Case Scenario:
Greg Allen is an employee, shareholder, director and the president of Greg Allen Construction Corp. In 1996, Daniel and Sondra Estelle hired Allen’s firm to renovate a home they owned in Ladoga, Indiana. To finance the cost, they obtained a line of credit from Banc One, Indiana, which required periodic inspections to disburse funds. Allen was on the job every day and supervised all of the work.
He designed all of the structural changes, including a floor system for the bedroom over the living room, the floor system of the living room, and the stairway to the second floor. He did all of the electrical, plumbing, and carpentry work and installed all of the windows. He did most of the drywall taping and finishing and most of the painting.
The Estelles found much of this work to be unacceptable, and the bank's inspector agreed that it was of poor quality.
When Allen failed to act on the Estelle's complaints, they filed a suit in an Indiana State court against Allen Construction Corporation and Allen personally, alleging in part that his individual work on the project was negligent. Can both Allen and his corporation be held liable for this tort? Explain.
In answering to the question be sure to:
- Analyze whether or not a director/officer can be held liable for the torts of the Greg Allen Construction Corporation.
- Discuss whether or not the facts would constitute the type of act protected by the corporate entity.