In another example of the City of Chicago operating by their own set of rules, the City has obtained personal judgment against the Manager of an LLC for unpaid water account debt.
The State of Illinois legislature and Courts have long held the Member or Manager of an LLC is not personal liable for the debts of the LLC. The exception to this standard is wrongful acts or omissions by the Member of Manager (which has typically been fraud). It was this exception to the rule that allowed the Court to rule against the Manager in Gerese Tadros v. The City of Chicago Department of Administrative Hearings, at al (2021 IL App (1st) 200273)).
The Court took the stance to interpret that exception to Member’s or Manager’s to be held liable for wrongful acts or omissions to show a Member or Manager can be held personally liable in certain situations. In addition, the City of Chicago municipal ordinance states, an agent of legal title holder, or person who is authorized to manage or dispose of premises, may be deemed an owner and held liable for water payment. Coupling these two together, the Court took the position the Manager of an LLC, who can be held liable for acts or omissions as owner of a property, therefore can have a personal judgment placed against them by the City of Chicago.
It’s a terrible interpretation of the LLC statute and only underscores the idea the City of Chicago demands to operate by their own playbook. We expect this case law to challenged, but LLC Managers should be aware of it’s existence when dealing with the City of Chicago.