Company Director Personal Liability for Torts In California
Corporate director or officer status neither immunizes a person from personal liability for tortious conduct nor subjects him or her to vicarious liability for such acts. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal. 3d 490, 505 229 Cal. Rptr. 456, 723 P.2d 573, 59 A.L.R.4th 447 (hereafter Frances T.); 18B Am.Jur.2d (1985) Corporations, 1877.)
As the Supreme Court held in United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal. 3d 586, 595 83 Cal. Rptr. 418, 463 P.2d 770: "Directors or officers of a corporation do not incur personal liability for torts of the corporation merely by reason of their official position, unless they participate in the wrong or authorize or direct that it be done.
They may be liable, under the rules of tort and agency, for tortious acts committed on behalf of the corporation."
As the Supreme Court explained in Frances T.: "It is well settled that corporate directors cannot be held vicariously liable for the corporation's torts in which they do not participate.
Their liability, if any, stems from their own tortious conduct, not from their status as directors or officers of the enterprise.
'An officer or director will not be liable for torts in which he does not personally participate, of which he has no knowledge, or to which he has not consented. ... While the corporation itself may be liable for such acts, the individual officer or director will be immune unless he authorizes, directs, or in some meaningful sense actively participates in the wrongful conduct.'
Directors are liable to third persons injured by their own tortious conduct regardless of whether they acted on behalf of the corporation and regardless of whether the corporation is also liable.
This liability does not depend on the same grounds as 'piercing the corporate veil,' on account of inadequate capitalization for instance, but rather on the officer or director's personal participation or specific authorization of the tortious act." (Frances T., supra, 42 Cal. 3d at pp. 503-504, original italics, fn. omitted.)
Shareholders are likewise not normally liable for a corporation's torts, "but personal liability may attach to them ... when they specifically direct or authorize the wrongful acts." (Wyatt v. Union Mortgage Co., supra, 24 Cal. 3d at p. 785; 18B Am.Jur.2d, supra, Corporations, 1829.)