The Unrecognized Trap of Corporate Registered Office Designation
Oct. 1, 2015
A Decision Potentially Too Important to Be Left Solely to Your Lawyer or Accountant
The naming of Corporate Registered Agents is often handled in a perfunctory fashion, with little thought given to potential liability issues. Attorneys and Accountants often name themselves as an entity's Registered Agent, in a bid to establish themselves with the client for future business generation.
What is often not considered is whether doing so subjects the client to jurisdiction in high verdict counties.
A recent legal verdict clearly illustrates this risk.
The attached case was tried in front of a Fulton County jury for the sole reason that that the registered agent is in Fulton County, while the business was in Cobb County.
I had informed a Cobb County-based client recently that their previous Fulton County lawyer had done them no favor in listing himself as the company's registered agent. The reason is that the Georgia Constitution requires a Defendant to be sued in the county of their residence. But a corporation can be sued in multiple counties if it has offices in multiple counties; and it can always be sued in the county where its Registered Agent is found in the Registered Office. The Plaintiff gets to choose which county in that case.
The Plaintiff's lawyer here, Bill Bird—who is a very good lawyer—chose Fulton rather than Cobb County in order to get in front of a Fulton County jury. Fulton County has long been considered a high verdict county, and objective jury verdict studies bear out this popular notion.
Looking at a deplorable situation objectively, which we as professionals are duty bound to do--It is an open issue whether a Cobb County would have awarded $3.7 million compensation for being raped while the woman is knocked out in a dental chair. But the tort is obviously worth a significant amount.
But what is to me incomprehensible is this Fulton County jury's deciding that the dental practice is 100% responsible for the patient being raped while she was knocked out, when it was unaware that this anesthetist considered his action to be an undisclosed fringe benefit of the job (both at his dental job as well as at another job at a hospital). AND THAT HE WAS 0% RESPONSIBLE FOR ACTUALLY RAPING HER WHILE SHE WAS KNOCKED OUT. I can see the dental practice being partially responsible for allowing this vermin to take his own sweet time behind a locked door. But 100%?
I sent an “I told you so” email to my client.
Beware the improvident naming of Corporate Agents and designation of Corporate Offices. This is not a clerical function, but one with significant potential ramifications.
Jury Gives $3.7 M to Victim of Sex Crime
Among the 19 victims of Paul Serdula were two girls younger than 16. Staff/File
ATLANTA — This week a Fulton County jury awarded $3.7 million in damages to a woman who was sexually assaulted while under anesthesia at a Cumberland dentist office in 2009. The jury's verdict, handed down Wednesday, found dental practice Goldstein Garber & Salama 100 percent liable for the psychological damage done to the woman, who was 18 at the time of the incident, according to court documents.
The dental practice, off Cobb Galleria Parkway, faces two other civil suits brought on by other victims of Paul Serdula, a nurse anesthetist who worked as an independent contractor for the dental practice for about two years. During an April 2011 bench trial, Cobb Superior Court Judge Reuben Green found Serdula guilty of assaulting 19 victims, including two girls under 16 years old. Green sentenced Serdula to life plus 25 years in prison in November 2011. The plaintiff in the case, who is not identified by name in the court documents, alleges in the documents the dental office is liable for Serdula's actions because none of the dentists at the office supervised Serdula and they allowed him to be alone with the victims behind closed doors.
Bill Bird, managing partner at Atlanta-based Bird Law Group and the plaintiff's attorney, said the dentists should have known better. “You don't just leave a helpless female in a room with a male. It's not a question of whether you know this person is going to do this act, it's that you know they are at risk when they are vulnerable,” Bird said. Matthew Barr, of the Atlanta law firm Hawkins Parnell Thackston & Young and one of the dental practice's attorneys, said there will “definitely” be an appeal because he believes the jury didn't “hear all of the facts.” He added the dental practice helped put Serdula behind bars.
“The practice helped get him arrested because he was secretly videotaping coworkers and patients, which the practice did not know about, and there was no indication that he had done anything in his years working there that would indicate that he was likely to do this to patients,” Barr said. Bird disagreed with Barr's characterization of the dental practice's involvement in the investigation, saying Serdula was caught after one woman saw a cellphone taped under a sink in the bathroom and called building security, which led to police involvement. “The lawyers for (Goldstein Garber & Salama) certainly claimed that their clients deserved all the credit for catching him, prosecuting him and putting him away,” Bird said. “I think that's an overstatement and reaching at best. Our comment to the jury was while they were certainly willing to take credit for arresting him, they refuse to take responsibility for their negligence.”
The defense team has two options, Barr said. They could ask the trial court to overrule the jury's decision and rule for the dental practice, or they could appeal the ruling altogether, Barr said. Either way, they have 30 days to take action, he added. Also at issue for Barr is the 100 percent responsibility the jury placed on the dental practice and zero percent on Serdula.
He said a statute requires the jury “must apportion responsibility” to anybody who was at fault for the plaintiff's injury. “We don't believe they were permitted to do that, legally, because there really was no question that he was to some degree at fault because of what he did,” Barr said. Bird countered by saying the jury ruled for his client and assigned 100 percent of the responsibility on the dental practice because they realized Serdula's actions were a crime of opportunity. “(Goldstein Garber & Salama) created the opportunity. But for that, this never could have happened,” Bird said.
Although the dental practice is in Cobb County, the case was tried in Fulton County because the dental office's official recipient of legal documents, which must be filed with the Georgia Secretary of State's office, is located in Atlanta. (emphasis added) Serdula was first arrested in Nov. 2009 and released on a $50,000 bond only to be arrested again a short while after his release once police determined some of his victims were minors. He was released again in July 2010, this time on a $250,000 bond, but was arrested for the third and final time in Dec. 2010.
Kim Isaza, spokesperson for the Cobb District Attorney's office, said Serdula filed a request for a new trial Sept. 26, 2014, in front of Judge Green, but the judge denied the motion on Sept. 30. Serdula asked for an appeal on Oct. 28, but the Court of Appeals hasn't yet scheduled a hearing, Isaza said, adding it will likely be put on the schedule in the coming months. This isn't the first civil case brought to bear stemming from Serdula's actions. He also worked at WellStar Cobb Hospital, and five patients who police believe were sexually assaulted by Serdula while at the hospital sued in Oct. 2010. The case was settled in spring 2011, but the terms of the settlement were never disclosed.