Authority of LLC Agents Other Than Its Manager. T.W. Herring Investments, LLC v. atlantic Builders Group, Inc. (Md. Ct. Spec. App. 2009)

T.W. Herring Investments, LLC v. Atlantic Builders Group, Inc.,186 Md.App. 673, 975 A.2d 264 (Md. Ct. Spec. App. 2009) raises an issue so basic that you wonder how it the trial court got it wrong.  An authorized agent of an LLC formed undder North Carolina law, but not its manager, filed an affidavit and a verified answer to a complaint by builder seeking a mechanic’s lien.  The trial court accepted the argument that only the manager had authority to act for the LLC in the litigation.  Slip Op., at 4. 

The Court of Special Appeals reversed:

There is no requirement in the above statutes or rules relating to the legal sufficiency of the affidavit other than that the affiant have the required knowledge. Thus, there is no Maryland statute or rule that prohibits a party from extending authority to a person with knowledge for the limited purpose of executing an affidavit on the party’s behalf.  In this case, the actual authority for that limited purpose was not contested by appellant; it was admitted.  

Slip Op., at 7-8.  Builder argued that Section 57C-3-25(c) of the North Carolina LLC Act only allowed managers to file official documents:

   (c) Any document or instrument required or permitted by law to be filed, registered, or recorded with any public authority and to be executed by a limited liability company … shall be sufficiently executed for such purpose if signed on its behalf by one of its managers.

Slip Op., at 9.  The Court rightly recognized that the purpose of that provision was only to assure the authority of the manger of act in that situation, not to limit the ability of other agents to act.  Id.  The Court then noted that Section 57C-10-03(c) of the North Carolina LLC Act incorporated the law of agency.  Id.  at 10.  Section 57C-3-24(a) permits a manager to delegate authority to other persons:

The delegation is without limitation, including authority to conduct the business of the company. The act of any person within the scope of the authority delegated is as effective to bind the limited liability company as would the act by a manager….

Id. (citations omitted).

Gary Rosin

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