“As a general rule, a corporation is a distinct legal entity, separate from the individuals who comprise them, and individual shareholders are not liable for the debts of the corporation.” —Welch, Judge 

Facts: A vehicle driven by Michael O’Niell crashed while traveling on Louisiana Highway 30. Vanessa Savoy, a 19-yearold guest passenger in the vehicle, sustained severe injuries as a result of the collision. O’Niell, who was under the legal drinking age, had been drinking at Fred’s Bar and Grill prior to the accident. Fred’s Bar is owned by Triumvirate of Baton Rouge, Inc., a corporation. Marc Fraioli is the sole shareholder and president of Triumvirate corporation. Fraioli was not at Fred’s Bar the night that O’Niell was served alcohol at the bar. Savoy, through a legal representative, brought a lawsuit against O’Niell, O’Niell’s automobile insurance company, Triumvirate corporation, and Fraioli seeking damages for her injuries. Savoy alleged that O’Niell was intoxicated at the time of the accident and that his drinking caused the collision. Savoy alleged that Triumvirate corporation was liable for serving O’Niell alcohol when he was underage and that Fraioli was liable as the owner of Triumvirate corporation. Fraioli filed a Motion for Summary Judgment asserting that as the shareholder of Triumvirate corporation he was not liable for the corporation’s debts. The trial court granted summary judgment to Fraioli and dismissed him as a defendant in the case. Savoy appealed. 

Issue: Is Fraioli personally liable for the debts of Triumvirate, a corporation of which is the sole shareholder? 

Language of the Court: As a general rule, a corporation is a distinct legal entity, separate from the individuals who comprise them, and individual shareholders are not liable for the debts of the corporation. Mr. Fraioli met his burden of proving Triumvirate’s corporate existence. Plaintiff failed to offer any evidence identified by law as indicia that Mr. Fraioli and Triumvirate are not actually separate entities. The involvement of a sole or majority shareholder in a corporation is not sufficient alone, as a matter of law, to establish a basis for disregarding the corporate entity. 

Decision: The court of appeal held that Fraioli was not personally liable for the debts of the Triumvirate corporation of which he was the sole shareholder. The court of appeal affirmed the trial court’s grant of summary judgment dismissing Fraioli from the case. 

Ethics Questions: What reasons could there be for Fraioli to operate his business as a corporation rather than as a sole proprietorship? Was it ethical for Fraioli to assert the corporate shield to avoid liability in this case?