Post-Judgment Attorney’s Fees Awarded for Separate Veil Piercing Suit
Judgment creditor was entitled to recover attorney’s fees incurred in pursuing judgment creditor’s sole shareholder in a separate action to pierce the corporate veil based on the fee recovery provision of the contract giving rise to the judgment.
In what it described as a case of first impression, Steiner Elec. Co. v. Maniscalco, 2016 IL App (1st) 132023, ¶¶ 40, 54-55, an Illinois appellate court reversed the circuit court’s ruling refusing to award the judgment debtor attorney’s fees expended in its suit to pierce the corporate veil where the attorney’s fees provision was contractual in the underlying, ancillary suit.
Plaintiff had obtained a default judgment against the defendant for the cost of products sold on credit, plus finance charges, attorneys fees, expenses and costs. Id. ¶ 2. Before the judgment was entered, however, the defendant had been dissolved. Id. ¶ 1. After pursuing postjudgment proceedings in which it collected extensive discovery of the dissolved defendant’s financial records, plaintiff filed the veil piercing suit against the defendant’s shareholder and an affiliated company. Id. ¶¶ 43-44. The lower court denied plaintiff’s request for post-judgment attorney’s fees on the grounds that there was no contractual agreement or statutory basis for such fees. Id. ¶ 45.
The appellate court disagreed, finding sufficient for this purpose the reference in the parties’ underlying purchase agreement to “‘all reasonable costs of collection including attorney fees and expenses.’” Id. ¶ 40. And while there was no Illinois state case law on point, the court relied on the reasoning in the Seventh Circuit’s decision granting post-judgment attorney’s fees for a veil piercing action in Centerpoint Energy Services, Inc. v. Halim, 743 F.3d 503 (7th Cir. 2014). Id. ¶¶ 49-50.
Finally, the court noted that the merger doctrine does not bar post-judgment attorney’s fees, since the claim for fees is ancillary to the underlying cause of action. Id. ¶ 54 (citing Poilevey v. Spivack, 368 Ill. App. 3d 412, 415 (1st Dist. 2006)).
