Limited Liability Goes Only So Far

Limited Liability Goes Only So Far

      A recent decision from New Jersey serves as a useful reminder that there are limits to the limited liability enjoyed by corporate officers. Specifically, an officer can be held personally liable for the consequences of their own torts. JT Queens Carwash, Inc. v JDW & Associates, Inc., 2016 N.Y. Slip OP 07295, 2016 WL 6605051 (App. Div. 2 Dept. Nov. 9, 2016).

      Frank Roman and JT Queens Carwash, Inc. sued JDW & Associates and Jay Weiss, its owner and president, asserting that while JDW and Weiss did procure certain insurance policies on behalf of the plaintiffs, they failed, as requested, to have the plaintiff’s landlord named as an additional insured. In addition, Weiss issued false certificates of insurance to that effect that the landlord was names as an additional insured.

      Reviewing a motion to dismiss the claims against Weiss individually, the court observed the general rule that corporate officers are not liable on contracts they enter into on behalf of the corporation, but noted as well that corporate officers “may be held personally liable for torts committed in the performance of the corporate duties.” (citations omitted.) In consequence thereof, it determined that the claim for negligent representation based upon that conduct should not have been dismissed. Rather, it found that the complaint and the evidence already submitted:

Alleged that Weiss personally signed a certificate of insurance falsely stating that the plaintiff’s landlord had been added as an additional insured on a certain commercial general liability insurance policy, and forwarded this certificate to the plaintiffs, knowing that it was required by the plaintiffs’ landlord. This is sufficient … to state a cause of action against Weiss, based on his personal participation in the commission of a tort. 2016 WL 6605051, *3 (citation omitted).