The Maryland Court of Appeals found today in a 5-2 opinion in a lead paint case that an individual member of a Maryland limited liability corporation (LLC) can be personally liable for torts committed on behalf of the LLC.
The case, Allen v. Dackman, is a classic Baltimore lead paint case, another saga in the tragedy of children suffering brain injuries as the result of ingesting chipping, flaking, and/or peeling lead-based paint.
The owner defendant sought refuge from personal liability because his acts were on behalf of his creatively named LLC, Hard Assets. The trial judge granted summary judgment. The Maryland Court of Special Appeals, in an opinion by Judge Zarnoch, affirmed:
No member shall be personally liable for the obligations of the limited liability company, whether arising in contract, tort or otherwise, solely by reason of being a member of the limited liability company. Thus, appellants cannot succeed in imputing the alleged negligent acts of Hard Assets to appellee.
The Maryland Court of Appeals disagreed, finding that a person can be held responsible for the torts committed on behalf of the LLC, finding that the lead paint landlord could be personally liable for Plaintiffs’ injuries because a reasonable jury could find that he was an “owner” of the property, as the Housing Code defined that term.
I did not find any of this earth-shattering because this has always been Maryland law for corporations. However appealing it might be to me personally as a member of an LLC, the logic of giving LLC members additional protection for torts makes little sense to me.
So Plaintiffs get another shot at putting on a case against the landlord individually. This will be an interesting case to try to a jury. Children claiming brain damage are almost invariably sympathetic but tenants, in this case, were not paying tenants. So there could be some “how can you sue the guy when he was not even the landlord?” sentiment from the jury (assuming there is no successful motion in limine to exclude that evidence).
The take-home lesson here for landlords is that you cannot have property, even vacant or property that is not rented, that has chipping, peeling, or flaking paint. The lesson for doctors, lawyers, and every other profession in this case: get insurance.
Brian Brown argued the case for Plaintiffs; James R. Benjamin, Jr. (Whiteford, Taylor, and Preston) argued on behalf of the Defendant.
You can find the full opinion here.