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Think Tank

Think Tank

Steps For the Discussion:

Please remember as we discussed in the zoom session, you are debating    the DEBATE THIS  prompt. You are going to write an 1 introductory  paragraph stating your position then 3 supporting paragraphs, and lastly 1 conclusion paragraph (total of 5 paragraphs). Feel free to incorporate the fact pattern I gave you as  an   example to help prove your point. But you do not necessarily have  to   answer the questions posed. I want to see reasoned analysis and   critical  thinking. There is no right or wrong answer.  Feel free to  use  the  internet for all supporting resources, cases, journal,  articles,  etc…  Make sure that you cite your sources.

William Sharp was the sole shareholder and manager of Chickasaw Club,  Inc., an S corporation that operated a popular nightclub of the same  name in Columbus, Georgia. Sharp maintained a corporate checking account  but paid the club’s employees, suppliers, and entertainers in cash out  of the club’s proceeds. Sharp owned the property on which the club was  located. He rented it to the club but made mortgage payments out of the  club’s proceeds and often paid other personal expenses with Chickasaw  corporate funds.

At 12:45 a.m. on July 31, eighteen-year-old  Aubrey Lynn Pursley, who was already intoxicated, entered the Chickasaw  Club. Chickasaw employees did not check Pursley’s identification to  verify her age, as required by a city ordinance. Pursley drank more  alcohol at Chickasaw and was visibly intoxicated when she left the club  at 3:00 a.m. with a beer in her hand. Shortly afterward, Pursley lost  control of her car, struck a tree, and was killed. Joseph Dancause,  Pursley’s stepfather, filed a tort lawsuit against Chickasaw Club and  William Sharp. Using the information presented in the chapter, answer  the following questions.

  1. Under what theory might the court in  this case make an exception to the limited liability of share-holders  and hold Sharp personally liable for the damages? What factors would be  relevant to the court’s decision?
  2. Suppose that Chickasaw’s  articles of incorporation failed to describe the corporation’s purpose  or management structure as required by state law. Would the court be  likely to rule that Sharp is personally liable to Dancause on that  basis? Why or why not?
  3. Suppose that the club extended credit to  its regular patrons in an effort to maintain a loyal clientele, although  neither the articles of incorporation nor the corporate bylaws  authorized this practice. Would the corporation likely have the power to  engage in this activity? Explain.
  4. How would the court classify Chickasaw Club, Inc.—domestic or foreign, public or private?

Debate This:
The sole shareholder of an S corporation should not be able to avoid liability for the torts of her or his employees