There is a split of judicial authority on whether limited liability applies when the creditor is a partner of a limited liability partnership. The New York Court of Appeals narrowly interpreted the partnership statute and denied the applicability, but the California Court of Appeals upheld it. The difference has been overlooked by the legal and business communities. This paper shows that the narrow interpretation is inconsistent with the legislative intent, laden with procedural obstacles in enforcement, and inharmonious with settled legal doctrines and tenets of law-making.
Lynn Bai & Sarah Harden, Limited Liability Partnerships: An (Overlooked) Hole in the Shield, 23 U. Pa. J. Bus. L. __ (forthcoming 2021).