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Monday, February 28, 2011

Builders Beware

by Gary Beaver

North Carolina law has long held that corporate officers could be held personally liable by piercing the corporate veil or for torts, including negligence, in which they personally participated.  Most commercial litigators have seen many cases in which the plaintiff stretches to allege a tort against the officer of a corporate defendant in order to use the specter of personal liability to drive a better result in the case (such as the in terrorem effect of personal liability to up the ante in settlement negotiations).  
Until now, there have been no reported N.C. cases applying individual tort liability on corporate officers in a construction context.  In January 2011, in White v. Collins Building, Inc., the N.C. Court of Appeals reversed the dismissal of negligence claims against a construction company president finding them adequate to survive pleading requirements.  Specifically, the plaintiff alleged that the president "oversaw and personally supervised the day-to-day construction of [plaintiffs'] residence and was negligent in "failing to properly supervise the construction of the residence, including, but not limited, failing to properly supervise the installation of the doors and windows, the flashing around the doors and windows, and the house wrap" and in "fail[ing] to properly supervise the design and installation of the plumbing system, including the hot water lines and other system components." 
One wonders if the plaintiffs actually have any evidence that the president did more than occasionally visit the worksite to check on progress.  In any event, builders should expect that if they are playing any role in on-site work, they will be named as defendants in lawsuits involving claims of negligent construction.  There are many aggressive lawyers who will provide a sufficient level of detail in the pleadings to get them into discovery whether or not they initially have any evidence to support those specific allegations.  It remains to be seen if the courts will allow similar allegations to pass if they are based only on "information and belief."     

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