R&J Construction v. Javaras, 2011 WL 10069461, an unpublished and dated opinion, still holds practical value for its discussion of the judicial notice rule, breach of contract pleading requirements and a limited liability company member’s insulation from liability for corporate debts.
The plaintiff sold about $70K worth of construction materials to a concrete company associated with the individual defendant. The concrete company’s legal name was WS Concrete, LLC, an Illinois limited liability company doing business under the assumed name, West Suburban Concrete. Defendant was a member of the LLC and point-person who ordered supplies from the plaintiff.
The plaintiff sued the individual and did not name the LLC as a party defendant.
The trial court dismissed the complaint because the plaintiff failed to attach the written contract and there was no evidence the defendant assumed personal responsibility for the contract obligations. The plaintiff appealed.
Result: Affirmed.
Reasons:
The Court first found the trial court correctly dismissed plaintiff’s suit for failure to attach the operative contract.
Code Section 2-606 requires a plaintiff to attach a written instrument (like a contract) to its pleading where the pleading is based on that instrument. The exception is where the pleader can’t locate the instrument in which case it must file an affidavit stating the instrument is inaccessible.
Here, the plaintiff alleged a written contract but only attached a summary of various purchase orders and invoices to the complaint. Since it failed to attach the contract, the appeals court found the complaint deficient and falling short of Section 2-606’s attached-instrument requirement.
The court next addressed whether the LLC File Detail Report (see above image), culled from the Illinois Secretary of State “cyberdrive” site was admissible on Defendant’s motion to dismiss. In ruling the Report was admissible, the Court cited to case precedent finding that Secretary of State records are public records subject to judicial notice. (Judicial notice applies to facts that are readily verifiable and not subject to reasonable dispute.)
Since the LLC Report plainly demonstrated the proper defendant was the LLC (as opposed to its member), and there was no evidence the individual defendant took on personal liability for plaintiff’s invoices, the trial court correctly dismissed the defendant.
Added support for the defendant’s dismissal came via the Illinois Limited Liability Company Act, 805 ILCS 180/1 et seq. Section 10-10 of the LLC Act provides that an LLC’s contractual obligations belong solely to the LLC and that a member cannot be personally responsible for LLC contracts unless (1) the articles of organization provide for personal liability and (2) the member consents in writing.
The Court next addressed plaintiff’s agent of a disclosed principal argument. The plaintiff asserted that since the individual defendant is the person who ordered plaintiff’s construction materials and it was unclear who the defendant represented, the defendant was responsible for plaintiff’s unpaid invoices.
The court rejected this argument. It noted that under Illinois law, where an agent signs a contract by signing his own name and providing his own personal contact information (address, phone number, SS #, etc.) and fails to note his corporate affiliation, he (the agent) can be personally liable on a contract. In this case, however, there was no documentation showing defendant ordering supplies in his own name. All invoices attached to the plaintiff’s response brief (to the motion to dismiss) reflected the LLC’s assumed name – “West Suburban Concrete” – as the purchasing entity.
Afterwords:
(1) the case provides a useful analysis of common evidentiary issues that crop up in commercial litigation where a corporate agent enters into an agreement and the corporation is later dissolved;
(2) Both the LLC Act and agency law can insulate an individual LLC member from personal liability for corporate debts;
(3) Secretary of State corporate filings are public records subject to judicial notice. This is good news for trial practitioners since it alleviates the logistical headache of having a Secretary of State agent give live or affidavit testimony on corporate records at trial.