May 17, 2024

Can a Corporate Officer Be Sued Individually? – McGlinchey Commercial Law Bulletin – December 2022 – | McGlinchey Stafford

Can a Corporate Officer Be Sued Individually? – McGlinchey Commercial Law Bulletin – December 2022 – | McGlinchey Stafford

McGlinchey’s Business Legislation Bulletin is a biweekly update of the latest, one of a kind, and impactful conditions in state and federal courts in the space of industrial litigation.


Equitable Lien

Michael v. Miller, Slip. Op. No. 2022-Ohio-4543

In this discretionary enchantment, the Ohio Supreme Court outlined when and in what circumstances an equitable lien may well arise.

The Bullet Stage: A lien is “‘a hold or declare which one human being has on the house of a different as a stability for some credit card debt or charge.’“ “A lien results in being equitable in character when gratification of the lien is sought from a unique fund or specific property beneath rules of fairness.”

Ohio courts have held that a few components are required to establish an equitable lien: (1) a responsibility, credit card debt, or obligation, (2) an identifiable res, and (3) an specific or implied intent that the home provide as security for the payment of a debt or obligation. As the Ohio Supreme Courtroom noted, even if these things are all met, they are not dispositive as to regardless of whether an equitable lien exists. Alternatively, “[c]ourts also take into account standard equitable concerns, this kind of as irrespective of whether third get-togethers had discover of the fantastic equitable fascination.”

Product Breach of Deal

McKinney v. Lamalfa Party Centre, 11th Dist. Lake, No. 2022-Ohio-4333.

In this appeal, the Eleventh Appellate District affirmed the demo court’s choice granting judgment to the plaintiff on a breach of contract assert due to the defendant’s material breach of a wedding ceremony settlement as a consequence of the COVID-19 pandemic.

The Bullet Issue: “‘[A] material breach takes place when a occasion violates a term critical to the function of the settlement.’” “‘Mere nominal, trifling, or specialized departures will not end result in a breach of contract slight departures, omissions, and inadvertencies ought to be disregarded.’” In purchase to establish a product breach, courts think about the adhering to components:

  1. the extent to which the hurt party will be deprived of the reward that he fairly envisioned,
  2. the extent to which the injured get together can be adequately compensated for the component of that benefit of which he will be deprived
  3. the extent to which the social gathering failing to conduct or to offer to accomplish will experience forfeiture,
  4. the chance that the occasion failing to carry out or to provide to conduct will get rid of his failure, using account of all the circumstances together with any affordable assurances, and
  5. the extent to which the behavior of the get together failing to conduct or to provide to conduct comports with specifications of very good faith and reasonable dealing.’”

As the Eleventh District pointed out in this case, “[w]ith these unilateral variations, [plaintiff]would have had a considerably diverse wedding reception than the one for which she contracted. The mandates, though acceptable COVID-19 safety measures in basic, materially altered the contract” and constituted a material breach.

Adoptive Business Data Exception

U.S. Financial institution v. Williams, 10th Dist. Franklin, No. 2022-Ohio-4590.

In this charm, the Tenth Appellate District reversed the trial court’s choice to grant the plaintiff summary judgment in a foreclosure motion, obtaining that an problem of actuality existed as to the volume owed on the financial loan.

The Bullet Point: Pursuant to Evid.R. 803(6), enterprise records that satisfy the enumerated needs are excepted from the rumour rule. Evid.R. 803(6) permits the admission of organization records of an entity even when the entity was not the maker of the documents, so very long as the other needs of Evid.R. 803(6) are satisfied, and conditions show that the documents are reliable. Accordingly, below the adoptive company data exception, the record require not be “prepared by the entity presenting them if the entity gained, maintained, and relied on the records in the ordinary class of enterprise, and included the documents into the organization records of the testifying entity.”

Frustration of Purpose

Cafaro-Peachcreek Joint Enterprise Partnership v. Spanggard, 11th Dist. Trumbull, No. 2022-Ohio-4468.

