A debtor’s pledge of his membership and partnership interests in numerous LLCs and limited partnerships was unenforceable because the LLC and partnership agreements prohibited transfer or required prior written consent of the manager, members, or partners and such consent was not obtained prior to the debtor’s grant of a security interest in the interests. Continue reading
The court held that single member LLCs are not protected by the Fifth Amendment privilege against self-incrimination and that the district court properly denied a member’s motion to quash a subpoena ordering production of business records of her single member LLCs. Though the Fifth Amendment privilege is available to sole proprietorships, it is not available to collective entities because they are separate legal entities from their owners. Continue reading
The court held that an LLP’s citizenship is determined by the citizenship of all partners and that the presence of one “stateless” partner thus renders the partnership stateless and destroys diversity jurisdiction. Further, even if the stateless partner were excluded from consideration, partners who were not United States citizens destroyed diversity jurisdiction because diversity jurisdiction cannot be maintained where aliens are on opposite sides of an action, and there were alien plaintiffs present in the case.
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NAMA Holdings, LLC (NAMA), an indirect owner of a Delaware LLC, brought an action to inspect the LLC’s books and records pursuant to provisions in the LLC’s operating agreement. NAMA argued that the operating agreement granted NAMA an unrestricted right of access to sensitive and proprietary information, but the LLC sought to limit the classes of documents available to NAMA and to require NAMA to execute a confidentiality agreement before granting access. Continue reading
The court determined that neither the de facto corporation doctrine nor the corporation by estoppel doctrine applied to a conveyance of real property to an LLC that did not yet exist, and the deed was thus void. Although the promoter had drafted and signed articles of organization, he had made no attempt to file them; therefore, the court concluded that there had been no colorable attempt to organize the LLC under the statute, and the de facto Continue reading
The Second Circuit joined the Sixth Circuit in upholding the validity of the check-the-box regulations and affirming the ability of the IRS to hold a single member of a disregarded LLC personally liable for unpaid employment taxes. McNamee was the owner of a single member LLC that had not elected to be treated as a corporation under the check-the-box regulations. The LLC failed to pay any required payroll taxes (i.e., unemployment, social security and Continue reading
Limited liability of partner.
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In this securities enforcement action brought by the SEC against the managing general partner (and its two individual principals) of 28 Colorado LLPs formed to purchase and collect debt pools of charged-off consumer debt, the Eleventh Circuit Court of Appeals reversed the district court and held that the general partnership interests sold to the investors were securities under the federal securities laws. The district court applied the Continue reading
Personal liability of partner for malpractice claim against partnership in absence of proof that partnership filed certificate of limited liability partnership with Secretary of State.
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Scope of NY LLP statute as not exempting partners from liability to account to withdrawing partner, or for breach of firm-related agreements between them.
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Two professional associations were partners in a partnership that was sued for breach of a commercial lease. The plaintiff sued the partnership and its two partners. The plaintiff obtained a judgment against the partnership, and that judgment was severed and became final. After the plaintiff was not able to collect the judgment from the partnership, the plaintiff obtained a summary judgment against one of the partners. The partner appealed arguing that Continue reading
Limited liability of partners of LLP even if designator is not used and third party does not know partnership is LLP.
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