LLCs May Not Protect Members for Personal Acts

08.06.25

By Tenzin Kaldhen, Law Clerk

One of the benefits of using a limited liability company (LLC) to operate your business is the ​“liability shield” that can protect LLC owners (members) from personal liability. Specifically, members are not personally liable for a debt, obligation, or other liability of the company solely for being or acting as a member. 

However, this shield is not absolute. For example, members may be personally liable for their own negligence if they commit a tort, regardless of whether they are acting within their duties on behalf of the LLC. To better understand how the liability shield works, this article compares two recent cases addressing the scope of the liability shield for Wisconsin LLCs.

Personal Liability for Tort (Negligent Acts)

In Garrett v. Ocean View Swimming Pool Services, LLC (2025), a homeowner sued a swimming pool services company (Ocean View) and its member-owner (Brown) for negligently servicing the homeowner’s pool. As the sole employee of Ocean View, Brown was the only person who worked on the pool. The homeowner alleged that the pool was damaged and that he would be forced to replace the pool at a significant cost. Ocean View and Brown sought to dismiss Brown from the lawsuit, arguing that Brown serviced the homeowner’s pool in his capacity as a member of Ocean View and not in his personal capacity. Ocean View and Brown argued that because Ocean View is a separate legal entity, the work done on the pool was solely by Ocean View; therefore, Brown should be dismissed.

The Wisconsin Court of Appeals in Ocean View held that Brown was personally liable because an agent who commits a tort may be held personally liable for their conduct. In response to the argument that the LLC’s liability shield protected Brown, the court noted that the liability shield exists in part to protect members from vicarious liability, but not to protect them from their own personal liability. Vicarious liability is a form of liability where an employer or supervisor is held liable for their employees’ conduct. In such a situation, the liability shield would protect the supervisor from being personally liable for their employees’ conduct. But here, Brown was the individual who committed the alleged negligence. Moreover, the decisions Brown made while servicing the pool were made within his own discretion as he was the sole owner and employee of Ocean View. Consequently, the owner’s claim was for Brown’s personal liability.

The Ocean View court noted that Wisconsin courts have a long-standing rule that an agent who commits a tort may be personally liable alongside the principal entity, citing the following:

• In Ferris v. Location 3 Corp., the Wisconsin Court of Appeals held that corporate agents may be held personally liable for tortious conduct, regardless of whether they acted on behalf of the corporation when they committed the act.
• In Oxmans’ Erwin Meat Co. v. Blacketer, the Wisconsin Supreme Court held that ​“a corporate agent cannot shield himself from personal liability for a tort he personally commits or participates in by hiding behind the corporate entity.”
• In Hanmer v. DILHR, the Wisconsin Supreme Court held that both the agent who committed the tortious act and the principal entity may be responsible for the injury. The Hanmer court specified that the corporate shield protects only those who would be vicariously liable, not those whose own conduct is at issue.
• Lastly, in Stuart v. Weisflog’s Showroom Gallery, Inc., the Wisconsin Supreme Court relied on the personal liability precedent created from the aforementioned cases in a case where an individual acting on behalf of their corporation violated the Home Improvement Practices Act. In response to the defendant’s contention that the principal applied was merely based on dicta (opinions not concerning the ultimate issue) and thus nonbinding, the court stated, ​“when the supreme court intentionally takes up and announces the law three times [in Oxmans’, Hanmer, and Stuart], we think it clear that the initial statement was not dicta.”

Note that the cases mentioned in Ocean View above dealt with personal liability in the event of an intentional tort (i.e., fraudulent misrepresentation). Ocean View, however, addressed the specific issue of personal liability in the event of an unintentional tort claim. Notwithstanding that difference, the Ocean View court held that Brown may be held personally liable for the negligence claim. Thus, Ocean View expanded the application of the personal liability rule for Wisconsin LLCs to include unintentional torts. But the expanded rule remains within the confines of a tort claim.

This distinction is noticeable in City of Wautoma v. Marek (2024), where the Wisconsin Court of Appeals held that Marek was not personally liable for violating a zoning ordinance while operating a rental business through an LLC.

No Personal Liability For Ordinance Violation

In Marek, the City of Wautoma named only Marek in a civil forfeiture action, alleging that Marek leased a rental property in a district zoned exclusively for single-family residential use to multiple unrelated tenants. The rental business was organized as an LLC, of which Marek was a member. The LLC was the sole owner of the rental building at issue. Marek argued that the only proper defendant in the forfeiture action was the LLC because it was the sole owner of the property, and that the City failed to show that Marek individually violated the ordinances at issue. The City argued that Marek was liable because she facilitated the rental to the unrelated tenants, including signing their leases.

The court held that Marek was not personally liable because the City failed to show that Marek, as an individual, violated the zoning ordinance. The court emphasized that the LLC was the sole owner of the property, and that a member of an LLC does not share the LLC’s liabilities solely because they are a member. In response to the City’s argument, the court responded that Marek could not have leased the property in her individual capacity because she did not have any ownership interest in the property. Therefore, the court held that the LLC was solely liable for the alleged unlawful use of the property.

Contrasting The Two Cases

In Marek, the City brought a civil forfeiture action against Marek as opposed to a tort action. The caselaw regarding personal liability in the event of a tort discussed in Ocean View was not relevant in Marek because a tort was not alleged.

In general, for a tort to exist, the plaintiff identifies specific ​“damages” caused by the injury. In other words, the plaintiff specifies a dollar amount that would make them whole after the injury caused by the alleged tort. In Ocean View, the cost of replacing the pool was the ​“damages” caused by Ocean View and Brown. However, in Marek, the City did not identify any ​“damages” that were caused by Marek violating the zoning ordinances.

Conclusion

In general, the LLC liability shield can protect members from personal liability, as shown in Marek. However, the liability shield does not protect LLC members from their own tortious conduct, as shown in Ocean View. Whether tortious conduct has been alleged depends on the facts and the nature of the plaintiff’s claim. Consequently, LLC owners who also work for their LLC should consider additional protections (such as insurance) for potential tort claims against them personally.