In this attractiveness, the Eleventh Appellate District reversed in part the trial court’s decision to grant summary judgment on the plaintiff’s breach of contract claim but refused to accept the defendant’s proposition to void the arrangement pursuant to the notion of “frustration of objective.”

The Bullet Issue: Voiding a deal because of to “frustration of purpose” occurs: “[w]right here, just after a agreement is built, a party’s principal function is significantly discouraged without having his fault by the event of an party, the non-incidence of which was a primary assumption on which the contract was designed, his remaining responsibilities to render effectiveness are discharged, except if the language or the instances reveal the opposite.” As the Eleventh District observed, the concept is not extensively approved in Ohio, and the Supreme Court of Ohio has not yet expressly adopted it.


Lively Participation Principle

Costa Invs., LLC v. Liberty Grande, LLC and Moses Bensusan, No. 4D21-2676 (Dec. 21, 2022)

The Fourth District concluded that a corporate officer who actively participates in a corporation’s torts can be individually liable even even though acting in a corporate potential.

The Bullet Place: Despite the fact that a company officer is not liable for the corporation’s torts basically by advantage of his company officer status, a corporate officer might be separately liable for the torts of the company in which he actively participates. Below this “active participation principle,” courts impose legal responsibility on the person as an actor instead than as a corporate officer, and liability is therefore not predicated on a getting that the corporation is a sham and a mere alter ego of the officer.

The central concern in this appeal was regardless of whether the appellee corporate officer could be independently liable for fraudulent representations in an trader agreement, which he signed as president of the corporation and not separately. Implementing the active participation idea, the Fourth District held that he can. This is mainly because the proof demonstrates that a fraud was fully commited, and the company officer actively participated in the fraud by signing the files, even even though he signed on behalf of the company. The trial court’s get granting summary judgment in favor of the company officer was consequently reversed.

Judgments Exceeding Jurisdictional Limits

Exquisite Carpet & Interiors, Inc. v. Martinez, No. 2D21-2272 (Fla. 2d DCA Dec. 21, 2022)

The Second Circuit identified a closing judgment for damages was void since it exceeded the county court’s approved jurisdictional limitations.

The Bullet Level: The county courts of Florida are courts of minimal jurisdiction and therefore precluded from getting into a judgment for damages in surplus of its mandated jurisdiction. If a judgment for damages exceeds the county court’s jurisdictional limit, the county judge has no power to enter the judgment, and it is void. In this circumstance, the trial court docket entered a last summary judgment awarding damages in surplus of the $15,000 jurisdictional limit of the county courtroom. On appeal, the Next District concluded that this judgment is void, and the correct class is to remand the case to the county court for even more proceedings. On remand, if the county courtroom establishes that the sum in controversy exceeds the approved jurisdictional limit, the county court docket need to transfer the action to the circuit court docket.

Insufficient Appellate File

Henry v. Purpose Indus., LLC and Amy Abdnour, No. 2D22-330 (Fla. 2d DCA Dec. 16, 2022)

The Second District denied a petition for certiorari because there was an inadequate appellate document.

The Bullet Point: On enchantment, the appellate court docket is bound by the presumption of correctness afforded to the circuit court, and it is the stress of the appellant or petitioner to present a departure from the necessary demands of the law. For that reason, where there is an inadequate appellate file, the appellate courtroom is not able to figure out whether the trial courtroom committed any error. In this case, the petitioner alleged that the circuit court docket did not give an chance to current proof prior to discharging her notices of lis pendens. The 2nd District observed that it is unclear whether the circuit court dedicated that mistake simply because there was an inadequate appellate history, as the 2nd District did not have a transcript of the listening to, and the petitioner did not try to give a assertion of the proceedings. The petition for writ of certiorari requesting that the court docket quash the circuit court’s buy discharging the notices of lis pendens was therefore denied.