Opinion ID: 6330798
Heading Depth: 2
Heading Rank: 3

Heading: Vicarious & Alter Ego Liability

Text: Spagna also argues the district court erred when it dismissed her complaint without discussing her claims that the National Fraternity is liable as the alter ego of the Chapter and that both the National Fraternity and Chapter are vicariously liable for the negligence of their officers and members because neither of those theories requires foreseeability. The National Fraternity argues there can be no vicarious or alter ego liability because Spagna has not plausibly alleged that the other Defendants were negligent or that the other Defendants acted as the National Fraternity’s agents. Under general vicarious liability principles, “[u]nless the agent is liable, there can be no liability on the part of the principal.” Hatcher v. Bellevue Volunteer Fire Dep’t, 628 N.W.2d 685, 695 (Neb. 2001). We need not decide whether Spagna plausibly alleged certain Defendants were the National Fraternity’s agents because Spagna has not plausibly alleged the supposed agents in this case were negligent under Nebraska law. The district court did not err in dismissing this claim. Alter ego liability allows courts to disregard “[t]he separate entity concept of the corporation” and reach the assets of the corporate shareholder(s) “where the corporation is a mere shell, serving no legitimate business purpose, and is used as an intermediary to perpetuate fraud on the creditors.” Christian v. Smith, 759 N.W.2d 447, 463 (Neb. 2008). To state a claim under this theory of liability, Spagna had to allege the Chapter was “under the actual control of” the National Fraternity and that the National Fraternity “exercised such control to commit a fraud or other wrong in contravention of” her rights. Id. at 462. Spagna alleged “the National Fraternity is -10- the controlling member and alter-ego of the Chapter” and now argues discovery may show the National Fraternity intentionally undercapitalized the Chapter so that the Chapter could not pay for its own wrongdoing. But, for the reasons previously stated, Spagna’s claims of wrongdoing do not survive the pleading stage under Nebraska law. The district court did not err in dismissing the complaint without discussing the alter ego theory because Spagna failed to plausibly state a claim entitling her to relief.