Tag: #llclawyer

Illinois, through its legislative branches, recently amended the Limited Liability Company Act (805 ILCS 180) through Senate Bill 1495.  Part of the bill was to overrule interpretations of specified portions of the LLC Act set forth in Dass v. Yale, 2013 IL App (1st) 122520, specifically concerning Section 10-10, related to the liability of members and managers. 

Dass v. Yale was the result of an action filed against both an LLC and an individual related to property damage.  One issue presented to the Appellate Court was whether Section 10-10 of the LLC ACT exempts LLC members or managers from personal liability for torts or fraud committed in their capacity as members or manages of the LLC.  The Court in Dass answered this question in the affirmative, reasoning:

In the case at bar, the plain language of section 10-10 states that, ‘[e]xcept as otherwise provided in subsection (d) of this Section, the debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the company. A member or manager is not personally liable for a debt, obligation, or liability of the company solely by reason of being or acting as a member or manager.’ 805 ILCS 180/10-10(a) (West 2010). Thus, ‘[s]ection 10-10 clearly indicates that a member or manager of an LLC is not personally liable for debts the company incurs unless each of the provisions in subsection (d) is met.’ Puleo, 368 Ill. App. 3d at 68. Here, there is no claim that [the manager] is liable under subsection (d), so [the manager] is not personally liable for the tort claim against [the LLC].

Dass, 2013 IL App. (1st) 122520 at ¶39.

The interpretation in Dass permitted individuals acting within their role for an LLC to escape individual liability for tortious conduct.  In Dass, the tortious conduct alleged was fraudulent misrepresentations by the Manager of the LLC.  The Manager was able to avoid individual liability.  The trial court concluded that the language of the Act protected the Manager “since all of the allegations of the complaint occurred while he was acting solely in his capacity as a manager of [the LLC].”  The appellate court agreed with the trial courts interpretation.

Senate Bill 1495 corrected the interpretation made in Dass, thus restoring personal liability for tortious acts of an individual, even if acting in his or her capacity as a manager or member of a LLC.  Sec. 10-10(a-5) now provides:

Nothing in subsection (a) or subsection (d) limits the personal liability of a member or manager imposed under law other than this Act, including, but not limited to, agency, contract, and tort law. The purpose of this subsection (a-5) is to overrule the interpretation of subsections (a) and (d) set forth in Dass v. Yale, 2013 IL App (1st) 122520, and Carollo v. Irwin, 2011 IL App (1st) 102765, and clarify that under existing law a member or manager of a limited liability company may be liable under law other than this Act for its own wrongful acts or omissions, even when acting or purporting to act on behalf of a limited liability company. This subsection is therefore intended to be applicable to actions with respect to which all timely appeals have not exhausted before the effective date of this amendatory Act of the 101st General Assembly as well as to all actions commenced on or after the effective date of this amendatory Act of the 101st General Assembly.

805 ILCS 180/10-10(a-5).

What does this mean for individuals operating an LLC?  You should be aware that you will remain liable for your individual actions, even if acting on behalf of the LLC.