Does a TX LLC prevent me from being sued personally?

Please note, this article only applies to TX LLCs and not to any LLCs outside of TX. You'd have to check the law in those other states.

Picture this:

You run a real estate rental business with a proper multiple LLC structure. Your tenant suffers damage through no fault of your own, but your tenant thinks it's your businesses fault. He convinces his lawyer the same. The lawyer thinks he'll sue everyone to have a better chance of making money, so he sues your LLC and he sues you personally. What happens?

Your lawyer can probably get your name dropped.

The TX LLC statutes are very protective of the "members" of an LLC. The law even says in Tex. Bus. Org. Code Section 101.113:

"A member of a limited liability company may be named as a party in an action by or against the limited liability company only if the action is brought to enforce the member's right against or liability to the company."

What does that mean? That means unless a member is suing his own LLC or an LLC is suing its own member, a member of an LLC can't be named as a party in an action by or against the LLC. This means that your lawyer will have an easier time defending the lawsuit. You may be able to even bring sanctions against the Plaintiff for filing an improper lawsuit.

Caveats

An LLC, doesn't prevent you from being sued for your own negligence. For example: if you do your own plumbing, do it incorrectly, and cause damages, you could be sued even if the plumbing work was under the scope of your LLC. What the above statute means is that the Plaintiff can't combine the two lawsuits into a single lawsuit, making the Plaintiff's job (the lawyer now has to try two lawsuits instead of one convenient lawsuit). This may cause a potential plaintiff's lawyer to not take a case on contingency.


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