Timberrrrr Tree, LLC ("Timberrrr") operates a tree removal service. Their slogan is "Short or Tall We Chop 'Em All". Theresa and Richard Rosen hire Timberrrr to clear 10 trees on their property. The estimate they receive from Timberrrr quotes a price of $6,000.00. A deposit of $500.00 must be paid within 7 days of the estimate, $2,500.00 must be paid at the start of the first day of Timberrrr's work. The remainder must be paid upon completion of the job.
Timberrrr states that they are "Fully Licensed and Insured" and give the Rosen's 3 names of prior customers that they may contact as references. The Rosen's contact the references and are given glowing reviews of Timberrrr's prior work. The Rosen's hire Timberrrr and give them a check for $500.00.
On the morning of the start of the job, Theresa Rosen writes a check for $2,500.00 (as required) and leaves for work. She tells the workers that she will come back during her lunch break and that Richard would also stop by during the day.
Charlie Park is working on the Rosen's trees for Timberrrr - his first time working in the tree industry. As Charlie is climbing the tree to trim branches his supervisor, Candice Brand shouts and tells him that she and another worker, Jeremy Hart, are taking the Rosen's check to the bank. The owner of Timberrrr told them to take a break at 10 am, when the local bank opens, and deposit the check in the company bank account. They will be back in 20-30 minutes. Candice tells Charlie to keep working. Charlie is left alone on the job site.
Charlie finishes trimming the branches. He decides that this is his opportunity to show Candice and the ownership at Timberrrr what a great, hardworking, take charge employee he is. He decides to cut down the large tree that he had just trimmed the branches off.
The tree falls. It crushes and kills Charlie. The tree falls on the Rosen's garage crushing Theresa Rosen's vintage 1953 Corvette which she bought at auction for $250,000.00 10 years ago.
Timberrrrr Tree, LLC ("Timberrrr") is being sued for negligence and breach of contract in connection with the death of Charlie Park. Charlie’s family is suing Timberrrr in their capacity as his beneficiaries. Charlie’s family alleges that Timberrrr was negligent in their supervision of the Rosen job site and in their training of Charlie. Additionally, they allege that Charlie signed an employment contract with Timberrrr that detailed the training Charlie would receive before being sent to work in the field and the company’s disability and life insurance policies, among other company benefits and policies. Chuck Park, Charlie’s dad, states that his son told him when he got the job two weeks before his death, that he would be receiving four (4) weeks of training from Timberrrr and that he didn’t anticipate actually taking any trees down at customer’s properties for at least a month. Chuck is shocked that Charlie was even at the Rosen’s home the day he died.
As a part of this employment contract, the family alleges, Charlie agreed to work where and when Timberrrr required him. He would be on call two weekends per month and paid a fair hourly wage including time and a half for any calls he was required to respond to on his “Call Weekends.” Chuck also states that he helped his son review the employment contract and complete the applications for disability and life insurance provided by Timberrrr. He helped Charlie complete and sign these forms the day Charlie was hired, and Charlie returned them to Timberrrr the next day. Chuck has a signed copy of the employment contract, signed by both Charlie and Candace, Charlie’s supervisor.
Timberrrr states that their standard practice involves two separate employment contracts: one is for supervisors and one is for general employees. They state that Charlie was not hired as a supervisor, but that he was inadvertently given a supervisor’s employment contract. They allege that they told Charlie that he would have to complete the correct contract. The employee contract provides for only seven (7) workdays of training, which Timberrrr alleges were completed a few days before Charlie’s death. They state that they did receive Charlie’s completed insurance applications the day after he was hired, but that they hadn’t been processed before Charlie’s death. As a result, Timberrrr states that the insurance companies refuse to pay any claim to the family because, from their point of view, he wasn’t an employee of Timberrrr. Documents were given to Charlie in connection with his hiring state that it is company policy that all insurance applications for new employees are to be processed and approved or denied within seven (7) days of hire.
Chuck has sued Timberrrr for damages including the $1,000,000.00 that would have been paid by the life insurance company if Timberrrr had processed the paperwork properly. He also seeks an additional $1,000,000.00 for Timberrrr’s failure to train Charlie for the four (4) weeks he had been promised and for the breach of various other terms in the signed contract.
Use the scenario.
Steve Wood and his business partner Holly Branch are the sole members and managers of Timberrrr, LLC. Knowing what you now know about business organizations, answer the following questions.
(a) Timberrrr tree is a Limited Liability Company. In a limited liability company, the owners are not liable for any debts or liabilities of the company. It means if the company of Tom and Holly goes into a loss or debt their personal assets will not be used to clear their insolvency, the assets pertaining to the Timberrr tree will be only used for payback of any damages. If Charlie’s family is successful, Then also they cannot reach Tom and Holly’s personal assets to satisfy the amount they are awarded.
(b) There is No business organization type that could protect personal assets. However, If any company is formed under the Limited Liability Company framework, the personal assets of the owners are legally secured and insulated from any business loss incurs with respect to the company.
(c) No, assets of both tom and holly are at the same risk. It is irrelevant for the court who is enjoying decision making power and who is not, because both of them are enjoying the profits of the company, it will make both liable. if the court wants to satisfy the award of damages to Charlie’s family by accessing of personal assets, assets of both Tom and Holly’s will be considered.
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