Case brief: case name, the facts, issue as question, holding, rationale

Case: Supreme Court of North Dakota. Boyd ADDY and Tom Hutchens, dba the M.A.H.D. Group, L.L.C., Plaintiffs and Appellants, v. Guy MYERS, Defendant, and Nancy Myers, individually and as part of M.A.H.D., L.L.C., Defendants and Appellees. No. 990387. Aug. 31, 2000 VANDE WALLE, Chief Justice. Boyd Addy and Tom Hutchens appealed from a judgment dismissing their action against Guy and Nancy Myers... I In June 1995, the M.A.H.D. Group was formed...to establish a restaurant in Bismarck named Ed Foo Yungs....Each of the named owners of the M.A.H.D. Group contributed $32,500 and owned 25 percent of the company. Although they were not all formally named in the M.A.H.D. Group organizational papers, the company informally consisted of four families: Guy and Nancy Myers, Boyd and Deb Addy, Tom and Kathy Hutchens, and Lance and Lori Doerr. Ed Foo Yungs opened in February 1996 and in a short time began experiencing financial difficulties. The minutes of a May 15, 1996 meeting for the M.A.H.D. Group state "[i]t was agreed that a $30,000.00 line of credit be set up at BNC National Bank." According to Boyd Addy and Tom Hutchens, they personally signed for what they described as a $15,000 line of credit for Ed Foo Yungs in May 1996 and for another $15,000 line of credit in July 1996. Boyd Addy and Tom Hutchens testified they loaned the $30,000 to the M.A.H.D. Group and it was to repay BNC National Bank with proceeds from the business. In November 1996, Ed Foo Yungs was still experiencing financial difficulties. On November 7, 1996, Boyd Addy, Tom Hutchens, Lance and Lori Doerr, and Guy and Nancy Myers attended a company meeting at the Myers's home. According to Nancy Myers, she was told Ed Foo Yungs needed another $15,000 line of credit, the money would be borrowed by the M.A.H.D. Group, and it would repay the loan....On November 8, 1996, Boyd Addy and Tom Hutchens personally signed for the $15,000 line of credit. Ed Foo Yungs continued to experience financial difficulties, and the minutes of a February 13, 1997 meeting state the owners decided to close the business on February 16, 1997. The minutes of a March 26, 1997 meeting state: "[i]t was agreed that the $45,000.00 due BNC National would be assumed equally by the Addys, Myers, and Hutchens, to be assumed by the 15th of April." Boyd Addy testified Nancy Myers objected at that meeting to paying $15,000. Guy and Nancy Myers subsequently retained an attorney, who wrote a letter to Lori Doerr requesting the minutes of the March 26 meeting be revised to reflect the Myers had not agreedto assume any personal liability for the $15,000. Boyd Addy and Tom Hutchens sued Guy and Nancy Myers. The trial court granted summary judgment for Guy Myers, concluding he was not personally obligated for the $15,000 loan because he was not listed as a capital contributor, an owner, a manager, a governor, or and of the $15,000 loan because there was no written guaranty signed by her. The court decided the $15,000 loan signed for by Boyd Addy and Tom Hutchens in November 1996 was for the M.A.H.D. Group; however, the company's articles of organization specifically stated its members were not liable for its debt, obligation, or liability and Nancy Myers did not intend to assume any personal liability for the $15,000 loan....The M.A.H.D. Group was established as a limited liability company under N.D.C.C. ch. 1032, which was enacted in 1993 N.D Sess. Laws. ch. 92. A limited liability company combines the flowthrough income tax advantages and capital structure of a partnership with the limited liability and governance structure of a corporation....Limited liability companies are taxed like partnerships, but are like corporations in that members have limited liability like corporate shareholders.... A limited liability company is a separate business entity and its owners or members are not exposed to personal liability for the entity's debts unless there are personal guarantees....Owners or members of a limited liability company can participate in management of the company without becoming personally liable for the entity's debt. Although a majority of members and owners of the M.A.H.D. Group could take action on its behalf to render it liable for its debt..., there is a difference between the company itself being liable for its debt and individual owners of the company being personally liable for its debt. Under N.D.C.C. 10-32-29 and the articles of organization of the M.A.H.D. Group, owners and members of the limited liability company generally are not, merely because of that status, personally liable for a judgment, decree or order of a court, or in any other manner for a debt, obligation or liability of the company.... To the extent the additional $15,000 loan constituted debt for the company, the owners or members of the company are not, merely because of that status, personally liable for the company debt under N.D.C.C. 10-32-29 and the company's articles of organization.... The trial court found Nancy Myers did not intend or agree to assume any personal liability for the debt....Although there is some evidence Nancy Myers believed she might be personally liable for one-fourth of the $15,000 loan, her belief was apparently based on her erroneous assumption that owners were personally liable for the debt of a limited liability company. Nancy Myers'ecord, we are not left with a definite and firm conviction the trial court made a mistake in finding Nancy Myers did not intend or agree to assume any personal liability for the loan. We therefore conclude the trial court's finding is not clearly erroneous under N.D.R.Civ.P. 52(a). We affirm the judgment.