## Facts

- Aloha Screens was a sole proprietorship owned and operated by Cosco Carlbom.
- Aloha Screens obtained telephone and related services from GTE Hawaiian Telephone Company (later Verizon Hawaii) under an oral arrangement.
- By May 1998, unpaid charges totaled $3,077.79.
- Verizon assigned the account for collection to Credit Associates of Maui, Ltd., which sued “Cosco Carlbom, individually and dba Aloha Screens.”
- At trial, Carlbom admitted he was Aloha Screens’ owner and sole proprietor and that the telephone numbers were the business’s numbers.
- A Verizon representative testified there was no written document signed by Carlbom personally agreeing to pay the charges.

## Issues

1. Whether a sole proprietor may be held personally liable for a debt incurred in the trade name of the proprietorship, despite the absence of a separate written agreement expressly imposing individual liability.
2. Whether any statute of frauds defense barred personal liability where the underlying service arrangement was oral.

## Decision

- The Intermediate Court of Appeals held that Carlbom, as sole proprietor of Aloha Screens, was personally liable for the unpaid telephone charges.
- The court reversed the judgment to the extent it denied recovery against Carlbom individually.
- The case was remanded for entry of judgment against Carlbom individually for the unpaid amount (and appropriate ancillary amounts as allowed).

## Legal Principles

- A sole proprietorship has no legal existence separate from its owner; the business and the individual are the same for liability purposes.
- A sole proprietor is personally liable for debts and obligations incurred in the course of the proprietorship’s business, including obligations incurred under a trade name.
- The absence of a separate written “personal guarantee” is not dispositive because treating the proprietorship as distinct from the owner incorrectly assumes a separate legal entity.
- A statute of frauds defense is waived if not properly raised.

## Conclusion

Because Aloha Screens was merely Carlbom’s trade name and not a separate legal entity, its unpaid telephone charges were Carlbom’s personal obligation; the appellate court reversed the denial of individual liability and remanded for judgment against him.


Credit Assocs. of Maui, Ltd. v. Carlbom, 50 P.3d 431 (Haw. Ct. App. 2002)