McBride Law Blog

BLOG

Tagged Posts: personal liability’

Personal Liability for Environmental Violations (Part III)

December 15, 2016

In State v. Pure Tech Systems, Inc.,[1] the property at issue had been used for petroleum and hazardous substance operations dating back to the 1880s and was already subject to the state’s closure order by the time it was transferred to Pure Tech Systems, Inc. (“Pure Tech”).  Subsequently, the City of Cleveland issued a citation to close the facility for the city and state fire code violations, followed by a consent order to address the violations.  The state’s environmental agency also began regulatory compliance actions against Pure Tech, which resulted in two additional consent orders. … Read the rest

Personal Liability for Environmental Violations (Part II)

December 8, 2016

In Morello v. State,[1] White Lion Holdings, L.L.C. (“White Lion”), a company owned by Morello, bought a piece of real property that was previously used as a pipe-manufacturing facility.  The previous owner of the property had a state-issued compliance plan to clean up groundwater contamination at the facility, which was also transferred to White Lion after the purchase.  A few years later, the State of Texas sued White Lion for failure to adhere to the requirements of the compliance plan and sought to hold Morello individually liable as the manager and operator of the company. … Read the rest

Personal Liability for Environmental Violations (Part I)

December 6, 2016

As you know, one of the principal advantages of forming a limited liability company or corporation is that it offers protection from liability for business debts and obligations.  As you also know by now, however, this liability shield is not absolute.  We explained in our previous blog series “LLC Update: Piercing the Corporate Veil” that in certain limited situations, courts may “pierce the corporate veil” to hold LLC members liable for business debts and obligations, especially when they operate the business without the requisite corporate formalities, commingle personal and business finances, and/or use the business entity to avoid creditors. … Read the rest

When a Corporation Fails To Exist (Legally) (Part IV)

October 27, 2016

In Hill v. County Concrete Co., Inc., Hill and Newman hired an attorney to form a construction services corporation to be known as “C&M Builders, Inc.” (C&M).[1]  The attorney advised Hill and Newman that the corporate name was available and that they could proceed with their business preparations, upon which Hill and Newman ordered checks, painted trucks, and opened a bank account, all imprinted with, or in the name of, C&M.  But for whatever reason, the attorney did not attempt to file the Articles of Incorporation until the end of February 1989, more than 3 months later, and when he did, the corporate name C&M was no longer available. … Read the rest

When a Corporation Fails To Exist (Legally) (Part III)

October 20, 2016

Corporation by Estoppel

In Cranson v. I.B.M. Corp., Cranson decided to invest in a corporation that was soon to be formed.[1] Upon being advised by the attorney that the corporation had been formed, Cranson received a stock certificate for his shares and was shown the corporate seal and minute book.  The company started conducting business, through corporate bank accounts, with auditors maintaining corporate books and records, and under a lease for the office space entered into by the corporation. … Read the rest

When a Corporation Fails To Exist (Legally) (Part II)

October 13, 2016

De Facto Corporation

Cantor v. Sunshine Greenery, Inc., a 1979 case out of New Jersey, is one of the best known cases on the doctrine of de facto corporation.[1]  In that case, Cantor was the landlord and Sunshine Greenery the tenant.  On December 16, 1974, Cantor prepared the lease naming Sunshine Greenery as the tenant, which was signed by Brunetti as president of Sunshine Greenery.  Cantor knew that Brunetti was starting a new corporation but did not request a personal guarantee from Brunetti. … Read the rest

When a Corporation Fails To Exist (Legally) (Part I)

October 6, 2016

We advise and write frequently on personal liability of business owners.  Certain entity forms, such as corporation and limited liability company (LLC), generally offer protection from personal liability for business owners.  Although we discussed in our previous blog series “LLC Law Update: Piercing the Corporate Veil” situations where courts “pierce the corporate (or LLC) veil” to hold business owners liable for business debts, veil piercing is more of an exception than the norm for properly formed and operated entities. … Read the rest

Maryland Law Update: How a Board Might Exercise Business Judgment When a Shareholder Makes a Demand (Part III)

August 11, 2016

In Oliveira v. Sugarman,[1] the Court of Special Appeals of Maryland said that, in reviewing corporate decisions made by a board of directors, it needs to consider the business judgment rule—a presumption that the board acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the company. The court explained that a shareholder derivative action, like this one, begins with a demand on the board and the board is required to make a decision as to whether to pursue the demanded lawsuit.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.