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Dave Kennett
Dave Kennett, Attorney
Category: Business Law
Satisfied Customers: 27689
Experience:  25 years practicing law
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can a cause of action be brought against a dissolved Georgia

Customer Question

can a cause of action be brought against a dissolved Georgia S corporation if dissolved accoring to law? If so, is there a statute of limitations that would apply and how many years?
Submitted: 5 years ago.
Category: Business Law
Expert:  Dave Kennett replied 5 years ago.
Dear JACUSTOMER - Typically the liability would be against the person, not the corporation and if the corporation is dissolved and there is a claim for negligence you could still have exposure personally. If you are discontinuing your business altogether then you would only need to be covered for the time you were active and not in the future however professional liability policies can be tricky as to coverage. My suggestion is to contact your carrier to see if you will be covered for any claims made while you were active if you give up your policy when you cease operations. Some policies required that you continue to be covered in order to be covered for past claims made. The general statute of limitations for negligence is two years and for some professional malpractice it is one year. In any event the important thing is to make certain your past coverage continues in effect if you drop your policy when you close the business. Whatever you do make certain that it is in writing.
Customer: replied 5 years ago.
I am the 100% owner and would not likely have had a hand in any professional "faux pas" personally. Can I still be held liable personally for past errors or omissions of my staff?
Expert:  Dave Kennett replied 5 years ago.
It is impossible for me or anyone to tell you that some court would not find against you or that you can't be sued, even if you are ultimately found not responsible. My point is that if you have had coverage you may still be covered for the prior acts but I can't read your policy to tell you for certain. That's why I said to contact your E&O carrier to see exactly what coverage you have or don't have. My opinion is that you would not be personally responsible for the acts of corporate employed however that doesn't mean someone can't sue you and you would have to defend. If you are insured then the insurance company provides the coverage. It's not so much saying you can or can't be held responsible as it is saying you can or can't be sued. It is expensive to defend lawsuits, even when you win and that is the reason to make certain you are covered by insurance.
Customer: replied 5 years ago.
Thank you. I am intimately familiar with professional liability insurance, one of my areas of expertise, since I have been selling professional liability insurance coverage for the past 25 years. My interest was in how the legal process might work if a claim were to arise.

Apparently, as usual, the law is unpredictable and there is not definitive answer. I was trying to determine if it would be feasible to avoid a $25,000 premium to cover a 2 year tail...apparently, it's could cost a lot more than that to defend.

Unfortunately, most professional liability is written on a "cliams made" basis meaning that the claim must be brought within the policy period or the extended reporting period, the latter of which I will be buying. With the insurance, my expense would be capped at $10,000, my deductible...just sad that I have to spend that kind of money.
Expert:  Dave Kennett replied 5 years ago.
I know. I have the same problem! I just see too many cases where someone believes they are safe through the "corporate veil" or otherwise and then a suit is filed. Ultimately they may win the suit but the cost of defense can be so outrageous they end up settling for at least part of the claim. Trial lawyers know this so they frequently file suits that I believe are frivolous but get away with it. So the botXXXXX XXXXXne becomes either have insurance or run the risk of defending a suit. I don't like the way the system operates in some of this but I can't change the laws.
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Expert:  Dave Kennett replied 5 years ago.
Thanks for using our service - Dave

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