Diedre is sole member manager of twenty limited liability co…
Diedre is sole member manager of twenty limited liability companies (LLCs) which collectively run a small restaurant business at City Beach called “Snack Hut.” The Snack Hut business is comprised of twenty freestanding “island themed” snack huts located along the bike path that runs through City Beach. Each “hut” serves an assortment of snacks, ice creams, candies and soft drinks to beach goers who travel up and down the bike path. The huts are walk-up only; there is no seated dining. Each of the twenty “huts” is individually owned and insured by one of the twenty separate LLCs collectively owned by Diedre, and each LLC is operated by a single employee employed by yet another entity, “Beach Corporation,” which is also owned by Diedre as its sole shareholder. Diedre initially started her Snack Hut business as a sole proprietorship five years ago with a single “hut” just south of the pier. But as her snack business grew she knew she needed to expand locations, and thus after a year she hired attorney Arnold to help her form a business plan and set up her business formally. Arnold formed all twenty of her LLCs as well as Beach Corporation, and he maintained her records for her at his law office. Diedre spent most of her time at the beach surfing and never held any corporate meetings, but once a year Arnold prepared unanimous written consents and statements of information for her to sign, and handles her annual taxes for the entities. Summer started off great for Snack Hut and looked like it was going to be Diedre’s best year to date. However, on the evening of July 4th during celebratory fireworks activities by some beach goers, a stray rocket veered and managed to lodge itself under a propane tank at beach hut “No.7” causing an explosion that seriously burned the hut No.7 employee, Preston, as well as fifteen customers who were standing nearby. These injury claims for all these parties far exceeded the liability insurance Diedre had purchased for hut No.7. All fifteen customers collectively filed a single lawsuit against Diedre individually for their personal injuries. Preston filed his own separate lawsuit against Diedre individually, but his suit also named each of the twenty LLCs and Beach Corporation as defendants. Discus the viability of the customers’ lawsuit. (50 points) Discuss the viability of Preston’s lawsuit. (50 points)