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Is It Time To Change The Name of LLCs?

Professor Joshua Fershee has been fighting the good fight on limited liability company nomenclature, but I fear that he is losing.  For example, the following appeared in a recent U.S. Magistrate's ruling denying a plaintiff's application to serve a defendant LLC by serving the California Secretary of State:

"While Plaintiff cites to California Corporations Code Section 1701, Section 1701 only applies to domestic corporations, and therefore, is inapplicable. Defendant Nove Plaza was organized in Delaware and registered in California as a foreign LLC.  Section 17701.16 of the California Code of Corporations applies to limited liability corporations ("LLCs").  Section 17701.16(c) requires that the agent for an LLC be unable to be served with reasonable diligence before service may be made upon the LLC by serving the Secretary of State. The Court looks to Section 415.50 of the California Code of Civil Procedure for guidance on reasonable diligence." (footnote omitted)

Hopson v. Nove Plaza, LLC, 2018 U.S. Dist. LEXIS 86041.  As an initial matter, Section 1701 applies to "corporations" as defined in Section 162, not "domestic corporations" as defined in Section 167.  See A Field Guide To Corporations And Domestic Corporations.  Second, it is the California Corporations Code, not the California Code of Corporations.  Third, California does not provide for entities denominated as "limited liability corporations". 

Although Professor Fershee has recently created a helpful checklist for the courts and attorneys writing about LLCs, it may be time to give up the fight and bestow an entirely new name on LLCs that is less likely to be confused with corporations.

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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
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