A. The simple answer to this question depends on whether your saddle club is properly incorporated as a corporation, a limited liability company (LLC), or partnership. (For more information about legal business entities, see the U.S. Small Business Administration website.
If your saddle club’s leadership has properly formed it as a business entity, such as a corporation or LLC, you as a board member are generally protected from personal liability. If your saddle club hasn’t been properly formed as a separate business entity, you remain at risk of personal liability. You only have personal liability protection if someone has taken the necessary steps to incorporate the club (i.e., articles of incorporation, business filings with the state, etc.). I make this distinction because, if your club operates like a separate business entity but is actually an informal and unincorporated club, you could be personally liable. This is especially important to note because informal organizations structured like corporations but not officially incorporated are common in the horse industry; these clubs don’t offer their board members or membership protection from personal liability.
Where you to have a properly formed corporate entity, and someone suffers an injury, a court might issue a judgment against the entity (in this case, your saddle club), but only the entity is financially liable. Thanks to its corporate status, the club’s directors, officers, and members are not personally responsible for paying that debt. By contrast, if an unincorporated association of horsemen/women owned the premises, the courts could require the unincorporated group’s individual directors/members to pay the judgment amount out of their own pockets, thus putting personal assets at risk.
All of the above said, a director or officer of a corporation can still be held liable if he or she:
- Personally and directly causes an injury or does something intentionally fraudulent, illegal, or clearly wrong-headed that causes harm;
- Personally guarantees a loan or debt on which the corporation fails to make payment;
- Fails to make sure that the entity files necessary tax returns; or
- Comingles nonprofit and personal funds
In order to minimize the risk of personal liability, two things are absolutely vital to a saddle-club-type organization: proper insurance coverage and proper legal entity formation. If you belong to an equine organization or serve on its leadership board and have questions about your specific liability and risk, please contact an attorney for guidance.