I reside in California and rear ended an automobile in Nevada. The driver retained counsel and is claiming medical damages that is in the area of $50k actual damages. My insurance policy is only for 30k. My insurance company has already offered the limits and but the plaintiff is going forward and is now refusing to negotiate toward settlement. I started a single member LLC after the accident and the business has little expenses, no debt, and some income. Based on the nature of the business, I can not accept another member into the LLC. If the plaintiff obtains a large judgment against me can I protect whatever present or future assets business I have in the LLC against this personal debt?
Had you started the LLC before the accident, you would be in better standing. If the plaintiff is successful at trial, his attorney would argue that you are trying to hide assets and would probably attempt to penetrate the corporate shield in search of assets. If the plaintiff is successful, and you have personal checking and savings accounts in the bank, the plaintiff will be able to levy your money. Get local help. Good luck.
I am not in your jurisdiction but I believe the short answer is No. Here is the more interesting issue for you. You have a 30,000.00 policy. Your insurance company has an obligation to try to settle the case within your policy limits. I hope your insurance company retained experts to look at the claimed damages. You really should ask this question to your the insurance company attorney that was provided to you under your insurance policy.
I am not licensed to practice law in Nevada, which is the state law that would likely be applied to your lawsuit since that is where the accident occurred and where the injuries were sustained. You should speak with a licensed NV attorney.
However, both California and Nevada have Uniform Fraudulent Transfer Acts. The CA version can be found here: http://www.leginfo.ca.gov/cgi-bin/displaycode?s... And the Nevada version can be found here: http://www.leg.state.nv.us/NRS/NRS-112.html
Under both CA and NV law, a transfer is considered fraudulent as to a creditor if the debtor made the transfer or incurred obligation with either (1) actual intent to defraud, hinder or delay any creditor of the debtor; or (2) without receiving in return reasonable value in the exchange or transfer and the debtor (1) was engaged or was about to engage in business or transactions for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (2) intended to incur debts reasonably beyond the debtor's ability to repay them when due.
Plus, it doesn't matter when you make the transfer in regard to when the creditor's claim arose or the obligation was incurred by the debtor.
Long story short, any transfer of personal assets to your LLC to avoid paying a creditor will not ultimately protect those assets from the judgment. The judgment creditor can move the court to find the transfer was fraudulent. BUT, we are assuming that the person who you rear-ended is an actual judgment creditor. That's a big assumption.
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