Mary owns a winery in southern Ohio she started 5 years ago. She established a L
ID: 2657296 • Letter: M
Question
Mary owns a winery in southern Ohio she started 5 years ago. She established a Limited Liability Company called “Great Grapes” to operate the winery under. Mary is hired as the President of Great Grapes and is responsible for all operations and manages all employees. Ted, an employee of Great Grapes recently was operating a backhoe (a digging machine) in the vineyard when he struck a fiber optic data line. His negligence shut down a number phone lines creating a significant liability in terms of damages Can Great Grape be held responsible for Ted's negligence? Briefly explain and state the legal principle as to why.
Explanation / Answer
Greetings,
Yes Great Grapes will be held responsible for the actions of its employees. One may argue that great grapes is a Limited Liability Firm, then how can it be held responsible. Let me clarify they limited liability means that in event if bankruptcy, the partners of the firm would not be required to bring in extra funds if assets are not enough to repay all the liabilities of the firm , if their capital is already fully paid up. But firm shall remain responsible for all the actions done by it or on its behalf. But if such actions are so severe that it lead to bankruptcy of the firm, then definitely, liability will be limited to the extent of paid up capital. Usually, in taxation laws or any laws related to govt dues, there are clauses whereby even if firm has limited liability feature, but if evasion of taxes etc is made with malafide intent then even the personal assets of partners/directors can be attached.
So in a given case, all the damages will be recovers from the firm assuming it to be minor damages not affecting continuance of the firm.