Am I Liable If My Business Is Sued?
Most business owners are closely involved in and connected to their enterprise, whether via investment or working day-to-day in its operations. However, there are varying levels of involvement. When a business is sued, its high ranking officers are usually not personally liable for the company’s alleged misdeeds. That said, there are exceptions to this general rule, and they can catch some owners entirely unaware.
The Business Judgment Rule Says No
Florida law generally favors business and business owners, wanting to keep capital flowing into the state. One example of this is the so-called ‘business judgment rule,’ which holds that if a member of a business’s board of directors performs their job in good faith, and in a manner that they (and the board) ‘reasonably believe’ is in the best interests of the corporation, they are personally immune from civil liability on behalf of their business.
However, this leaves many potential terms that need defining in each case of alleged wrongdoing. It is not always clear-cut to determine that a person acted in the best interests of the corporation in the heat of the moment. In addition, the business judgment rule only applies to civil litigation against the company itself – if a member of the board commits an individual, intentional tort, such as fraud, they can face civil penalties for such an action.
Crimes Are Not Torts
A civil tort is not the same as a crime; the former only has to be proven by a “preponderance of the evidence” – in other words, it has to be more likely than not – while the latter must be proven beyond a reasonable doubt. The two are similar, however, in that board members of a company can be individually sued or tried for a crime if their actions warrant it.
If a business is sued for breach of contract, for example, the board members will generally be immune – but if it is shown that a board member caused the breach by fraud, that person may be sued or tried appropriately, because of their deliberate and intentional act. These cases can be difficult, but with the right legal help, they can be straightened out and the right people can be held liable.
Call A Seminole, FL Business Law Attorney
A business owner’s first instinct will generally be to protect their business in the event of a lawsuit. However, understanding the law surrounding civil cases is crucial to determine how you should proceed. A Florida business law attorney from the Hunt Law Group can help answer any questions you may have about the process. Call our office today at (727) 471-0444 to schedule a consultation.