Adkisson's

Uniform Protected Series Act

(UPSA)

Caution State Law Variances!

SECTION 204. SERVICE OF PROCESS, NOTICE, DEMAND, OR OTHER RECORD.

(a) A protected series of a series limited liability company may be served with a process, notice, demand, or other record required or permitted by law by:

(1) serving the company;

 

JayNote: The reference to "company" here is to the series organization, not the protected series. Service will not be good if the service is made directly on the protected series, other than by serving the registered agent of the protected series (which under § 203(a) is also the same registered agent of the series organization).

 

(2) serving the registered agent of the protected series; or

 

JayNote: Under § 203(a), the registered agent for every protected series is whoever is serving as the registered agent for the series organization, so this could have read "serving the registered agent of the series organization" and it would be about as correct.

 

(3) other means authorized by law of this state other than [cite this state's limited liability company act].

 

Reporter's Comment to Subsection (a) – Under this provision, serving a protected series of a series limited liability company by serving the company has the same effect as serving the protected series' registered agent. Except as otherwise provided in subsections (c) through (g), effective service requires that the protected series being served be adequately identified.

 

However effected, service of a record on a protected series does not affect the protected series if the record is inapposite. For example, serving a summons to a deposition on a series limited liability company has no effect on a protected series of the company unless the summons names the protected series as the deponent. Likewise, serving a protected series with a charging order pertaining to a judgment debtor has no effect if the debtor is neither an associated member of the protected series nor a protected-series transferee.

 

This provision does not directly provide how to serve a protected series of a series limited liability company if the protected series ceases to have a registered agent, or its registered agent cannot with reasonable diligence be served, because such a provision is unnecessary.

 

A protected series of a series limited liability company may be served by serving the company. Subsection (a)(1). If the company ceases to have a registered agent, or its registered agent cannot with reasonable diligence be served, a protected series of the company may be served by serving the company under the relevant law for making substituted service.

 

(b) Service of a summons and complaint on a series limited liability company is notice to each protected series of the company of service of the summons and complaint and the contents of the complaint.

 

JayNote: Issues involving service of process for a lawsuit took up many hours of the Drafting Committee's work. Ultimately, it was decided that, because of the potential for confusion between the series organization and probably numerous protected series, it made more sense to allow the plaintiff to serve the series organization and that would be "good service" on all of the protected series. The idea here is that even if the plaintiff doesn't know the right defendant, the series organization most likely will, and then the summons and complaint can be directed by the series organization to the target protected series to respond.

 

An additional consideration here was that this method of service also allowed the series organization to keep an eye on what was going on in its protected series, and not later be surprised by litigation or a judgment, etc., involving one of its protected series which had failed to advise (culpably or negligently) the series organization of its financial distress.

 

It is anticipated that if the plaintiff for whatever reason doesn't know which protected series is the one liable on a particular claim (such as is most likely to occur with a tort plaintiff), the plaintiff will likely "carpet bomb" both the series organization and each and every protected series other than the affected one may have to seek dismissal of the claims on the grounds that it was not the correct entity responsible.

 

(c) Service of a summons and complaint on a protected series of a series limited liability company is notice to the company and any other protected series of the company of service of the summons and complaint and the contents of the complaint.

 

Likewise, service made upon one protected series operates as service upon all protected series and the series organization, which is why requiring in § 203(c) that all of the protected series must use the same registered agent as the series organization makes such wonderfully good sense.

 

(d) Service of a summons and complaint on a foreign series limited liability company is notice to each foreign protected series of the foreign company of service of the summons and complaint and the contents of the complaint.

(e) Service of a summons and complaint on a foreign protected series of a foreign series limited liability company is notice to the foreign company and any other foreign protected series of the company of service of the summons and complaint and the contents of the complaint.

 

JayNote: Recall that in this context "foreign" means another U.S. state or jurisdiction (a series LLC formed outside of the U.S. would be an "alien" series LLC).

 

Subsections (d) and (3) largely, but not entirely, presumes that a foreign series LLC  will qualify to do business in-state and thus will be required to appoint an in-state registered agent.

 

(f) Notice to a person under subsection (b), (c), (d), or (e) is effective whether or not the summons and complaint identify the person if the summons and complaint name as a party and identify:

(1) the series limited liability company or a protected series of the company; or

(2) the foreign series limited liability company or a foreign protected series of the foreign company.

