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Appeals court: Limited liability still effective for defendant

| Nov 18, 2015 | Civil Appeals |

A court decision was recently appealed that involved a loan and a limited liability company. The appeal related to the plaintiffs’ limited argument for liability protections under an LLC — an argument that the appellate court did not agree with.

The original case stemmed from a loan made to a company called JJR Enterprises. The company was a limited liability company, which meant that the partners of the company would have been protected personally from certain creditors and debts.

The plaintiffs made a loan to the company, which was in the process of or had been dissolved at the time of the loans, according to the plaintiffs. Because of this, the plaintiffs were seeking recovery for the loan from a specific defendant.

The original court ruled in favor of the defendant, stating that the defendant was covered by the LLC protections. Specifically, the trial court said that defendant was not aware of the dissolution at the time the loan was taken on.

The plaintiffs appealed, arguing that the defendant was not covered by LLC protections because the company was being dissolved and the loan was not related to a requirement for winding up the business. The appellate court ruled for the defendant, stating that it did not agree with plaintiffs’ limited view on LLC protections.

The appellate court ended its written decision by noting it was deciding only in the matter of LLC protection. It reiterated that it was not deciding if the defendant would be liable if plaintiffs had provided proof that he knew about the business dissolution at the time the loan was taken out.

Appealing court decisions can be complex. In this case, the plaintiffs appealed based on their definition of a business law principle. The court didn’t agree with that definition. Understanding the variations of legal terms and ideas is one important aspect of appellate law and why it’s important to consult with a professional on such cases.

Source: State of Oregon Court of Appeals, “A150057) Wohrman v. Rogers,” accessed Nov. 18, 2015