Can a corporate secretary be liable for corporate debt?

Asked over 1 year ago - Sacramento, CA

I was the secretary for the corporation of a business that failed almost two years ago. Today I was served with a lawsuit for the corporation, but they included the California Secretary of State Statement of Information that was filed in 2009 with my name on there as the Secretary for the corporation. The summons was served on behalf of the corporation and not me personally. From what I understand in reading the complaint and summons, the former CEO/president personally guaranteed that debt but they can't find him so they're trying to serve me on behalf of the corporation. I have no idea about this debt since the business closed almost two years ago. Can they go after me personally? Should I worry or contact an attorney?

Additional information

Thank you Ms. Koslyn, Ms. Herrera and Mr. Chen for your responses.

I know the corporation was definitely dissolved. I just did a name search on the SOS site and it shows the company was dissolved for some time. My worry is that these creditors will try to name me personally despite the fact that I had absolutely nothing to do with the company. I don't own any shares or anything and just worked there briefly for about two years. I definitely didn't sign any contracts or anything since I just helped with payroll and some secretarial duties. It's just stressing me out because someone can get sued so easily and it appears I have to pocket my own money to hire an attorney to defend myself against a rather ridiculous debt collection lawsuit that I had absolutely no part of. :(

Attorney answers (4)

  1. Pamela Koslyn

    Contributor Level 20

    11

    Lawyers agree

    1

    Answered . it sounds like you were SERVED as a corporate agent of the corporation, being an officer, but not SUED as someone responsible for the liabilities.

    If the corporation has no assets, then the plaintiff won't be able to get very far, maybe just an uncollectible judgment.

    And if you weren't named as a defendant, the plaintiff is not suing you. The only way you could be held liable is if there are defendant DOES named (unnamed people because the plaintiff doesn't know who did what), and you at some point get named as a DOE and the plaintiff is successful in proving that you were the "alter ego" of the corporation, which is difficult, since that means you signed corporate contracts under your own name, commingled your personal money with the corporation's etc.

    But you were the Secretary, so you've got some connection with this corporation, and you'll at least be a witness, as well as agent for service of the complaint. See a business litigator to be on the safe side. The corporation probably agreed to indemnify you for your legal fees, but if it failed 2 years ago, that may not mean anything and you may have to pay for this yourself.

    Avvo doesn't pay us for these responses, and I'm not your lawyer just because I answer this question or respond to... more
  2. Rosana G Herrera

    Contributor Level 9

    6

    Lawyers agree

    1

    Answered . I would agree with my colleague. I would add that you review any corporate documents that you have to ensure that you did not sign any personal guarantees on behalf of the company, particularly given the time-frame. It's unlikely given that you've not been personally sued; nonetheless, you want that peace of mind. I also recommend that you determine whether the corporation was formally dissolved. It is possible that the corporation was never legally dissolved and just became inactive or suspended for failure to pay taxes or failure to file the statement of information. The corporation may be unable to defend itself against the lawsuit filed against it and plaintiff may more aggressively attempt to add you as a DOE defendant under the cause of action explained by my colleague.

    This answer does not constitute legal advice and is provided for informational purposes only.
  3. Gary Stephen Brown

    Contributor Level 10

    3

    Lawyers agree

    1

    Answered . I have reviewed the response of a colleague and want to add some comforting thoughts that directly address your question. NO, as a secretary of the corporation there is no basis for holding you responsible for corporate debt. The service of process is a necessary step to a lawsuit to get the court involved. It does not involve you beyond attempting to use you as a conduit to notifying the corporation. If you know the whereabouts of any of the former directors, I advise you to notify them.

    The advice provided is in good faith but not a guaranty of accuracy under all circumstances.
  4. Frank Wei-Hong Chen

    Contributor Level 20

    3

    Lawyers agree

    Answered . It appears you were served as an officer of the corporation but not as an individual defendant. If the summons and complaint does not have your name on it, then you are not being served as an individual.

    There are some instances when an individual is liable for the corporation's debts and obligations, either as a guarantor or under an "alter ego" theory.

    You should give the summons and complaint to the CEO/President so that the corporation can timely respond. Under California law, a corporation must be represented by counsel to participate in litigation.

    Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is... more

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