 

Reporter's Comment to Subsections (b)-(f) – In a world of complex, multi-tiered, multipart organizations, it is not always easy to identify which part of such an organization is legally responsible for a particular claimed harm. This difficulty enhances statute of limitations risk.

These five subsections encompass series limited liability companies, protected series, foreign series limited liability companies, and foreign protected series. The intent is to mitigate the statute of limitations risk by addressing the "relating back" issue in the context of amending a compliant.

 

Both federal and state courts provide criteria for amending a complaint to name a new party and having the amendment relate back to the original complaint. See, e.g., F.R.C.P. 15(c), Minn.R.Civ.P. 15(h). While "relating back" solves the statute of limitations problem, the relating back rules require inter alia that "the party to be brought in by amendment … received such notice of the action that it will not be prejudiced in defending on the merits." F.R.C.P. 15(c)(1)(C)(i)

 

In some jurisdictions, a plaintiff can also use "Doe" defendants to address the statute of limitations risk. See, e.g., Miss.R.C.P. 9(h) ("Fictitious Parties. When a party is ignorant of the name of an opposing party and so alleges in his [sic] pleading, the opposing party may be designated by any name, and when his [sic] true name is discovered the process and all pleadings and proceedings in the action may be amended by substituting the true name and giving proper notice to the opposing party.").

 

However, using "Doe" defendants raises complex issues. See N.Y. C.P.L.R. 1024 (McKinney), Vincent C. Alexander, Practice Commentaries (explaining the complexities, noting that: (i) "the defendant whose name is unknown must be described in such a way as to fairly apprise the party that he or she is an intended defendant"; (ii) [a]n inadequate description renders the action jurisdictionally defective"; and (iii) [e]ach case, of course, is fact-specific as to the sufficiency of the description of the intended defendant").

 

Moreover, federal and some state courts disfavor the "Doe" tactic. See, e.g., Barrow v. Wethersfield Police Dep't, 66 F.3d 466, 468 (2d Cir. 1995), modified, 74 F.3d 1366 (2d Cir. 1996) ("We have stated that it is familiar law that 'John Doe' pleadings cannot be used to circumvent statutes of limitations because replacing a 'John Doe' with a named party in effect constitutes a change in the party sued. Thus, such an amendment may only be accomplished when all of the specifications of Fed.R.Civ.P. 15(c) [relating back rule] are met.") (quoting Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1075 (2d Cir.1993); internal quotation marks and brackets in original omitted); State ex rel. Holzum, 342 S.W.3d 313, 316 (Mo. 2011) (holding that naming Doe defendants is immaterial to a motion to relate back an amendment to the complaint and stating that the applicable rule "allows a change in parties but requires that the correct party defendant receive 'notice' of the original action").

 

JayNote: Subsection (f) really highlights the problem with service of process, etc., in connection with a series LLC, which is that the plaintiff may not be able to figure out which protected series is the one which is responsible for the liability, and thus is given great latitude in making that service. Correspondingly, very substantial and unique duties are placed on the series organization to get the process service to the correct protected series, with the failure of those duties potentially resulting in default judgments in favor of the plaintiff against the series organization and all the protected series.

 

UPSA AND WEBSITE CONTENTS

 

ARTICLE 1. GENERAL PROVISIONS

SECTION 101. SHORT TITLE.     SECTION 102. DEFINITIONS.     SECTION 103. NATURE OF PROTECTED SERIES.    SECTION 104. POWERS AND DURATION OF PROTECTED SERIES.     SECTION 105. GOVERNING LAW.     SECTION 106. RELATION OF OPERATING AGREEMENT, THIS ACT, AND LIMITED LIABILITY COMPANY ACT.     SECTION 107. ADDITIONAL LIMITATIONS ON OPERATING AGREEMENT.     SECTION 108. RULES FOR APPLYING LIMITED LIABILITY COMPANY ACT TO SPECIFIED PROVISIONS OF ACT.

 

ARTICLE 2. ESTABLISHING PROTECTED SERIES

SECTION 201. PROTECTED SERIES DESIGNATION; AMENDMENT.     SECTION 202. NAME.     SECTION 203. REGISTERED AGENT.     SECTION 204. SERVICE OF PROCESS, NOTICE, DEMAND, OR OTHER RECORD.     SECTION 205. CERTIFICATE OF GOOD STANDING FOR PROTECTED SERIES.     SECTION 206. INFORMATION REQUIRED IN ANNUAL BIENNIAL REPORT; EFFECT OF FAILURE TO PROVIDE.

