In a complicated legal manuver, a lawsuit has been filed against Don Kirnan’s Syracuse Junior Hockey Club naming them a co-defendant in a suit related to a failed minor pro hockey franchise. The suit is filed against the Syracuse Junior Hockey Club, a nonprofit corporation registered in Dewitt, N.Y.
According to the Syracuse Stars Website Kirnan is listed as “President/Owner/Head Coach”. The Stars are reportedly scheduled to play in the USPHL Elite Division in the 2013-2014 season.
According to the suit, filed in the Lycoming County New York Courthouse on May 30, the city is owed for unpaid utility bills, plus a $7,500 rent check – half of the $15,000 fee charged the team for using the stadium for the season – that was due the city on Jan. 5.
The suit naming the Syracuse Club does not name Kirnan personally, because of its not for profit status members of its board of directors are indemnified against lawsuits by the club. The question to be considered is whether or not the club can defend itself against the lawsuit?
Not for profit companies are legally obligated to only carry over as much operating capital as needed to continue to operate in the next business year. If not, a cash influx will be needed, and then the question will be where does it come from?
The other Defendants in the lawsuit are Williamsport Outlaws LLC, and club owner Kristin Rooney, of Phoenix, Ariz.
The lawsuit seeks to use the complicated legal doctrine of “piercing the corporate veil”. This tactic is used when the corporation does not have enough assets to pay off debt, and must prove that an “owner” funded the corporation using personal funds and not through legal loan, or investment documents made to the corporation as its own entity.
Piercing the Corporate Veil, would involve being able to prove that an individual is responsible for corporate debts. If that can be proven, then the person could risk all of his or her personal assets.
Though it is not uncommon for any business to have a lawsuit filed against them, it is certainly uncommon for a Junior Hockey team to be tied to a lawsuit that involves a failed minor pro hockey team.
TJHN will update this story as more information becomes available.
