Legal Question in Business Law in California

Re: LLC partnership

I'm confused about your question -- are you asking if the Bank can get a judgment against the LLC in Illinois and enforce it against LLC assets in California? The answer depends on whether the LLC did sufficient business in Illinois, along with other factors. You're going to have to provide more information to get an answer to your question.

Re: LLC partnership

First, LLCs don't have partners (they have members) and they aren't partnerships. This is an important distinction, and while you probably understand this, careless use of the terminology could cause confusion.

Second, debtors often negotiate with their creditors to settle obligations for a lesser amount. In some states, a distinction is made as to whether there is a bona fide dispute over the amount owed, or whether the settlement for a lesser amount is purely because the creditor would rather accept something than nothing. The distinction usually goes to the issue of whether there is a consideration given or not; if there is no real dispute as to what is owed, the settlement for a lesser amount may not be enforceable in court if the creditor changes its mind. The facts you give shed no light on this possible issue.

Third, you don't say whether the negotiations with the bank resulted in a settlement agreement, a novation, or a judgment (possibly a stipulated judgment). Or perhaps there was no agreement at all. This is pretty important to giving you a useful answer.

A sister-state judgment is simply a judgment in, say, California issued here to give effect to the demonstrated fact that the plaintiff to a lawsuit in another state, say, Illinois, has an Illinois judgment that California is willing to enforce due to the U.S. Constitution's requirement that states respect the actions of each other's courts based on the laws of the other state - the so-called "comity" principle.

If the bank got a judgment in IL, CA will enforce it for the amount awarded by the IL court, and no more.

If any of these general principles I'm reciting seem to fly in the face of what's happening to this LLC, then by all means contact me for some further free discussion of what's happening....either I don't understand the facts, or some facts are missing, or someone's getting deprived of their reights through bad advice, or no advice.

Re: LLC partnership

I should add that a judgment in Illinois should preclude the bank from filing a new action in California, Illinois or anywhere to try for a bigger judgment from the same set of facts or on the same debt. This is the principle of res judicata.