Commercial Club Building LLC. v. Global Rescue LLC
Commercial Club Building LLC. v. Global Rescue LLC, 2023 UT App 37 (Hagen, J.)
Global Rescue LLC created a wholly owned subsidiary, GR Direct LLC. GR Direct entered a lease with Commercial Club Building LLC before going out of business. When GR Direct went out of business, it transferred all its assets to its parent company, Global Rescue. Commercial Club sued GR Direct for breach of contract, was awarded a default judgment, and later raised direct claims against Global Rescue to hold the company accountable for the judgment against its subsidiary. A jury found that Global Rescue could be held liable for GR Direct’s lease under a theory of joint venture and alter ego. Global Rescue moved for a judgment notwithstanding the verdict, which the district court denied. The Utah Court of Appeals reversed and remanded, holding in part:
- A JNOV on the joint venture finding would have been appropriate. The evidence did not support the existence of a joint venture, as there was no evidence of “a mutual right to control, and any purported profits or losses were several, not joint.”
- Practice Tip: A parent company and subsidiary may, under the right circumstances, be able to create a joint venture even though one did not exist here.