by Chris Graham and Joseph Kelly

Taylor v. Hogan, Case No. 3-179/12-0898 (IA Court of Appeals April 24, 2013)

Iowa appeals court affirmed defense verdict in legal malpractice trial. LLC #1 and its individual members sued attorney that represented LLC #2 in an investment deal. LLC #1 was a member of LLC #2. LLC #1 and its members alleged that attorney owed them a duty to obtain releases of guarantees made by LLC #1 and its individual members.

Trial court held that neither LLC #1 nor the individual members had standing to sue LLC #2’s attorney.

The court stated “[b]ecause in Iowa, as elsewhere, a limited liability company is a legal entity distinct from its members, it is also the general rule that an attorney representing a limited liability company owes a duty of care solely to the limited liability company, not to its separate members.”

Attorney only owed a duty to LLC #2, not its member, LLC #1, or LLC #1’s members.