Hypo 2

Instead of going into partnership, Debbie and Ian properly file all the necessary forms and documents with the Secretary of State to form Eagle Painting Services, LLC. To raise the money to start their new business, Debbie sells her truck for its full value of $3,000. Unfortunately, Ian is only able to get $27,000 out of his coin collection.

So, together their assets are worth $30,000:$3,000 from Debbie (or 10% of the startup funds) and $27,000 from Ian (90% of the startup funds). When they then sign an operating agreement, Debbie agrees to be liable for 10% of the company's expenses and acknowledges she's entitled to only 10% of the company profits. Ian, likewise, is liable for 90% of the expenses and will appreciate 90% of the profits.

Now when Debbie spills the paint on June's rug, June files a lawsuit naming Eagle Painting Services, LLC, Debbie, and Ian as defendants.

Q: What result?

[Hint: Do I need to mention the chart again?]

	1.	The suit should be dismissed against Debbie and Ian because they are not liable for June's damages.
	2.	Eagle Painting Service, LLC's shareholders must pay for June's damages
	3.	Debbie and Ian are jointly and severally liable for June's damages
	4.	The suit should be dismissed against Eagle Painting Services, LLC because Debbie and Ian are liable for June's damages