Law School Case Brief
New Horizons Supply Coop. v. Haack - 224 Wis. 2d 644, 590 N.W.2d 282 (Ct. App. 1999)
Although it appears that filing articles of dissolution is optional, Wis. Stat. § 183.0906, the order for distributing a limited liability company's assets following dissolution is fixed by statute, and the company's creditors enjoy first priority. Wis. Stat. § 183.0905. A dissolved limited liability company may dispose of known claims against it by filing articles of dissolution, and then providing written notice to its known creditors containing information regarding the filing of claims. Wis. Stat. § 183.0907.
Defendant Allison Haack and her brother, George, properly formed a limited liability company (LLC), Kickapoo Valley Freight, under Wis. Stat. § 183.0201. Subsequently, Allison signed an application for a gasoline credit card issued to Kickapoo by plaintiff New Horizons Supply Cooperative. New Horizons contacted Kickapoo when its account was past due, and Allison said she would start making payments. When New Horizons inquired again when no payment was received, Allison informed it that the LLC had been dissolved. Plaintiff New Horizons sued on the debt, and judgment was entered against defendant Allison Haack personally, with the small claims judgment of the Grant County Circuit Court (Wisconsin) entering judgment in favor of plaintiff New Horizons in its action to recover past-due amounts on a gasoline credit card issued to defendant's LLC, after rejecting her defense that Allison could not be held personally liable under Wis. Stat. § 183.0304.
Did the trial court err when it held a businesswoman personally liable for the debt of the now dissolved LLC?
The appellate court rejected Allison Haack's defense that she could not be held personally liable, pursuant to Wis. Stat. § 183.0304. The court held that judgment for plaintiff New Horizons was proper, even though treating the LLC as a partnership was error. When the LLC dissolved, defendant failed to take the appropriate steps that were required by Wis. Stat. § 183.0905 et seq. to shield herself from any personal liability for the LLC's debts. Also, New Horizon's claim did not appear to exceed the value of any liquidation distribution defendant might have received from dissolution of the LLC.
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