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.

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. 

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.

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.

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