Water, Waste & Land, Inc. d/b/a Westec v. Lanham
Colorado Supreme Court
955 P.2d 997 (Colo. 1998)
Clark negotiated an engineering contract with Westec (plaintiff) purportedly on behalf of Lanham (defendant), without disclosing that the actual principal was Preferred Income Investors, LLC (PII), or that PII was even an LLC; when PII failed to pay, Westec sued Lanham, Clark, and PII individually. The county court found Clark acted as Lanham's agent (dismissing Clark) and held Lanham and PII liable; the district court reversed based on a statute treating an LLC's filed articles of organization as constructive notice of its LLC status, and Westec appealed.
Whether members of an LLC are excused from personal liability on a contract where the other contracting party did not have notice that the members were negotiating on behalf of an LLC at the time the contract was made.