XV. Llc Member or Manager Will Be Personally Liable if She Contracts in Her Own Name, or if She Otherwise Fails to Disclose She Is Acting on Behalf of Her Llc

• Library: South Carolina Limited Liability Companies (SCBar) (2020 Ed.)

XV. LLC Member or Manager Will Be Personally Liable if She Contracts in Her Own Name, or if She Otherwise Fails to Disclose She Is Acting on Behalf of Her LLC

In the 2019 case, Johnson v. Little, 426 S.C. 423, 827 S.E.2d 207 (Ct. App. 2019), Little sold certain of his LLC's assets to Johnson, which contract warranted that the property was clear of any liens, and further that "seller" will indemnify purchaser. The court concluded that the LLC's assets were subject to various encumbrances, and Little was thus personally liable for them.

Little argues the master erred in finding him individually liable because under section 33-44-303 of the South Carolina Code (2006), all liabilities rest solely with the company and not with him individually. We disagree.
The comment to section 33-44-303 provides:

A member or manger, as an agent of the company is not liable for the debts, obligations, and liabilities of the company simply because of the agency. A member or a manager is responsible for acts or omissions to the extent those acts or omissions would be actionable in contract or tort against the member or manager if that person were acting in an individual capacity.

"Therefore, as a matter of law, a manager of a limited liability company can wrongfully interfere with his company's contracts and be held individually liable for his acts." Dutch Fork Dev. Grp. II, LLC v. SEL Props., LLC, 406 S.C. 596, 606, 753 S.E.2d 840, 845 (2012).
We find the master did not err in entering judgment against Little individually in addition to his company. The contract provided it was entered into "by and between Robert Little individually and CQI Oncology/Infusion Services, LLC." Furthermore, the contract is signed by Little both as an individual and in his capacity as the sole member and manager of the LLC. . . .
[Little's] actions caused the vendors to not be paid. This constitutes wrongful interference with his company's contracts. Because Little was a party to the contract as an individual and his actions caused the contract to be breached, the master did not err in finding him individually liable.¹²⁵

In First South Bank v. Rosenberg, 428 S.C. 179, 790 S.E.2d 919 (Ct. App. 2016), the two individual members of their LLC, both personally guaranteed a loan made to their LLC. One member's guarantee was signed on his behalf by his co-member pursuant to a power of attorney he had granted to the co-member. In a challenge to the effectiveness of this power of attorney, the court of appeals concluded that the power of attorney was valid and bound the member. Both members were thus personally liable for the debt of their LLC.

If the LLC member or manager does not disclose that in taking actions that she is acting on behalf of her LLC, rather than on her own...