June 21, 2021

Volume XI, Number 172

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June 18, 2021

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Court Rules An LLC To Be An Unincorporated Association, But Is That Correct?

Cal. Serv. Emples. Health & Welfare Trust Fund v. Greenbox Servs. LLC, 2021 U.S. Dist. LEXIS 93477 involved a plaintiff's attempt to serve a limited liability company.   After thrice failing to serve personally the LLC's agent for service of process, the plaintiff sought the District Court's permission to serve by mail.  While I don't normally get very interested in questions of service, this statement by U.S. Magistrate Judge Laurel Beeler caught my eye:

Greenbox Services, as an LLC, is an unincorporated association.

Is this correct?  Section 18035(a) of the California Corporations Code defines an "unincorporated association", with certain exceptions not applicable here,  as "an unincorporated group of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not".   An LLC is within this definition.

Does this mean that an LLC is subject to California' Unincorporated Association Law (Title 3 of the California Corporations Code)?  No, because Section 18055(d) excludes LLCs from the application of Title 3.  It is for this reason that I take issue with one part of the court's ruling.   Judge Beeler's writes:

A plaintiff may serve an unincorporated association by delivering a copy of the summons and the complaint to "the person designated as agent for service of process in a statement filed with the Secretary of State."  Cal. Civ. Proc. Code § 416.40.   Where the designated agent cannot with reasonable diligence be found at the designated address, California Corporations Code § 18220 permits the court to authorize service "by delivery of a copy of the process to one or more the association's members . . . and by mailing a copy of the process to the association at its last known address."

Section 18220 is part of Title 3 of the Corporations Code and therefore not applicable to LLCs by virtue of Section 18055(d) even though LLCs are unincorporated associations.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 162
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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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