Court Opinion

ID: 9561227
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:05:35.984179+00
Date Added: 2024-06-11T09:13:41.626525
License: Public Domain

ERICKSON, Justice,
specially concurring:
Mountain States Welding and Sheet Metal, Inc. (Mountain States) was suspended by the Secretary of State as a Colorado corporation on August 22, 1979, for failure to pay fees and file corporate reports. Despite the suspension, the corporation continued its operations and was doing business as a corporation on both the date that David L. Billings was employed as a welder and sheet metal worker and on the date that he was injured. The workmen’s compensation insurance policy for Mountain States was cancelled on July 15, 1980, for nonpayment of insurance premium. Mountain States was uninsured on August 21, 1980, when Billings suffered serious and permanent injuries while working for Mountain States. Mountain States has not filed reports, paid fees, or taken any. steps to cause the corporation to be in good standing. In my view, the record establishes that the individuals who were responsible for the operation of Mountain States were aware that the corporation had been suspended, that its workmen’s compensation insurance had lapsed, and that the company was insolvent at the time that David Billings was hired. Section 7-3-104, 3 C.R.S. (1973), imposes liability for individuals who assume to act as a corporation without the authority to do so. Failure to file the required corporate reports results in the suspension of authorization to do business in Colorado, and that privilege has never been restored to Mountain States. Since Mountain States was never reinstated, it cannot claim continuing corporate vitality relating back to its initial suspension. See Rocky Mountain Sales & Service, Inc. v. Havana RV, Inc., 635 P.2d 935 (Colo.App.1981).
The majority has ordered that this matter should be remanded for a hearing to determine whether the corporate veil should be pierced and individual liability imposed on Joe Micciche. In my view, the court of appeals correctly analyzed the individual statutory liability issue, but did not have the benefit of the majority’s interpretation of section 7-3-104. See Phillips & Stong Engineering Co. v. Howard B. James Associates, Inc., 529 P.2d 1013 (Okla.App.1974); In re Hare, 205 F.Supp. 881 (D.Md.1962), and Moore v. Rommel, 233 Ark. 989, 350 S.W.2d 190 (1961), which support the imposition of individual liability in this case.
In my view, the hearing ordered by the majority is mandated by our interpretation of section 7-3-104. The trial court and the court of appeals were both primarily concerned with the issue of whether the failure to comply with the requirements of section 7-10-101, 3 C.R.S. (1973 & 1979 *374Supp.) caused the corporate business entity to revert to a partnership. The issue on remand is properly focused on whether the corporate veil should be pierced and individual liability imposed on Joe Micciche. The limited liability provided by incorporation is not absolute, and individual liability may be imposed after a determination that:
[T]he corporate fiction is being used by the corporation itself to defeat public convenience, justify wrong either to third parties dealing with the corporation or internally between stockholders, or to perpetrate fraud or other reprehensible conduct.
1 Fletcher, Cyclopedia Corporations § 41.30 (1983 rev. ed.).
The majority opinion properly focuses the issues to be determined on remand and, in my mind, provides a proper balance to determine the factual issues in this case. See Krendl & Krendl, Piercing the Corporate Veil: Focusing the Inquiry, 55 Denver L.J. 1 (1978).
Accordingly, I specially concur in the majority opinion.