Yes, you can sue an LLC. A limited liability company is its own legal person under state law, which means it can be named as a defendant, served with a lawsuit, and held responsible for its own contracts, torts, and statutory violations. The complication is not whether the LLC can be sued but what you can actually recover: any judgment normally comes out of the LLC’s assets, not the personal savings of its owners. Getting past that wall is possible in specific circumstances, and even when you cannot get past it, there are ways to structure the case so a win is worth something.
What Suing an LLC Actually Means
An LLC’s defining feature is the liability wall between the company and its members. If you win a judgment against the LLC, you can go after the LLC’s bank accounts, equipment, inventory, and other business assets. You generally cannot touch the members’ personal homes, cars, or savings. State laws create this protection to encourage business formation by limiting the downside risk of ownership.
That wall is not absolute. Members remain personally liable for their own wrongdoing. If the owner personally committed fraud against you, personally guaranteed a loan you relied on, or personally drove the truck that hit your car, the LLC structure does not shield them from those individual acts. The operating agreement may also create situations where members accept additional responsibility beyond what state default rules provide.
Because of the wall, the first practical decision is who to name as a defendant. In most cases it is the LLC by its exact registered name, sometimes the LLC plus one or more individuals whose personal conduct is part of the claim, and occasionally the members themselves under a veil-piercing theory.
When You Can Reach the Members Personally
When an LLC is really just a shell for its owner’s personal finances, courts can disregard the liability wall entirely and hold the members personally responsible for the company’s debts. This is called piercing the corporate veil, and it is the most powerful tool available to a plaintiff suing an underfunded LLC.
Courts look at several factors:
- Commingling of funds, meaning the member used the LLC’s bank account for personal expenses or vice versa, blurring the line between personal and business money.
- Undercapitalization, where the LLC was never given enough money to realistically cover its foreseeable obligations, suggesting it was set up purely to absorb liability.
- Lack of separateness, meaning the LLC never held meetings, kept records, or maintained the basic operational formalities that distinguish a real business from a paper entity.
- Fraud or injustice, where respecting the LLC’s separate existence would effectively reward dishonest conduct or produce a fundamentally unfair result.
No single factor is enough on its own. Courts typically require a showing that the LLC was an alter ego of its owner and that treating it as a separate entity would sanction fraud or cause serious injustice. Courts apply slightly less emphasis on internal formalities for LLCs than for corporations because LLCs are not legally required to observe as many formalities in the first place. The focus shifts more toward whether the finances were genuinely kept separate.
Send a Demand Letter First
Before filing anything, send the LLC a written demand letter. It should describe what the LLC did wrong, state a specific dollar amount or action you want, and set a deadline of roughly 14 to 30 days to respond before you file. Send it by certified mail so you have proof of receipt.
A demand letter sometimes resolves the dispute without the cost of litigation, and it shows a court later that you tried to resolve the matter in good faith. Many contracts actually require written notice of a dispute before either side can file, so skipping the letter could get your case dismissed on a technicality.
Check the Contract for an Arbitration Clause
Read any contract you signed with the LLC before you invest time preparing a lawsuit. Many business agreements include an arbitration clause requiring both sides to resolve disputes through a private arbitrator instead of a judge or jury. Under the Federal Arbitration Act, these clauses are enforceable as long as the underlying contract is valid.1Office of the Law Revision Counsel. 9 USC 2 – Validity, Irrevocability, and Enforcement of Agreements to Arbitrate If the LLC moves to compel arbitration and the court agrees, your lawsuit gets dismissed or stayed while the arbitration plays out.
Arbitration is different from court rather than automatically worse. You typically give up the right to a jury, the discovery process is more limited, and appeal options are narrow, but it is usually faster and less expensive. The clause only covers disputes the parties actually agreed to arbitrate, so read the scope carefully. A party that ignores the clause and litigates for months can sometimes be found to have waived its right to demand arbitration later.
