Can LLC Members Sue Each Other for Damages?

By: Courtney Fernald

Courtney Fernald (00164840xBEBCA)Limited liability companies, or “LLCs,” have become an increasingly popular business entity choice in Florida due to their combination of favorable legal, business and tax attributes. Most of the appeal of the LLC lies in the “limited liability” concept that makes individuals feel shielded, but in reality LLC members can be individually liable to one another for any wrong doing.

When Can You Sue a Fellow Member of the LLC?

First look to the operating agreement and see if it contains a provision that expressly authorizes direct actions between members. If the operating agreement is clear that members are directly liable to each other, you may proceed and bring your action against the other member. Similarly, if Florida law mandates a statutory duty among members and you have a claim that such duty was breached, you may also proceed with your action against another member.

If the operating agreement does not provide for direct actions among members and there is no statutory claim to assert, you can only bring your action if you can show that you have suffered both (i) a direct harm that is independent of the harm suffered by the LLC, and (ii) a special injury that is separate and distinct from injury suffered by other members.  This can be daunting and difficult, and in many cases, an impossible test to overcome.

Due to the complexities involved in filing a direct lawsuit against an LLC member, it is important that you consult with an attorney before proceeding. Should you have any questions, please call Englander Fischer at (727) 898-7210 to see how one of our attorneys can assist you.

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About Greater Tampa Chamber of Commerce

The Greater Tampa Chamber of Commerce is a not-for-profit business membership organization that helps promote the businesses and business interests of our members. We come from diverse backgrounds: from small businesses, big corporations, government bodies and the military. United, we become a single, unifying force with the power to shape the future of Tampa Bay.