Explain clyde monett has been operating an art

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Reference no: EM1369615

Clyde Monett has been operating an art restoration business since 1998, specializing in the refurbishment of portraits and paintings. He operated the enterprise as a sole proprietorship (called Monett's Art Restoration Services) until 2006, when he attended a "Business Structures, Licenses and Permits" workshop at the local community college, at which time the presenting attorney suggested he convert his business to a corporation, in order to "shield" Monett's personal property and real estate from liability for his business'
financial obligations (Monett's personal net worth is approximately $150,000.) Through the incorporation process, the only change to the business name was the addition of the word "Incorporated." Monett was the only incorporator of the business. He serves as the president, vice-president and treasurer of the corporation; his sister, Georgette O'Keeffe, is the secretary. Since the corporation was formed in 2006, Clyde and Georgette have only convened one "official" corporate meeting; the meeting lasted approximately one hour, and the two shared family gossip for forty-five minutes of that hour. Monett's Art Restoration Services, Incorporated has maintained an average daily balance of $45.22 in the corporate checking account at Homeland National Bank.

Yesterday, Monett inadvertently purchased the wrong art refurbishment materials (the cleaning solution was too acidic,) and the oversight resulted in irreparable damage to a painting conservatively valued at $75,000. The owner of the painting, Paul Picasso, demands $75,000 in damages from Monett; Monett apologizes, offers two free coupons for future restoration services, and refuses to pay the $75,000. The current corporate checking account balance is $52.84.

Is Clyde Monett personally liable for the $75,000 damage claim (explain your answer)? Is he ethically obligated to pay Paul $75,000

Reference no: EM1369615

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