Common Grounds and Filing Deadlines
The legal basis for your claim shapes everything that follows, and each type of claim has its own filing deadline. Miss the deadline and the court will dismiss the case regardless of how strong it is.
Breach of Contract
A breach of contract claim arises when the LLC fails to do what a binding agreement required: not paying for delivered goods, abandoning a service agreement midway through, or violating lease terms. You need to show a valid contract existed, you held up your end, the LLC did not, and you suffered financial harm. Contract claims typically must be filed within three to six years of the breach, depending on the state.
Tort Claims
Tort claims cover harm caused by the LLC’s wrongful conduct rather than a broken agreement. Negligence is the most common example: a customer slips on an unmarked wet floor in the LLC’s store, or an employee causes a car accident while making deliveries. Defamation, fraud, and intentional interference with business relationships also apply to LLCs. Negligence and personal injury deadlines usually run one to three years from the date of injury. Fraud claims often carry a three-to-six-year window, but many states start the clock when you discovered or should have discovered the fraud rather than when it occurred. This discovery rule applies more broadly wherever the harm was hidden or could not reasonably have been detected, and fraudulent concealment by the defendant can pause the clock further.
Employment Disputes
If you worked for the LLC, your claim might involve unpaid wages, wrongful termination, or workplace discrimination. The Fair Labor Standards Act covers minimum wage and overtime violations for most private-sector employees, and federal anti-discrimination laws prohibit termination or harassment based on race, sex, religion, disability, and other protected characteristics.
For discrimination claims, you generally cannot go straight to court. You must first file a charge with the Equal Employment Opportunity Commission within 180 days of the discriminatory act, or 300 days if your state has its own anti-discrimination enforcement agency.2U.S. Equal Employment Opportunity Commission. Time Limits For Filing A Charge The EEOC investigates and either resolves the charge or issues a right-to-sue letter allowing you to proceed in court.
Wage-and-hour claims under the FLSA carry an advantage for workers: if you win, the court must order the LLC to pay your attorney’s fees and court costs on top of any unpaid wages.3Office of the Law Revision Counsel. 29 USC 216 – Penalties That fee-shifting provision makes it easier to find a lawyer willing to take a wage case on contingency.
Where to File
Picking the wrong court can get your case dismissed before anyone looks at the facts. You need subject matter jurisdiction (the court’s authority to hear your type of case) and personal jurisdiction (the court’s authority over the LLC).
State Court
Most lawsuits against LLCs land in state court. You can generally file where the LLC has its principal place of business, where it is registered to do business, or where the events giving rise to your claim occurred. State courts of general jurisdiction can hear nearly any type of civil case without a minimum dollar amount.
For smaller disputes, small claims court is faster, cheaper, and does not require a lawyer. You can sue an LLC in small claims court, but you must name the LLC as the defendant rather than any individual member. Dollar limits vary widely, from as low as $2,500 to as high as $25,000, with most states capping claims around $10,000. If your damages exceed the limit, you either file in regular civil court or accept the small claims cap.
Federal Court and the LLC Citizenship Wrinkle
Federal court is an option when your claim involves a federal statute like the FLSA or federal anti-discrimination laws, or when the dispute meets the requirements for diversity jurisdiction. Diversity requires the amount in controversy to exceed $75,000 and complete diversity of citizenship between the parties.4Office of the Law Revision Counsel. 28 USC 1332 – Diversity of Citizenship; Amount in Controversy; Costs
LLCs create a complication here. Unlike corporations, which are citizens of their state of incorporation and principal place of business, an LLC takes on the citizenship of every single one of its members. The Supreme Court established this rule for unincorporated entities, holding that a federal court must look at the citizenship of all members to determine whether complete diversity exists.5Justia U.S. Supreme Court Center. Carden v. Arkoma Assocs., 494 U.S. 185 If even one member shares a state of citizenship with you, diversity fails. And if another LLC is a member, you have to trace through that entity’s members too. This can make it surprisingly difficult to get an LLC case into federal court on diversity grounds alone.
