Menard, Inc. v. Clauff, No. 14-1741 (8th Cir. 2015)
Annotate this CaseMenard operated a store in a building subleased from Wal-Mart. In 2006, Menard entered into a Purchase Agreement (PA) with Dial; Clauff signed as a managing member of Dial. Menard planned to build a store and wanted to be relieved of its obligations under the sublease. Menard and Dial agreed that Dial would assume responsibility for the sublease after Menard opened its new store. With Wal-Mart’s consent, DKC (Chauff's other LLC) and Menard executed an Assignment. Clauff purported to sign as a member of DKC. DKC did not file Articles of Organization until later. Clauff and Menard claim, but neither provided evidence, that DKC adopted the Assignment after the company formed. Menard remained secondarily liable. Menard opened its new store in 2008. When the Sublease expired in 2011, Wal-Mart was owed more than $700,000. Menard paid $350,000 and sued Dial, DKC, and Clauff. The district court granted summary judgment, finding Clauff liable under Nebraska Revised Statute 21-2635: "[a]ll persons who assume to act as a limited liability company without authority to do so shall be jointly and severally liable for all debts and liabilities of the company." The Eighth Circuit reversed for determination of whether common law or section 21-2635 preclude Clauff's argument that his liability may be avoided because DKC adopted the contract and commenced performance.
Court Description: Civil case - Contracts. In an action holding defendant Clauff jointly and severally liable for a contract he signed on behalf of an LLC before it came into existence, the district court did not err in finding, based on the summary judgment record, that Clauff was not authorized to obligate the LLC to a lease assignment because the LLC not yet properly organized under Nebraska law and could not transact business or incur debt that was not incidental to its organization; assuming the parties intended the LLC to receive the assignment of the lease, Clauff cannot escape liability under Nebraska Revised Statute Sec. 21-2635 (repealed 2013) merely because the parties did not intend him to be personally liable; however, the matter should be remanded for further proceedings on the question of whether Nebraska common law and/or Sec. 21-365 preclude Clauff's argument that his liability under the Lease Assignment may be relieved or avoided because the LLC came into existence, adopted the contract and commenced performance. Judge Colloton, dissenting.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.