I n a
recent decision
from the Louisiana Court
of Appeals (Fifth
Circuit),
the court denied retroactive
reinstatement of
an LLC that had been affirmatively
dissolved by
its members. In denying retroactive reinstatement, in effect the court affirmed
the application
of an atypical Louisiana
statute which
provides inter alia that
upon voluntary dissolution
the members
of the LLC are liable severally
for the LLC’s debts and obligations.
In re: Reinstatement of
S & D Roofing, LLC, ___So.3d___, No. 16-CA-85, 2016 WL 5231860 (La. Ct. App. Fifth Cir. Sept. 22, 2016).
Shane Dufrene and David Cain organized
S&D Roofing, LLC as a Louisiana limited
liability company. S&D contracted to
provide roofing
services to
9029 Jefferson Highway, LLC. Apparently
the work was never done, because Jefferson
sued S&D
for breach
of contract. Cain received
the service
of process
although Dufrene
never did. Thereafter,
a default judgment was entered against
S&D for
$15,000.
Apparently neither
Cain nor Dufrene ever
received that
notice of the default judgment. Some seven months
after that
default judgment
was entered, Cain and Dufrene voluntarily dissolved
S&D, and in connection
therewith submitted an affidavit which
provided in
part that
S&D owed no debts. This dissolution
was pursuant
to Louisiana Revised Statute 12:1335.1, which provides
in part:
In addition
to all other methods
of dissolution, if a [LLC] is no longer doing
business and
owes no debts, it may be dissolved
by filing an affidavit with Secretary
of State executed by the members… attesting to
such facts
and requesting
that [LLC]
be dissolved. Thereafter,
the members… shall be personally liable
for any debts or other claims against the [LLC] in proportion to
their ownership
interest in
the company.
When Jefferson sought to enforce its default judgment
against Dufrene
and Cain, they sought to reinstate the
LLC pursuant
to court order and as well to have that reinstatement
be retroactive
to the effect that they would not be personally liable
on Jefferson’s claim. This reinstatement
was sought
pursuant to
a statute
that provides:
The Secretary
of State shall reinstate
a [LLC] that has been dissolved
pursuant to
this Section
only upon
receipt of
an order issued by a court of competent jurisdiction directing
him to do so.
While the court did grant reinstatement,
it did not do so retroactively. When Dufrene
and Cain complained that
the reinstatement
was not retroactive, the court referenced
a number of
other Louisiana
LLC statutes
that do provide for retroactive reinstatement.
As the provision
here relied
upon did not provide for retroactive
reinstatement,
the court found that that was outside the statutory scope. In addition, the court recited
a number of policy reasons why retroactive treatment
was not appropriate, including
the ability
of third parties to rely upon the public record.
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