United States District Court Finds New Mexico Recognizes Outsider Reverse Veil Piercing

Judge Gegory J. Fouratt, United States Magistrate Judge (presiding by consent), recently found New Mexico recognizes outsider reverse veil piercing. Defendant Osvaldo De La Vega has been a licensed medical doctor in New Mexico specializing in nephrology through a practice he named “Southwest Health Services, P.A.” (“Southwest Health”). Imming v. De LaVega, 2025 U.S. Dist. Lexis 187945 at 2 (D.N.M. Sep. 24, 2025). Defendant De La Vega was the sole owner and decisionmaker for Southwest Health from its formation to the date on which he sold its assets and closed it down in February 2018. Id. at 2-3. On the advice of an attorney, DLV created a limited liability company called “Mesilla Capital Investments, LLC” (“MCI”) to hold title to the commercial real estate on which his medical practice and dialysis units were located. Id. at 3.  

On February 13, 2017, Plaintiff sued Defendants De La Vega and Southwest Health in New Mexico state court, alleging inter alia that they had violated the New Mexico Human Rights Act (NMHRA) by subjecting her to sexual harassment in the form of a hostile work environment. Id. at 4. On February 13, 2020, the state district court entered a Final Judgment in the amount of $867,971.07, which included the damages award as well as Plaintiff’s attorney’s fees and costs. Id at 5. Defendants De La Vega and Southwest Health appealed the jury verdict, and the verdict was affirmed by the Court of Appeals on February 1, 2023. Id. 

The Federal Court found: “During the 29 months leading up to the state court trial, [De La Vega] enjoyed substantial net worth” exceeding “$45 million dollars.” Id. Rather than pay the Judgment against him, however, the Court found Defendant De La Vega stripped Defendant Southwest Health of its assets to avoid the Judgment. Id. at 12 (“By stripping Southwest Health of its assets without arranging for it to receive anything in return, DLV ensured that Southwest Health would be unable to pay any judgment that Plaintiff might obtain against it”).

The Court also found Defendant De La Vega wrongfully transferred assets to create a new company, “MCI-MX, and subsequently transferred to it properties he had long owned in his personal capacity, for the primary purpose of minimizing the assets that would be available to pay any judgment that Plaintiff might obtain in the upcoming trial of the state case. The Court further finds that DLV did so ‘with actual intent to hinder, delay or defraud’ (as used in N.M.S.A. 1978 § 56-10-18(A)(1)) Plaintiff in the event she became a judgment creditor against him or Southwest Health.” Id. at 15. 

The Court also found Defendant De La Vega was not a credible witness at trial. Id. at 17-28. Indeed, the Court found “the sheer number of times that DLV’s trial testimony was impeached with his own prior statements under oath. Whether by using DLV’s deposition testimony, testimony in the Texas state case or the bankruptcy case, or in sworn answers to written discovery, Plaintiff’s counsel successfully impeached DLV’s trial testimony nearly three dozen times… The Court was and remains stunned at the frequency and impunity with which DLV testified in ways that were directly contrary to, or meaningfully inconsistent with, his previous testimony or sworn statements on the same subjects. The Court has not presided over—or ever participated in or even observed—a proceeding in which a witness’s testimony was so thoroughly discredited.” Id. at 17-18 (emphasis added).

In short, the Court found Defendant De La Vega did “whatever possible to complicate, frustrate, and stymie Plaintiff’s ability to collect on any judgment she obtained against DLV or Southwest Health.” Id. at 19. The Court concluded that the veil of MCI and MCI-MX should be pierced, because “[v]iolators of the law, as a state court jury found DLV to be, cannot be permitted to evade the ramifications of their legal violations by hiding or transferring personal assets into an entity over which they have exclusive and complete control. Indeed, it would be contrary to public policy for the Court to overlook a judgment debtor’s shell games to avoid legal obligations to a judgment creditor.” Id. at 32. 

The Court concluded: “‘this case patently presents a blending of the very factors which courts have regarded as justifying a disregard of the corporate entity in furtherance of basic and fundamental fairness.’ [De La Vega] is improperly using MCI to avoid Plaintiff’s collection efforts and has made himself undercapitalized with the intent of creating a facade that he cannot access assets to satisfy the Final Judgment. Piercing MCI’s veil would serve public policy by allowing Plaintiff to receive the compensation she was awarded by the state court jury, [De La Vega]’s efforts to conceal his assets notwithstanding. To do otherwise would be to permit De La Vega to continue using the ‘legal fiction of a separate corporate structure [and] would result in an injustice toward [P]laintiff.'” Id. at 50-51. The Court therefore found reverse veil piercing was a proper remedy, pierced MCI’s veil, and found MCI was jointly and severally liable for the Final Judgment with Defendant De La Vega.