Geringer v wildhorn ranch inc case brief

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United States District Court, D. Colorado.

Diane GERINGER, individually, and as parent and next best friend of Tara Geringer, and as surviving spouse of William Geringer, decedent, and mother

of Jared Geringer, decedent, Plaintiff(s), v.

WILDHORN RANCH, INC., a Colorado Corpor- ation, M.R. Watters and Les Bretzke, Defendants.

Civ. A. No. 87–F–1213. Dec. 14, 1988.

Widow and mother of resort guests who died in boating accident brought action against the resort, its owner, and others. Following jury verdict in fa- vor of plaintiff, the District Court, Sherman G. Fin- esilver, Chief Judge, held that: (1) evidence warran- ted application of the corporate alter ego doctrine; (2) punitive damages could be awarded against cor- poration which was found negligent, even though zero percent of the negligence was attributed to it; and (3) Colorado premises liability statute does not apply to act of landowner in supplying chattel to an invitee.

Ordered accordingly.

See also 706 F.Supp. 1452.

West Headnotes

[1] Corporations and Business Organizations 101 1044

101 Corporations and Business Organizations 101II Disregarding Corporate Entity; Piercing

Corporate Veil 101k1042 Factors Considered

101k1044 k. Domination or control by shareholder. Most Cited Cases

(Formerly 101k1.4(4))

Corporations and Business Organizations 101 1048

101 Corporations and Business Organizations 101II Disregarding Corporate Entity; Piercing

Corporate Veil 101k1042 Factors Considered

101k1048 k. Non-observance of corporate formalities. Most Cited Cases

(Formerly 101k1.4(4)) Theory of corporate alter ego requires plaintiff

to show that an individual consistently disregarded the formalities of the corporate form and so domin- ated the affairs of the corporation, in a manner which injured the plaintiff, that to acknowledge the legal fiction of the corporation would promote in- justice and harm public convenience.

[2] Innkeepers 213 10.27

213 Innkeepers 213k10 Injury to Person of Guest

213k10.27 k. Recreational areas and activit- ies; swimming pools. Most Cited Cases

(Formerly 213k10.3) Duty owed to guests by owner and operator of

resort ranch with respect to condition of paddle- boats provided for guests did not arise out of rela- tionship between landowner and invitee and thus did not come within purview of Colorado premises liability statute. C.R.S. 13–21–115.

[3] Negligence 272 1079

272 Negligence 272XVII Premises Liability

272XVII(C) Standard of Care 272k1079 k. Standard established by stat-

ute or other regulation. Most Cited Cases (Formerly 272k31) Colorado premises liability statute does not es-

tablish a feudal realm of absolute protection from liability for simple negligence based only on a de- fendant's status as a landowner. C.R.S. 13–21–115.

Page 1 706 F.Supp. 1442 (Cite as: 706 F.Supp. 1442)

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[4] Negligence 272 259

272 Negligence 272IV Breach of Duty

272k259 k. Violations of statutes and other regulations. Most Cited Cases

(Formerly 272k31) Colorado premises liability statute does not re-

flect an intention to extend the application of premises liability doctrine to the negligent supply of a chattel by a landowner. C.R.S. 13–21–115.

[5] Federal Civil Procedure 170A 674

170A Federal Civil Procedure 170AVII Pleadings

170AVII(B) Complaint 170Ak674 k. Theory of claim. Most Cited

Cases

Pleading 302 49

302 Pleading 302II Declaration, Complaint, Petition, or State-

ment 302k49 k. Theory and form of action. Most

Cited Cases Federal and Colorado pleading rules require

only that defendant be afforded adequate notice of the claims against him; under the federal rule, plaintiff need not plead all of the elements of a spe- cific theory but need only notify the defendant of an intent to prove liability for injuries. Fed.Rules Civ.Proc.Rule 15, 28 U.S.C.A.

[6] Federal Civil Procedure 170A 836

170A Federal Civil Procedure 170AVII Pleadings

170AVII(E) Amendments 170Ak835 Conforming to Proof

170Ak836 k. Time for amendment. Most Cited Cases

If defendant had sufficient notice of the focus of the evidence at trial, court has discretionary au- thority to allow posttrial amendment to conform to the evidence, and that amendment should be gran-

ted freely. Fed.Rules Civ.Proc.Rule 15, 28 U.S.C.A .

[7] Federal Civil Procedure 170A 842

170A Federal Civil Procedure 170AVII Pleadings

170AVII(E) Amendments 170Ak839 Complaint

170Ak842 k. Theory or form of action. Most Cited Cases

Complaint which alleged that defendant was the “owner” of resort and, as the owner, was vicari- ously liable for the deliberate negligence of his em- ployees gave defendant adequate notice of plaintiffs' intent to use corporate alter ego as legal theory to support allegations of personal and vicari- ous liability.

