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Are Corporate Officers Are Personally Liable For Negligent Supervision And Training Under Georgia Dram Shop Act

September 17, 2017

Atlanta Car Crash Attorneys Ask If Corporate Officers Are Personally Liable For Negligent Supervision And Training Under Georgia's Dram Shop Act

Before we answer the question, we need to have an understanding of what it means for a corporate officer to be personally liable. Under Georgia law, corporate officers are not personally liable for torts of the company generally. Under our system of law, the act of incorporating a business serves to protect the corporate officers and shareholders from personal liability. However, Georgia law recognizes an exception to that principle known as piercing the corporate veil. Piercing the corporate veil means that an injured person is allowed to sue a corporate officer personally instead of only suing the corporation for damages arising out of acts committed by the corporation.

Piercing the corporate veil is authorized by a Georgia court in limited circumstances. One of these conditions is where the company is actually the "alter ego" of the individual. In that rare instance, a judge will allow the injured person to pursue damages against the corporate officer or shareholder because observing the corporate form and allowing the officers or shareholders to avoid personal liability would be unjust to the claimant. Georgia courts permit a plaintiff to sue an individual under the "alter ego" theory only after the plaintiff exhausts all other alternatives.

Georgia law recognizes another alternative to the alter ego theory when the plaintiff seeks to pierce the corporate veil. In Georgia, corporate officers who participate directly in the commission of a tort, or civil wrong, are personally liable for damages and cannot hide behind the protection of the corporate form.  However, Georgia courts take a strict view of this exception and are hesitant to hold corporate officers personally responsible for many torts that exist in Georgia. For example, Georgia courts refuse to hold a corporate officer personally liable for the torts of negligent training and negligent supervision of employees. That does not mean the corporation is not responsible; only the individual. A recent court decision reinforced the rule that corporate officers cannot be held personally liable for negligent training and negligent supervision. The Georgia Court of Appeals extended this rule to claims falling under the Georgia Dram Shop Act.

A discussion of Georgia's Dram Shop Act is vital before we analyze the decision and why it is important to people injured or killed by drunk drivers in Georgia. Georgia' Dram Shop Act, found in Georgia Code §51-1-40, states that the consuming alcohol is the "proximate cause" of deaths and injuries from accidents caused by drunk drivers. However, subsection (b) of §51-1-40 allows plaintiffs to bring a civil action against a person or entity that served an intoxicated person an alcoholic beverage knowing that the person would soon be driving. Therefore, a bar or restaurant may be liable to a plaintiff for over serving a drunk person who then gets into an accident.

The Georgia Court of Appeals examined whether a corporate officer could be liable for negligent training and  supervision when sued under Georgia's Dram Shop Act. The Court of Appeals followed previous precedent and dismissed the case against the corporate officer. Fortunately, the plaintiff—who was seriously injured in a crash with a person who consumed alcohol at the bar as was obviously drunk—was allowed to pursue damages, including punitive damages, against the bar as a corporation even though the court allowed the sole shareholder to remain immune from personal liability by operation of Georgia corporate law.

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If you have been involved in any type of accident caused by someone else's negligence, contact Montlick & Associates today for your free consultation. Montlick & Associates has been representing those who suffer serious injuries throughout all of Georgia and in the Southeast for over 39 years, including but not limited to Albany, Athens, Atlanta, Augusta, Columbus, Gainesville, Macon, Marietta, Rome, Roswell, Savannah, Smyrna, Valdosta, Warner Robins and all smaller cities and rural areas in the state. Our car accident lawyers have been representing those who suffer serious injuries throughout all of Georgia and the Southeast for over 39 years.

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 Barnes v. Smith, 794 SE 2d 262 - Ga: Court of Appeals 2016

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Category: Case Studies

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All information provided by our blogs is general in nature and should not be relied upon as legal advice. Consult a Montlick attorney for details about your unique situation.