Hodge v. Strong Built International, LLC

Citations: 159 So. 3d 1159; 14 La.App. 3 Cir. 1086; 2015 La. App. LEXIS 418; 2015 WL 898533Docket: No. 14-1086

Court: Louisiana Court of Appeal; March 3, 2015; Louisiana; State Appellate Court

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Plaintiffs Donald C. Hodge, Jr. and Rachel Hodge allege that their father, Donald C. Hodge, Sr., died from injuries sustained when the straps on his ladder-style deer stand failed, causing the stand to fall. They filed a lawsuit against multiple parties, including Strong Built International, L.L.C. and Ken Killen, the sole member/manager of the LLC, seeking damages under the Louisiana Products Liability Act. Ken Killen moved for summary judgment, arguing that the deer stand was not manufactured by his LLC and that he could not be held personally liable. The trial court granted his motion, dismissing the claims against him, which the plaintiffs appealed, claiming he was personally liable as a manufacturer.

The court ruled on the summary judgment motion, which is guided by La.Code Civ. P. art. 966, aimed at securing just and efficient resolutions. Summary judgment is appropriate when the evidence demonstrates no genuine issue of material fact and the movant is entitled to judgment as a matter of law. The burden initially lies with the movant, but if the movant does not bear the burden of proof at trial, they need only show a lack of factual support for the opposing party's claims. The appellate court conducts a de novo review, applying the same standards to determine if summary judgment is warranted. The trial court's decision to grant summary judgment in favor of Ken Killen was upheld.

Mr. Killen's potential personal liability for damages from a defective deer stand manufactured by Strong Built International hinges on the argument that he, as a member/manager of the Louisiana limited liability company, is protected from individual liability under La.R.S. 12:1320. The plaintiffs contend that Strong Built International is Mr. Killen's "alter ego" and cite exceptions to liability in La.R.S. 12:1320(D), advocating for "piercing the corporate veil" to hold him personally liable. Louisiana law generally treats limited liability companies as separate entities from their members, protecting members from liability unless exceptional circumstances exist, such as fraud or failure to operate on a corporate footing. Factors for determining if a company is an alter ego include commingling of funds, failure to adhere to corporate formalities, and undercapitalization. The plaintiffs allege Mr. Killen failed to demonstrate compliance with these formalities, citing discrepancies between his affidavit and bankruptcy filings. Nevertheless, the burden of proof lies with the plaintiffs to show that the corporate entity should be disregarded, not with Mr. Killen to prove adherence to formalities.

The record indicates no significant discrepancies between Mr. Killen's affidavit and Strong Built International's bankruptcy filings. The plaintiffs incorrectly conflated Strong Built, Inc., a corporation with multiple shareholders including Mr. Killen, with Strong Built International, L.L.C., a limited liability company solely owned and managed by Mr. Killen, which acquired the assets of Strong Built, Inc. after its 2008 bankruptcy. Consequently, the request to pierce the corporate veil is unsupported. 

Regarding La.R.S. 12:1320, which governs the liability of LLC members and managers, the statute states that their liability is strictly defined by its provisions, protecting them from personal liability for the LLC's debts and obligations. However, there are exceptions, including personal liability for fraud or breaches of professional duty. The supreme court's ruling in Ogea clarified the "professional duty" exception but did not conclude whether a contractor's license conferred "professional" status, as no evidence was presented to show that the individual involved was part of a recognized profession. Mr. Killen's affidavit explicitly states he is not an engineer or licensed professional in any field. He participated in creating the deer stand sold by both Strong Built entities but did not directly control its design or material choices. The plaintiffs failed to provide evidence contradicting Mr. Killen's claims.

Mr. Killen is not personally liable under the “breach of professional duty” exception to La.R.S. 12:1320(D), nor is there sufficient evidence for liability under the “other negligent or wrongful act” exception. The court references the Ogea decision, which outlines four factors to determine the applicability of the latter exception: (1) whether the member's conduct can be classified as a recognized tort; (2) whether it can be classified as a crime for which an individual could be held accountable; (3) whether the conduct was related to a contract with the LLC; and (4) whether the conduct occurred outside the member's capacity. In this case, the criminal conduct and contract factors are not relevant. 

The tort factor requires the existence of a duty of care from the member to the plaintiff, which is a legal question. The Ogea court noted that this duty must exceed contractual obligations to avoid undermining the limited liability rule. The factor regarding actions outside a member's capacity relates to acts that are either outside official roles or that violate personal duties to the injured party. 

While Mr. Killen bears the initial burden of proof for summary judgment, the plaintiffs will ultimately bear the burden of proof at trial. He submitted an affidavit affirming his role as a member and manager of Strong Built International, the company implicated in the case, and provided evidence of its limited liability status. His affidavit asserts that the claims against him are attributable to the LLC, and he questions the absence of specific allegations of his individual negligence. Mr. Killen also clarified that, although he contributed ideas for the deer stands' design, he was not involved in their manufacturing processes, which were managed by other employees and an overseas contractor.

Plaintiffs failed to counter Mr. Killen's affidavit with sufficient evidence to meet their burden of proof at trial regarding negligence in the manufacturing and design of deer stands. Mr. Killen affirmed he was not personally responsible for these tasks while affiliated with Strong Built International or its predecessor, Strong Built, Inc., asserting his involvement was solely in his capacity as a member and manager. The plaintiffs did not provide evidence indicating that Mr. Killen's actions exceeded his duties as a member/manager or that he undertook additional responsibilities to the plaintiffs. Consequently, the limitations of liability under La.R.S. 12:1320 were deemed applicable to Mr. Killen. The trial court's decision granting Mr. Killen's motion for summary judgment was affirmed, with costs assigned to the plaintiffs, Donald C. Hodge, Jr. and Rachel Hodge. The litigation involves several entities, including Strong Built International, LLC, Ken Killen, and others. Strong Built, Inc. went bankrupt in 2003, leading to asset transfer to Strong Built International, which also filed for bankruptcy in 2009. TN International purchased the 'StrongBuilt' tradename following the bankruptcy. Liberty Surplus Insurance Corporation was previously involved but dismissed from the suit. The plaintiffs also claimed that BlueGrass Outdoor is a successor to Strong Built International. Lastly, the court did not address the plaintiffs' arguments regarding the alleged defective deer stand's manufacturer, as Mr. Killen's entitlement to summary judgment was established on liability grounds.