[8] Federal Civil Procedure 170A 842

170A Federal Civil Procedure 170AVII Pleadings

170AVII(E) Amendments 170Ak839 Complaint

170Ak842 k. Theory or form of action. Most Cited Cases

There can be no prejudice in allowing amend- ment of complaint to assert corporate alter ego the- ory where chairman of the board and president of a closely held corporation has four months to gather corporate minutes, promissory notes, or documenta- tion of the purchases sought prior to trial.

[9] Federal Civil Procedure 170A 2252

170A Federal Civil Procedure 170AXV Trial

170AXV(K) Trial by Court 170AXV(K)1 In General

170Ak2252 k. Advisory jury. Most Cited Cases

Where parties to action with jury triable issues do not agree that an equitable issue should be presented to the jury, court may substitute its own findings of fact for those of the jury, if necessary,

Page 2 706 F.Supp. 1442 (Cite as: 706 F.Supp. 1442)

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but there is no error in submitting the issue to the jury.

[10] Corporations and Business Organizations 101 1086(6)

101 Corporations and Business Organizations 101II Disregarding Corporate Entity; Piercing

Corporate Veil 101k1079 Actions to Pierce Corporate Veil

101k1086 Evidence 101k1086(4) Weight and Sufficiency

101k1086(6) k. Justice and equity in general. Most Cited Cases

(Formerly 101k1.7(2)) Court must view record as a whole to determ-

ine whether corporate form has been used to defeat public convenience so that corporate alter ego the- ory should be applied.

[11] Corporations and Business Organizations 101 1058

101 Corporations and Business Organizations 101II Disregarding Corporate Entity; Piercing

Corporate Veil 101k1057 Particular Occasions for Determin-

ing Corporate Entity 101k1058 k. In general. Most Cited Cases

(Formerly 101k1.6(13)) Corporate alter ego theory would be applied to

impose liability on owner of corporation in view of his domination and control of the corporation, his business cards which represented that he was the owner of corporation property, his use of funds from another corporation to make purchases for the corporation, and his personal involvement with the instrumentalities which caused the harm to the plaintiffs.

[12] Damages 115 87(2)

115 Damages 115V Exemplary Damages

115k87 Nature and Theory of Damages Ad- ditional to Compensation

115k87(2) k. Necessity of actual damage. Most Cited Cases

Colorado exemplary damages statute is de- signed to distinguish exemplary damages from pure penalties by requiring that the plaintiff successfully prove an underlying claim for damages caused by the defendant's conduct; statute only allows for award of exemplary damages in conjunction with underlying independent civil action in which actual damages are assessed for some legal wrong to the injured party. C.R.S. 13–21–102(1)(a).

[13] Damages 115 87(2)

115 Damages 115V Exemplary Damages

115k87 Nature and Theory of Damages Ad- ditional to Compensation

115k87(2) k. Necessity of actual damage. Most Cited Cases

In the absence of finding that the plaintiff has suffered damages, defendant may not be penalized merely for wrongful conduct. C.R.S. 13–21–102(1)(a).

[14] Corporations and Business Organizations 101 2507

101 Corporations and Business Organizations 101IX Corporate Powers and Liabilities

101IX(E) Torts 101k2507 k. Exemplary damages. Most

Cited Cases (Formerly 101k498) Having found that conduct of corporation was

negligent and that its conduct caused the plaintiff to suffer actual damages and the misconduct was wan- ton and willful, jury could award exemplary dam- ages against it even though it attributed zero per- cent of the negligence to the corporation. C.R.S. 13–21–102(1)(a).

*1444 Douglas E. Bragg, James A. Cederberg, Denver, Colo., for plaintiff.

Donald E. Cordova, Denver, Colo., for defendant

Page 3 706 F.Supp. 1442 (Cite as: 706 F.Supp. 1442)

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Wildhorn Ranch, Inc.

Sheldon E. Friedman, Christopher T. Macaulay, Miles Cortez, Englewood, Colo., for defendant M.R. Watters.

Deana Willingham, Wheatridge, Colo., for defend- ant Les Bretzke.

MEMORANDUM OPINION AND ORDER ON POST–TRIAL MOTIONS

SHERMAN G. FINESILVER, Chief Judge. This matter comes before the court on motions

of defendants for judgment notwithstanding the verdict, for new trial pursuant to Rule 59 of the Federal Rules of Civil Procedure, and for amended judgment. On September 28, 1988, the jury re- turned a verdict against defendants for damages arising out of a boating accident at the Wildhorn Ranch Resort. The court considered many of the is- sues raised in defendants' post-trial motions prior to and during trial. We have considered defendants' motions collectively and individually and conclude that neither a new trial, judgment notwithstanding the verdict, nor amended judgment is warranted. The evidence supports the jury's verdict. The sever- al motions are DENIED for the reasons stated be- low.

