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  1. #1
    Join Date
    May 2008
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    Default President Of Corporation Being Personally Sued

    My question involves business law in the state of: OHIO

    I am being personally sued by a customer of mine, even though I am a Delaware C corporation. Is this legal? If so, what the hell is the purpose of incorporating??

  2. #2
    Join Date
    Mar 2007
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    9,085

    Default Re: President Of Corporation Being Personally Sued

    Quote Quoting rjgill84
    View Post
    My question involves business law in the state of: OHIO

    I am being personally sued by a customer of mine, even though I am a Delaware C corporation. Is this legal? If so, what the hell is the purpose of incorporating??
    Typically, it is to insulate your personal wealth behind the "corporate veil".

    However, if your personal actions led to personal loss, there may be some leeway.

    What happened?

  3. #3
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    Sep 2005
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    Default Re: President Of Corporation Being Personally Sued

    I could go to a court right now and sue you for faking the moon landing. My case wouldn't have any merit, but the fact that you started a corporation wouldn't prevent me from suing you personally.So no, being incorporated doesn't magically stop your customer from trying to sue you personally.

    Does the customer have a valid claim against you personally? We have no information about he lawsuit, so we can't know. Start by reading this.

  4. #4
    Join Date
    Mar 2008
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    1,995

    Default Re: President Of Corporation Being Personally Sued

    Yes, I have seen corporate officers personally sued for a variety of reasons.

    I bought a business from a retiring couple where sometime before the business sale, they sold and installed a set of tires on a customer's car, which fell off on the highway, resulting in serious injury. Though the company had liability insurance, the plaintiff attorney chose to sue the company, as well as the couple, president, and treasurer respectively for gross negligence in the operation of the business, for example failing to hire qualified personeel, as well as the absence of proper safety procedures.

    From what I understand, the insurance company providing the GL provided legal defence for the "corp", but it was also recommended that the owners retain their own counsel, which they didn't do. The case was eventually settled when plaintiff attorneys found the couple moved to FL, and paid for a home in their name. Apparently having a home in FL is the greatest asset protection tool one can have, as the entire value of the home, no matter how large is homesteaded.

    After area I found where corporatae officers are PERSONALLY liable is by statute, more particularly in my state, NY, in the area of "workman's comp" should the company fail to obtain coverage for it's workers.

    I had a business where we had a serious accident, and I was told that I could be personally responsible for hospital bills, as well as fines, had I failed to obtain coverage. Fortunately, when I took over the business, the state WC auditor came by for an inspection, made a big stink, and I had everyone put on.

    Recently, Al Franken, the commedian running for senator was fined, $25,000, I beleive personally, for failure to obtain workman's comp for workers in his NY company.

    With the advent of Enron, Federal statutes been enacated that made the CEO and CFO's of public companies personally liable for false reprensentation in the company's financial statements.

    I've been told years ago by some business owner, that even if you incorporate, plan on someone suing you personally anyway. My wife, who did small SBA type business lending, tells me the usual arrangement for married couples is for the husband to own the business, the wife the house and other assets, and filing taxes separately. While they may gurantee the SBA loan, but if the husband, "president officer" is sued, the they cannot come after the wife, separately, and the family assets provided the wife is not an officer, and not at all involved in the business.

    Bottomline, if you're in business, plan on being personally sued, and be prepared for it.

    So, piercing the corporate fail, tort, and statute are various ways through which owner-officers are sued personally.

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