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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 Commercial Legislation Bulletin is a biweekly update of recent, unique, and impactful circumstances in condition and federal courts in the spot of industrial litigation.


Equitable Lien

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

In this discretionary attraction, the Ohio Supreme Court outlined when and in what circumstances an equitable lien could arise.

The Bullet Level: A lien is “‘a keep or declare which a person particular person has on the home of a different as a safety for some financial debt or demand.’“ “A lien results in being equitable in character when fulfillment of the lien is sought from a particular fund or distinct home under principles of equity.”

Ohio courts have held that a few elements are essential to set up an equitable lien: (1) a obligation, debt, or obligation, (2) an identifiable res, and (3) an specific or implied intent that the assets serve as protection for the payment of a debt or obligation. As the Ohio Supreme Court mentioned, even if these variables are all fulfilled, they are not dispositive as to irrespective of whether an equitable lien exists. Alternatively, “[c]ourts also get into account classic equitable concerns, such as whether or not 3rd events had see of the outstanding equitable interest.”

Materials Breach of Deal

McKinney v. Lamalfa Celebration Center, 11th Dist. Lake, No. 2022-Ohio-4333.

In this charm, the Eleventh Appellate District affirmed the demo court’s decision granting judgment to the plaintiff on a breach of deal declare owing to the defendant’s product breach of a marriage agreement as a final result of the COVID-19 pandemic.

The Bullet Point: “‘[A] substance breach occurs when a get together violates a expression crucial to the intent of the agreement.’” “‘Mere nominal, trifling, or technological departures will not result in a breach of agreement slight departures, omissions, and inadvertencies must be disregarded.’” In buy to create a substance breach, courts take into account the following factors:

  1. the extent to which the wounded occasion will be deprived of the profit that he reasonably anticipated,
  2. the extent to which the hurt get together can be adequately compensated for the aspect of that reward of which he will be deprived
  3. the extent to which the social gathering failing to complete or to supply to accomplish will put up with forfeiture,
  4. the chance that the get together failing to carry out or to offer to execute will cure his failure, taking account of all the circumstances like any sensible assurances, and
  5. the extent to which the conduct of the party failing to carry out or to give to complete comports with expectations of good faith and good working.’”

As the Eleventh District mentioned in this scenario, “[w]ith these unilateral changes, [plaintiff]would have had a significantly unique marriage reception than the a person for which she contracted. The mandates, though correct COVID-19 security steps in basic, materially altered the contract” and constituted a materials breach.

Adoptive Company Information Exception

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

In this enchantment, the Tenth Appellate District reversed the trial court’s selection to grant the plaintiff summary judgment in a foreclosures action, finding that an difficulty of point existed as to the volume owed on the financial loan.

The Bullet Place: Pursuant to Evid.R. 803(6), company data that fulfill the enumerated specifications are excepted from the hearsay rule. Evid.R. 803(6) permits the admission of enterprise records of an entity even when the entity was not the maker of the information, so extensive as the other needs of Evid.R. 803(6) are achieved, and situations reveal that the data are honest. Appropriately, underneath the adoptive business enterprise documents exception, the document need to have not be “prepared by the entity featuring them if the entity received, managed, and relied on the data in the everyday training course of enterprise, and included the information into the organization information of the testifying entity.”

Frustration of Intent

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

In this charm, the Eleventh Appellate District reversed in portion the demo court’s determination to grant summary judgment on the plaintiff’s breach of contract assert but refused to accept the defendant’s proposition to void the settlement pursuant to the strategy of “frustration of reason.”

The Bullet Issue: Voiding a deal owing to “frustration of purpose” arises: “[w]listed here, right after a deal is produced, a party’s principal objective is substantially frustrated devoid of his fault by the prevalence of an occasion, the non-prevalence of which was a primary assumption on which the contract was manufactured, his remaining responsibilities to render effectiveness are discharged, unless the language or the situation show the contrary.” As the Eleventh District observed, the thought is not extensively approved in Ohio, and the Supreme Court of Ohio has not but expressly adopted it.


Active Participation Idea

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

The Fourth District concluded that a company officer who actively participates in a corporation’s torts can be independently liable even although performing in a company capability.

The Bullet Level: Whilst a corporate officer is not liable for the corporation’s torts only by virtue of his company officer standing, a company officer may be individually liable for the torts of the corporation in which he actively participates. Less than this “active participation concept,” courts impose legal responsibility on the particular person as an actor alternatively than as a company officer, and legal responsibility is hence not predicated on a acquiring that the company is a sham and a mere change ego of the officer.

The central concern in this charm was regardless of whether the appellee corporate officer could be separately liable for fraudulent representations in an investor deal, which he signed as president of the company and not individually. Implementing the energetic participation theory, the Fourth District held that he can. This is due to the fact the proof demonstrates that a fraud was committed, and the company officer actively participated in the fraud by signing the files, even though he signed on behalf of the company. The demo court’s purchase granting summary judgment in favor of the company officer was thus reversed.

Judgments Exceeding Jurisdictional Boundaries

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

The 2nd Circuit established a last judgment for damages was void due to the fact it exceeded the county court’s recommended jurisdictional boundaries.

The Bullet Place: The county courts of Florida are courts of limited jurisdiction and as a result precluded from entering a judgment for damages in excessive of its mandated jurisdiction. If a judgment for damages exceeds the county court’s jurisdictional restrict, the county choose has no electrical power to enter the judgment, and it is void. In this situation, the demo courtroom entered a remaining summary judgment awarding damages in extra of the $15,000 jurisdictional limit of the county court docket. On enchantment, the Next District concluded that this judgment is void, and the appropriate system is to remand the case to the county court for even further proceedings. On remand, if the county court decides that the quantity in controversy exceeds the prescribed jurisdictional restrict, the county court need to transfer the motion to the circuit court docket.

Inadequate Appellate Report

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

The Second District denied a petition for certiorari due to the fact there was an insufficient appellate report.

The Bullet Position: On appeal, the appellate court is certain by the presumption of correctness afforded to the circuit court docket, and it is the load of the appellant or petitioner to demonstrate a departure from the necessary prerequisites of the regulation. Hence, wherever there is an inadequate appellate file, the appellate court docket is not able to determine regardless of whether the trial courtroom fully commited any error. In this situation, the petitioner alleged that the circuit court docket did not supply an chance to current proof prior to discharging her notices of lis pendens. The Second District found that it is unclear whether the circuit court committed that error simply because there was an inadequate appellate record, as the Next District did not have a transcript of the hearing, and the petitioner did not attempt to give a statement of the proceedings. The petition for writ of certiorari requesting that the court docket quash the circuit court’s order discharging the notices of lis pendens was thus denied.