RIGHT TO LIFE INSURANCE NOT TERMINATED BY DISSOLUTION OF LLC

August 1, 2019

The first few lines of this tragic case:

“Four men formed a limited liability company to test a new business model for providing chiropractic services. Their enterprise was plagued by treachery and tragedy. One of the men committed fraud against the company and was forced out. A second declared personal bankruptcy, and then, with the third, allegedly created a competing business, looted the company, and then cancelled the company. The fourth man sued the second and third for those acts, but took his own life before that suit concluded.

The deceased member’s widow has sued the company, the second and third man, and their affiliated entities. She claims she is entitled to the proceeds from the life insurance policy the LLC had taken out on her husband under an agreement among the members. The enforceability of that agreement depends on, inter alia, whether the LLC had dissolved before her husband’s death. On the defendants’ motion to dismiss, I find that the dissolution provision of the company’s LLC agreement is susceptible to two reasonable interpretations. I therefore must construe the provision in favor of the plaintiff, and under that construction, her rights to the life insurance policy are not terminated by the company’s dissolution. I also conclude the plaintiff states a claim for a statutory receivership.”

You can read the case in its entirety here:

https://llc199a.com/wp-content/uploads/Coyne-v-Fusion-Fireworks.pdf

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