I. Plaintiff Diane Geringer brought this action in

her own name and as guardian of her minor- daughter Tara Geringer, pursuant to Colorado law, seeking damages for personal injuries and the wrongful death of her husband William Geringer and minor-son Jared Geringer. Jurisdiction before this court is based on diversity of citizenship. 28 U.S.C. § 1332.

During August of 1986, the Geringer family was vacationing at the Wildhorn Ranch Resort, a guest ranch located in Teller County, Colorado.FN1

William and Jared Geringer drowned during a boat- ing accident on a lake at the Ranch. Paddleboating was among the recreational activities offered by the

Resort.

FN1. Our statements are drawn from testi- mony and arguments of counsel at trial.

At trial, the liability evidence focused on the maintenance and condition of the paddleboats, op- eration of the Resort, and plaintiffs' conduct in pro- curing and operating the boat. Plaintiffs' case fo- cused on repairs made a short time prior to the acci- dent and defendants' knowledge that the *1445 boats leaked, filled with water, and became un- stable. Defendants' case for comparative or contrib- utory negligence argued that the Geringers took out a boat that had been secured to the shore and acted unreasonably in not wearing life jackets. Plaintiffs' rebuttal raised conflicting evidence as to whether the boats had indeed been secured to discourage their unsupervised use and whether life jackets were available.

Defendant M.R. Watters originally owned the Ranch, but claimed to have deeded it over to Wild- horn Ranch, Inc. Wildhorn Ranch, Inc. operated the Resort and provided management services to the homeowners association time-share cabins. The corporation was owned by the three members of its Board of Directors, M.R. Watters, son David, and wife Doris. Defendant Les Bretzke was an inde- pendent contractor whose company provided repair and construction services to the Resort and the homeowners association. Evidence presented at tri- al showed that Bretzke was significantly involved in the operations of the Resort through management meetings and the supervision of Resort employees. Bretzke supervised the repair of the boats. M.R. Watters inspected the boats and determined they were fit for return to the water. The boats were re- paired by a Resort employee with the assistance of a ranch-hand. The ranch-hand was employed by a firm contracted to operate horseback riding facilit- ies at the Ranch.

[1] Evidence was also presented at trial on the issue of corporate alter-ego. The theory of corpor- ate alter-ego requires plaintiff to show that an indi-

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vidual consistently disregarded the formalities of the corporate form and so dominated the affairs of the corporation, in a manner which injured the plaintiff, that to continue to acknowledge the legal fiction of the corporation would promote injustice and harm public convenience.FN2 This evidence was presented through the testimony of M.R. Wat- ters and others involved in the operation of the re- sort and through the admission of various corporate records.

FN2. See Section III, infra.

At the close of defendants' case, we directed a verdict for the homeowners association and David Watters, finding a reasonable juror could not con- clude that any conduct attributable to these defend- ants caused the accident.

The jury found that all of the parties had been negligent and that their negligence had caused the plaintiffs' injuries. The jury apportioned the negli- gence causing the accident as follows: zero percent (0%) of the negligence was attributed to Wildhorn Ranch, Inc.; seventy percent (70%) of the negli- gence was attributed to M.R. Watters; twenty per- cent (20%) of the negligence was attributed to Les Bretzke; five percent (5%) of the negligence was attributed to Diane Geringer; and five percent (5%) of the negligence was attributed to William Geringer. The jury concluded that Wildhorn Ranch, Inc. was the corporate alter-ego of M.R. Watters and charged negligence attributable to the corpora- tion to M.R. Watters. The jury also found that the conduct of each of the defendants was wanton and willful and awarded exemplary damages against each of the defendants.

II. At trial, defendants contended that the Color-

ado premises liability statute applied to the case rather than common law simple negligence. See Colo.Rev.Stat. § 13–21–115. The court, however, held that the statute was inapplicable. Claims foun- ded on the statute were stricken.FN3

FN3. Premises liability claims had been added to the litigation through amendment. Earlier, the court denied defendants mo- tions to dismiss the complaint for failure to state a claim under the premises liability statute.

Post-trial, defendants Watters and Bretzke con- tend that they were prejudiced by failure to instruct the jury on premises liability in that the landowner's standard of care under the statute is higher than that of simple negligence. Defendant Bretzke contends that the statute provides the exclusive remedy for injuries incurred on the premises of a landowner.

*1446 A 1986 Colorado statute includes sub- stantially different language than that applied by Colorado courts in the past. See Salmon, 1986 Col- orado Tort Reform Legislation, 15 Colo.Lawyer 1363, 1370 (1986); Hyman and Feiger, Legal As- pects of Health and Fitness Clubs: A Healthy and Dangerous Industry, 15 Colo.Lawyer 1787, 1792 (1986).FN4 The statute requires that the court de- termine which standard of care applies to a case. Colo.Rev.Stat. § 13–21–115(4). Issues of liability and damages are left to the jury. Id.