 

ARTICLE 3. ASSOCIATED ASSET; ASSOCIATED MEMBER; PROTECTED-SERIES TRANSFERABLE INTEREST; MANAGEMENT; RIGHT OF INFORMATION

SECTION 301. ASSOCIATED ASSET.     SECTION 302. ASSOCIATED MEMBER.     SECTION 303. PROTECTED-SERIES TRANSFERABLE INTEREST.     SECTION 304. MANAGEMENT.     SECTION 305. RIGHT OF PERSON NOT ASSOCIATED MEMBER OF PROTECTED SERIES TO INFORMATION CONCERNING PROTECTED SERIES.

 

ARTICLE 4. LIMITATION ON LIABILITY AND ENFORCEMENT OF CLAIMS

SECTION 401. LIMITATIONS ON LIABILITY.     SECTION 402. CLAIM SEEKING TO DISREGARD LIMITATION OF LIABILITY.     SECTION 403. REMEDIES OF JUDGMENT CREDITOR OF ASSOCIATED MEMBER OR PROTECTED-SERIES TRANSFEREE.     SECTION 404. ENFORCEMENT AGAINST NON-ASSOCIATED ASSET.

 

ARTICLE 5. DISSOLUTION AND WINDING UP OF PROTECTED SERIES

SECTION 501. EVENTS CAUSING DISSOLUTION OF PROTECTED SERIES.     SECTION 502. WINDING UP DISSOLVED PROTECTED SERIES.     SECTION 503. EFFECT OF REINSTATEMENT OF SERIES LIMITED LIABILITY COMPANY OR REVOCATION OF VOLUNTARY DISSOLUTION.

 

ARTICLE 6. ENTITY TRANSACTIONS RESTRICTED

SECTION 601. DEFINITIONS.     SECTION 602. PROTECTED SERIES MAY NOT BE PARTY TO ENTITY TRANSACTION.     SECTION 603. RESTRICTION ON ENTITY TRANSACTION INVOLVING PROTECTED SERIES.     SECTION 604. MERGER AUTHORIZED; PARTIES RESTRICTED.     SECTION 605. PLAN OF MERGER.     SECTION 606. STATEMENT OF MERGER.     SECTION 607. EFFECT OF MERGER.     SECTION 608. APPLICATION OF SECTION 404 AFTER MERGER.

 

ARTICLE 7. FOREIGN PROTECTED SERIES

SECTION 701. GOVERNING LAW.     SECTION 702. NO ATTRIBUTION OF ACTIVITIES CONSTITUTING DOING BUSINESS OR FOR ESTABLISHING JURISDICTION.     SECTION 703. REGISTRATION OF FOREIGN PROTECTED SERIES.     SECTION 704. DISCLOSURE REQUIRED WHEN FOREIGN SERIES LIMITED LIABILITY COMPANY OR FOREIGN PROTECTED SERIES PARTY TO PROCEEDING.

 

ARTICLE 8. MISCELLANEOUS PROVISIONS

SECTION 801. UNIFORMITY OF APPLICATION AND CONSTRUCTION.     SECTION 802. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT.     SECTION 803. TRANSITIONAL PROVISIONS.     SECTION 804. SAVINGS CLAUSE.     SECTION 805. SEVERABILITY CLAUSE.     SECTION 806. REPEALS; CONFORMING AMENDMENTS.     SECTION 807. EFFECTIVE DATE.

 

- - - - -

 

Protected Series Agreements and Forms -- A list of the "best practices" agreements and records that all protected series structures should have.

 

SERIES LLC COURT OPINIONS

 

UPSA COURT OPINIONS

 

None

 

- - - - -

 

NON-UPSA COURT OPINIONS

 

191212 ... Ohio ... Delaware Act .. MSP Recovery Claims, Series LLC v. Phoenix Ins. Co., 2019 WL 6770981 (N.D. Ohio, 2019).

 

181019 ... Florida ... Delaware Act ... MRS Recovery Claims, Series LLC v. USAA General Indemnity Co., 2018 WL 5112998 (S.D.Fla., Oct. 19, 2018).

