Can liability action and director’s liability action be joined in the same lawsuit?

Introduction

It was only in 2012 that the Supreme Court ruled on the accumulation of two types of shares. The debt liability action and the administrator’s liability action. But STS No. 539/2012, of 10 September 2012 allowed their accumulation, establishing doctrine. We will see what this SC criterion is based on and what it consists of.

What does accumulation consist of?

Before the above-mentioned ruling was issued, there were divergences between different courts and hearings. Not only regarding the possibility of accumulation or not, but also regarding the competence to know them. Thus, it was not certain whether the actions could be accumulated or should be presented individually. Furthermore, the court of first instance and the Commercial Court could be responsible for hearing the decision. STS 539/2012 changed this uncertainty by setting a criterion.

Thus, this criterion consists of the possibility of accumulating the processing of these two actions in the same process. With respect to the competence to resolve them, the ruling determines that the Commercial Courts will be responsible.

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The company’s director will be held responsible of the company's debts to the company’s owners and to its creditors. He must therefore respond with his personal assets for the company's debts.

On what arguments does the SC base its decision to allow the accumulation of proceedings?

The ruling bases the possibility of accumulation mainly on the connection between the two. The STS breaks this argument down into the following:

• Both actions have a prejudicial relationship. If action against the company is successful, it will serve as a basis for the action for liability of directors.
• Both actions are based on the company’s failure to comply with its obligations.
• The purpose of both actions is common, to compensate the damages caused by the failure of the company.

Furthermore, as an additional argument, he argues that exercising them separately is an obstacle to effective judicial protection. If cumulation is not allowed, the plaintiff is obliged to file two lawsuits, one for each action. One before the court of first instance and the other before the Commercial Court. This entails an excessive burden, forcing the filing of two lawsuits for the same compensation.

Another important Supreme Court ruling

Another important Supreme Court ruling for the accumulation of these actions is STS 1650/2016. This ruling resolves, in addition to an appeal in cassation, an extraordinary appeal for a procedural violation.

Briefly, the origin of this ruling is a lawsuit filed with the Court of First Instance No. 1 of Gijón. In this lawsuit, two actions were joined. An action of individual responsibility of the administrators and an action of credit claim. The plaintiff, a public limited company, claimed 199,658.68 euros for unpaid claims by another company. In addition, he claimed the liability of the directors of the demanded company.

When the claim was partially upheld (‘79,982.28 instead of ‘199,658.68), both the plaintiff and the defendants appealed. Section 7 of the Provincial Court of Asturias, which was responsible for ruling, did not allow the defendants’ appeal. It did, however, uphold the plaintiff’s appeal, extending the sentence to the amount initially requested by the plaintiff.

One of the defendants, namely the administrator, appealed against the judgment of appeal, filing the two aforementioned appeals. Appeal in cassation and extraordinary appeal for procedural infraction.

Analysis of the extraordinary appeal for procedural infraction

Of these two appeals, we are interested in analyzing the second one. The reasons for this appeal were that the court that heard the application at first instance was not competent. Specifically, according to the appellant, Articles 48.2 LEC, 86ter 1.6º LOPJ and the doctrine of the SC were being violated.

If we analyze the facts, the lawsuit was initially filed in the commercial courts of Oviedo. This lawsuit was filed before September 10, 2012, the date of the STS which changed the criteria. As a result, the Commercial Court declared that it did not have jurisdiction to hear the claim and dismissed it. It also declared that the jurisdiction was vested in the courts of first instance, following the SC’s previous criterion.

The appellant considered that the court of first instance and the court of appeal had ignored the new doctrine of the SC. Although lawsuit was filed before the STS of 2012 that we have been analyzing, sentence on appeal was issued afterwards. Therefore, the appellant considers that the appellate court should have taken into account the STS.

The court of first instance should be considered incompetent. The SC considered this argument to be insufficient, and dismissed the extraordinary appeal on the grounds of procedural infringement.

What is relevant here is that, on the occasion of this appeal, the SC ratifies the doctrine initiated by the STS of 2012. This consolidates the possibility of accumulating the actions of liability of the administrators and liability for debts. In addition, it confirms the competence of the Commercial Courts to hear these actions.

Conclusions

The inadmissibility of the accumulation meant that a double claim had to be made for each of the actions. The burden of having to double the demand was disproportionate. To such an extent that constitutional doctrine considers it contrary to the principle of effective judicial protection. Both actions have the same purpose, to compensate for the damage caused by society. So it was only a matter of time before the SC ruled in favor of accumulation.

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