FN4. The Colorado statute was enacted after the Colorado Supreme Court abol- ished various common law standards. Mile High Fence Co. v. Radovich, 175 Colo. 537, 489 P.2d 308, 310 (1971) (standards of simple negligence apply in premises li- ability actions). Salmon, 1986 Colorado Tort Reform Legislation, 15 Colo.Lawyer 1363, 1370 (1986). The common law standards were keyed to a plaintiff's status as a trespasser, licensee or invitee. Like the common law, the new statute establishes duties owed by a landowner to three cat- egories of plaintiffs. To date, few courts have construed the language of the new statute.

[2][3] Assuming that the Geringers were invit- ees and the defendants were landowners under the

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statute, the duty litigated in this case did not arise out of that relationship. See Colo.Rev.Stat. § 13–21–115(1) and (3)(c). The statute provides:

In any civil action brought against a landowner by a person who alleges injury occurring while on the real property of another and by reason of the condition of such property, or activities con- ducted or circumstances existing on such prop- erty, the landowner shall be liable only as provided in subsection (3) of this section.

Id. at (2) (emphasis added). The statute clearly requires more than a finding that the defendant owns the land on which plaintiff was injured. The second element requires the court to consider the nature of the occurrence and to make distinctions. The statute does not establish a feudal realm of ab- solute protection from liability for simple negli- gence based only on a defendant's status as a landowner.

The second element lists two alternative types of injury. The alternatives are related in their focus on the relation between the land and the injury. The statutory classification “activities conducted or cir- cumstances existing on such property” must be read narrowly with careful regard for the intent of the le- gislature to re-establish common law distinctions in the law of premises liability. See Pigford v. People, 197 Colo. 358, 593 P.2d 354 (1979) (statutes in derogation of common law are to be strictly con- strued to restrict provisions to the clear intent of the legislature); Matter of Colacci's Estate, 37 Colo.App. 369, 549 P.2d 1096 (1976) (statutes in derogation of common law should be strictly con- strued). Traditionally, the activities for which a de- fendant is liable as a landowner are inherently re- lated to the land—construction, landscaping or oth- er activities treating the land. See, e.g., Smith v. Cutty's Inc., 742 P.2d 347 (Colo.App.1987) (guest injured in toboggan accident at resort, liability turned on condition of toboggan path); White v. Pines Enterprises, Inc., 728 P.2d 759 (Colo.App.1986) (slip and fall, liability turned on negligent snow removal and duty to homebuyer in-

vitees).

[4] The causation evidence in this case focused on defendants' maintenance of the paddleboats and on defendants' knowledge of their condition follow- ing purported repairs. The duty litigated in this case was that of a supplier of chattel to provide its user with chattel that was not defective. Breach was es- tablished, in part, by evidence of negligent main- tenance and repair of that chattel. The fact that boats must be used on a lake is no more instructive than the fact that, generally, any activity conducted by humans must necessarily occur on the earth. The statute does not reflect an intention to extend the application of premises liability doctrine to the neg- ligent supply of chattel by a landowner.

The Colorado premises liability statute does not apply to this case. Motions of defendants Wat- ters and Bretzke for new trial based on submission of the case to the jury on simple negligence rather than premises liability are denied. See Fed.R.Civ.P. Rule 59.

*1447 III. Defendant Watters challenges the verdict find-

ing him liable for the negligence of his alleged cor- porate alter-ego, Wildhorn Ranch, Inc. By its ver- dict, the jury found that Wildhorn Ranch, Inc. was the corporate alter-ego of defendant M.R. Watters and that his domination of the corporation caused injury to the plaintiff. The record reflects that there was sufficient evidence to support the jury verdict that M.R. Watters liable for his own negligence as well as that of the corporation.

[5][6] Federal and Colorado pleading rules re- quire only that a defendant be afforded adequate notice of the claims against him. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Rand v. Perales, 737 F.2d 257, 260 (2nd Cir.1984); LaFond v. Basham, 683 P.2d 367, 369 (Colo.App.1984). Rule 15 of the Federal Rules of Civil Procedure requires that a plaintiff submit “a short and plain statement of the claim showing that the pleader is entitled to relief.” Under the Rule, a

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plaintiff need not plead all the elements of a specif- ic theory but need only notify the defendant of in- tent to prove liability for injuries. Runyan v. United Brotherhood of Carpenters, 566 F.Supp. 600, 608 (D.Colo.1983). If a defendant has sufficient notice of the focus of the evidence at trial, Rule 15(b) provides the court with discretionary authority to allow post-trial amendment to conform to the evid- ence, and further that such amendment shall be freely granted.

Defendant Watters contends that he did not re- ceive notice of plaintiffs' alter-ego theory until two weeks before trial, when trial briefs and jury in- structions were exchanged. Defendant's evidence at trial on the corporate alter-ego theory consisted mainly of the testimony of M.R. Watters and his son David regarding corporate finances, organiza- tion, and the responsibilities of corporate officers. Plaintiffs impeachment of this testimony included the presentation of inconsistent testimony of em- ployees regarding corporate organization and oper- ation and the lack of documentary proof of the formal structure claimed by the defendant. Defend- ant Watters alleges that documentary proof could have been gathered and presented had he been properly apprised of the claim before trial.

