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Taylor v. Meecorp Capital Markets, LLC

2009 WL 2634922 (U.S. Dist. Ct. D. N.J. 2009) (Unpublished)

LIMITED LIABILITY COMPANIES — Just like in the corporate setting, members of a limited liability company cannot individually sue for the wrongs allegedly done to their companies.

A New Jersey limited liability company (LLC) sought partial financing from a lender for the purchase and development of a condominium complex. The lender issued a loan commitment. It was accepted and signed by each of the LLC’s members, who personally guaranteed the LLC’s obligations thereunder. The commitment required the LLC to pay a three percent, non-refundable, commitment fee. The fee was earned for, among other things, the mere commitment to provide funds. The commitment also required the LLC to provide certain collateral. The LLC paid one-third of the commitment fee when it signed the commitment, but never gave the lender the required collateral or the balance of the commitment fee. The LLC and one of its members then sued the lender alleging breach of contract, breach of the covenant of good faith and fair dealing, fraud, unjust enrichment, usury, and violation of the New Jersey Consumer Fraud Act. The lender filed a summary judgment motion against the other two members of the LLC and counterclaimed for the remainder of the loan commitment fee.

The United States District Court granted the lender’s summary judgment motion. It held that, just like in the corporate setting, members of a limited liability company cannot individually sue for the wrongs allegedly done to their companies. The fact that a member may also be a guarantor of the company’s obligations does not create standing to assert an individual claim against a creditor. Here, one of the plaintiffs and a third-party defendant were the members of the LLC and acted as guarantors. Neither of these parties alleged that the lender actually harmed them. Instead, the Court noted that their claims were the claims of the LLC and, thus, they did not have standing to assert the LLC’s claims. As for the loan commitment fee, the Court declared that: (a) the commitment stated that the fee was deemed earned at the signing of the loan commitment; (b) both members personally guaranteed the fee; and (c) the contract was unambiguous. Therefore, it held that the lender was entitled to the remainder of the loan commitment fee.


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