President of Building Company Liable for Negligence Despite Acting on Behalf of Company

Asset Protection

The January 2011 North Carolina Court of Appeals case of White v. Collins Bldg., Inc. involved purchasers of beach house who filed a negligence claim against several defendants, including the building company’s president and sole shareholder, Edwin E. Collins, Jr., alleging that he failed to properly supervise the construction of their home, leading to sustained water, window, and plumbing damage.

The Superior Court Judge granted Collins’ motion to dismiss claim against him in his individual capacity. On appeal, the Court of Appeals held that Collins could be personally liable for negligence in construction of the home, even in absence of facts sufficient to pierce the corporate veil.
The Court stated that:
“it is well-settled law in North Carolina that one is personally liable for all torts committed by him, including negligence, notwithstanding that he may have acted as agent for another or as an officer for a corporation. Furthermore, the potential for corporate liability, in addition to individual liability, does not shield the individual tortfeasor from liability. Rather, it provides the injured party a choice as to which party to hold liable for the tort. Hollowell, 97 N.C.App. at 318-19, 387 S.E.2d at 666 (internal citations omitted). As in Sturm, Defendant’s argument “fails … to acknowledge our well established common-law exception to individual liability in a corporate context for an individual’s tort liability.” Sturm, 2 A.3d at 868. Accordingly, based on well-settled law in North Carolina, Defendant may be personally liable for negligence if the facts support a negligence claim against him.” (Emphasis added).
This case should serve as a wake-up call for hands-on small business owners who think that their corporation or limited liability company will protect their personal assets from disgruntled customers. One solution, of course, is to hire others to do the supervisory work, which should help protect against individual liability for the owner. In addition, small business owners should engage in prospective comprehensive asset protection planning to ensure that their family’s financial future is safeguarded.
Thanks to Durham attorney Bob Idol for bring this case to my attention.
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