Naming and Serving the LLC
Filing begins with drafting a complaint that tells the court who you are, who you are suing, what happened, why the LLC is legally responsible, and what relief you want. The complaint must name the LLC by its exact legal name as registered with the state. Getting this wrong creates problems, so check the LLC’s filing with the secretary of state before you draft. Initial filing fees for a civil complaint in state court generally range from about $40 to over $400, depending on the court and the amount in dispute.
Once you file, the court issues a summons, the official notice to the LLC that it has been sued. In federal court, the LLC then has 21 days to respond after being served.6United States Courts. Federal Rules of Civil Procedure State court deadlines typically fall in a similar range. If the LLC does not respond in time, you can ask the court for a default judgment.
A lawsuit does not officially begin until the LLC receives proper service of the summons and complaint. Botching service is one of the most common ways plaintiffs lose time and money early. Under the Federal Rules of Civil Procedure, you can serve an LLC by delivering copies to an officer, a managing or general agent, or any other agent authorized to accept service.7Legal Information Institute. Federal Rules of Civil Procedure Rule 4 – Summons In practice, that usually means serving the LLC’s registered agent, the person or company the LLC designated to receive legal papers when it filed its formation documents. You can find the registered agent by searching the business entity database on the secretary of state’s website in the state where the LLC is registered.
If the registered agent cannot be located or the LLC has let its registration lapse, most states allow substitute service through the secretary of state’s office. The general process involves filing the summons addressed to the LLC in care of the secretary of state, along with proof that you attempted normal service first. Some jurisdictions also permit service by certified mail or through a professional process server, which typically costs $45 to $95. You will need to file a proof of service document confirming that service was completed according to the rules.
Collecting a Judgment
Winning and collecting are two different problems. An LLC with real assets may pay voluntarily or have property you can levy against through post-judgment enforcement. Many small LLCs have limited cash, and the members have no personal obligation to cover the shortfall unless you successfully pierced the veil.
If you are trying to reach a member’s ownership interest in the LLC rather than the LLC’s own assets, most states limit you to a charging order. A charging order works like a lien on the member’s share of distributions. You receive whatever the LLC would have paid that member, but you do not gain voting rights, management authority, or direct access to the LLC’s property. The LLC can simply choose not to make distributions, leaving you with a technically valid order and no cash flow behind it. A majority of states treat the charging order as the exclusive remedy for reaching a member’s interest, meaning you cannot force a sale of the membership interest or seize LLC property directly.
This is where pre-suit due diligence pays off. Investigate whether the LLC has real assets, insurance coverage, or other resources that could satisfy a judgment before you file. Suing an empty shell wastes time and money even if you win on every legal point.
Suing a Dissolved or Inactive LLC
Dissolving an LLC does not automatically erase its debts. A dissolved LLC enters a winding-up period during which it must settle outstanding obligations before distributing any remaining assets to its members. Your rights against a dissolved LLC depend on whether it followed proper dissolution procedures.
Under the model Uniform Limited Liability Company Act adopted in most states, a dissolved LLC can send direct notice to known creditors setting a deadline of at least 120 days to submit claims. Any claim not submitted by the deadline is barred. For unknown claims, the LLC can publish a notice of dissolution in a newspaper, after which creditors generally have three years to bring an action before the claim is barred.8Bureau of Indian Affairs. Uniform Limited Liability Company Act 2006 (Last Amended 2013)
If the LLC distributed assets to its members before paying all its debts, creditors can pursue the members individually to recover those improperly distributed funds. This is not the same as piercing the veil. The theory is simpler: the members received assets that should have gone to creditors first, and they can be required to return them up to the amount they received. Act quickly if you learn an LLC is dissolving, because the statutory deadlines are firm and courts enforce them.