[7] Plaintiffs' complaint alleged that defendant Watters was the “owner” of the Ranch and the Re- sort, that as owner of the Resort he was “vicariously liable” for deliberate negligence of its employees, and that his own actions as a corporate officer were deliberately negligent and caused in- jury to the plaintiffs. On May 16, 1988, defendant Watters filed a motion to dismiss the claims against him personally. Watters argued, in part, that since he had no contact with the plaintiffs during their stay at the Resort, their only theory of recovery was one which disregarded the corporate form of Wild- horn Ranch, Inc. Defendant argued that the claims against Watters should be dismissed for failure to state a corporate alter-ego claim. On June 10, 1988, plaintiffs responded that their theory was one of corporate alter-ego and detailed evidence which in-

cluded the lack of documentary proof. The pre-trial motion to dismiss was denied. In our view, defend- ant Watters was adequately apprised of the plaintiffs intent to use corporate alter-ego as the legal theory to support allegations of personal and vicarious liability. Defendant Watters was also put on notice of the court's intention to allow plaintiffs to proceed on that theory. Defendant Watters was not prejudiced in preparing to meet plaintiffs' claims.

[8] Defendant Watters's acknowledgment of the issue in his motion to dismiss (filed May 16, 1988) demonstrates that the complaint and circumstances known to him put Watters on notice that the corpor- ate alter-ego theory was essential to one of plaintiffs claims against him. Defendant Watters's testimony at trial demonstrates that his lawyers were prepared to make a record of what they be- lieved would prove the corporate form of Wildhorn Ranch, Inc. There can be no prejudice where the chairman of the board and president of a closely held corporation had four months to gather corpor- ate minutes, promissory notes, or *1448 document- ation of the purchase of stock.FN5 See Rand v. Perales, 737 F.2d 257, 260 (2nd Cir.1984) (adequate notice is that which apprises reasonable person in the position of the recipient of the pos- sible consequences of the claim).

FN5. We note that Mr. Watters testimony of corporate operations indicated that cor- porate records compiled by Watters, his son, and secretary were in the corporate of- fice at the family home in Rocky Ford, Colorado. These records were easily ac- cessible to defendant Watters.

[9] Colorado law is consistent with general common law on corporate alter-ego or piercing the corporate veil. See Micciche v. Billings, 727 P.2d 367, 372–73 (Colo.1986); Fink v. Montgomery El- evator Co., 161 Colo. 342, 421 P.2d 735, 739 (1966) (quoting 1 Fletcher, Cyclopedia of Corpora- tions § 41.1); see also Krendl and Krendl, Piercing the Corporate Veil: Focusing the Inquiry, 55

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Den.L.J. 1 (1978). Whether or not adherence to the corporate fiction would promote injustice in a par- ticular case is an equitable issue. LaFond v. Basham, 683 P.2d 367, 369 (Colo.App.1984). Where the parties to an action with jury triable is- sues do not agree that an equitable issue should be presented to the jury, the court may substitute its own findings of fact for those of the jury, if neces- sary. 1 Fletcher, Cyclopedia of Corporations § 41.25 (Supp.1987) (citing McCain Foods, Inc. v. St. Pierre, 463 A.2d 785 (Maine 1983)). There is no error in submitting the issue to the jury. See, e.g., Mackey v. Burke, 751 F.2d 322, 326–27 (10th Cir.1984); Bucyrus–Erie Co. v. General Products Corp., 643 F.2d 413, 418 (6th Cir.1981) (reviewing jury instruction). The approach is particularly ap- propriate in tort cases where causation issues un- derlay the finding of corporate liability as well as negligence.

The jury was instructed on the law and pur- poses of the corporate alter-ego doctrine and that defendant Watters could be held liable for the cor- poration if they found plaintiff had proved three factors: (1) that he has consistently engaged in a course of conduct by which he has ignored the ex- istence of the corporate entity or entities; (2) that he has, in fact, conducted business as an individual by exercising such paramount and personal control over the operations of the corporation that their cor- porate existence has been disregarded and their business interests and his own personal interests cannot be reasonably separated; and (3) that his domination of the corporation caused injury to the plaintiff so that to continue to recognize the exist- ence of a separate corporate entity would promote injustice. Appendix, Jury Instruction 45; 3 Devitt, Blackmar and Wolff, Fed.J.Prac. § 76.05 (4th ed. 1987); Fink v. Montgomery Elevator Co., 161 Colo. 342, 421 P.2d 735, 739 (1966); Harding v. Lucero, 721 P.2d 695, 698 (Colo.App.1986); LaFond v. Basham, 683 P.2d 367, 369 (Colo.App.1984).

