Arla Cahill Receives Great Result for Client in a Case Involving a Corporate Officer Being Held Personally Liable for Past Company's Debts
On March 5, 2019, Mandelbaum Barrett Member Arla D. Cahill successfully defeated a plaintiff’s motion for summary judgment and prevailed on a cross-motion for summary judgment that dismissed a complaint for $125,000 entirely and with prejudice in favor of the firm’s client. The complaint sought to hold the client, a corporate officer, personally liable for the alleged debt of a defunct New Jersey corporation based on an unsigned credit agreement containing a joint and several liability provision that plaintiff sought to enforce under Utah law. The court rejected plaintiff’s argument that use of a corporate credit card constituted an agreement by the officer to be personally liable for the company’s charges. The court also found no evidence that the proffered credit agreement was the original agreement issued for the company’s account or any other evidence justifying personal liability. Applying New Jersey law, the court found that, unlike Utah law, unsigned personal guarantees and unilateral, inconspicuous “bill stuffer” amendments to material terms of credit agreements are unenforceable. Because this was the second time this plaintiff filed suit against the corporate officer, the court also found that the suit was barred by New Jersey’s entire controversy doctrine.