williams mullen 2009. maintaining a healthy corporate structure october 27, 2009 presented by:...
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Williams Mullen 2009.
Maintaining a Healthy
Corporate Structure
October 27, 2009October 27, 2009
presented by:presented by:
Martin A. Donlan, Jr.Martin A. Donlan, Jr.
W. Benjamin PaceW. Benjamin Pace
Robert L. SamuelRobert L. Samuel
2 Williams Mullen 2009.
What Is a Joint Venture?
An association of persons or entities who, without creating a partnership or a corporation, – Intend to engage in and carry out a single
business venture for joint profit and – Who combine their resources for such
purpose.
See, e.g., Roark v. Hicks, 362 S.E.2d 711, 714 (Va. 1987).
3 Williams Mullen 2009.
Why Are We Talking About Joint Ventures?
Because plaintiffs’ lawyers have begun using the theory:
– To seek liability “up the chain” of a facility’s corporate structure.
– To apply pressure on corporate management for settlement purposes.
– To pursue a theme of “Profits over Patients” at trial.
4 Williams Mullen 2009.
What is the Risk?
Where a joint venture exists, the parties’ unity of interest and control over the venture justifies imposing liability on one party to the venture for the acts or omissions of the other party.
Parties to a joint venture are “jointly and severally” liable.
Liability may be imposed even though the parties otherwise have no legal relationship.
5 Williams Mullen 2009.
Elements of a Joint Venture
1. The parties to the joint venture must enter into an agreement to carry on an enterprise for profit;
2. Their agreement must evidence their intent to be joint venturers;
3. Each must make a contribution of resources;
4. Each must have some degree of joint control over the venture; and
5. Each must share in both profits and losses.
46 Am. Jur. 2d Joint Ventures § 8
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Key Elements of Joint Venture
Although not all elements must be present, there must at least be:– A “community of interest” between the parties
(normally, a right to share in the profits and a duty to share in the losses); and
– A right to joint control.
• In Nursing Home cases, the appearance of joint control is key.
7 Williams Mullen 2009.
Who is a Target for Joint Venture Liability?
Facilities without insurance or coverage below any applicable Med/Mal cap.
Large chain holding companies utilizing individual entities as license-holders.
Owners of management companies and/or real estate with relationship to ownership of facilities.
Entities holding facilities’ real estate.
8 Williams Mullen 2009.
How to Protect Against Joint Venture Liability
Avoid the appearance of “control” over a facility’s operation by limiting:– Common ownership of entities– Common officers/directors of entities– Ownership role in operations– Intermingling of funds (centralized accounting)
Maintain meticulous corporate records, detailing the division of operations.
9 Williams Mullen 2009.
The Common Ownership Structure
Parent Holding Company
RE Holding Company OP Holding Company
RE SPE Company
RE SPE Company
RE SPE Company
RE SPE Company
OP Holding Company
OP Holding Company
OP Holding Company
OP Holding Company
Management Company
LEASES
MGMT
AGMT’S
Williams Mullen 2009.
Martin A. Donlan, Jr.Martin A. Donlan, Jr.
Richmond, VA
703.783.6934
W. Benjamin PaceW. Benjamin Pace
Richmond, VA
804.783.6932
Robert L. Samuel, Jr.Robert L. Samuel, Jr.
Virginia Beach, VA
757.473.5322
North Carolina Virginia Washington, D.C. London, England
www.williamsmullen.com
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