In Nunez v. Pinnacle Homes, L.L.C., 2015 WL 5972529 (La. 10/14/15), a homeowner brought a New Home Warranty Act claim against the LLC that constructed her home and the sole member of the LLC. After construction, plaintiff was informed that her home did not meet the required elevation for permitting purposes and flood insurance. At trial, it was determined that Mr. Lenard, the sole member of the LLC, did not properly supervise the elevation of the property and Mr. Lenard was found personally liable under the “professional duty exception” to the general rule of limited liability for members, managers, employees and agents of a Limited Liability Company.
The Third Circuit affirmed the trial court and held that a breach of Lenard’s professional duty as a contractor under La. R.S. 12:1320(D) allowed for recovery against him as an individual, despite the lack of contractual privity between plaintiff and Lenard. Lenard sought writs to the Louisiana Supreme Court, which remanded to the Third Circuit to issue a ruling in light of Ogea v. Merritt, 13-1085 (La. 12/10/13), a 2013 Supreme Court decision that set forth the framework to assess the personal liability of an LLC member.
On remand, the Third Circuit again imposed personal liability, finding that Lenard breached a professional duty because he “was acting as a professional with attainments in special knowledge, particularly as evidenced by his having attained licensure from the state, as distinguished from mere skill.” Lenard again appealed to the Supreme Court.
In Nunez, the Supreme Court observed that the legislature through the creation of the LLC as a business entity intended to promote commerce by limiting personal liability for debts incurred or acts performed on behalf of an LLC. Thus, the legislature largely intended to shield individual members, managers, and employees of an LLC from liability, and created only “narrowly defined circumstances” in which a member of the LLC may be subject to personal liability. According to the court, the facts of Nunez did not fall within the professional duty exception; therefore, the Third Circuit erred when it imposed personally liability upon Lenard.
The Nunez court rejected the Third Circuit’s conclusion that a contractor licensed by the state was a “professional” within the meaning of the LLC statute. According to the court, a “profession” is different from other occupations or trades. Unlike with professions such as accounting, architecture, law, medicine, etc. recognized by the legislature in Title 12 as professions, the court found no authority that the legislature intended “contracting” or “contractors” to be considered professionals in this context. Given that there are some fifty-seven other “professions and occupations” licensed by the state, the Supreme Court feared that a broad interpretation of the professional duty exception “would allow the general rule of limited liability to be swallowed up by the narrow professional duty exception.”