Tuesday, June 11, 2019

Summer LLC Issue Spotting

Another new case provides fun with entity issue spotting. Here’s today’s gem from Wade v. Touchdown Realty Group, LLC, 2019 WL 2403193 (D.Mass.), 1 (D.Mass., 2019):

Plaintiffs Gregg and Karin Wade allege that the home they purchased from Defendant Touchdown Realty Group, LLC (“Touchdown”) did not comply with building codes in breach of the purchase agreement and that Touchdown and Defendant Thomas Clayton falsely represented that the home was a three-bedroom house, not a two-bedroom house, and that it was code-compliant. ...

Touchdown is a Rhode Island limited liability corporation, with its principal place of business at 12 E. Cottage Street, Smithfield, Rhode Island. Touchdown is in the business of buying and renovating residential real estate for resale. Clayton's wife, Kelly Clayton, is Touchdown's sales manager and sole shareholder. The company address is also the Claytons' home address in Rhode Island.

At a quick glance, we see that an LLC has been called a “corporation.”  And we have an LLC with a “sole shareholder,” as opposed to a member. 

In addition, the court does a jurisdictional analysis of the LLC without actually specifically assessing the residency of the LLC member, which is how LLC jurisdiction is determined. In fairness, the residency of the LLC’s “sole shareholder” is identified earlier in the opinion. 

If nothing else, cases like this make me proud of my students, who are largely able to avoid such mistakes. Very proud. 


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