Key Takeaways:

  • You can sue an LLC in small claims court if the claim falls within the financial and jurisdictional limits.
  • LLC owners are typically protected from personal liability, but there are exceptions.
  • The maximum amount you can claim varies by state and depends on whether you are suing as an individual or business.
  • To file a lawsuit, you need to determine the LLC’s legal name, draft a complaint, and properly serve the LLC.
  • If an LLC is not responsive to legal action, additional steps like default judgments may apply.
  • Professional legal guidance can help navigate complexities such as piercing the corporate veil.

Can You Sue a Limited Liability Company (LLC)?

Yes, you can sue an LLC in small claims court as long as it meets the requirements and the financial amount the plaintiff is seeking for damages. The small claims court system was created to allow individuals to settle minor financial and property disputes without a lawyer. The plaintiff and defendant in most instances represent themselves. Some states do allow for attorney representation.

When Can an LLC Be Sued?

An LLC can be sued under various circumstances, including:

  • Breach of Contract – If the LLC fails to honor a contract, whether verbal or written.
  • Unpaid Debts – Vendors, contractors, or employees can sue for outstanding payments.
  • Personal Injury or Property Damage – If negligence by the LLC or its employees leads to injury or damage.
  • Fraud or Misrepresentation – If the LLC misleads customers or business partners, legal action may be taken.
  • Violations of Employment Law – Employees can sue for unpaid wages, discrimination, or wrongful termination.

While an LLC provides liability protection, the company itself remains responsible for its actions and obligations.

Can an LLC Owner be sued personally?

If the owner is found personally liable to the lawsuit then they can be sued. However, there are still specific liability protection and limitations. LLC owners have separate bank account from their personal assets. Under the asset protection plan, many of the assets are protected to preserve the owners properties. Someone can sue the LLC and seize its business assets, but the LLC members personal assets are protected. However, having an LLC will not protect the owner from all of its business related liabilities. 

When Can an LLC Owner Be Held Personally Liable?

Although LLCs protect owners from personal liability, there are exceptions where a court may hold an owner personally responsible, such as:

  • Piercing the Corporate Veil – If an LLC is not operated separately from the owner’s personal finances, courts may ignore its liability protection.
  • Personal Guarantees – If an owner personally guaranteed a loan or contract, they are responsible for the debt.
  • Fraud or Illegal Activities – Owners cannot use an LLC to commit fraud or illegal activities and escape liability.
  • Gross Negligence or Misconduct – If an owner’s actions directly cause harm, they may be sued personally.

Understanding these exceptions is crucial for both claimants and LLC owners seeking to protect their assets.

How Much Can Be Collected in Small Claims Court?

The amount plaintiffs can receive in small claims court changes. Who is bringing the lawsuit and how many times they have filed in small claims factors in as well. The general guidelines are:

  • Individuals or a business owned by an individual (sole proprietorship) can sue up to $10,000.
  • Corporations, LLCs, and other business entities are capped at $5,000.
  • If a bodily injury or other specific actions are part of the suit, the limit is $7,500.

If a larger claim exists, you are not allowed to break up the claims into different actions. The total claim cannot be above the approved limits.

State-Specific Small Claims Limits

Each state has different monetary limits for small claims court. Here are a few examples:

  • California: Individuals can sue for up to $10,000, while businesses are limited to $5,000.
  • Texas: Maximum claim amount is $20,000.
  • New York: Limits vary by location, with a cap of $10,000 in New York City and $5,000 elsewhere.
  • Florida: Claims are limited to $8,000.
  • Illinois: The small claims cap is $10,000.

If your claim exceeds your state’s limit, you may need to file in a different court, such as civil or business court.

Preparing a Suit Against an LLC

An LLC is a business type that acts as a separate legal entity (see characteristics of an LLC). The members of the LLC are not who you would be suing as their personal property and assets are protected. When filing suit against the LLC, the LLC is the defendant, not the members (individual owners or managers.) If a large sum is in dispute, hiring a lawyer is recommended to be sure you are properly represented.

Small claims courts limit the types of cases that can be disputed. Each state has different restrictions but disputes in this system include personal loan disputes, landlord-tenant disputes, and outstanding contract fulfillment. The suit must be filled before the statute of limitations ends, which can be as little as a few years.

Before filing suit, you should gather all evidence necessary to present your case. Examples of evidence include:

  • Contracts or promissory notes.
  • Correspondence including emails and proof of delivery or attempted delivery including a mail tracking information or certified mail receipt.
  • Phone records.
  • Video or photographic evidence relevant to the case.
  • Expense records including receipts, bills, invoices relevant to the case.
  • Police reports.
  • Insurance claims.
  • Medical records.

If you have witnesses, they can appear in court on your behalf.

Steps to File a Suit Against an LLC

When filing a suit against an LLC, the following steps should be adhered to:

  • Determine the court where the suit will take place.
    • If you and the LLC are in the same state, the case can be filed in the city or county where the dispute took place.
    • If the LLC is in a different state from you, the case may qualify to be filed in federal court. This is possible when the damages are high enough. Refer to the Federal Rules of Civil Procedures for federal filing requirements.
  • Find the legal name of the LLC. The LLC may use a different name, and to file suit you must use the legal name. The state Secretary of State of Divisions of Corporations website list all LLC legal names. You can search by the owner's name or the name in which they are doing business.
  • Draft the complaint which is the first document that will be filed with the court to begin the lawsuit. The complaint must include:
    • Your legal name as the plaintiff.
    • The legal name of the LLC as the defendant.
    • A detailed explanation of the wrongdoing you feel has been committed by the LLC and why you deserve compensation. Check with your state court clerk for existing forms that can be used to file the complaint. The court clerk is available to answer questions about forms and complaints but cannot provide any legal advice.
  • File the complaint with the court system. A copy of the complaint must be mailed to the LLC in conjunction with a summons. In some circumstances, the complaint will have to be delivered to the principal business address of the LLC. If an attorney is being used, they can serve the complaint and notice of appearance. The notice of appearance is only needed if you are using an attorney.

What Happens If the LLC Fails to Respond?

If the LLC does not respond to the lawsuit within the required timeframe, you may request a default judgment, meaning the court could rule in your favor automatically. Steps to take include:

  1. Verify Service of Process – Ensure the LLC was properly served.
  2. File a Default Judgment Request – Submit a request with supporting documents proving your claim.
  3. Enforce the Judgment – If the LLC still does not pay, legal actions such as garnishing bank accounts or placing liens on assets may be necessary.

Seeking legal advice can be helpful in ensuring the judgment is enforceable.

FAQ Section:

1. Can you sue an LLC for breach of contract?

Yes, an LLC can be sued for breach of contract if it fails to meet its contractual obligations. The claim must be filed within the state’s statute of limitations.

2. How do I find the legal name of an LLC before suing?

You can search for an LLC’s legal name through the Secretary of State’s business registry in the state where it is registered.

3. Can I sue an LLC if they went out of business?

Yes, but recovering compensation may be difficult if the LLC no longer has assets. You may need to check whether the owner can be held personally liable.

4. What happens if an LLC ignores a lawsuit?

If an LLC does not respond, the court may issue a default judgment, allowing the plaintiff to collect damages.

5. Is it necessary to hire a lawyer to sue an LLC?

While small claims court does not require a lawyer, consulting a legal expert can increase your chances of success, especially for complex cases.

Legal Support to Sue an LLC

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