Goodman v. Darden, Doman & Stafford Associates

Darden, Doman & Stafford Associates (DDS) (plaintiff) purchased a building from John Goodman (defendant). Goodman and DDS also agreed that Goodman would renovate the building for DDS through a corporation that Goodman would form to limit his personal liability. DDS subsequently contracted with “Building Design and Development Inc. (In Formation) John A Goodman, President.” Thereafter, Goodman incorporated his company. DDS made its first progress payment on the project in August with a check made out to “Building Design and Development Inc.—John Goodman.” Goodman endorsed this check as the company’s president after crossing out his name and asked DDS to make future checks payable only to the corporation. DDS complied with Goodman’s request. Several months later, DDS demanded arbitration against Goodman and his corporation, claiming breach of contract. Goodman moved to dismiss the claim against him, arguing that DDS agreed that the corporation would be solely liable under the contract due to the contract’s reference to Goodman’s corporation being in formation. DDS responded with evidence that the contract intended for Goodman to be personally responsible. The trial court granted Goodman’s motion, ruling that (1) DDS knew that Goodman’s corporation did not exist, (2) DDS (which was comprised of highly educated people) could have expressly provided for Goodman’s personal liability, (3) Goodman told DDS that he wanted to limit his personal liability, and (4) DDS made payments to the corporation. The intermediate court of appeals reversed. Goodman appealed.