Question

BUSINESS LAW!!!

Mary Slough contracted with Castlerock Building Inc., which was owned by Max Nitzer, to remodel a house. Nitzer estimated the cost at $500,000. Eventually, however, Mary paid Nitzer more that $1.3 million. Mary sought to be reimbursed but Nitzer could not provide an accounting for the project. Specifically, he could not explain double and triple charges, nor whether the amount Mary pad had actually been spent on the house. Meanwhile, Nitzer had commingled personal and corporate funds. As for Castlerock, it has issued no shares of stock, and the minutes of the corporate meetings "all looked the same." Mary sues Castlerock and Nitzer. As the Court reviewing these facts, would you hold Nitzer personally liable? Why or Why not?

Answer 1

Yes. Nitzer will be held personally liable to explain the cause for such escalated costs as also for reimbursement ,if any , if anything exhorbitant has been charged-- as it seems costs are doubled & tripled, without any reason, therefor.

Even though , Nitzer had incorporated his entity, he has not maintained proper records, in the absence of which he will not be in a position to justify the expenses for the project , that is rightfully expected by Mary.

Also, Nitzer had commingled ,(ie.using corporate funds for personal use--without maintaining any discretion)personal and corporate finances.

And the company had not issued any shares for outside subscription.

Natuarlly, the company, had not maintained any record of any meetings (if at all any one had been held),nor recorded any decision taken , with respect to the project spending or any escalation in its costs

Everything looks a purpose-ful sham , to swindle/divert money to personal accounts.

Even though the business is separate legal entity , distinct from the owner, it looks as though , the financial transactions have been operated personally by Nitzer.

After all that is said above, there is every reason to PIERCE THE CORPORATE VEIL, ie. Protrude/look beyond the general rule --which says --that business is a separate legal person , distinct from the owner & can own assets & incur liabilities in its own legal capacity --& the owners cannot be held liable for the formers' default----

& hols Nitzer personally liable to Mary for reimbursement of excesses in costs.