By: Rob Harris
A recent North Carolina appellate decision provides a cautionary tale to those who seek to limit their personal liability by engaging in transactions through entities they form for the transaction.
Before the economic collapse, Angelo Accetturo, along with others, decided to build a golf course on land they had purchased in North Carolina. The wannabe golf course developers formed a limited liability company Wilderness Trail Holdings, LLC, which acquired title to the land. Mr. Accetturo, who was president of the company, met and engaged a company called Shapemasters to construct the golf course.
By the middle of 2008, after construction had been ongoing for a year and a half, the economic decline was in full swing, and Wilderness Trail stopped paying Shapemasters. Mr. Accetturo provided assurances that payment would be forthcoming, and Shapemasters, apparently relying on that committment, continued its efforts until 2009.
In 2010, Shapemasters prevailed upon Mr. Accetturo to sign a confession of judgment acknowledging that more than $2,500,000 was owed. The North Carolina Court of Appeals recently described the manner in which Mr. Acceturo signed the document:
It was signed before a notary public on 20 September 2010. Accetturo signed the document above an unlabeled signature line. Beside his signature, he wrote “WT” and “pres.” The verification page of the confession, executed the following day, states Accetturo is “owner” of WTDC and has “executed the foregoing Confession of Judgment in my capacity as President of WILDERNESS TRAIL DEVELOPMENT CORPORATION with full authority to bind WILDERNESS TRAIL DEVELOPMENT CORPORATION thereto.”
Shapemasters romptly sought to enforce the judgment, not only against Wilderness Trail, but against Mr. Accetturo individually. Accetturo balked, claiming that he intended to sign only on behalf of the company. The trial court rejected Accetturo’s argument, finding as follows:
1. Defendant Angelo Accetturo (Accetturo) freely and voluntarily executed the Confession of Judgment that was filed in this matter on October 5, 2010 (Confession of Judgment).
2. The Confession of Judgment is a signed, sworn, and written statement by Accetturo, expressly made on behalf of himself, Wilderness Trail Development Corporation, and Wilderness Trail Holdings, LLC, that concisely states why they are all jointly and severally liable to Shapemasters, Inc. (Plaintiff) for the work performed at a winery and the development known as Wilderness Trail.
3. Once filed, copies of the Confession of Judgment were immediately served, individually, on each of the three Defendants in October 2010, as is reflected by the Affidavits of Service and Return Receipts filed with the Court.
4. The affidavits of the parties relating to the present Motion indicate that Defendants made and intended for Plaintiff to rely upon representations that Defendants were jointly and severally liable to Plaintiff for its services.
5. Plaintiff reasonably relied, to its prejudice and detriment, on Defendants’ representations of liability and provision of the Confession of Judgment by providing additional services and forgoing other legal action against Defendants on the parties’ underlying contract.
Mr. Accetturo took an appeal, but the appellate court was equally unsympathetic to his position. As the court held, “the confession of judgment clearly lists all three parties and states Accetturo, WTCD, and Wilderness Trail Holdings are “jointly and severally” confessing judgment and are liable for the debt to Shapemasters.”