## Facts

- Helen Palangio contracted in July 1994 for construction of a residence in Damascus, Arkansas, with Jerry Bullington, identified in the agreement as “Jerry Bullington, d/b/a Bullington Builders, Inc.”
- The contract displayed “Bullington Builders, Inc.” and included a one-year express warranty on workmanship and materials “beyond normal wear and tear,” plus a promise to work timely without sacrificing quality.
- The agreement did not expressly address implied warranties of habitability or proper construction.
- Bullington Builders, Inc. had been incorporated in December 1993, but its charter was revoked for failure to pay franchise taxes about six weeks before construction was completed and was never reinstated.
- After completion, Palangio complained of numerous defects and unsatisfactory workmanship, including alleged negligence in steps, driveway, attic work, support piers, and other items.
- More than one year after completion, Palangio hired another builder to repair the defects.
- In October 1997, Palangio sued Bullington (as “d/b/a Bullington Builders, Inc.”) for negligence, breach of contract, and breach of implied warranties of habitability and proper construction.
- A jury found for Palangio; the circuit court entered judgment holding Bullington individually liable and awarding \$19,000 in damages.

## Issues

1. Whether Bullington could be held personally liable for liabilities arising from the construction contract where the corporation’s charter was revoked before completion and Bullington continued performance thereafter.
2. Whether the contract’s one-year express warranty and quality language required the court to withhold implied-warranty theories from the jury as waived or displaced, making it error to submit waiver of implied warranties to the jury.

## Decision

- The Arkansas Supreme Court affirmed the judgment for Palangio.
- The court held Bullington was personally liable for liabilities arising from faulty or incomplete performance occurring during the period of corporate charter revocation because he continued operating and performing after revocation.
- The court held there was no reversible error in the trial court’s submission of implied-warranty waiver issues to the jury, despite the existence of an express warranty.

## Legal Principles

- Limited liability depends on maintaining corporate status; failure to comply with statutory requirements (including franchise tax obligations) can result in charter revocation and loss of corporate protections.
- Officers, directors, or owners who actively participate in operating a corporation during a period of charter revocation for nonpayment of franchise taxes may be individually liable for debts and obligations incurred during that period.
- A contractor who continues performance after revocation may be personally liable for defective performance, including liability framed as breach of express or implied warranties.
- As a general contract rule, where an express warranty covers the same subject as an asserted implied warranty, the express warranty may be exclusive; however, appellate relief requires a showing of reversible instructional or submission error.

## Conclusion

The court affirmed a damages award against the builder individually, holding that continued operation and contract performance after corporate charter revocation supported personal liability, and that the trial court’s handling of implied-warranty waiver questions did not warrant reversal.


Bullington v. Palangio, 345 Ark. 320, 45 S.W.3d 834 (Ark. 2001)