16 Jade Street, LLC v. R. Design Construction Co.
728 S.E.2d 448
S.C.2012Background
- Aten and his wife are the only members of R. Design Construction Co., LLC.
- R. Design contracted with Jade Street, LLC to build a four-unit condominium; Aten served as general contractor and selected subs, receiving a $150,000 fee.
- Catterson & Sons Construction, owned by Michael Catterson, was a subcontractor focused on framing/AAC block; Catterson did not perform construction but liaised with the crew.
- Defects were identified by Kern-Coleman; subsequent inspections revealed additional defects, construction halted, and Jade Street sued for negligence, breach of implied warranties, and R. Design for contract-related claims.
- The circuit court held Aten personally liable for negligence, R. Design liable for multiple claims, Catterson & Sons liable for negligence and contract, and awarded Jade Street damages; on appeal, issues include whether LLC liability shields Aten and whether Catterson is personally liable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aten is personally liable for torts while acting for the LLC | Aten argues the LLC act shields members from personal liability. | Court rejects a broad personal-liability shield and reads the statute as not intended to immunize tortfeasors. | Aten is personally liable. |
| Whether Catterson is personally liable for acts of Catterson & Sons | Jade Street argues Catterson should be personally liable for the firm's torts. | Catterson contends no personal liability under corporate liability principles. | Catterson is not personally liable. |
Key Cases Cited
- Hoang v. Arbess, 80 P.3d 863 (Colo.App. 2003) (LLC member liability not always shielded)
- Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 881 A.2d 937 (Conn. 2005) (statutory interpretation of LLC liability limits)
- Milk v. Total Pay & HR Solutions, Inc., 280 Ga.App. 449, 634 S.E.2d 208 (Ga. App. 2006) (LLC liability shield interpretations in Georgia)
- Allen v. Dackman, 413 Md. 132, 991 A.2d 1216 (Md. 2010) (corporate liability principles applied to LLCs)
- Rothstein v. Equity Ventures, LLC, 299 A.D.2d 472, 750 N.Y.S.2d 625 (N.Y. App. Div. 2002) (LLC member liability in torts examined)
- d’Elia v. Rice Development, Inc., 147 P.3d 515 (Utah Ct. App. 2006) (analysis of LLC member tort liability)