Connecticut Court of Appeals Upholds Separateness of Single-Member LLC

Connecticut Court of Appeals Upholds Separateness of Single-Member LLC

      A recent decision of the Connecticut Court of Appeals has (yet again) affirmed that an LLC and its member(s) are separate, and that claims belonging to the LLC are not as well claims of the members.   O’Reilly v. Valletta, 55 A.3d 583 (Conn. App. Nov. 20, 2012).

      Hub Associates, LLC and its sole member, O’Reilly, brought suit against Robert Pformer with respect to the use of certain real property leased by the LLC from a condominium association of which Pformer was a board member.  Those claims were dismissed by the trial court.  For reasons that are not entirely clear, O’Reilly, but not the LLC, initiated an appeal of the trial court’s ruling.  Pformer, in addition to arguing on appeal that the decision of the trial court was substantively accurate, as well argued that O’Reilly lacked standing to bring the appeal, and that it should be dismissed for lack of jurisdiction.

       Notwithstanding that O’Reilly was the sole member of the LLC, the Connecticut Court of Appeals held that a “member or manager … may not sue in an individual capacity to recover for an injury based on a wrong to the limited liability company.”  Id. at 587.  On that basis the appeal was dismissed.

      The principles identified in this decision are equally applicable in Kentucky as evidenced by the recent decision of the Court of Appeals in Chou v. Chilton.  Other cases rendering the same result include:

·                     Zipp v. Florian, 2006 WL 3719373 (Conn. Super. Nov. 13, 2006) (member of an LLC lacked standing to bring suit based upon damage to property owned by LLC);

·                     Finley v. Takisaki, 2006 WL 1169794 (W.D. Wash. April 28, 2006) (members of an LLC lacked standing to assert a claim for injury to the LLC);

·                     Carey v. Howard, 950 So.2d 1131 (Ala. 2006) (members of LLC lacked standing to sue for declaratory relief with respect to option agreement between LLC and third-party);

·                     Northeast Realty, LLC. v. Misty Bayou, L.L.C., 920 So.2d 938 (La. App. 2006) (members of an LLC lacked standing to intervene in an action against an LLC to quiet the tax title because claim of ownership of property in dispute belonged to the LLC); and

·                     Cortellesso v. Town of Smithfield Zoning Board of Review, 888 A.2d 979 (R.I. 2005) (sole member of LLC lacked standing to appeal zoning decision on property that the sole member had conveyed to the LLC).