Case 32.2

The case study is about the red light abatement action (Pen. Code § 11225) taken by the City of Los Angeles and the People of the State of California (collectively, the city) against a local business that has been registered as a “Medical Therapy Offices” and the owners of the property the business has been run in. The red light abatement law was passed in 2005 to stop prostitution. Mavaddat, the manager of the Limited Liability Company, LLC Pacific has appealed that he is exempt from personal liability for any judgement against the LLC. The circumstances, in my opinion point to the fact that Mavaddat shares some of the liability as he enjoys a great authority over the functioning of Pacific company. He has been the signatory on behalf of Pacific to rent the property to the business registered under the name Victoria Health Care at their building. In the following discussion, I will shed some light on why I think so from a legal and ethical point of view.

Was Mavaddat aware of the illegal behavior by the tenants?

In my opinion Mavaddat was not aware of the illegal activities taking place at Victoria Health Care but shares ethical and legal responsibility to have stopped the illegal activities. Following are some reasons to support my argument.

Ethical Considerations: Mavaddat had a responsibility towards safeguarding the interests of the organization that he has been working for. The organization had trusted him with providing him powers to make decisions about renting out their properties. He attained the right to visit the property for inspection but he didn’t. Therefore he can be held responsible for the trouble Pacific LLC is on ethical grounds.

Legal Considerations:  Under subdivision (a), Corporation Code section 17158 (Corp. Code § 17158) the manager cannot be held responsible for what their company does. Pacific LLC seems to be a manager-managed LLC where Mavaddat is a nonmember manager. He has the power to make decisions about the organization. Therefore his negligence toward the legal power and trust invested in him, he is personally liable under Corporation Code, Section 17101(Corp. Code § 17101) because of his conduct and written guarantee to strive for the welfare of the organization in the form of a job agreement.

When is a manager of an LLC responsible for a nuisance?

The manager can be held responsible if he is personally involved in nuisance related activities that is against the LLC code of conduct. The actions of the manager must be in the category that make it against the law and where a court can intervene in the functioning of the LLC. It is pertinent to mention here that the allegation must not be baseless and thoroughly investigated and all the facts be present for prosecution. There are some circumstances that a manager may not be personally responsible but still he can be sued for negligence.

References

Article 2. Red Light Abatement Law – Sections 11225-11235 :: California Penal Code :: 2005 California Code :: California Code :: US Codes and Statutes :: US Law :: Justia. (n.d.). Retrieved November 19, 2015

Section 17101 :: 2012 California Codes :: US Codes and Statutes :: US Law :: Justia. (n.d.). Retrieved from http://law.justia.com/codes/california/2012/corp/title-2.5/chapter-3/section-17101

Section 17158 :: 2012 California Codes :: US Codes and Statutes :: US Law :: Justia. (n.d.).         Retrieved from http://law.justia.com/codes/california/2012/corp/title-2.5/chapter-        4/section-17158