On Labor Day in 1999, an explosion caused by stray propane gas destroyed the home of Jerry Usovsky, killing seven people and seriously injuring several others. The survivors and the estates of the deceased filed a lawsuit based on several tort theories. Among those named in the complaint were Double Circle and Farmers Cooperative Association of Keota (Keota).
Double Circle, which delivered the propane prior to the accident, was a limited liability company, and Keota was its 95% owner. Keota's executive board also served as Double Circle's executive board. An agreement between Double Circle and Keota stated that Keota was responsible for Double Circle's "human resource and management safety" activities.
The complaint alleged that Keota was personally liable for the accident. Keota moved for summary judgment, arguing that the structure of Double Circle as an LLC protected Keota from personal liability as long as Keota operated within its prescribed duties as a limited liability manager of Double Circle.
Under what circumstances is a member or manager of an LLC personally liable? Will the court find Keota liable? If Keota were owned in part by Company X, also an LLC, could Company X be found liable? Under what circumstances would the members of the Keota executive board who also sat on the Double Circle executive board be personally liable to the members of Double Circle? To third parties injured by the tortious conduct of Double Circle?