At the request of defendants, the third element of our instruction modified the standard test to re-

flect the link of causation normally required to charge an individual with liability for the torts of his corporation. See Bucyrus–Erie Co. v. General Products Corp., 643 F.2d 413, 418 (6th Cir.1981); Krendl and Krendl, Piercing the Corporate Veil: Focusing the Inquiry, 55 Den.L.J. 1, 21 (1978). The instruction on this issue included a list of factors to guide the jury in its consideration of these three ele- ments. Appendix, Jury Instruction 46; see also Bucyrus–Erie, 643 F.2d at 418 (reviewing jury in- struction).

Plaintiffs presented substantial evidence that defendant Watters disregarded corporate formalities in operating Wildhorn Ranch, Inc. In 1985, Watters regained ownership of the Wildhorn Ranch through foreclosure on its previous owner. Within days of the foreclosure, Watters formed Wildhorn Ranch, Inc. Defendant produced the Articles of Incorpora- tion. Although Watters testified that he had deeded the Ranch over to the corporation, the deed could not be located. Although Watters testified that stock in the corporation had been purchased, and this fact was corroborated by the testimony of David Wat- ters that he had paid $100,000 for his shares, no stock was issued and no record of the transaction was produced.

Once a week, the family held “formal” corpor- ate board meetings at their home in *1449 Rocky Ford, Colorado. Watters's wife attended some of these meetings, but Watters could not recall how often. No minutes were produced. Watters could not recall how often minutes were actually taken.

Watters operated several corporations out of his Rocky Ford, Colorado office. Debts of one cor- poration were frequently paid with funds from an- other corporation or from Watters's personal funds, depending upon the financial condition of a particu- lar corporation when the debt came due. The bill of sale for the paddleboats in issue and Watters testi- mony proved that Watters purchased the boats with funds from a corporation unrelated to the Ranch, the Resort, or the homeowners association. See De- fendants' Exhibit A. Although Watters testified that

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loans between the corporation were duly entered in the ledgers of each corporation by his secretary, no record of the loans or ledgers was produced. Testi- mony of the principals and employees regarding their own responsibilities and those of the various corporations and managers working at the Ranch demonstrated that the operation of the corporation was so muddled that no clear picture of accountab- ility or organization can be drawn from the record.

[10][11] While no one factor controls our ana- lysis, the court must view the record as a whole to determine whether the corporate form has been used to defeat the public convenience. Reader v. Dertina & Assoc. Marketing, 693 P.2d 398, 399 (Colo.App.1984); LaFond v. Basham, 683 P.2d 367, 369 (Colo.App.1984); Rosebud Corp. v. Bog- gio, 39 Colo.App. 84, 561 P.2d 367, 371 (1977); see also Bucyrus–Erie Co. v. General Products Corp., 643 F.2d 413, 418 (6th Cir.1981) (each case on equitable issue of corporate alter-ego is sui gen- eris and reviewed on its own facts). The clear im- port of the entire record is that Watters consistently engaged in a course by which he ignored the exist- ence of Wildhorn Ranch, Inc. and his other corpor- ations.

Defendant Watters's domination and control of the corporation was reflected in the testimony of various employees of the Ranch. Testimony sup- ported the perception of various employees that Watters was in complete control of the Ranch. For example, Watters testified that he could fire all of its employees or “clean house” if he found it neces- sary. Watters presented the sheriff's deputy invest- igating the accident with a business card which rep- resented that Watters was the owner of Wildhorn Ranch, Inc. See Plaintiffs' Exhibit 129. Again, while the factors of note in the record may seem ambiguous when viewed in isolation, the record as a whole clearly establishes the fact that Watters was in control of Wildhorn Ranch, Inc., its board of dir- ectors, and employees.

Similarly, the issue of whether Watters domin- ation of the company caused injury to the plaintiff

was addressed through the testimony of Watters, Bretzke and the employees who repaired the boat. The jury found that Watters personally had acted negligently and that his negligence caused injury to the plaintiffs. According to this testimony (1) Wat- ters purchased the boats for the Wildhorn Ranch, Inc. using funds from another corporation, (2) in taking this action for the corporation, Watters selec- ted certain boats from a number of others he admit- ted were in disrepair, (3) Watters had knowledge that the boats leaked, became unstable, and required frequent removal from the lake to drain water from their hulls, (4) Watters inspected the boats after leaks had been patched and determined that the ex- tra repairs requested by his employees were cos- metic, unnecessary, and costly, (5) Watters in- formed Les Bretzke of his decision that the boats should be returned to the water for use, (6) over the objections of the employees who had been making the repairs, Les Bretzke complied with Watters de- cision and ordered the boats returned to the water.