 

180605 ... North Dakota ... Nevada Act ... Flaten v. Couture, 912 N.W.2d 330, 2018 ND 136 (2018).

 

Updated List

 

SERIES LLC ARTICLES BY JAY ADKISSON

 

2019.01.28 ... Understanding The Protected Series Act: Article 8 And Final Thoughts

2018.11.24 ... Understanding The Protected Series Act: Treating Out-Of-State Series

2018.11.18 ... Understanding The Protected Series Act: Mergers

2018.10.29 ... Understanding The Protected Series Act: Dissolution And Winding Up Of Protected Series

2018.10.21 ... Understanding The Protected Series Act: Liability Limitations And Claims

2018.08.30 ... Understanding The Protected Series Act: Assets, Members And Management

2018.08.28 ... Understanding The Protected Series Act: Creating A Protected Series And Service Of Process

2018.07.18 ... Understanding The Protected Series Act: The Framework of UPSA - Part 2 of a Series

2018.06.18 ... Understanding The Protected Series Act: What Is A Protected Series?

 

 

More articles on Series LLCs by Jay Adkisson click here

THE CHARGING ORDER PRACTICE GUIDE BY JAY ADKISSON

 

The Charging Order Practice Guide: Understanding Judgment Creditor Rights Against LLC Members, by Jay D. Adkisson (2018), published by the LLCs, Partnerships and Unincorporated Entities Committee of the Business Law Section of the American Bar Association

Click here for more information

 

Now available for purchase at https://goo.gl/faZzY6

MORE INFORMATIONAL WEBSITES BY JAY ADKISSON

 

  • Jay Adkisson - More about Jay D. Adkisson, background, books, articles, speaking appearances.

 

  • Captive Insurance - Licensed insurance companies formed by the parent organization to handle the insurance and risk management needs of the business, by the author of the book Adkisson's Captive Insurance Companies.

 

  • Asset Protection - The all-time best-selling book on asset protection planning by Jay Adkisson and Chris Riser.

 

  • Collecting On A Judgment - An explanation of common creditor remedies, strategies and tactics to enforce a judgment, including a discussion of common debtor asset protection strategies.

 

  • Voidable Transactions - Discussion of the Uniform Voidable Transactions Act (a/k/a 2014 Revision of the Uniform Fraudulent Transfers Act) and fraudulent transfer law in general.

 

  • Private Retirement Plans - An exploration of a unique creditor exemption allowed under California law which can be very beneficial but is often misused.

 

  • Charging Orders - The confusing remedy against a debtor's interest in an LLC or partnership is explained in reference to the Uniform Partnership Act, the Uniform Limited Partnership Act, and the Uniform Limited Liability Company Act.

 

  • California Enforcement of Judgments Law - Considers the topic of judgment enforcement in California, including the California Enforcement of Judgments Law and other laws related to California creditor-debtor issues.

 

  • Anti-SLAPP Laws - A collection of and commentary about Anti-SLAPP laws and significant court decisions on the subject within the United States, and special treatment of the California Anti-SLAPP Act.

 

CONTACT JAY ADKISSON

 

Contact Jay Adkisson:

 

Phone: 702-953-9617     Fax: 877-698-0678     jay [at] jayad.com

 

Unless a dire emergency, please send me an e-mail first in lieu of calling to set up a telephone appointment for a date an time certain.

 

Las Vegas Office: 6671 S. Las Vegas Blvd., Suite 210, Las Vegas, NV 89119, Ph: 702-953-9617, Fax: 877-698-0678. By appointment only.

 

Newport Beach Office: 100 Bayview Circle, Suite 210, Newport Beach, California 92660. Ph: 949-200-7773, Fax: 877-698-0678. By appointment only.

 

Social Media: Twitter and LinkedIn

 

© 2019 by Jay D. Adkisson. All rights reserved. No part of this website may be copied in whole or in any part without the express written permission of Jay D. Adkisson. Nothing herein is any advertisement or offer by the firm to practice in any jurisdiction where no attorney of the firm is licensed to practice law. This website does not give any legal advice or opinion, and is no substitute for the advice and counsel of an attorney consulted in the relevant jurisdiction. Other. Questions about this website should be directed to jay [at] jayad.com, by phone to 702-953-9617 or by fax to 877-698-0678. This website is http://www.protectedseriesact.com