Ambiguous provisions may blur line between customary capital call and personal liability of LLC members

Ben Bruner Iowa Commercial Litigation Dickinson Law Firm Des Moines, Iowa

Posted on 06/16/2011 at 11:34 AM by Benjamin Bruner

In Racing Investment Fund 2000 v. Clay Ward Agency, Inc., 320 S.W.3d 654 (Ky. 2010), an LLC creditor attempted to force the LLC to call for capital from the members in order to satisfy the creditor's judgment claim for unpaid insurance premiums.  The creditor’s attempt was based on a capital call provision in the LLC operating agreement. The court thoroughly analyzed the specific capital call provision in great detail in determining the members’ liability to the LLC’s judgment creditor, but ultimately refused to order a capital call based on its interpretation of the limited liability provision contained in the Kentucky’s LLC Act. 

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