A Louisiana Supreme Court decision, Ogea vs. Travis Merritt, provides an extensive analysis of Louisiana’s limited liability company law as it relates to an LLC member’s comprehensive liability to third parties.
In that case, a new homeowner sued her builder, a Louisiana LLC, and its sole member, personally, for alleged defective foundation work. After trial, judgment was rendered against the LLC and its sole member, Mr. Merritt, finding that Mr. Merritt personally performed a portion of the foundation work and failed to properly supervise the subcontractor who actually poured the concrete slab. The Court of Appeal affirmed but reduced the total award.
The Louisiana Supreme Court reversed the judgment as it applied to Mr. Merritt personally, and affirmed the judgment as it pertained to the LLC entity.
The Court emphasized the legal status of a Louisiana LLC as a distinct, separate juridical person. The Court then closely scrutinized Louisiana’s limited liability company statute for exceptions to the general rule that a limited liability company member is not generally liable for company obligations. The Court found the exceptions of (1) fraud; (2) breach of professional duty; and (3) other negligent or wrongful act; and then determined that these exceptions were exclusive, rather than illustrative.
Applying the facts to the statute, the Supreme Court did not find that Mr. Merritt individually committed fraud, any breach of professional duty, or any negligent or wrongful act, under the facts of the case. And, even though Mr. Merritt was personally involved in the foundation construction process, the Court did not find that those actions constituted individual negligence or breach of a professional duty.
The Ogea decision establishes that a Louisiana limited liability company member is shielded from LLC obligations unless fraud, breach of professional duty, or negligence or other wrongful conduct is proven against the individual member associated with a particular transaction. No other exceptions to the general rule are to be applied.
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