Partner Quentin Knipe authored an article in the Idaho Statesman titled “Quentin Knipe: Court reaffirms strength of Idaho LLC's liability limits.” In the article, Knipe discusses a recent Idaho Supreme Court ruling in which the court clarified the distinction between the members of an LLC and the LLC in a case where the plaintiff sought to impose personal liability on individual members of an LLC for the contractual obligations of the LLC.
In Wandering Trails v. Big Bite Construction, the plaintiff sued two companies, as well as the owners of the companies, that failed to do road paving work for a residential community, asking the court to ignore the legal separateness of the owner-members of the LLC. The court declined to follow corporate precedent for “piercing the veil,” a process by which you must convince a court that the LLC is essentially the alter ego of its member or members to a degree that it would be unfair to treat those personalities as separate.
According to Knipe, the takeaway from the court’s decision is that people should protect themselves in their initial dealings with LLCs—request financial statements, seek personal guarantees from the LLCs members, etc.—rather than hoping to win a court battle when they are dissatisfied.
Read “Quentin Knipe: Court reaffirms strength of Idaho LLC's liability limits,” published September 17, 2014.