A February 27, 2013 Iowa Court of Appeals opinion serves as yet another real-world example of how and why taking the time to set up a formal entity – in this case an Iowa LLC – can benefit and provide protection to the LLC’s owners (whether members or managers). In the February 2013 opinion, the Iowa appellate court upheld a district court’s order that refused to allow a third-party (the plaintiff) to pierce the veil of an LLC in an effort to hold the LLC’s 2 members (50/ 50 owners) personally liable on several claims, including breach of contract and unjust enrichment claims. Citing to Cemen Tech, Inc. v. Three D Indus., L.L.C., 753 N.W.2d 1, 6 (Iowa 2008), the Iowa Court of Appeals found summary judgment in favor of the LLC’s owners was proper. Specifically, the appellate court found that despite allegations that the LLC’s tax returns show improper distributions and despite the LLC selling its assets after an administrative dissolution, the LLC’s owners were entitled to limited liability and the protections afforded under the Iowa Limited Liability Company Act.
For more information and to learn how you can seek protection as a business owner, consider contacting a licensed attorney in your jurisdiction.
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