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Chapter 39
Limited Liability Companies and Limited Liability Partnerships
VI. Answers to Critical Legal Thinking Cases
39.1 Limited Liability
Yes. The plaintiffs who sued Bone are required to pay the legal fees he incurred while fighting the
plaintiffs’ lawsuit. Limited liability law provides that the owners and managers of a limited liability
company (LLC) do not have personal liability for the debts and obligations of the LLC. North Carolina
General Statutes Section 57C-3-30 provides “(a) A person who is a member or manager, or both, of a
limited liability company is not liable for the obligations of a limited liability company solely by reason
39.2 Liability of Members
Only Microhard.com, LLC is liable. Harold, Jasmine, Caesar, and Yuan, the owners Microhard.com,
LLC, are not liable. Heather, the LLC’s employee who caused the accident is personally liable to Singer,
the pedestrian she negligently injured. An LLC is liable for any loss or injury caused to anyone as a result
of a wrongful act or omission by a member, a manager, an agent, or an employee of the LLC who
39.3 Member-Managed LLC
Big Apple, LLC and Jennifer are liable to the injured pedestrian. Martin and Edsel, the other owners of
Big Apple, LLC are not personally liable. The LLC was a member-managed LLC and not a manager-
and was acting within the scope of LLC business when she caused the accident. However, Martin, and
Edsel are not personally liable for the accident because they are protected by the LLC shield from
personal liability.
39.4 Manager-Managed LLC
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by Chelsea. In a member-managed LLC, all of the member-owners are agents of the LLC and can bind
the LLC to contracts. However, in this case the LLC is a manager-managed LLC, whereby only the
personally liable for that lease, however.
39.5 Duty of Loyalty
Yes, Ally is liable. Members of a member-managed LLC owe a fiduciary duty of loyalty to the LLC. This
You, LLC, she has breached her duty of loyalty to Movers & You, LLC. Ally is liable for any damages
caused to Movers & You, LLC.
39.6 Duty of Care
negligent conduct, Jonathon is not liable to the LLC for the loss caused to the LLC. However, if his
conduct was grossly negligent conduct, then he is liable to the LLC for the loss caused to the LLC. It
seems that forgetting to put out flashing signs to warn pedestrians of an extremely dangerous condition
amounts to gross negligence. If Jonathon engaged in grossly negligent conduct by not putting out the
Jonathon.
VII. Answers to Ethics Cases
39.7 Ethics Case
collected $1 million. There is still $9 million of unpaid judgment. Angela, Yoko, Cherise, and Serena, as
owner members of the LLC, are not personally liable for any of the judgment. One of the reasons for
forming and operating as an LLC is to shield the owners from personal liability. And that is what happens
here. So the injured Catherine can recover $800,000 liability insurance from Allied and can recover the
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outweighs the reason for holding the owners personally liable. The ethical thing for owners of LLCs to do
is to acquire sufficient liability insurance to pay most claims. That way, injured parties will be
compensated for injuries and the owners will not be subject to personal liability.
39.8 Ethics Case
any damages her breach of loyalty causes the LLC. In this case, there is no question that Melony acted
unethically. Not only the law but also ethical principles were violated by her actions. She owed a
fiduciary duty to her co-owners to not reveal secrets to any other party. She acted unethically by
breaching this duty of trust.
