Source: https://www.cuhlaw.com/buslaw.html
Timestamp: 2019-04-26 11:39:21+00:00

Document:
Generally, a corporate officer will not be held individually liable on any contracts, either written or oral, which are entered into on behalf of the corporation. O'Neill v. United States (D.C.Ohio 1968), 281 F.Supp. 359; Centennial Ins. Co. of New York v. Vic Tanny Internatl. of Toledo, Inc. (1975), 46 Ohio App.2d 137. Two limited exceptions, however, remove a corporate officer from the protection of the corporate fiction and will allow a finding of individual liability: 1) piercing the "corporate veil," Bucyrus-Erie Co. v. Gen. Prod. (C.A.6, 1981), 643 F.2d 413; and 2) the failure of a corporate officer to identify the corporate capacity in which he is dealing with regard to a specific business transaction, Spicer v. James (1985), 21 Ohio App.3d 222; Boutell v. Patriarch Computers and Copiers (Dec. 2, 1993), Cuyahoga App. No. 64149, unreported.
In Dombroski v. WellPoint, Inc., 119 Ohio St.3d 506, 2008-Ohio-4827, the Ohio Supreme Court modified the so-called Belvedere test for when it is appropriate to pierce the corporate veil and impose liabilty on shareholders or officers set forth in Belvedere Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc. (1993), 67 Ohio St.3d 274, 617 N.E.2d 1075. Dombrosoki sued the parent insurance company for bad faith in denying certain treatment the insurer deemed "investigational." Although the court refused to allow the corporate veil to be pierced in this case, the court modified the second prong of the Belvedere test to make is somewhat easier to pierce corporate veils. The Belvedere test now is: The corporate form may be disregarded and individual shareholders held liable for wrongs committed by the corporation when (1) control over the corporation by those to be held liable was so complete that the corporation has no separate mind, will, or existence of its own, (2) control over the corporation in such a manner as to commit fraud, an illegal act, or a similarly unlawful act against the person seeking to disregard the corporate entity, and (3) injury or unjust loss resulted to the plaintiff from such control and wrong." All three prongs of the test must be met for piercing to occur.
See also, our discussion of Premier Therapy LLC v. Childs, 2016-Ohio-7934.
In Champion Gym & Fitness, Inc. v. Crotty, 2008-Ohio-5642, the Second District Court of Appeals reversed a summary judgment holding that there were genuine issues of fact whether the conditions of a "commitment letter" were met and sufficient to constitute a binding contract. In Ohio, an agreement to agree is not always unenforceable as a contract. The buyer of a fitness business attempted to cancel the purchase of a business after signing a commitment letter and making a $40,000 down payment. There was a genuine issue of fact whether the buyer had successfully negotiated a new lease with the landlord for the business which was a condition of the commitment letter. The lesson: a document that is intended as a letter of intent may be binding without appropriate qualifying language.
However, in Espyville of Pennsylvania v. Ron-Bon, Inc., 2016-Ohio-1304, the 11th District Court of Appeals affirmed the trial court's refusal to enforce a contract for the sale of a business based upon either the letter of intent or a purported accepted draft of the purchase agreement. As to the letter of intent, the court said that the letter did not contain all essential terms, so if was insufficient to constitute an enforceable contract. In exchanging contract drafts, the buyer's lawyer presented a draft that contained terms objectionable to seller. The seller changed the terms, one of which was the scope of the business being sold, signed the changed contract, and sent it back. The buyer's lawyer returned the contract in a red-lined version, but changed the scope of the business being sold back to a previous version and changed some other items. After receiving that draft, the Seller told the buyer's lawyer the deal was off. The buyer's lawyer then had the buyer sign seller's previous version and attempted to enforce it as a contract. According to the trial court and the court of appeals, the transmission of the red-lined version was a counter-offer. When Seller rejected the counter-offer and said the deal was off, there was no longer an offer on the table for buyer to accept.
