Can I collect against personal assets of small corp owner?

[ALogan]

What is the name of your state (only U.S. law)? California

A general contractor owes money for damages. Damages were his direct responsibility. E.g., he refused to correct a problem he created, which led to flooding when it rained; he personally mismeasured for cabinets and doors and that led to many thousands in rework and repair expenses; and there is more. There is a 5-figure sum on the table. His small business is incorporated and his wife is an officer. From what his former employee told me, it appears that money I paid him--that should have gone to suppliers or subcontractors--may have been spent on his personal home improvements. From what I have heard, I doubt his corporation has money. HOW CAN I FIND OUT IF HE USED MY PAYMENTS FOR PERSONAL ASSETS? Do I have a shot at collecting through his personal assets? Can I hold him "personally" accountable, or "pierce his corporate veil?"What is the name of your state (only U.S. law)?

 

[Mass_Shyster]

What is the name of your state (only U.S. law)? California

A general contractor owes money for damages. Damages were his direct responsibility. E.g., he refused to correct a problem he created, which led to flooding when it rained; he personally mismeasured for cabinets and doors and that led to many thousands in rework and repair expenses; and there is more. There is a 5-figure sum on the table. His small business is incorporated and his wife is an officer. From what his former employee told me, it appears that money I paid him--that should have gone to suppliers or subcontractors--may have been spent on his personal home improvements. From what I have heard, I doubt his corporation has money. HOW CAN I FIND OUT IF HE USED MY PAYMENTS FOR PERSONAL ASSETS? Do I have a shot at collecting through his personal assets? Can I hold him "personally" accountable, or "pierce his corporate veil?"What is the name of your state (only U.S. law)?

A corporation will not protect someone from damages due to their own negligence. Five figures exceeds small claims limit in CA, so you'll need a lawyer anyway.

You can sue someone for their actions, and sue their employer, so the corp won't protect him.

 

[tranquility]

I don't believe the personal assets are at risk under these facts unless the corporate veil is pierced. While that used to be the case, the law is changing. You will need to see an attorney to see the case law on the matter in your state.

The "negligence" here arises because of a contractual duty. The president did not have a duty to do the repairs properly or at all without the contract with the corporation by the OP. If the president crashed his car into someone, that would be a duty separate duty breached without regard to the contract and the president would be separately liable. Failure to perform a contractual duty should not give rise to a negligence action as a matter of law but dealt with as a breach of contract.

However, each case is different and the facts really matter. There will be a lot of discovery and some experts involved to reach a result. Piercing seems a realistic possibility as well.

 

[ALogan]

THANK YOU for the replies. I understand that an attorney is required.

What information might help with piercing the corporate veil?

How might it be determined if he dumped my payments into personal assets? I have been told he failed to pay suppliers/subs on my job site and that at about the same time, he pumped big bucks into personal home improvement.

 

[Zigner]

THANK YOU for the replies. I understand that an attorney is required.

What information might help with piercing the corporate veil?

How might it be determined if he dumped my payments into personal assets? I have been told he failed to pay suppliers/subs on my job site and that at about the same time, he pumped big bucks into personal home improvement.

Best answer: Ask your lawyer

But, as a partial answer: It doesn't matter WHAT he spent the money on.

 

[ALogan]

Thank you for the reply. I wondered if funneling business payments into his personal home improvements in lieu of paying debt on construction might prove he was treating corporate assets as his own. I am going off what others have told me, but it appears his corporate assets are thin. I fear there won't be anything to collect if I cannot pursue the matter with him as an individual. Can a private detective help in this matter? Thanks.

 

[tranquility]

I agree with Zinger. What he spent it on is not relevant, how he treated the corporation's money is. Look up "alter ego" on the internet.