Duty of Care. J. R. Mullins, the sole director and shareholder of the Food Stores of South Carolina, Inc (FSSC), opened two Sav-A-Lot grocery stores in Myrtle Beach. He then established another corporation, Food Stores of Greenville (FSG), and opened a Sav-A-Lot store in the Greenville community. Mullins was also FSG's sole shareholder and director. He instructed FSG's vice president to place Sav-A-Lot advertisements with the Greenville News-Piedmont, which was owned by Multimedia Publishing of South Carolina, Inc The two Myrtle Beach stores were later closed and their inventory transferred to the Greenville store. FSG then transferred 144,000 to Mullins and other of his corporationspurportedly to repay debts owed by FSG. When the Greenville Sav-A-Lot closed following this transfer, Multimedia was left unpaid for the advertising services that it had provided to FSG. Mullins claimed that he had relinquished management of FSG to others and did not know that Multimedia had not been paid. Can Mullins, as corporate director and sole shareholder of FSG, avoid liability for the debts of the FSG corporation when he was on notice that the advertising had been ordered from Multimedia? Is Mullins's statement that he did not know of the debt tantamount to neg-ligence and a breach of his duties as a director? Should Mullins have inquired into whether the Multimedia account had been paid? Discuss these issues and whether Mullins should escape liability for the Multimedia debt.
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