#Business #law #cases
LLC Doesn t Protect Owner From His Own Tort
On March 17, 2005, Chris K. Sturm and Tammy Sturm and Harb Development entered into a contract for the construction of a new home in Bristol, Conn. After the house was built, the Sturms found that the house had not been built in accordance with the contract and that the workmanship was poor. Among a long list, the Strums claimed that the foundation lacked an adequate concrete slab, the dormer was built incorrectly, the first and second floors varied from
the construction plans, and the windows throughout the house were improperly installed.
Unhappy with their new home, the Sturms filed this legal action against Harb Development, LLC and its principal, John J. Harb. The Sturms alleged that the poor workmanship in the construction of the new home constituted negligence and fraud, and violated several Connecticut statutes.
John J. Harb filed a motion to strike all counts of the complaint against him in his individual capacity, claiming that the Sturms had failed to plead sufficient facts to warrant piercing the corporate veil. The trial court agreed and granted Harb s motion. The Sturms filed this appeal.
In their appeal, the Sturms state that they were not attempting to pierce the corporate veil, but were asserting a claim against Harb for his own individual negligence and fraud. The Connecticut Supreme Court agreed. However, since both parties addressed the issue of whether or not there were sufficient allegations of negligence and fraud against Harb and it is a matter law, the Supreme Court considered the issue.
The Court stated that It is well established that an officer of a corporation does not incur personal liability for its torts merely because of his official position. Where, however, an agent or officer commits or participates in the commission of a tort, whether or not he acts on behalf of his principal or corporation, he is liable to third persons injured thereby. . . . To allege negligence, the Strums had to show that Harb had a duty, that he breached that duty, that the breach caused an injury, and that there was an actual injury. A duty may come from a contract or a state law such as a building code. However, the Strums failed to allege that Harb was personally a party to the contract and failed to show any duty imposed by law. The Strums also failed to allege the manner in which Harb breached the duty, if there was a duty. Therefore, the Supreme Court found that the Strums had failed to state a case against Harb and dismissed this part of the case.
The Court further found that the Strums had failed to allege that Harb knew or should have known that the representations he made were false. Because this is an essential element of misrepresentation, the Court also dismissed this part of the case.
In this case, Harb was lucky that the Strums had failed to allege facts that would support a finding of negligence or fraud on his behalf. Had the Strums asserted in their Complaint facts concerning Harb s personal behavior and actions, the results of this case may well have been reversed. It is vitally important for a person who has a complaint against another person to allege facts that, if proven to be true, will cause a court to rule in favor of the person who has the complaint.