Most people–even many lawyers and judges–think that "limited liability" means immunity, even for "officers" of a limited liability entity (LLE). But those acting–or deciding not to act–on behalf of an LLE remain personally responsible for their actions. They can avoid liability on contracts entered into on behalf of the LLE by fully disclosing that they are acting as agents for, and identifying by proper name, the LLE as principal. But they remains fully responsible for whatever civil or criminal wrongful acts in which they participate.
This was brought home to me by the opinion in 1319 Third Ave. Realty Corp. v Chateaubriant Rest. Dev. Co., LLC, 2008 NY Slip Op 09910 (NY AD [1st] December 18, 2008). That opinion affirmed a civil contempt order against "the sole owner and principal" of an LLC even though only the LLC was a party to the law suit in which the civil order was issued. Id. at 1. The court found that "It defies credulity that [the LLC’s only member & presumably its manager] was unaware of the [trial court’s] orders." Id.
The only problem that I have with the opinion is that it does not discuss the wording of the orders defied by the LLC and its member and "principal". Most injunctions and orders against an LLE apply by their terms to the LLE and to its officers, agents and employees. A knowing failure by an officer, agent or employee to obey the order is routinely grounds for civil contempt.
Words to the wise.
posted by Gary Rosin