Assignment 2: Legal Issues in Business Organizations Part II

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In Part I of the assignment, Chuck House and Ben Holmes created a business they called House & Holmes Facilities Management.  At the time, Chuck and Ben were the only employees.  By the end of the second year, House & Holmes hired two additional full-time employees and paid a few temporary laborers as needed for certain maintenance jobs. 

Chuck and one of the temporary laborers, Steve, were carrying an old cast iron bathtub through a customer’s house when the homeowner’s dog ran under Steve’s feet, causing him to lose his balance and drop his end of the tub.  Unable to control the tub, Steve dropped his end of the tub causing it to knock over a flat screen television that shattered on the floor.  The tub left scratches in the wood floors.  Steve tore his rotator cuff in the fall and was unable to work for two months.   Ryan, the customer, was upset about his television.

House & Holmes owns three trucks and one van, each registered to the business.  The vehicles advertise the company’s name, phone number and website.  Jason, one of the full-time employees, drives one of the trucks home at night when he is on call for emergency repairs. One night Jason stopped off at Hillside Tavern to have a couple of beers before going home. On the way home, Jason swerved to avoid hitting a deer and hit a car  driven by Charmaine Wilson.  Charmaine’s car sustained $4,500 in damages and she missed three days of work recovering from her injuries.  

Regions Bank loaned $20,000 to House & Holmes.  Chuck, Ben and their friend Phil agreed to be co-sureties for the loan.  The handyman business defaulted on the loan and Regions Bank plans to sue Phil for payment of the loan.

House & Holmes agreed to install a new air conditioning  unit and an outdoor kitchen in a luxury home on the beach.  The parties agreed to a price of $9,500 for the purchase and installation of the air conditioning unit and outdoor kitchen.  Chuck agreed to let the homeowner pay for the work in installments of $2000 a month.  Two months later, the homeowner filed for bankruptcy.  Chuck demanded payment of the remaining amount due or threatened to repossess the outdoor kitchen appliances.  The customer could keep the air conditioning unit since the previous payments covered the cost.  

Gabriella Garcia was born in Mexico in 1985 and recently became a U.S. citizen.  Gabriella speaks fluent English with a strong Hispanic accent.  Gabriella’s accent does not interfere with her ability to communicate with others.  Gabriella applied for a job with House & Holmes; however, she was not hired for the position.


Based on the different situations described in the scenario, create a 5 to 8 page Microsoft Word document that includes the answers to the following:

  • Is the business selected in Week 3 still the best type of organization for Chuck and Ben?  If yes, provide reasons for your selection.  If no, then select the appropriate type of business organization and provide support for your selection.
  • Explain the liability of the homeowner, Chuck, and Steve for the incident with the tub and the types of insurance the parties should have.  Determine Steve’s options for seeking compensation for his injuries.  Consider both the damage to the Ryan’s property and Steve’s injuries.   
  • Explain which party is liable for Charmaine’s injuries.  Assume each party maintains insurance coverage on his/her vehicle.  Which insurance company will be liable for payment of Charmaine’s claims?  Remember the business is located in Florida.
  • Is Regions Bank required to seek payment from the House & Holmes before demanding payment from the co-sureties?
  • Can the bank collect the full amount of the loan from Phil?  If Phil pays the loan, does he have a right to contribution from Chuck and Ben?  If so, how much can Phil recover from Chuck and Ben?
  • What are the rights of each party to the air conditioning units, outdoor kitchen appliances and payments owed when the homeowner files bankruptcy? 
  • On what grounds might Gabriella have a discrimination lawsuit against House & Holmes?  Provide support for each ground selected and then provide arguments that the House & Holmes may make to counter each claim.
  • Explain any ethical concerns House & Holmes may face related to the topics covered.
  • Conclude your paper by providing suggestions for House & Holmes to help prevent future occurrences of these types of legal and ethical problems.

Support your answers with appropriate research, reasoning, cases, laws, and other relevant examples. 

Submit the paper in APA format and properly cite sources on a separate page using APA.

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