16 Jade Street, LLC v. R. Design Construction Co.
747 S.E.2d 770
S.C.2013Background
- R. Design Construction, LLC (members: Carl Aten Jr. and his wife) contracted to be general contractor for a 4‑unit condominium developed by 16 Jade Street, LLC; Aten signed on behalf of R. Design, not personally.
- R. Design selected subcontractor Catterson & Sons (Michael Catterson sole shareholder) to perform framing and AAC block work; Catterson functioned mainly as liaison, not hands‑on laborer.
- Construction revealed numerous defects; Catterson & Sons walked off the job after a payment dispute; R. Design failed to replace the subcontractor or adequately remedy defects, and work stalled.
- Jade Street sued R. Design, Aten, Catterson & Sons, and Catterson for negligence, breach of implied warranties, and breach of contract; the trial court found Aten personally liable for negligence (failure to supervise) and held R. Design and Catterson & Sons liable.
- Trial court awarded approximately $925,556; Aten appealed his personal liability; Jade Street appealed the court’s refusal to hold Catterson personally liable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aten may be held personally liable for negligence committed while acting as an LLC member | Jade Street: Aten personally negligent for failing to supervise subcontractors; Residential Home Builders Act creates duty and license creates civil liability | Aten: LLC Act shields members from personal liability for acts done for the LLC; alternatively, no statutory duty exists | Court: Aten owed no tort duty under the Residential Home Builders Act; reversed personal liability (did not decide the LLC Act shielding issue) |
| Whether Michael Catterson is personally liable for torts of Catterson & Sons | Jade Street: Catterson personally liable for his company’s negligence | Catterson: as a shareholder he is not personally liable for corporate acts | Court: Affirmed no personal liability for Catterson (shareholder shield applies) |
Key Cases Cited
- Doe v. Marion, 378 S.C. 390, 645 S.E.2d 245 (2007) (statutory duty for private cause of action determined by legislative intent and statute's language)
- Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591 (1999) (court may avoid addressing additional issues when disposition of a threshold issue is dispositive)
- Aaron v. Mahl, 381 S.C. 585, 674 S.E.2d 482 (2009) (in bench trials, findings must be affirmed if any evidence supports them)