Tuesday, September 10, 2013
A Rose By Any Other Name?
A Rose By Any Other Name?
A case recently filed raises an interesting existential question, namely when does a particular business entity exist. Pharmacogenetics Diagnostic Laboratory, LLC v. Essential Molecular Testing Corporation, LLC – PGXL Partners, LLC, Civil Action No. 3-13-cv-867-H (W.D. Ky.). This dispute has been assigned to Judge Heyburn.
Essentially, Pharmacogenetics entered into a contract, signed by Scott Goodman, to which Essential Molecular Testing (“EMT”) was a party. However, it turned out that EMT did not, at the time the contract in dispute was signed, exist under that name. Rather, after the date of the contract’s execution, Scott Goodman caused a previously existing LLC to change its name to that on the contract.
Which brings us to the Bard’s question. Clearly if an LLC or other business entity of the name set forth in the contract as of the date of its execution were to subsequently change its name, it would be undisputed that the entity under its new name remains bound by the agreement. What should be, however, the answer on the reverse, namely that an existing entity adopts the name of the entity named in the contract. Is this a question of intent: if Goodman always intended that the existing LLC would be the party to the contract, that he simply dropped the ball in getting its name changed to that set forth in the contract prior to its date of execution (or promptly thereafter), does the contract fail as, at least to, that business entity? If that is the case, is the agent who acted on behalf of the existing, but improperly named, LLC personally liable on the obligations thereby created?
Judge Heyburn has his work cut out on this one.
Before closing, it bears noting that the complaint as filed, contains a number of apparent errors with respect to various organizational forms. For example, the plaintiff is identified in the caption of the case as a LLC, is identified in paragraph 3 of the complaint as a corporation, and is identified in paragraph 8 of the complaint as that mythical entity a “limited liability corporation.” Meanwhile, EMT is described in the style as an LLC, in paragraph 4 of the complaint as a corporation of which Scott Goodman is, at paragraph 5 of the complaint, identified as the sole member. Those details aside, I would not be surprised if the complaint is initially attacked on the basis of jurisdiction. While diversity jurisdiction is claimed, no averments are made with respect to the citizenship of either the plaintiff or the defendants.