TREATING LIMITED LIABILITY COMPANIES AS CORPORATIONS

As Michigan law provides some effective remedies and developed common law to govern disputes involving corporations, it is often desirable to apply corporate law principles to limited liability companies. I’ve never seen any reason to treat the entities differently in regard to civil claims and would argue in virtually all respects that the well-developed corporate common law ought to be applied to LLCs

Michigan courts continue to inch closer to this reality. Just this week, the Michigan Court of Appeals released a decision indicating that the doctrines of “De Facto Corporation” and “Corporation by Estoppel” both apply to LLCs. This case, Duray Development, LLC v Perrin, (docket # 287722 released 04/13/10), is yet another step in the direction of common treatment of both types of entities. The decision provides plenty of good language to use when arguing for common treatment including comments regarding the common goal of both structures as limiting liability.