Pleading standards, Rule 12 (b)(6). Error to dismiss a complaint alleging personal participation in corporate tort.

Prive v. Vermont Asbestos Group and Manosh (2008-474) (14-Jan-2010) 2010 VT 2 (Reiber, C.J.)

Plaintiff appeals the dismissal of his complaint against defendant Howard Manosh, the president and CEO of VAG,. The trial court granted Manosh’s motion to dismiss on the grounds that plaintiff’s failure to allege facts that would make Manosh personally liable for his actions at VAG. the second amended complaint alleges that Manosh “has been found to make all decisions regarding . . . maintenance and control of erosion from tailing piles . . . [and] containment and storage of discarded mining [hazardous] waste.” we conclude that plaintiff’s amendments could survive a 12(b)(6) motion to dismiss and were not, therefore, futile. It was thus an abuse of discretion for the trial court to deny plaintiff’s second motion to amend. We reverse and remand.

The crucial issue here is whether plaintiff provided adequate notice that Manosh personally participated in the alleged wrongful acts. Plaintiffs face a “low threshold for withstanding a 12(b)(6) motion to dismiss.” Indeed this an “exceedingly low” threshold in that “[m]otions to dismiss for failure to state a claim are disfavored and should be rarely granted.” As we stated in Bock, “[d]ismissal under Rule 12(b)(6) is proper only when it is beyond doubt that there exist no facts or circumstances, consistent with the complaint[,] that would entitle the plaintiff to relief.” Bock, 2008 VT 81, ¶ 4. Further, Vermont Rule of Civil Procedure 8 on pleading “omits the requirement . . . that the facts relied upon be pleaded, requiring instead a short and plain statement of the claim showing that the pleader is entitled to relief.” Bock, 2008 VT 81, ¶ 5 (quotations omitted) (citing Reporter’s Notes, V.R.C.P. 8). The key to whether a complaint is sufficient is notice; the complaint must provide “a statement clear enough to give the defendant fair notice of what the plaintiff’s claim is and the grounds on which it rests.” Id.

“Vermont has recognized that a corporate officer may be held liable for a tort in which the officer personally participated even though the corporation may also be liable.” Agency of Natural Res. v. Upper Valley Reg’l Landfill Corp., 167 Vt. 228, 243, 705 A.2d 1001, 1010 (1997) (emphasis added). One of the clearest statements on liability for corporate officers comes from the United States Court of Appeals for the Tenth Circuit:

It is the general rule that if an officer or agent of a corporation directs or participates actively in the commission of a tortious act or an act from which a tort necessarily follows or may reasonably be expected to follow, he is personally liable to a third person for injuries proximately resulting therefrom. But merely being an officer or agent of a corporation does not render one personally liable for a tortious act of the corporation. Specific direction or sanction of, or active participation or cooperation in, a positively wrongful act of commission or omission which operates to the injury or prejudice of the complaining party is necessary to generate individual liability in damages of an officer or agent of a corporation for the tort of the corporation.

Lobato v. Pay Less Drug Stores, Inc., 261 F.2d 406, 408-09 (10th Cir. 1958). We made a similar statement in Parker v. Cone, 104 Vt. 421, 160 A. 246 (1932), where we relied upon agency law to hold that a corporate officer is “not personally liable for torts committed by [an employee] while carrying out his instructions, unless he specifically directed them to be done, or participated or cooperated therein.” Id. at 425, 160 A. at 248. It is true that a corporate officer has no liability merely by reason of his office, but it is not true that a corporate officer has immunity for acts performed for the benefit of the corporation . there are some actions for which both the corporation and the corporate officer can be held liable—namely, those actions in which the corporate officer “personally participated.”

Plaintiff does not allege that Manosh is liable because of his status as president and CEO of VAG—an allegation that would not in itself be sufficient grounds for stating a claim of personal liability against Manosh. The second amended complaint alleges that Manosh has “ma[d]e all decisions regarding what is left of VAG operations,” including decisions regarding “maintenance and control of erosion from tailing piles located on VAG’s asbestos mine property.” the second amended complaint alleges much more than mere guilt by association. Plaintiff’s second amended complaint sufficiently alleges facts to put Manosh on notice of the claims of active participation in the torts asserted against him and VAG -- that Manosh “personally participated” in the alleged tortious actions—namely, by directing where the tailing piles would be placed and how they would be contained.