2011-2012 Bill 5150: Liability of Members and Managers of Limited Liability Companies

1 South Carolina General Assembly 2 119th Session, 2011-2012 3 4 H. 5150 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Reps. Harrell, Harrison, Sandifer, Lucas, Hardwick, Howard, Clemmons, Ott, Crawford, 10 Bingham, Owens, White and Funderburk 11 Document Path: l:\council\bills\dka\4064sd12.docx 12 13 Introduced in the House on April 19, 2012 14 Introduced in the Senate on May 1, 2012 15 Currently residing in the Senate 16 17 Summary: Liability of members and managers of Limited Liability Companies 18 19 20 HISTORY OF LEGISLATIVE ACTIONS 21 22 Date Body Action Description with journal page number 23 4/19/2012 House Introduced, read first time, placed on calendar without reference (House 24 Journalpage 34) 25 4/26/2012 House Member(s) request name added as sponsor: Funderburk 26 4/26/2012 House Read second time ( House Journalpage 117) 27 4/26/2012 House Roll call Yeas96 Nays0 ( House Journalpage 117) 28 4/26/2012 House Unanimous consent for third reading on next legislative day (House 29 Journalpage 118) 30 4/27/2012 House Read third time and returned to Senate with amendments ( House Journalpage 3) 31 5/1/2012 Senate Introduced and read first time ( Senate Journalpage 14) 32 5/1/2012 Senate Referred to Committee on Judiciary ( Senate Journalpage 14) 33 5/4/2012 Senate Referred to Subcommittee: Campsen (ch), Hutto, Malloy, Campbell, Massey 34 6/5/2012 Senate Recalled from Committee on Judiciary ( Senate Journalpage 8) 35 6/6/2012 Senate Read second time ( Senate Journalpage 120) 36 37 38 VERSIONS OF THIS BILL 39 40 4/19/2012 41 4/19/2012-A 42 1 INTRODUCED 2 April 19, 2012 3 4 H. 5150 5 6 Introduced by Reps. Harrell, Harrison, Sandifer, Lucas, Hardwick, 7 Howard, Clemmons, Ott, Crawford, Bingham, Owens and White 8 9 S. Printed 4/19/12--H. 10 Read the first time April 19, 2012. 11 12

[5150-2] 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO REENACT SECTION 3344303, CODE OF LAWS OF 12 SOUTH CAROLINA, 1976, RELATING TO THE LIABILITY 13 OF MEMBERS AND MANAGERS OF LIMITED LIABILITY 14 COMPANIES, AND TO EXPRESS THAT IT IS THE CLEAR 15 AND UNAMBIGUOUS INTENT OF THE GENERAL 16 ASSEMBLY TO SHIELD A MEMBER OF A LIMITED 17 LIABILITY COMPANY FROM PERSONAL LIABILITY FOR 18 ACTIONS TAKEN IN THE ORDINARY COURSE OF THE 19 LIMITED LIABILITY COMPANY’S BUSINESS. 20 21 Whereas, the South Carolina Supreme Court recently issued the 22 opinion in the case of 16 Jade Street v. R. Design Construction 23 Co., LLC, et al., where the Court held that the General Assembly 24 did not intend the Limited Liability Company Act to shield a 25 member of a limited liability company from liability for his own 26 torts; and 27 28 Whereas, the Court provided in its majority opinion that “while we 29 agree the language of the LLC Act appears to insulate a member 30 from personal liability, we hold that such a sweeping liability 31 shield was not intended by the General Assembly”; and 32 33 Whereas, the Court further provided in its majority opinion that 34 “the right to sue one’s tortfeasor is a longstanding right in our legal 35 system, and we will only find it abrogated by statute through ‘clear 36 legislative intent’”; and 37 38 Whereas, the Court provided in its majority opinion that “we are 39 not persuaded that (limiting personal liability) was the intent of the 40 General Assembly”; and 41

[5150] 3 1 Whereas, the Court stated in its majority opinion that they 2 “conclude that Section 3344303(a) only protects nontortfeasor 3 members from vicarious liability and does not insulate the 4 tortfeasor himself from personal liability for his actions.” Now, 5 therefore, 6 7 Be it enacted by the General Assembly of the State of South 8 Carolina: 9 10 SECTION 1. The General Assembly, by this act, reenacts Section 11 3344303, Code of Laws of South Carolina, 1976, as of the 12 effective date of this act that was interpreted in the 16 Jade Street 13 opinion of the South Carolina Supreme Court so that the clear and 14 unambiguous intent of the General Assembly of the State of South 15 Carolina as expressed in the language of that section is that the 16 limited liability act was intended by the General Assembly to 17 shield a member of an LLC from personal liability for actions 18 taken in the ordinary course of business of the LLC. 19 20 SECTION 2. This act takes effect upon approval by the 21 Governor. 22 XX 23

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