Missouri Court of Appeals venue ruling addresses i…

Missouri Court of Appeals venue ruling addresses individual liability of corporate employee

In State of Missouri, ex rel. The Doe Run Resources Corp. v. Honorable Margaret M. Neill, (Mo. App. E.D. 05/20/2003), whether venue was proper in the City of St. Louis turned on whether the joinder of the corporate defendant’s vice president and chief financial officer was pretensive.

The standard of pretensive joinder the court applied was that “Courts recognize pretensive joinder (1) where the pretensive nature of the joinder appears on the face of the pleadings, and (2) where there is in fact no cause of action against the resident defendant,” either because “the facts pleaded in the petition are not true”; or because “the facts, even if true, do not support a valid claim based on substantive law.”

The court found the facts pleaded did not support a valid claim against the corporate officer because the petition alleged that at all relevant times he was the corporate defendant’s vice president and chief financial officer and that all of the alleged acts and omissions were performed within the course and scope of his employment.

The petition alleged he was liable to the plaintiffs because, as an officer of the Corporation, he had actual or constructive knowledge of its wrongful conduct and participated in it.

The court stated that “the very nature of the actions [the officer] is alleged to have taken is such that that they could only be undertaken in [his] official capacity . . . and not in an individual capacity.”

The court further explained: “Under Missouri law, ‘merely holding a corporate office will not subject one to personal liability for the misdeeds of the corporation.’ . . . ‘In order to make an officer or agent of a corporation liable to a third person, something more must be shown than a mere act of nonfeasance on the part of the agent.’. . . ‘Nothing short of active participancy in a positively wrongful act intendedly and directly operating injuriously to the prejudice of the party complaining will give origin to individual liability.’ . . [T]he true basis of liability should be the violation by the officer or servant of some duty owed to the third person by reason whereof injury results to such third person. Certainly the managing officer of a corporation would not be liable to a third person for any injury resulting from a neglect of duty unless that duty was one he owed to such third person.” The court distinguished a number of cases in which there had been individual liability of a corporate officer.

The court also found the plaintiffs’ conspiracy allegations insufficient because they were conclusory and because “a corporation cannot conspire with its agents.”

This case is significant not only in helping corporate defendants avoid the undesirable forum of the city of St. Louis, but also because of its implications for individual liability of corporate defendants under Missouri law, which may come up in other contexts as well.

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