Legal Question in Civil Litigation in California

To start, it is sometime difficult to ascertain whether a company is an LLC, or Limited Liability Company. The reason is simply that we don't always know what state in which the company was orgainized. For example, a California company could have been created under the laws of the state of California, Nevada, or even Delaware. You would have to check the state records for each state to find out for yourself which state. However, in litigation there is a "discovery" process which takes place. That is where information is sought, and theoretically, provided by both sides in the case. During that process no doubt your attorney will seek out the answer to that question directly from the plaintiff. If it is determined they are not an LLC, then your attorney will likely take appropriate action which might even include efforts to have the case dismissed.

Offhand, I don't know the answer. But before you make it an issue, why don't you propound document requests for the LLC agreement and anything else that might be relevant. Of course, if plaintiff objects, you might have to justify your request when you bring a motion to compel. It might not be a California LLC.

You are correct that, if an LLC is to sue, it must, in fact be an LLC. The question is one of "standing," i.e. does the entity have the capacity (right) to appear in court. If you cannot find the entity, in California, be sure to check other states. Most states have websites, where you can search for an LLC. Note that, if the LLC exists, but is not in good standing, it cannot sue.

If you are sure that the LLC does not exist, then you can file a Demurrer to the Complaint. In essence, a Demurrer (of this type) requests that the court finds that, even if all the allegations are true, the Plaintiff cannot file the action because of its lack of capacity to sue. Presumably, the Plaintiff will either oppose your Demurrer by indicating that it is a viable LLC or it will change or dismiss the action, altogether.

As to whether it is "illegal (fraudulent)" to file a complaint on behalf of a non-existent LLC, my experience is that your remedy lies, most readily, through the process of demurring to the complaint or filing other motions, at the outset of the case. Certainly, it is illegal to file false documents with the court, but I have never seen a criminal prosecution arise out of an action by an LLC that does not have appropriate standing.

The same issue arises for the plaintiff's attorney. If the attorney, in fact, knew that the LLC lacked standing but filed the action, anyway, you can file a motion for monetary sanctions against the Plaintiff and the Plaintiff's counsel. There are a few statutes that allow for sanctions.

Note that, if you file a Demurrer to the complaint and the Demurrer is sustained without leave to amend, then you have won. If your case is the type in which attorney's fees are recoverable, then you can ask for them. In any event, you would be able to a judgment for your costs, such as filing fees.

The plaintiff is required to allege standing, that would include alleging that the plaintiff is an "LLC organized and existing under the laws of the state of . . . ." or words to that effect. The other attorneys are right that there are no fraud or criminal penalties for failing to properly allege standing. Your remedies lie in filing a demurrer if standing is not properly alleged, or if the plaintiff is not, actually, an LLC.

A LLC not registered or current with the state of California cannot bring suit. Contact me directly.