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Saltiel v. GSI Consultants, Inc.

A-7049-98T3 (N.J. Super. App. Div. 2000) (Unpublished)

CORPORATIONS; PERSONAL LIABILITY—The mere fact that an officer or director is acting on behalf of a corporation will not shield that person from personal liability for his or her acts, even those of providing consulting services.

A landscape architect submitted a bid to a college to provide landscaping architectural services in connection with the reconstruction of the college’s softball and soccer fields. The architect relied on turfgrass specifications submitted to it by a consultant. After the work was performed, the soccer field immediately began having problems with standing water. The college tried several remedial measures; however, none worked. As a result, the architect hired another consulting company to investigate the cause of the problem. It opined that the problem stemmed from the turfgrass specifications because they included a root zone that did not allow for proper water drainage. Thereafter, as part of the architect’s contract with the college, the firm prepared new specifications and hired a contractor to reconstruct the field at a cost of $351,000. The architect sued the original consulting firm and its officers and directors for damages arising from the defective turfgrass specifications. The individual officers and directors moved for summary judgment on the ground that they were operating on behalf of the corporation. The lower court granted summary judgment on the basis that the consultant was a corporation and “one of the purposes is—is to hopefully escape from individual liability or responsibility.” The architect appealed and the Appellate Division reversed, holding that whether personal liability will attach to individuals acting on behalf of a corporation will depend on the underlying claim and the applicable theory of liability. The Court concluded that “corporate officers may be held personally liable for torts committed on behalf of a corporation” if they direct the tortious act to be done or participate or cooperate in the act. Further, “officers and directors may be individually responsible even if liability attaches to the corporation.” This “participation theory” is not limited to intentional torts or fraud; negligent acts will qualify. Thus, “the mere fact that [the officers and directors of the consultant] were acting on behalf of a corporation would not shield them from personal liability.”

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