Question

Facts: A vehicle driven by Michael O’Niell crashed while traveling on Louisiana Highway 30. Vanessa Savoy, a 19-year-old guest passenger in the vehicle, sustained severe injuries as a result of the collision. O’Niell, who was under the legal drinking age, had been drinking at Fred’s Bar and Grill prior to the accident. Fred’s Bar is owned by Triumvirate of Baton Rouge, Inc., a corporation. Marc Fraioli is the sole shareholder and president of Triumvirate. Savoy, through a legal representative, brought a lawsuit against O’Niell, O’Niell’s automobile insurance company, Triumvirate, and Fraioli seeking damages for her injuries. Fraioli filed a Motion for Summary Judgment asserting that as a shareholder of Triumvirate Corporation, he was not liable for the corporation’s debts.

Ethics Questions:  The law permits shareholders to avoid personal liability for the debts of the corporation they own because corporations are separate legal entities and they are liable for their own debts and obligations.  It will not be practically possible for Fraioli to check the age of each of his customers before serving them liquor. Also, on the day of the accident, Fraioli was not present in the bar when liquor was served to O’Niell. So was it ethical for Fraioli to assert the corporate shield to avoid liability in this case. Releasing Fraioli from liability will not release Triumvirate from its liability.

Should Fraioli be liable in the facts above? Why or why not? What rules make Fraioli liable or not liable and why?

Answer 1

As the company is a legal entity, Fraioli has limited liability, they operate independently from their owners. He is responsible for his financial responsibilities but not as a partner of Triumvirate, companies are responsible for shares. Sure, it was reasonable for Fraioli to use the corporate immunity and prevent prosecution in this case. Fraioli could be found accountable under the responsible party doctrine even though he was not aware of O'Niell drinking at Fred'sbar.

He may be found legally liable if the court determines that Fraioli had neglected to supervise and educate the workers adequately or if a reasonable individual should have done the correct thing to do to avoid unlawful conduct. The law of the corporate judgement states if Fraioli can not be found individually accountable for actions that damage the corporation if the court believes that he is operating in good faith.

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