Opinion ID: 2355030
Heading Depth: 1
Heading Rank: 3

Heading: Liability of Corporate Officer

Text: Appellants also challenge the denial of a directed verdict on the jury's determination that Mrs. Vuitch was individually liable for appellee's injuries. The trial court instructed the jury that appellee had presented three theories of liability with respect to Mrs. Vuitch: (1) vicarious liability as a shareholder of the corporations whose corporate veils should be pierced; (2) civil conspiracy; and (3) negligence, in that she was liable for her own tortious acts as a corporate officer. [29] The trial court also instructed the jury, after setting forth appellee's various theories of liability, that if it found for appellee on any theory as to any appellant, it need not consider the remaining theories. We have addressed appellee's first theory of Mrs. Vuitch's liability in Part II of this opinion, and because of our holding that the evidence was sufficient to pierce the corporate veil of both corporations, we need not and do not decide whether Mrs. Vuitch could be held individually liable as a participant in a civil conspiracy. [30] We now examine the third theory, that Mrs. Vuitch committed tortious acts which injured appellee. The general rule is that corporate officers are personally liable for torts which they commit, participate in, or inspire, even though the acts are performed in the name of the corporation. Cafritz v. Corp. Audit Co., 60 F.Supp. 627 (D.D.C. 1945). In Bethesda Salvage Co. v. Fireman's Fund Ins. Co., 111 A.2d 472, 474 (D.C.1955), this court noted: Corporate officers are liable for their torts, although committed when acting officially. In other words, corporate officers, charged in law with affirmative official responsibility in the management and control of the corporate business, cannot avoid personal liability for wrongs committed by claiming that they did not authorize and direct that which was done in the regular course of that business, with their knowledge and with their consent or approval, or such acquiescence on their part as warrants inferring such consent or approval. [quoting 3A Fletcher, supra, § 1135 (1969)]. Sufficient participation can exist when there is an act or omission by the officer which logically leads to the inference that he had a share in the wrongful acts of the corporation which constitute the offense. Dwyer v. Lanan & Snow Lumber Co., 141 Cal.App.2d 838, 297 P.2d 490 (1956) (in closely held corporation, judgment against corporate acting president for failure to remove steel cable from roadway affirmed, where two of three persons running corporation, including president, knew of the danger but failed to remedy situation). Appellants contend that because the evidence was insufficient to connect Mrs. Vuitch to any medical practices of Laurel Clinic, no reasonable juror could have concluded that she participated in any negligent or tortious act causing injury to appellee. Mrs. Vuitch claimed that since she had no training in medicine, did not determine or participate in the development of the medical policy for Laurel Clinic, and had no knowledge that appellee was treated at the Clinic, she had not committed any negligent or tortious acts which resulted in appellee's injury. Appellee's theory of Mrs. Vuitch's liability for her own tortious acts centered on the commission by her (as well as by Dr. Vuitch) of an intentional tort as a result of appellee's retention in the Clinic and the Annex for post-operative treatment in violation of sections 103(a) [31] and 305(c) [32] of the D.C. Ambulatory Surgical Treatment Center Licensure Act. Laurel Clinic's Articles of Incorporation provide for three directors. As noted, the three-person Board of Directors consists of Dr. and Mrs. Vuitch and their son, and since 1973, Dr. and Mrs. Vuitch have been co-owners of all corporate stock and of the Edgevale property used by the Clinic Annex. The Clinic's By-Laws provide that All corporate powers of the corporation shall be exercised by or under the authority of and the business and affairs of the corporation shall be controlled by the Board of Directors subject, however, to such limitations as are imposed by law, the Articles of Incorporation or these by-laws, as to actions to be authorized or approved by the shareholders. The Board of Directors may by contract or otherwise give general or limited special powers and authority to the officers and employees of the corporation to transact general business or any special business of the corporation, and may give powers of attorney to the agents of the Corporation to transact any special business requiring such authorization. Article III, Section 3.01. (Plaintiff's Exhibit No. 20). Mrs. Vuitch has been the Clinic's secretary-treasurer since 1973 and her duties are chiefly in the areas of business and finance. [33] She is trained in banking, accounting, business and nursing home administration. She handles the finances for the Clinic, which Dr. Vuitch described as a huge clinic, [34] and the Hospital, and pays all the bills, takes care of matters such as the lease negotiations for the Eye Street Office and generally works with the attorneys on the corporations' affairs. As a corporate officer and director she, with the other directors, is responsible for approval of the by-laws as well as the appointments of the Clinic medical director and administrator, and has the power to purchase and maintain insurance for the corporation and others, and to secure other indemnification. [35] In addition to being the second-ranking officer in a substantial operation, Mrs. Vuitch had also been aware of the Clinic's long-standing overnight policy for treating patients. On direct examination, Mrs. Vuitch asserted that she was unaware patients had stayed overnight at the Clinic after 1973 and did not know patients had stayed at the Annex for surgical or medical treatment; she also testified that she