After graduation, you decide to go into business with Donny Doofus, selling horticultural supplies and services. You don’t know Doofus very well, but the two of you form an LLC called “Woody Ornamentals LLC.” You agree that you each own half of the LLC and that you will serve as co-managers.

You buy a lot of equipment and inventory on credit in the LLC’s name, but no vehicles. The equipment and inventory are secured by a proper financing statement and security agreement. You and Donny sign personal guarantees with suppliers for inventory advances. The LLC hires one employee, Barney Brownnose.

After graduation, you decide to go into business with Donny Doofus, selling horticultural supplies and services. You don’t know Doofus very well, but the two of you form an LLC called “Woody Ornamentals LLC.” You agree that you each own half of the LLC and that you will serve as co-managers.

You buy a lot of equipment and inventory on credit in the LLC’s name, but no vehicles. The equipment and inventory are secured by a proper financing statement and security agreement. You and Donny sign personal guarantees with suppliers for inventory advances. The LLC hires one employee, Barney Brownnose.

One weekend, Donny has an accident while driving his own car. The accident is his fault, and he injures Victor Victim. Donny has supplies he has bought for the LLC in his car at the time of the accident. Victor sues both Donny and the LLC for his injuries.

A. Under what circumstances might the LLC be liable for the accident?

Victor needs money for his medical bills and lost wages. While the case is still pending, Victor hires two very intimidating debt collectors. They come into the shop while you and Donny are gone. They tell Barney that Victor hired them, and they are there to seize and sell the equipment and inventory in partial satisfaction of Victor’s claim.

B. Are they legally allowed to seize the property? Why or why not? Give at least two reasons. Would it make a difference if Barney lets them take the equipment?

Barney won’t let the debt collectors take anything. The hoodlums beat Barney up and leave. Barney is badly hurt. His arm is broken, and he won’t be able to work for several weeks. He might have a permanent injury. The hoodlums are nowhere to be found.

C. Barney wants to sue you, Donny, and the LLC for creating a hostile work environment. Can he recover under this theory? What other remedy or remedies are open to Barney against you, Donny, and the LLC? Assuming the debt collectors are gone, can Barney successfully pursue Victor for what they did? What are Victor’s defenses?

You blame Donny for causing all this trouble, and you decide to terminate your association with him. You leave and start your own business. Two years later, you are sued by the suppliers for Woody Ornamentals LLC for inventory that Donny bought after you left and which you knew nothing about. Donny and Woody Ornamentals LLC have since gone into bankruptcy.

D. Why might you be liable to the suppliers? What could you have done to protect yourself?