Tuesday, February 27, 2018

State Laws Committed to Confusing Business Entities, Courts Happy to Help

Another unforced error on the LLC front, again with a limited liability company being called a corporation.   

This time, it is a recent Texas appellate court case where the court states: “In its pleadings, AMV contends that it is presently a limited liability corporation known as ArcelorMittal Vinton LLC.”  Wallace v. ArcelorMittal Vinton, Inc., 536 S.W.3d 19, 21 n.1 (Tex. App. 2016), review denied (Mar. 31, 2017).  As is so often the case, that is not accurate. 

In its brief, the entity AMV simply stated, that it was a Defendant-Appellee as named in the suit, ArcelorMittal Vinton, Inc., was “n/k/a [now known as] ArcelorMittal Vinton LLC.” Carla WALLACE, Plaintiff-Appellant, v. ARCELORMITTAL VINTON, INC., Defendant-Appellee., 2015 WL 7687420 (Tex.App.-El Paso), 1.  AMV’s counsel never said it was a corporation.  The court did that on its own.

Sigh.  Even in Texas, LLCs are not corporations. I swear!  I looked at the statute.

And yet, a close look at the statute shows why this gets confusing for some people.  The Texas statute provides specific cross-references to certain business provisions (emphasis added):

Sec. 101.002.  APPLICABILITY OF OTHER LAWS. 

(a)  Subject to Section 101.114, Sections 21.223, 21.224, 21.225, and 21.226 apply to a limited liability company and the company's members, owners, assignees, affiliates, and subscribers.

(b)  For purposes of the application of Subsection (a):

(1)  a reference to "shares" includes "membership interests";

(2)  a reference to "holder," "owner," or "shareholder" includes a "member" and an "assignee";

(3)  a reference to "corporation" or "corporate" includes a "limited liability company";

(4)  a reference to "directors" includes "managers" of a manager-managed limited liability company and "members" of a member-managed limited liability company;

(5)  a reference to "bylaws" includes "company agreement"; and

(6)  the reference to "Sections 21.157-21.162" in Section 21.223(a)(1) refers to the provisions of Subchapter D of this chapter.

Added by Acts 2011, 82nd Leg., R.S., Ch. 25 (S.B. 323), Sec. 1, eff. September 1, 2011.

As Ham Porter would say, "You're killing me, Smalls." 

http://lawprofessors.typepad.com/business_law/2018/02/state-laws-committed-to-confusing-business-entities-courts-happy-to-help.html

Corporations, Joshua P. Fershee, Legislation, LLCs | Permalink

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