Debate – s corporations | Law homework help

One full Page double space. Argue and debate the answer of my colleague. 

Situation:

 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.

Debate this: 

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

ANSWER OF MY COLLEAGUE:

 

“On a balance of probability, the S corporation’s sole shareholder should not avoid responsibility for the tort actions of their employees. Hence, I consent to the statement. In this context, the sole shareholder’s involvement in the management of the club operations makes him liable for any tort action that occurs to the patrons. Because he owes the patrons a duty of care, he should not permit his employees to allow excessive alcohol consumption in the club as a reasonable person. The patrons like Pursley would not consume alcohol that exposes them to risks of losing their lives. Again, the sole shareholder cannot avoid liability because; once the employees notice that their clients’ alcohol consumption may pose a danger while driving they should ensure the patrons arrive safely at their destination. It can be through driving the client home or making arrangements that ensure patrons reach home safely. Therefore, the sole shareholder is vicarious liable for the damage that the patrons or clients accrue following employees’ recklessness. “