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Tagged Posts: manager’

Personal Liability for Environmental Violations (Part III)

December 15, 2016

In State v. Pure Tech Systems, Inc.,[1] the property at issue had been used for petroleum and hazardous substance operations dating back to the 1880s and was already subject to the state’s closure order by the time it was transferred to Pure Tech Systems, Inc. (“Pure Tech”).  Subsequently, the City of Cleveland issued a citation to close the facility for the city and state fire code violations, followed by a consent order to address the violations.  The state’s environmental agency also began regulatory compliance actions against Pure Tech, which resulted in two additional consent orders. … Read the rest

Personal Liability for Environmental Violations (Part II)

December 8, 2016

In Morello v. State,[1] White Lion Holdings, L.L.C. (“White Lion”), a company owned by Morello, bought a piece of real property that was previously used as a pipe-manufacturing facility.  The previous owner of the property had a state-issued compliance plan to clean up groundwater contamination at the facility, which was also transferred to White Lion after the purchase.  A few years later, the State of Texas sued White Lion for failure to adhere to the requirements of the compliance plan and sought to hold Morello individually liable as the manager and operator of the company. … Read the rest

Personal Liability for Environmental Violations (Part I)

December 6, 2016

As you know, one of the principal advantages of forming a limited liability company or corporation is that it offers protection from liability for business debts and obligations.  As you also know by now, however, this liability shield is not absolute.  We explained in our previous blog series “LLC Update: Piercing the Corporate Veil” that in certain limited situations, courts may “pierce the corporate veil” to hold LLC members liable for business debts and obligations, especially when they operate the business without the requisite corporate formalities, commingle personal and business finances, and/or use the business entity to avoid creditors. … Read the rest

Personal Liability of Business Owners Update: You Don’t Buy Immunity from Suits for Your Own Wrongdoing by Forming an LLC: LLC Member’s Personal Liability for Torts

January 12, 2016

As many of you know, one of the greatest advantages of forming an LLC is that it offers protection from personal liability for business debts and liabilities. As we explained in our previous blog series “Personal Liability of Business Owners,” however, the liability shield is not absolute, and there are limited circumstances in which courts will impose personal liability on LLC owners. One such situation is where a member or manager commits a tort (wrongful act) while acting in furtherance of LLC business, the consequence of which is often misunderstood by LLC owners (and even some lawyers).… Read the rest

Will Your Personal Obligations Cause You To Lose Control of Your LLC? LLC Charging Order Update: Vision Marketing Resources, Inc. v. McMillin Group, LLC (Part 2)

December 29, 2015

Vision Marketing Resources, Inc. v. McMillin Group, LLC.

 In Vision Marketing, the court first addressed whether it could issue a charging order against a non-Kansas LLC over which it did not have jurisdiction. There was no Kansas case law on this issue, so the court looked at several cases in which other state’s appellate courts held that the court need not have jurisdiction over the foreign LLC (i.e., those formed elsewhere) in order to issue a charging order against the interests of its members: for example, the Illinois Appellate Court found that a court only needs to have jurisdiction over the judgment debtor to enter charging orders against the judgment debtor’s interest, because charging orders on distributional interests do not affect the rights or interests of the LLC; and in Georgia, the Court of Appeals has likewise held that it is only necessary for a court to have jurisdiction over the judgment debtor to have the authority to enter charging orders against the judgment debtor’s interest because the LLC has no right or direct interest that is affected by the charging order.… Read the rest

Will Your Personal Obligations Cause You To Lose Control of Your LLC? LLC Charging Order Update: Vision Marketing Resources, Inc. v. McMillin Group, LLC

December 19, 2015

In our previous blog series on single-member LLCs and creditors’ rights (available here), we discussed charging order protection and courts’ application of the same to single-member LLCs. As we mentioned, the obvious purpose of charging order is to protect other members of an LLC from having involuntarily to share governance responsibilities with someone they did not choose or from having to accept a creditor of another member as a co-manager—that is, to protect the autonomy of the original members and their ability to manage their own enterprise.… Read the rest

LLC Owners, If You Owe Someone Money, Your Ownership of an LLC Might Not Be Protected: When It Comes to Single-Member LLCs, Charging Order May Not Be the Exclusive Remedy (Part 6)

December 5, 2015

After Olmstead v. FTC, a Florida Case with Potential National Implications.

The Florida Supreme Court’s opinion in Olmstead v. FTC created much uncertainty concerning charging order protection for multi-member LLCs in Florida[1] and seems to have been the catalyst for legislative action in Florida and Delaware, among others.

In 2011, the Florida legislature amended the Florida Revised Limited Liability Company Act to provide that a charging order is the sole and exclusive remedy by which a judgment creditor of a member or member’s transferee may satisfy a judgment from the judgment debtor’s interest in an LLC or rights to distributions from the LLC.… Read the rest

LLC Owners, If You Owe Someone Money, Your Ownership of an LLC Might Not Be Protected: When It Comes to Single-Member LLCs, Charging Order May Not Be the Exclusive Remedy (Part 5)

November 14, 2015

Real Life Stories (Cases) on the Issue: Olmstead v. FTC (Florida).

Olmstead v. FTC, a non-bankruptcy case, dealt with the question as to whether a court may order judgment debtor to surrender all right, title, and interest in the debtor’s single-member LLC to satisfy an outstanding judgment (not unlike the question of whether a debtor-member in bankruptcy transfers all of his or her interests in the LLC to the bankruptcy trustee).[1] In that case, the Federal Trade Commission (“FTC”) sued the defendants for unfair or deceptive trade practices involving an advance-fee credit card scam and obtained judgment for more than $10 million in restitution.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.