Norman Costello and Joseph Ruggiero were members of Silk, LLC, the owner of Silk Stockings and Cafe Del Mar, which was a bar and adult entertainment nightclub in Groton, Connecticut. Anthony Sulls was drinking heavily one night at Silk Stockings and, although he was obviously drunk, employees at Silk Stockings continued to serve him. Giordano (another member of the LLC) and Costello were working there that night. They both greeted customers (who numbered in the hundreds), supervised employees and performed “other PR work.” When Sulls left the nightclub at 1:45 a.m. with two friends, he drove off the highway at high speed, killing himself and one of his passengers, William Ridgaway. 

Ridgaway’s estate sued Costello and Giordano personally. The defendants filed a motion for summary judgment seeking dismissal of the complaint.

You Be the Judge: Are Costello and Giordano personally liable to Ridgaway’s estate?

Holding:  Costello and Giordano’s motion for summary judgment was denied. The claims against Giordano and Costello on not based on their ownership of the limited liability company. Instead, plaintiff alleges that these two defendants were personally negligent on the night that Ridgaway died. Giordano and Costello were both present, supervising other employees. Therefore, this case cannot be resolved on a motion for summary judgment.

Questions:

1. Are members of an LLC personally liable for the debts of the business.

2. Isn’t it obvious, then, that the court should grant the motion for summary judgment?

3. Isn’t the whole point of an LLC to protect personal assets from business liabilities? Why would the court deny the motion for summary judgment?

4. Were the two defendants negligent that night?

5. What could the defendants have done to protect themselves against suit?

6. Is their status as LLC members useless?