Richard owns and operates his home construction company as an S Corporation. Whi
ID: 448457 • Letter: R
Question
Richard owns and operates his home construction company as an S Corporation. While he has commingled funds of the corporation and his private life, he has nevertheless always operated with the business name "Richard's Construction Company, Inc." to notify other parties that he is operating as a corporation. A home inspector who is looking over one of Richard's construction sites trips over a power cord that has been left negligently on the edge of a roof line, and the inspector falls to the ground. The medical and other costs of the inspector's fall amount to $250,000, and the inspector and his insurance company sue Richard's company for recovery of the expenses.
The corporation is found to have only a small amount of money and other assets, and only $100,000 in liability insurance that will pay. Can the inspector and his insurance company recover the remaining $150,000 in expenses from Richard's personal funds?
No. His personal assets are protected from liability because his business is a corporation.
No, because he provided proper notice to the public that his business is a corporation with limited liability.
Yes, if the court finds that the corporation is under-capitalized and has merely been an alter ego of Richard as a person.
Yes, because Richard was negligent.
A.No. His personal assets are protected from liability because his business is a corporation.
B.No, because he provided proper notice to the public that his business is a corporation with limited liability.
C.Yes, if the court finds that the corporation is under-capitalized and has merely been an alter ego of Richard as a person.
D.Yes, because Richard was negligent.
Explanation / Answer
Answer is B.
No, because he provided proper notice to the public that his business is a corporation with limited liability.
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