Opinion ID: 2789418
Heading Depth: 2
Heading Rank: 1

Heading: Clauff's Authority

Text: We begin our analysis by noting that the factual discrepancies between the PA and the Lease Assignment create some uncertainty regarding whether the parties intended to bind Dial-Columbus or DKC-Columbus to the Lease Assignment. The parties, however, represented to the district court and to this court that DKCColumbus was the intended party to the Lease Assignment. Therefore, for purposes of summary judgment review, we will rely on the parties' representations regarding their intent, bearing in mind that future discovery may reveal that resolution of this issue is far less clear than the parties led the district court to believe. We find no fault in the district court's conclusion that, based on the summary judgment record, Clauff was not authorized to obligate DKC-Columbus to the Lease Assignment. The Nebraska LLCA prescribed the method by which LLCs could form and prohibited an unorganized LLC from transacting business or incurring debt that -6- was not incidental to its organization. See Neb. Rev. Stat. §§ 21-2605, 21-2608. Viewed in conjunction with these provisions, it is clear that § 21-2635 created the prospect of liability for persons who acted as an LLC without the state having granted them authority to do so. This interpretation of the term authority is supported by the legislative history of § 21-2635 and is consistent with how courts have interpreted similarly-worded state statutes in Nebraska and other jurisdictions. See, e.g., Par 3, Inc. v. Livingston, 686 N.W.2d 369, 372-73 (Neb. 2004) (interpreting Neb. Rev. Stat. § 21-2020);3 Timberline Equip. Co. v. Davenport, 514 P.2d 1109, 1110-11 (Or. 1973); Model Bus. Corp. Act § 146 cmt. (1969) (stating the authority to act as a corporation must come from the state); The Nebraska Limited Liability Company Act: Hearing on LB 121 Before the Comm. on Banking, Commerce and Ins., 1993 Leg., 93rd Sess. Jan. 26, 1993, at 11 (statement of Sen. David Landis, Member, Comm. on Banking, Commerce and Ins.). Accordingly, assuming that DKCColumbus was actually the intended recipient of the Lease Assignment, Clauff was not authorized to obligate the company to this contract.4 But see Par 3, 686 N.W.2d at 372-73 (defendant not liable under Neb. Rev. Stat. § 21-2020 for contract he signed in name of unincorporated business because record established that parties actually intended to bind a different, lawfully formed corporation). 3 Section 21-2020, which is Nebraska's corporate analogue to § 21-2635, provides that [a]ll persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under the Business Corporation Act, shall be jointly and severally liable for all liabilities created while so acting. 4 However, the summary judgment record indicates that DKC-Columbus came into existence and adopted the Lease Assignment long before any debts or liabilities actually arose under the Lease Agreement. It is therefore unclear whether Menard was actually harmed in any way by Clauff's unauthorized conduct. The Nebraska Supreme Court tends to disapprove of somewhat similar unbargained for events. See Porter v. Smith, 486 N.W.2d 846, 853 (Neb. 1992). -7-