When a business is responsible for causing a personal injury, the injured person often needs to sue a legal entity—a corporation, limited liability company, or other business type—either on its own or in addition to individuals who may bear liability. For someone outside the legal field the idea of suing a corporation may sound daunting. It’s common to hear people speak of corporations as huge, powerful organizations that ordinary people can’t hope to defeat. The truth is often quite different.
What are business entities?
There are a lot of different legal forms a business can take. The simplest are sole proprietorships (owned by one person) and general partnerships (owned by more than one person). These forms of entity are the “default” whenever someone conducts business, regardless of whether they are organized in a meaningful way. The owner of a sole proprietorship, or the owners of a general partnership, are personally liable for the obligations of their business. For example, if a delivery service is operated as a sole proprietorship by the individual who owns it, the individual owner can be sued individually in the event that she causes an accident while working. In these “personal liability” forms of business, the owners’ personal assets are exposed to the risks of the business.
Corporations and other “limited liability” forms of business entity, including limited liability companies (LLCs), limited partnerships, and specialized business forms like limited liability partnerships (LLPs), put a legal fiction between the owner and the business. These business forms require their organizers to file special paperwork with the Secretary of State, as well as compliance with numerous other rules. A properly organized corporation “owns” most kinds of liability that arise in the course of its business. Its owners typically aren’t personally responsible for the corporation’s debts.
How lawsuits against limited liability entities work
Suing a corporation or other limited liability business entity requires knowing at least the name of the entity. Organizations that do business in Nevada are required to be registered with the state, regardless of whether they are organized under Nevada law or under the laws of another state. As part of registration, a business must provide the Secretary of State with an agent for service of process, which may be an officer of the company or a business that serves the purpose for others. The agent for service of process provides individuals with the address where lawsuits can be properly served against the corporation.
Among the challenges of suing a corporate defendant can be a lack of assets sufficient to cover a court judgment. In some cases it may be possible to reach beyond the corporation or other limited liability entity to sue its owners, a process called “piercing the corporate veil.” This process requires certain facts to be true, such as improper governance practices on the part of the corporate owner or personal involvement by the owner in wrongful activities. Identifying the owners of a business can itself be a challenge, as owners are often able to stay anonymous in public records, and a business may itself be owned by another business entity. In fact, large businesses often have complex structures that need to be pieced apart by a plaintiff’s attorney to find the proper entity to sue.
A person who has been injured by a business should not let the “corporate” nature of the responsible party deter them from exploring a lawsuit. The law firm of Greenman Goldberg Raby Martinez has represented clients in personal injury cases for over 45 years. We are used to dealing with the complications of suing corporate defendants and can help you understand what may be involved in recovering compensation for your injuries. Call us today for a free attorney consultation. We can be reached at 702-388-4476 or through our contacts page.