Is it possible to sue a Limited Liability Company (LLC)?
Yes, you may sue an LLC in small claims court provided it fits the standards and the financial amount sought by the plaintiff for damages. The small claims court system was established to enable people to resolve minor financial and property issues without the assistance of a lawyer. In most cases, the plaintiff and defendant represent themselves. Attorney representation is permitted in several states.
Can the owner of an LLC be sued personally?
If the owner is determined to be personally accountable for the litigation, they might be sued. There are, however, particular liability protection and restrictions. LLC owners have a bank account that is distinct from their personal assets. Many assets are covered under the asset protection plan in order to maintain the owner’s properties. The LLC may be sued and its assets seized, but the LLC members’ personal assets are protected. Having an LLC, however, does not insulate the owner from all business-related responsibilities.
How Much Money Can Be Recovered in Small Claims Court?
The amount of money that litigants may get in small claims court varies. It is also important to consider who is initiating the complaint and how many times they have filed in small claims court. The basic guidelines are as follows:
Individuals or businesses owned by individuals (sole proprietorships) may sue for up to $10,000 in damages.
Corporations, LLCs, and other commercial organisations have a $5,000 limit.
The maximum is $7,500 if the complaint includes physical harm or other specified conduct.
If a bigger claim exists, you are not permitted to divide it into several actions. The total amount of the claim cannot exceed the allowed limitations.
Putting Together a Lawsuit Against an LLC
An LLC is a form of company that operates as a distinct legal entity (see characteristics of an LLC). You would not sue the LLC members since their personal property and assets are protected. When a lawsuit is filed against an LLC, the defendant is the LLC, not the members (individual owners or managers.) If a big money is at stake, it is best to hire a lawyer to ensure you are appropriately represented.
The sorts of disputes that may be contested in small claims courts are limited. Personal loan issues, landlord-tenant conflicts, and pending contract fulfilment are all examples of disputes in this system. The complaint must be filed before the statute of limitations runs out, which may be as short as a few years.
Before initiating a lawsuit, you should acquire all of the evidence you will need to support your case. Here are some examples of evidence:
Promissory notes or contracts
Correspondence, includes emails, as well as evidence of delivery or attempted delivery, such as mail tracking information or a certified postal receipt.
Video or picture evidence that is pertinent to the case.
Expense documents, such as receipts, bills, and invoices, that are relevant to the case.
According to police reports.
Claims for insurance.
If you have witnesses, they may testify in your place.
How to File a Lawsuit Against an LLC
When bringing a lawsuit against an LLC, the following procedures must be followed:
Determine which court will hear the case.
If you and the LLC live in the same state, you may bring the action in the city or county where the issue occurred.
If the LLC is located in a different state than you, the lawsuit may be eligible for filing in federal court. When the damages are severe enough, this is a viable option. For federal filing requirements, see the Federal Rules of Civil Procedure.
Determine the LLC’s legal name. The LLC may operate under a different name, but in order to bring a lawsuit, you must use the legal name. All LLC legal names are listed on the website of the state Secretary of State’s Divisions of Corporations. You may look for the owner’s name or the name under which they conduct business.
Create the complaint, which will be the initial document submitted with the court to initiate the litigation. The following information must be included in the complaint:
As the plaintiff, your legal name will be used.
The LLC’s legal name as the defendant.
A thorough description of the misconduct you believe the LLC has done and why you deserve recompense. Check with the clerk of your state court to see if there are any existing forms that can be utilised to submit the complaint. The court clerk may answer inquiries concerning paperwork and complaints but cannot provide legal advice.
Submit the complaint to the legal system. A copy of the complaint, together with a summons, must be addressed to the LLC. In certain cases, the complaint must be addressed to the LLC’s major business address. If an attorney is hired, they will be able to serve the complaint and notice of appearance. The notice of presence is only required if you are represented by an attorney.