LLC Fails To Protect Owner Against Negligence

A limited liability company does not provide blanket protection against personal liability. According to a recent decision by Florida’s Second District Court of Appeals the managing member of a LLC can be held personal liability for negligent actions without a piercing of the corporate veil. Estate of Canavan v. National Healthcare Corp, 2004 Fla. App. LEXIS 10998 (Fla. 2d DCA, July 23, 2004)

This case involved a negligence action brought against an LLC who owned a nursing home and the LLC’s sole member and manager who operating and managed the nursing home. The plaintiff alleged that the owner was personally negligent for approving the home’s budget, that the functioned as sole member of the nursing home governing body, that he ignored complaints of residents made to him personally, and that his mismanagement caused medical problems and damages to the residents. The owner argued that he could not be held personally liable since the nursing home was owned by the LLC.

The appellate court held that personal negligent is tortious conduct which is not shielded from personal liability, hence it was not necessary to pierce the corporate veil in order to make the alleged individual tortfeasor/member as a party defendant. The case is a reminder that LLC protection is not absolute. A LLC member or manager can be held personally liability for his or her own personal negligence or other tortious conduct while acting on the LLC’s behalf.