If an employee driving a truck causes an accident and leaves the scene of the accident, can the employer be held liable for punitive damages based upon the acts of the employee? In Estate of Beavers v. Knapp, 175 Ohio App.3d 758, 2008-Ohio-2023, a truck driver making a turn saw a motorcycle lose control and start sliding under the semi trailer. The truck driver panicked and sped up, running over the cyclist, and leaving the scene of the accident. The driver later falsely denied that he had been involved in the accident. On learning about the accident in the newspaper, the employer ordered the employee back into town to talk to the police and fired the employee upon learning of the employee's conduct. A jury awarded punitive damages against the employee and separate punitive damages against the employer. The Franklin County Court of Appeals held that the employee's act of leaving the scene of the accident and covering up supported an award of punitive damages; however, without some participation or ratification by the employer, the employer could not be held liable for punitive damages. The court noted that the employer had a written policy prohibiting employees from leaving the scene of an accident and the employer promptly terminated the employee upon learning of the violation of the policy. The court also noted, however, that some courts of appeal in Ohio, apparently contrary to Ohio Supreme Court authority, have l iberally awarded punitive damages against an employer merely because of wanton, or present, or malicious intent on the part of the employee, particularly if there were any facts suggesting that the employer had ratified the employee's conduct.
The Ohio Supreme Court has now firmly established the principle that a business may not impose an interest rate on unpaid invoices by merely stating an interests rate on the invoice itself. Any interest rate other than the legal rate (set annually by the Ohio Tax commissioner) must the established by a contract agreed by the parties. The Court rejected the lower courts' rulings that an interest rate agreement was established by receipt of invoices stating the rate without objection, a procedure that may sometimes establish contract terms in a commercial transaction under the Uniform Commercial Code, RC 1302.10. Minster Farmers Coop. Exchange Co., Inc. v. Meyer, 117 Ohio St. 3d 459, 2008-Ohio-1259. The ruling reversed the contrary cases we previously reported here: Minster Farmers Cooperative Exchange Company, Inc. v. Meyer (3d Dist. App.), 2006-Ohio-1886, and Minister Farmers Cooperative Exchange Company, Inc. v. Dues(3rd Dist. App.), 2006-Ohio-1887.
Harwood v. Weiss (8th Dist. App.), 2005-Ohio-5542, trial court had a duty to vacate a cognovit judgment when there was evidence that the payments on the judgment had been mailed via certified mail, but the checks remained uncashed and the certified mail was returned unclaimed. Defense of payment may be raised as a meritorious defense in a motion seeking relief from a cognovit judgment.
The Ohio Supreme court summarized the law in a 2001 case. Click here for the court's excellent summary of the law along with the complete text of Revised Code Section 4399.18 as of July 1, 2010. Full article here.
Most employees currently fill out I-9 forms and submit accompany documents to employers who determine whether the worker has met federal requirements. With the E-Verify system, employers enter a name and social security number into a computer using the internet.
Business groups claim that the system is a burden on employers and that there will be misidentification of workers. There is also the question of whether an employer who is not a federal contractor violates employee privacy by doing more than conforming with the established I-9 procedure.
Effective January 1, 2007, Ohio's Constitution features a new minimum wage applicable to all employers. The minimum wage will be indexed to the consumer price index, but the precise mechanism is, at best, unclear. Employers must keep records and make them available to the employee or to a person acting on the employee's behalf upon request. There are severe penalties for noncompliance with the minimum wage. Employees have a right to recover three times any back wage underpayments and collect attorneys' fees. Employers will have no right to collect attorneys' fees unless the employee's suit is found to be frivolous. If an employer is found to have retaliated against an employee for questioning the wage rates, the courts are required to award an amount sufficient to deter future misconduct at a minimum rate of $150 per day. An employer who appeals an adverse decision cannot get a stay of judgment on appeal.
Business Entities: Corporations, Limited Liability Companies, Partnerships etc.
Protecting Yourself from Corporate Liability.
So You think you Have a Corporation.

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