This case study describes the lawsuit between Greg Mitchell, Sara Hartman, Dangerfield Inc., Continental Concessions and Sandman Resorts. Sara Hartman arrived at Sandman Resorts, where she planned on staying a week as a guest. Heavy snowfall was increasing at six inches a day and even though the driveway had been cleared earlier that day, snow continued to coat the pavement. Greg Mitchell, the valet parking attendant, gave Hartman a receipt that stated “The Management is Not Responsible for Damages Incurred by Valet Parking Customers” on the back but Hartman did not read it. She began walking in between the cars just as Mitchell started to accelerate forward. When he saw Hartman between the two cars, he attempted to brake but hit the accelerator instead. This caused Hartman to be wedged in between the two cars. In order to help her, Mitchell got out of the car, but slipped on the icy pavement causing injuries to himself. Both Mitchell and Hartman suffered severe injuries from the accident. Hartman sued Mitchell, Dangerfield, Sandman, and Continental, while Mitchell sued Hartman, Continental, Dangerfield, and Sandman for negligence and for the dangerous conditions that caused the accidents.
In this scenario, Dangerfield Inc. and Continental Concessions, LLC are sister companies and are wholly owned subsidiaries of Sandman Resorts, and s-corporation. Continental Concessions is a limited liability company (LLC), which is a partnership that allows tax treatment with limited liability for the owners (Twoney and Jennings, 2011). It also means that the company is a legal entity with the authority to conduct business in its own name (Twoney and Jennings, 2011). The owners of entities are also known as members. Advantages of limited liability companies are that they pool together resources and conduct their business without the requirement of a formal organizational structure (Twoney and Jennings, 2011). A major disadvantage of a limited liability partnership is that there is unlimited liability of each partner and the length of the business. One partner’s death can end the partnership (Twoney and Jennings, 2011). In the case Katris v Carroll, Steven Doherty, Lester Szlendak, Peter Katris and William Hamburg form an LLC to exploit the capabilities of a new software program created by Doherty, called Viper. Doherty was in charge of marketing and technical responsibilities. In the meantime, Doherty worked as an independent contractor for Patrick Carroll, where he developed a software program called WWOW that had major similarities to the Viper software. Peter Katris sued both Carroll and Doherty. Katris argued that Doherty owed her and the LLC a fiduciary duty and that Doherty showed authority of a manager. The court stated Doherty showed no managerial duties and states that “who is not a manager owes no duties to the company or to the other members solely by being a member”. Doherty had no fiduciary duties to Katris or the LLC. Dangerfield is a c-corporation and the Sandman resort is an s-corporation. An s-corporation allows shareholders to be treated as partners for tax purposes and retain the benefit of limited liability (Twoney and Jennings, 2011). An s-corporation is limited to 75 shareholders, while a limited liability company is not limited to the amount of owners and there is not a restriction on the types of entities (Twoney and Jennings, 2011). Unlike an s-corporation, a c-corporation is taxed separately from its owners. By having a c-corporation, you limit the owner’s legal and financial liabilities(C-corporation, 2013). Most companies are treated as c-corporations (C-corporation, 2013). Both companies, Dangerfield and Continental are wholly owned subsidiaries of Sandman Resorts. A subsidiary is a company that is partially owned by another corporation that owns more than half of subsidiaries stock (Subsidiary, 2013). Subsidiaries can be formed in various ways, either by purchasing a controlling interest in an
