Opinion ID: 2495475
Heading Depth: 2
Heading Rank: 3

Heading: Whether the trial court erred in granting Shivers's separate motion, as he can be held individually liable.

Text: ¶ 29. The trial court found that it was undisputed that Shivers was not present at the time of the alleged misrepresentations on the boat and that there was no evidence of him acting as an individual, but only as a member of Gant-Shivers. Thus, citing Mississippi Code Section 79-29-305 (Rev. 2009), the trial court granted the motion, as Shivers could not be held individually liable. ¶ 30. The Grand parties make three arguments: (1) As an individual member of the general partnership discussed above, Shivers had an individual duty to disclose; (2) the limited-liability-shield statute is inapplicable to an LLC member's own acts or omissions; and (3) the corporate veil may be pierced when fraud is involved. ¶ 31. Even assuming that a general partnership arose by operation of law, Shivers was not a partner. Shivers's involvement in this matter began when Gant-Shivers became a limited partner in Grand-Miss LP. The Grand parties argue that Shivers's signature on the allegedly false HUD-1 statement should subject him to individual liability. However, that statement was not signed until April 15, 2005, after the limited partnership had been formed. At that time, Shivers was a member of Gant-Shivers, a corporate limited partner in Grand-Miss LP. ¶ 32. The Grand parties argue that the trial court erred in applying the limited-liability-shield statute to these facts. See Miss.Code Ann. § 79-29-305(1), (2) (Rev. 2009). It provides: (1) A person who is a member of a limited liability company is not liable, by reason of being a member, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent or employee of the limited liability company. (2) A member of a limited liability company is not a proper party to a proceeding by or against a limited liability company, by reason of being a member of the limited liability company, except: (a) Where the object of the proceeding is to enforce a member's right against or liability to the limited liability company; or (b) In a derivative action brought pursuant to Article 11 of this chapter. Id. The Grand parties cite decisions of other courts in the argument that individual liability is a possibility for a limited-partnership member's own acts or omissions. [1] The Gunnings and Causey courts applied state statutes that are different from Mississippi's statute, in that they except a person's own acts or conduct. Gunnings, 2007 WL 1931291, at ; Causey, 2005 WL 2000625, at . Handy is factually dissimilar in that an LLC member was found individually liable for actions taken before formation of the LLC. See Handy, 2000 WL 364199, at . Here, all of Shivers's actions occurred after the formation of Gant-Shivers. Clement supports Shivers's position. Clement, 881 So.2d at 974-75. Applying a statute identical to Mississippi's, the Clement court held, The mere act of signing the contract on behalf of [an LLC] in his capacity as a member did not make [the LLC's manager and sole member] a signatory to the contract in his individual capacity. Id. ¶ 33. Finally, citing cases from other courts, the Grand parties argue that, when fraud or misrepresentation are involved, the veil of an LLC may be pierced. [2] The Young court stated in dicta that, if Utah law applied, individual liability might be found. But liability was found under the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Young, 92 Fed.Appx. at 392. A Texas court has held that an LLC's veil may be pierced when it has been used as a sham to perpetrate a fraud. McCarthy, 251 S.W.3d at 590-91. The LLC at issue was used as a front and purposefully was kept undercapitalized and unable to pay its creditors. Id. at 591. Here, no such evidence was presented regarding Gant-Shivers, and no evidence was presented of Shivers participating personally in any representations to the Grand parties. ¶ 34. The law of Delaware, as applied by its own courts and those of other jurisdictions, allows a court to pierce the corporate veil of an entity when there is fraud.... [3] However, the trial court applied a Mississippi statute. Thus, Delaware's business-association law, however persuasive, does not lead to a finding of error. ¶ 35. We find no error in the grant of Shivers's separate summary judgment motion.