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Am I personally liable in a lawsuit against LLC for which I have been listed as a manager

Los Angeles, CA |
Filed under: Starting an LLC

I recently found out my boss put my name on her LLC as a Manager when lfiling for the corporation. I was not aware of this. We recently found she was involved in fax blasting to market which is illegal in most states. She got sued by a lawyer who received two of her faxes for 3100 dollars. Her name was not listed on the LLC filing to obvoisly, protect her name. Instead, she listed an Agent of service, another company member and me as a manager. I was not aware of this. Becasue she was not listed the agent of process got served and the company had a judgement against it. but the agent was dismissed for payment. Later on, I got served ("the manager") paper saying I had to go in for examination to provide information to the creditor for payment for money that is owed and that the judgement was against me. Along with the notice to go to court I was given a SC-133 form to give the judgement creditor my information to garnish wages, property, ect. My boss told me that doent apply to me, I am just an employee and I just need to go to court and show my ID so they know Im just an employee. The judgement creditor told me that I was listed as a managing member so I was legally responsible. He said that if I did not cooperate He could have the judge seize my purse to get personal info and that I had to give my bank info, other property and social security. I told him I was not the owner and he realized that I may have been involved in fraudulant activity. He asked the judge to give me another court date to find the owners info or address I could get off the hook. Unfortunatly, I work from home and have only met my boss a few times and dont know her address.. .
What I want to know is am I really legally responsible becasue she listed me as a Manager on the LLC filings? Why is the Agent not responsible? Why did I receive a judgement withought a hearing? Will this affect my credit even if I get my boss to pay it off in full? If my boss pays it, do I still need to go to the next court date the creditor set? What other things has my (ex-boss) got me into and what I can do?

Attorney Answers 3

  1. Fax blasting is illegal in all states. It is a federal violation as well as a violation in California. The company is legally responsible for the debt and the liabilities. Unless you are an individual judgment debtor, you can only be responsible for the amount of your contribution to the company, which in this instance appears to be none.

    The agent for service of process has no legal liability for the debts of the corporation; it is merely a designate to recieve papers for the company. A judgment was taken because the agent did not provide you with the papers. Presumably the agent gave the papers to your boss, who apparently ignored them.

    If you were named individually, the judgment will affect your credit, even if paid in full.

    You should continue to appear in court to address the issues of the debt, and explain to the lawyer who got the judgment the full set of circumstances. Showing your ID in court will not get you out of trouble.

    You should also see your own lawyer immediately to get your name removed from the company. Since you are listed as the manager, presumably you have the ability to dissolve the company, which you should do immediately to avoid any further liability. You also might want to consider resigning your employment since it may be obvious to you now that your employer does not have your best interests at heart.

  2. Assuming that you were not named as an individual in the suit, your personal finances are not at issue. As the manager of the LLC you do have to appear at a debtor exam and provide information on the LLC's finances.

    Assuming further that you had nothing to do with the fax blasting, you are not a member of the LLC, and there has been no ruling to disregard the corporate entity, there should not be a judgment against you. HOWEVER...

    It is not the court's job to figure that out. The attorney who filed the suit may have named you. Unless you defend yourself, the court has no reason to deny a request for a judgment against you. You need to be proactive in figuring out your exposure. Does the lawsuit name you as a defendant? Were you personally served the lawsuit before the judgment was entered? Between filing a law suit and getting a debtor exam scheduled no less that six months passes. Did you get served six + months ago and ignoreD the suit? If so, you may have difficulty now clearing your name from the judgment.

    Either way it is imperative that you consult your own attorney. If you cannot afford one, you should see if you can get help from a legal assistance office. Regardless, you must be proactive. If you stick your head in the sand, chances are you will get hurt.


  3. One of the hallmarks of a Limited Liability Company is that of limited liability just as the name implies. Creditors must look to the LLC for satisfaction of debts or wrongs, unless a member or employee engaged in fraud or a criminal offense.

    A judgment was obtained against you apparently by default. Judgments can be set aside within a limited period of time. The time limit will vary depending on a number of facts including whether or not you received notice of the action and had an opportunity to defend yourself and when, if at all, you were notified of the judgment. I recommend that you consult with private legal counsel to evaluate your particular facts and case.

    If it is claimed that you engaged in criminal or unlawful conduct and that was the basis for the judgment, that is more complicated. Again, it is your best interest to immediately seek the advice of an attorney who might be able to negotiate with the creditor to relieve you of liability and evaluate whether or not the judgment can be set aside.

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