Norman Costello and Robert Giordano were members of Silk, LLC, which owned a bar

Question

Norman Costello and Robert Giordano were members of Silk, LLC, which owned a bar and adult entertainment nightclub called Silk Stockings. Costello and Giordano both worked at the bar as well, and supervised and conducted trainings for other employees, including the bartenders.

One night, Anthony Sulls came to a Silk Stockings and drank heavily. Though obviously drunk, employees at Silk Stockings continued to serve him. Costello and Giordano were both working on the night in question, and the evidence shows that they each served Mr. Sulls at least one drink.

Sulls left the nightclub obviously drunk and got in his car. He drove off with two of his friends and shortly thereafter crashed his car, killing himself and injuring one of his passengers, Bill Ridgeway. Mr. Ridgeway is now suing Costello and Giordano personally for damages related to his injuries.

1) Review the case Hodge v. Strong Built International, LLC and Section 17-1d in your text. Based on this information, and your lectures this week, answer this question--"When (if ever) can an individual member of an LLC be held responsible for the debts and liabilities of the LLC?"

2) Review the facts presented in the hypothetical above. Do you think a court in the case of Costello and Giordano might reach a different conclusion than the court in the Hodge v. Strong Built International with regard to the liability of the members of the LLC? Explain your reasoning

Explanation / Answer

1) If an LLC incurs debts or otherwise becomes legally liable to another person or entity, the business assets of that LLC may be at risk to satisfy a judgment against the company, but in general, the personal assets owned by the owners of the LLC would be shielded. Generally, in LLC, there is no personal liability unless there is a damage or physical injury or death to the third person by one of the partners in LLC. In such case, personal liability is applicable to the individual member and not the corporation.

2) Here, Costello and Giordano bears the initial burden of the proof on the motion for summary judgement. Anthony's friend Bill Ridgeway will bear the burden of proof at the trial. Same is the case with Hodge v Strong Built International. Although Mr. Killen bears the initial burden of proof on this motion for summary judgment, the plaintiffs are the parties that will bear the burden of proof at trial. Mr. Killen has submitted into evidence an affidavit stating that he was a member and manager of Strong Built International, the company that allegedly manufactured the deer stand at issue herein. And in the present case, Bill who was the friend of Anthony alleges that Costello and Giordano fed Sulls with excessive liquor and allowed him to drink excessively.

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