The Fourteenth Court of Appeals recently issued an opinion in Kennebrew and Elite Protective Services, LLC v. Harris deciding a dispute that arose out of a short lived two member Texas limited liability company. There were a number of claims and issues discussed in the opinion but I’m only going to focus on the issue of liability of the remaining members in the LLC.
Kennebrew initially formed the LLC as a single member. He later brought Harris into the company at which time Harris made an initial capital contribution and the two signed a Management Agreement. The two members, Kennebrew and Harris, were the only two members of Elite Protective Services, LLC. As happens, their relationship deteriorated and Harris decided to leave the company by withdrawing as a member.
While he was a member, Harris loaned significant sums to the company to keep its operations running. After his withdrawal, Harris filed suit against both Elite and Kennebrew seeking payment for the fair value of his membership interest and repayment of the loans he made to the company.
In rendering its decision in favor of Harris, the trial court found Kennebrew and Elite were jointly and severally liable for both Harris’s damages and attorney’s fees.
All parties appealed with Kennebrew arguing that the evidence was insufficient to hold him jointly and severally liable for Harris’s damages and attorney’s fees.
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