180 So. 3d 285
La.2015Background
- Jennifer Nunez contracted with Pinnacle Homes, L.L.C. to build a house; Allen Lenard was Pinnacle’s sole member and individually licensed contractor.
- Permit required base flood elevation 10 ft above sea level; finished slab elevation was ~8.66 ft, making corrective work (~$201,600) necessary.
- Nunez sued Pinnacle and later added Lenard individually; trial found Pinnacle breached contract and held Lenard personally liable under La. R.S. 12:1320(D) for breach of professional duty.
- The court of appeal affirmed Lenard’s personal liability; the Louisiana Supreme Court granted review to resolve scope of the narrow professional-duty and negligent/wrongful-act exceptions to LLC limited liability under La. R.S. 12:1320(D).
- The Supreme Court reversed: (1) contractors are not "professionals" for purposes of §12:1320(D) merely because they are licensed, and (2) Lenard’s failures were contract breaches (poor workmanship) done in furtherance of the LLC contract, not independent torts or crimes triggering personal liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an individually licensed building contractor is a "professional" under La. R.S. 12:1320(D) | Licensure renders Lenard a professional; thus he may be personally liable for breach of professional duty | LLC statute’s "professional" exception is limited to professions recognized in Title 12; mere licensure as a contractor does not qualify | Reversed: contractor licensure alone does not make a member a "professional" under §12:1320(D) |
| Whether failing to ensure required elevation is a "negligent or wrongful act" exposing Lenard to personal liability | Lenard’s failure to supervise/elevate violated law and permit, rising to independent negligent/wrongful act | The elevation obligation arose from the contract; poor workmanship in furtherance of the LLC contract is insufficient for personal liability | Reversed: acts were contractual breaches, not independent torts/crimes invoking §12:1320(D) |
| Whether local ordinance criminalizes Lenard’s conduct so as to weigh for personal liability | Ordinance creates misdemeanor for noncompliance with elevation rules; thus conduct could be wrongful/criminal | Ordinance duties apply to the "applicant" on the permit (the owner); record shows applicant was the owner, not Lenard; no violation established | Held: ordinance did not apply to Lenard as a basis for personal liability |
| Whether conduct was undertaken outside member capacity (personal capacity) | As the licensed contractor overseeing work, Lenard acted personally and should be liable | Conduct was performed in furtherance of the LLC contract and within his role as member/manager | Held: conduct was within member/manager capacity and in furtherance of the contract, so limited-liability protection applies |
Key Cases Cited
- Ogea v. Merritt, 130 So.3d 888 (La. 2013) (interpreting §12:1320(D) and articulating factors for when member conduct may trigger personal liability)
- Foti v. Holliday, 27 So.3d 813 (La. 2009) (legislative awareness of existing law and statutory interpretation principles)
- Kevin Assocs., L.L.C. v. Crawford, 865 So.2d 34 (La. 2004) (de novo review where facts are undisputed)
- Faucheaux v. Terrebonne Consol. Gov't, 615 So.2d 289 (La. 1993) (existence of duty is a question of law)
- Regions Bank v. Ark-La-Tex Water Gardens, L.L.C., 997 So.2d 734 (La. App. 2 Cir.) (statutory purpose of limited liability for business entities)