Utah Supreme Court
When does the reciprocal attorney fees statute apply to alter ego claims? Bushnell v. Barker Explained
Summary
An accounting firm client sued the firm owner individually under an alter ego theory after prevailing against the firm. The district court denied the owner’s request for attorney fees under the reciprocal fee statute and failed to rule on his costs request. The court of appeals affirmed both denials.
Analysis
The Utah Supreme Court’s decision in Bushnell v. Barker provides important guidance on when the reciprocal attorney fees statute applies in contract disputes involving alter ego theories and clarifies the timing requirements for costs requests under Rule 54(d).
Background and Facts
John Bushnell hired Dale K. Barker Company to prepare tax returns under a contract containing an attorney fees clause for the “nondefaulting party.” After disputes arose, Bushnell sued both the company and Dale Barker individually under an alter ego theory. Barker successfully obtained a directed verdict dismissing the alter ego claim and sought attorney fees under Utah’s reciprocal fee statute and costs under Rule 54(d). The district court denied both requests.
Key Legal Issues
The Supreme Court addressed two issues: (1) whether the reciprocal attorney fees statute applies when an alter ego defendant would not be a party to the underlying contract even if the theory succeeded, and (2) whether a costs memorandum filed after verdict but before judgment entry satisfies Rule 54(d) timing requirements.
Court’s Analysis and Holding
The Court affirmed denial of attorney fees, explaining that alter ego liability is procedural, not substantive—it holds individuals liable for corporate obligations without making them parties to the contract. Since Barker would not have been a “defaulting party” even if the alter ego theory succeeded, the contract’s fee provision could not be triggered under Utah Code § 78B-5-826.
However, the Court reversed on costs, holding that Barker’s May 7 memorandum filed after the April 3 directed verdict but before the September 19 judgment satisfied Rule 54(d)’s timing requirements under the “after verdict but before judgment” provision.
Practice Implications
This decision clarifies that alter ego theories do not transform procedural liability into party status for fee-shifting purposes. For costs requests, practitioners should file memoranda promptly after favorable rulings rather than waiting for final judgment to ensure compliance with Rule 54(d).
Case Details
Case Name
Bushnell v. Barker
Citation
2012 UT 20
Court
Utah Supreme Court
Case Number
No. 20100207
Date Decided
March 27, 2012
Outcome
Affirmed in part and Reversed in part
Holding
The reciprocal attorney fees statute does not apply when an alter ego theory would not make the defendant a party to the contract, but a costs memorandum filed after verdict but before judgment satisfies Rule 54(d) timing requirements.
Standard of Review
No deference review for statutory construction and rule interpretation
Practice Tip
File costs memoranda promptly after a favorable verdict rather than waiting for final judgment entry to ensure compliance with Rule 54(d) timing requirements.
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