learned appellee had been treated at the Clinic after appellee had left on Friday. She admitted, however, that she knew Clinic patients went to the Annex and remained overnight, although she believed they went for their own convenience and not because of medical complications. But in her deposition testimony, which was read into evidence at trial, Mrs. Vuitch admitted that she understood it has been Dr. Vuitch's policy to treat complications in the Clinic and not to transfer patients to a hospital. [36] Moreover, Mrs. Vuitch testified that she was never told by anyone that the policy of keeping patients overnight at the Clinic and Annex had changed. She considered her job to be full time, had an office at the Clinic and also admitted that in addition to paying all the bills [37] for the Edgevale property on which the Annex is located, she visits the property to corroborate which bills should be paid. Mrs. Vuitch also evidenced knowledge of the D.C. Ambulatory Surgical Treatment Center Licensure Act. She not only knew that the licensing law had changed in 1978, but her deposition refreshed her recollection that she had spoken to a company representative about its requirements. Although she asserted at trial that she had no memory of meeting with lawyers to discuss the requirements under the Act after it was passed in 1978, she admitted that part of her job included dealing with lawyers about legal matters. Dr. Vuitch testified that Mrs. Vuitch knew he had testified at hearings before the Council of the District of Columbia on the proposed ambulatory surgical treatment center licensure legislation, and she had met with legal counsel, Mr. Lucas, after the law was enacted and assisted in obtaining the equipment necessary to comply with the 1978 law. Contrary to appellants' contention, the evidence supports the jury's verdict that Mrs. Vuitch participated in some meaningful sense in the tortious behavior. She remained a corporate officer and exercised her authority as such even though she knew about the corporation's practice of treating surgical complications and retaining patients overnight. She was present at the Clinic at least three days a week, made appointments for patients, participated in counseling services for Clinic patients, had lived at the Annex in the past, and had driven there with Dr. Vuitch when he had transported patients. On cross-examination, her recollection was refreshed that she had even participated in patient care in the past by staying late with patients and, at least once, bringing medicine to patients. She knew what was required and prohibited by law and, nevertheless, facilitated the operations of the Clinic and its Annex, which permitted the corporations' policies and practices to be carried out. Her responsibilities and activities were probative of her knowing participation in the activities of the Clinic. [38] Appellants' contention that Mrs. Vuitch cannot be held liable for her failure to object, change, or second guess the Clinic's medical practices because she lacked the necessary medical expertise to do so, misses the point. That she does not determine medical policy is not dispositive. As a corporate officer she was charged with responsibility for the management and control of the corporate enterprise in a lawful manner. [39] Her liability does not arise, as appellants suggest, merely because of her official relation to the corporation, (Brief at 9), but because of activities for which the evidence demonstrated she was responsible and for which she admitted responsibility at trial. The trial court correctly denied a directed verdict on the issue of Mrs. Vuitch's liability for her own acts. Viewing the evidence most favorably to appellee, the jury could reasonably have found that Mrs. Vuitch's management and control of the business end of the corporate activities facilitated the continuing implementation of the overnight policy which she knew was a regular part of the operations of the Clinic and the Annex, and that she thus authorized and directed the wrongful acts done in the regular course of business. The evidence was sufficient to establish that she knew of and consented to or acquiesced in a long-standing corporate policy which was contrary to the law. [40] Bethesda Salvage Co. v. Fireman's Fund Ins. Co., supra, 111 A.2d at 474 (corporate president who owned one-half of all stock and engineered all dealings with insurance policy on false fire loss claim, was personally and individually liable although fraud was committed in behalf of corporation) (citing 3A Fletcher, supra, § 1135); see New England Box v. Gilbert, 100 N.H. 257, 123 A.2d 833 (1956) (officer or director personally liable for conversion by corporation or one of its officers where knowingly acquiesced therein); Dwyer v. Lanan & Snow Lumber Co., supra, 141 Cal.App.2d 838, 297 P.2d 490 (acting president of small corporation held personally liable for injuries to plaintiff who was pinned in truck by fallen cable; president knew before cable fell its location was dangerous, but took no action). Moreover, the jury could find on the evidence before it that Mrs. Vuitch's conduct was intentional, and that the violation of the statute was evidence of negligence. District of Columbia v. White, 442 A.2d 159, 163 (D.C. 1982); Whetzel v. Jess Fisher Management Co., 108 U.S.App.D.C. 385, 388, 282 F.2d 943, 946 (1960); Hecht Co. v. McLaughlin, 93 U.S.App.D.C. 382, 383, 386, 214 F.2d 212, 215 (1954). Such a determination is consistent with the evidence that Dr. and Mrs. Vuitch jointly ran the Clinic although in other respects they led separate lives, and that the manner in which they operated the Clinic, contrary to District of Columbia law, was a proximate cause of appellee's injury. [41] Accordingly, we hold, on review of the denial of a directed verdict, that the evidence was sufficient to submit the issue of Mrs. Vuitch's liability to the jury, and to sustain its verdict.