Project #155198 - Law

Business Tutors

Subject Business
Due By (Pacific Time) 11/21/2016 05:00 pm

FACTS Valley View Enterprises, Inc., built Pine Lakes Golf Club and Estates in Trumbull County, Ohio, in two phases—“Phase I” and “Phase II.” Valley View Properties, Ltd., a limited partnership, cut out the roadways and constructed sewer lines, water lines, and storm water lines with water inlets.

Joseph Ferrara was the owner and the president of Valley View Enterprises and the sole general partner of Valley View Properties. Ferrara failed to obtain the proper permits for the development work in a timely manner and failed to comply with their requirements once they had been obtained. On behalf of the state of Ohio, Michael DeWine, the state attorney general, filed a suit in an Ohio state court against the Valley View entities and Ferrara. The suit alleged that the defendants had violated the state water pollution control laws and sought civil penalties. The court entered a judgment in the defendants’ favor, holding with respect to Ferrara that “a corporate officer cannot be held liable merely by virtue of his status as a corporate officer.” DeWine appealed.

ISSUE Did Ferrara’s status as general partner make him responsible for the acts of Valley View Properties?

DECISION Yes. A state intermediate appellate court reversed the lower court’s judgment in favor of the defendants. With respect to Valley View Properties, Ferrara was not “entitled to the insulation from liability of a corporate officer.” On remand, the trial court was to determine the number of violations established by the state and issue and apportion penalties among the liable parties.

REASON The state charged three defendants with pollution control violations—Valley View Enterprises, Valley View Properties, and Ferrara. Valley View Enterprises had obtained the Phase I permit. The permit stated, “The permittee must comply with all conditions of this permit, any permit noncompliance constitutes a violation of [state law].” Valley View Properties owned the property on which the development was built and held the Phase II permit.

Ferrara was in charge of both entities and all of the activities performed at the construction site—and he failed to obtain the necessary permits before those activities were undertaken. The lower court’s holding that Ferrara was not responsible because “a corporate officer cannot be held liable merely by virtue of his status as a corporate officer” was in error with respect to Valley View Properties. For the limited partnership, Ferrara was not a “corporate officer” but the general partner. In that capacity, he was not entitled to insulation from liability.

CRITICAL THINKING—Legal Consideration How are the penalties likely to be apportioned among the three defendants? Explain. (1 Paragraph)

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