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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
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Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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Went into the restaurant business with relatives in Houston,

Resolved Question:

Went into the restaurant business with relatives in Houston, TX. Signed 5 year lease. A year after opening, I gave my shares/interest in the LLC to my relative. As far as I was concerned I was out of the business. 2-1/2 years later the restaurant goes under. Now the leasing company is suing my relative and myself for breaking the lease. I received notice of the lawsuit yesterday.

My question is: I'm a resident of California and the restaurant and lawsuit are in Harris County, TX. Do they have any jurisdiction to come after me? Should I respond to the District Clerk informing them that for the past 3 years I've had nothing to do with the restaurant business?
Submitted: 8 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 8 years ago.
If you have signed a personal guarantee on the lease, then both members would be liable for that personal guarantee. In general, the members of the LLC are not personally liable for the debts of the LLC. Also if you have proof that you transferred your interests in the LLC, absent your having signed any personal guarantees, would be grounds to seek to have you dismissed from the suit. Just because you are in CA, by virtue of your owning a business or being member of an LLC in TX, that submits you to the jurisdiction of the TX courts. However, if you prove you have sold the interests in the LLC and do not have any personal guarantees signed on the lease, you would be able to seek out of the suit by filing a motion to dismiss.
Vermont Law Review VUCM Appendix 2

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