Magic Valley's claim to pierce the corporate veil, however, the testimony of Dr. Davis, the comments of Magic Valley's counsel, and the contents of Magic Valley's brief on appeal, noted above, all indicate that Magic Valley was on notice in Magic Valley I that there might be a basis to pierce the corporate veil of PBS to hold the Kolouchs liable. We can reach only one conclusion: Magic Valley did not exercise due diligence to discover its claim to pierce the corporate veil.