Design Professionals May Be Sued In Their Individual Capacity

By: Scott J. Hedlund

Case report on W.J. Spano Company, Inc. v. Mitchell, 943 So.2d 1131, 205-2115 (La.App. 1 Cir. 9/15/06)

Recently, the Louisiana First Circuit Court of Appeal held that a design professional, who is also a member of a limited liability company ("LLC"), is susceptible to personal liability for his alleged negligence in performing his/her professional duties . The case, W.J. Spano Company, Inc. v. Mitchell, 943 So.2d 1131, 205-2115 (La.App. 1 Cir. 9/15/06), involved the construction of a new home in Baton Rouge, Louisiana. Defendants, Dennis and Linda Mitchell (the "Mitchells"), hired W.J. Spano Company, Inc., ("Spano") to construct the home beginning in February 2001. In July 2003, more than thirteen months past the originally anticipated completion date, the Mitchells discharged Spano. Spano subsequently sued the Mitchells alleging he was arbitrarily terminated causing him substantial damages. The Mitchells countersued, and added Rene J.L. Fransen, individually("Fransen"), and Rene J.L. Fransen Landscape Architect, L.L.C. as defendants.

Fransen filed a peremptory exception of no cause of action, claiming the suit arose solely from his work as a member of the LLC, and as such he was shielded from any individual liability. The trial court agreed with Fransen, and dismissed the claims against him, individually. The Mitchells appealed the dismissal of the claims alleging that La. R.S. 12:1320(D), which provides for the liability of members and managers of LLCs to third parties, provided for a cause of action against Fransen individually as a professional. La. R.S. 12:1320(A) provides that the "liability of members, managers, employees, or agents, as such, of a limited liability company ... shall at all times be determined solely and exclusively by the provisions of the Chapter." Section D provides:

Nothing in this Chapter shall be construed as being in derogation of any rights which any person may by law have against a member, manger, employee, or agent of a limited liability company because of any fraud practiced upon him, because of any breach of professional duty or other negligent or wrongful act by such person, or in derogation of any right which the limited liability company may have against any such person because of any fraud practiced upon it by him.

The Court of Appeal agreed with the Mitchells that, although Section B of the statute insulates members and managers of an LLC from personal liability for a debt or obligation of the LLC, Section D "clearly provides a cause of action against a member, manager, or employee of a limited liability company because of any breach of professional duty, as well as for any fraud or other negligent or wrongful act." The Court distinguished those cases which found no liability for individuals acting for an LLC in their capacity as a member, finding acts "outside one's capacity as a member" would refer to acts of professional or personal negligence.

Written for The Legal Blueprint, 2007, Issue 2.