Defendant Watters's control of the finances, fa- cilities and employees of the Wildhorn Ranch Re- sort, of Wildhorn Ranch, Inc. and of other corpora- tions caused the injuries of which plaintiffs com- plain. To allow Watters to assert the fiction of a separate corporate entity as a means of avoiding li- ability when he has *1450 consistently disregarded the corporate form would defeat public conveni- ence.

IV. Finally, Defendant Watters contends that the

jury's answers to special interrogatories demon- strate that instructing them on the alter-ego issue so confused the jury that he is entitled to a new trial. On similar grounds, defendant Wildhorn Ranch, Inc., moves for judgment notwithstanding the ver- dict, or in the alternative, for an altered or amended judgment.

On Special Verdict Form A, the jury was asked to answer three questions regarding the conduct of Wildhorn Ranch, Inc. First, the jury answered that the corporation had been negligent. Special Verdict

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Form A, question 1. Second, the jury found that the corporation's negligence had caused the damages claimed by plaintiffs. Id. at question 2. Third, the jury found that the conduct of the corporation was not only negligent, but willful and wanton. Id. at question 16. The jury was instructed that to determ- ine the relative fault of the parties, the negligence of an individual would have to be attributed to that individual or to the corporation, without counting the negligence of a particular person twice. Ap- pendix, Jury Instruction 44a. The jury was also in- structed that if it found that defendant Wildhorn Ranch, Inc. was an alter-ego of defendant M.R. Watters under the law, the negligence of the corpor- ation was attributable to M.R. Watters. Appendix, Jury Instruction 45. The jury found that the corpor- ation was an alter-ego of Mr. Watters. Special Ver- dict Form A, question 5. In attributing percentages of fault to the various parties pursuant to Colorado law, the jury entered the numeral “0” in the blank provided for Wildhorn Ranch, Inc. Id. at question 12. The jury also awarded punitive damages against the corporation. Defendants argue that this finding is contrary to Colorado law. We have considered and reject defendants' interpretation of Colorado law.

[12][13] The applicable Colorado statute provides: “In all civil actions in which damages are assessed by a jury for a wrong done to the person ... the jury, in addition to actual damages sustained by such party, may award him reasonable exemplary damages.” C.R.S. § 13–21–102(1)(a). The statute is designed to distinguish exemplary damages from pure penalties by requiring that the plaintiff suc- cessfully prove an underlying claim for damages caused by a defendant's conduct. Harding Glass Co., Inc. v. Jones, 640 P.2d 1123, 1127 (Colo.1982) . The statute only allows for an award of exemplary damages “in conjunction with an underlying and in- dependent ‘civil action’ in which actual damages are assessed for some legal wrong to the injured party.” Palmer v. A.H. Robins, Inc., 684 P.2d 187, 214 (Colo.1984). In the absence of a finding that the plaintiff has suffered damages, a defendant may

not be penalized merely for wrongful conduct. De- feyter v. Riley, 671 P.2d 995, 998 (Colo.App.1983). Therefore, the statute is keyed to a finding that the defendant's conduct caused damages to the plaintiff. Taylor v. Sandoval, 442 F.Supp. 491, 495 (D.Colo.1977).

[14] Having found that the conduct of Wild- horn Ranch, Inc. was negligent, that its conduct caused the plaintiff to suffer actual damages, that its conduct was wanton and willful, the jury awar- ded exemplary damages against the corporation in accordance with Colorado law. See Taylor, 442 F.Supp. at 495–96. The jury found that the com- bined conduct of the parties had caused actual dam- ages to the plaintiffs and fixed various amounts for those damages. The jury also applied Colorado comparative fault statutes in conjunction with the instruction on alter ego to attribute percentages of fault to each party. The jury clearly attributed the fault of the corporation to M.R. Watters as instruc- ted by the court. The fact that a jury applies the law of corporate alter-ego to attribute the fault of a cor- poration to its principal does not defeat its finding that the corporation's conduct caused actual dam- ages to a plaintiff. Furthermore, the verdict form demonstrates that the jury applied the courts in- structions in the step-by-step manner required by the stipulated special interrogatories.*1451 Accord- ingly, defendants' motions on this issue are denied.

V. Substantively, we have considered the totality

of the evidence regarding the corporate form of Wildhorn Ranch, Inc. and of the conduct of M.R. Watters. We affirm the jury verdict on the question of corporate alter-ego. Furthermore, the record of defendant Watters conduct contains evidence on which a reasonable juror to find him personally li- able for plaintiffs' injuries. Defendant M.R. Watters is liable to plaintiffs for his own negligence and that of defendant Wildhorn Ranch, Inc.

ORDER We have considered the totality of the objec-

tions raised in defendants' post-trial motions as well

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as the complete trial record. Neither the facts of this case nor the applicable law warrant new trial, judg- ment notwithstanding the verdict, or amended judg- ment.

