If I have a repair business that is incorporated, can a customer sue me personally for work that I done to his vehicle before I incorporated?
Question Details:
I know I had fixed the vehicle for the problem it came into my shop for. Customer wants full refund. His lawyer recommended me to settle in full amount of $2600 before court. Customer will not give any leeway in settlement. Customer was rude and unhappy from day one. My business was not a corporation at that time so he is suing me personally. His lawyer is telling me that if I don't settle and lose I can end up paying much much more that can put me out of business. The papers the customer had filed against me mentioned fraud charges.
You say that your "business was not a corporation at that time," from which I assume you mean that at th time of the problem, it was a sole proprietorship or partnership, not a corporation (or LLC). If that's the case, then yes, the customer can sue you personally, since if there was corporation or LLC when the events giving rise to the claim occured, there was no separate business--you and the business were one and the same.
Fraud is a basis for suing--where it can be worse for a business than a breach of contract or negligence claim is that I believe that Ohio has a consumer protection law, under which, if a consumer sues and wins, the business may have to pay triple damages. (NJ has a similar law, and it can be a killer.) The consumer protection law is essentially based on fraud, so if the consumer is alleging fraud, he might invoke this law and recover a multiple of his actual losses.


Are you a lawyer?