Litigation Trepidation

Question: Can a house corporation member be sued for something that happens at the chapter house? Answer: Yes, all of us can be sued and for almost anything. The real question is what is the likelihood a lawsuit will be successful?
A house corporation director who helps move a beer keg into the chapter house is liable if that action contributes to underage drinking. He is liable to have criminal charges brought against him and if someone is injured as a result of drinking that beer, he may have to defend in a civil trial as well. If a house corporation member acts on his own without the knowledge and permission of the rest of the board, the other board members may escape liability. This assumes that he is not acting in his role as a house corporation member. The duties of house corporation members/officers should be known to all who serve. A person acting outside of those duties is not protected from individual liability nor does insurance cover such acts.
It is important to note that a house corporation may be liable for failure to correct unsafe conditions in the house for which they have direct or indirect knowledge. For example, a fire marshall’s notice to the house corporation for code violations puts that house corporation (not its individual members) at risk if there is a fire arising out of those violations.
The best way to insulate alumni serving on house corporations is to follow the law. Ensure the corporation is properly registered with and recognized by the state. Do not act outside of the ordinary and reasonable duties of the house corporation. Do take all reasonable precautions to ensure the operation of the house is safe. Keep every one informed or what the house corporation is doing.
House corporations that follow the law and prudent reasonable operational standards have little to fear from successful third party claims. The corporate shield will give them significant protection. Any house corporation which becomes the target of a lawsuit should contact the RMF, their Grand Trustee and competent local legal counsel immediately.
There are many factors to consider in being named in a lawsuit and too numerous to adequately cover in this article. But if your House Corporation or directors are named in a lawsuit, contact Risk Management Foundation and your personal attorney.