IT IS HEREBY ORDERED that claims stated against all defendants in plaintiffs' amended com- plaint, filed July 26, 1988, pursuant to the Colorado premises liability statute, Colo.Rev.Stat. § 13–21–115, are STRICKEN; it is further

ORDERED that all post-trial motions filed by defendants are DENIED; it is further

ORDERED that the Motion of Defendant Les Bretzke for New Trial Pursuant to Rule 59 of the Federal Rules of Civil Procedure is DENIED; it is further

ORDERED that the Motion of Defendant M.R. Watters for Judgment Notwithstanding the Verdict, or, in the Alternative, for New Trial is DENIED; it is further

ORDERED that the Motion of Defendant Wildhorn Ranch, Inc. for Judgment Notwithstand- ing the Verdict and for Amended or Altered Judg- ment are DENIED; it is further

ORDERED that, in all particulars, the jury ver- dict on the question of corporate alter-ego attribut- ing the negligence of Wildhorn Ranch, Inc. to M.R. Watters is affirmed; it is further

ORDERED that Motions of Defendants Les Bretzke and M.R. Watters for Stay of Judgment Pending Resolution of Post–Trial Motions Pursuant to Rule 62(b) of the Federal Rules of Civil Proced- ure are DENIED AS MOOT.

MEMORANDUM OPINION AND ORDER ON POST–TRIAL MOTIONS

APPENDIX Instruction No. 44a

You must apportion negligence among the vari- ous parties, including the plaintiffs, the decedent, William Geringer, and the several defendants. In

doing so, you must not count the negligence of an individual defendant twice. If you find any of the individual defendants negligent, you must determ- ine whether such defendant's negligence was in his individual capacity or solely as an officer, agent or employee of a corporate defendant. If such defend- ant was individually negligent, then his negligence should be apportioned to him and not the corpora- tion. If such defendant was negligent solely as an officer, agent or employee of a corporate defendant, then his negligence should be apportioned to the corporation and not to him.

INSTRUCTION NO. 45 The Plaintiff claims the Defendant, M.R. Wat-

ters, is the alter ego of Wildhorn Ranch, Inc. This amounts to a claim that those parties should be treated as being one and the same entity or person under the law so that the separate corporate exist- ence of Wildhorn Ranch, Inc. should be disregarded and the Defendant, M.R. Watters, should be held personally liable for its obligations and liability, if any, for wrongdoing.

With respect to that issue you are instructed that a corporation, generally, is a separate legal en- tity authorized under the law to do business in its own right and on its own credit as distinguished from the credit and assets of other persons or cor- porations.

*1452 This principle imposes liability on the individual who uses the corporation merely as an instrument for conducting his own personal busi- ness or merely to accomplish some ulterior pur- pose.

Thus in the context of this case, where one is the principal stockholder of one or more corpora- tions and personally conducts the corporation's business or manages its assets, he may be found in- dividually liable for the corporate obligations if three factors are proved:

(1) that he has consistently engaged in a course of conduct by which he has ignored the existence of

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the corporate entity or entities;

(2) that he has, in fact, conducted business as an individual by exercising such paramount and personal control over the operations of the corpora- tion or corporations that their corporate existence has been disregarded and their business interests and his own personal interests cannot be reasonably separated; and

(3) that his domination of the corporation caused injury to the plaintiff so that to continue to recognize the existence of a separate corporate en- tity would promote injustice.

If you find that plaintiff has proven each of these three propositions by a preponderance of the evidence, then the foreperson shall complete Spe- cial Verdict Form B, answering “yes” the prepon- derance of the evidence shows that Wildhorn Ranch Inc. was the alter-ego of defendant M.R. Watters according to the law as stated in these instructions; or if you find that plaintiff has not proven each of these three propositions then your answer must be “no” the preponderance of the evidence does not show that Wildhorn Ranch Inc. was the alter-ego of defendant M.R. Watters. You shall all then sign the form.

INSTRUCTION NO. 46 In applying the test set out in Instruction 45 to

determine whether plaintiff has established these three elements, you may consider the factors listed below together with all the evidence in the case.

(1) whether a corporation is operated as a sep- arate entity;

(2) commingling of funds and other assets;

(3) failure to maintain adequate corporate re- cords or minutes;

(4) the nature of a corporation's ownership and control;

(5) absence of corporate assets and under capit-

alization;

(6) use of a corporation as a facade for opera- tions of the dominant stockholder or stockholders;

(7) disregard of legal formalities and failure to maintain an arms-length relationship among related entities;

(8) non-functioning of other officers or direct- ors; and

(9) diversion of the corporation's funds or as- sets to noncorporate assets.

However, the mere fact that a person loans money to a corporation of which he is a sharehold- er, or that another corporation in which he owns stock loans money to that corporation, is not, by it- self sufficient to establish that the elements in In- struction No. 45 have been proved.

D.Colo.,1988. Geringer v. Wildhorn Ranch, Inc. 706 F.Supp. 1442

END OF DOCUMENT

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