No Good Deed Goes Unpunished

It is usually best to seek an attorney’s advice before communicating with a creditor regarding a debt.  The case of Klingstubbins v. Reynolds, et al6 .(COA 11-549), decided January 17, 2012 by the North Carolina Court of Appeals, describes how letters from an individual regarding a debt owed by his LLC resulted in the individual becoming liable for the LLC’s debt.  In this case, an architect  sued an LLC for payment.  An individual member of the LLC wrote two letters to the architect stating his intent to pay the debt, although there was no legal obligation for him to do so.  A second letter also stated his desire to pay the bill.  When payment was not made, the architect sued both the LLC and the individual.  The Court of Appeals found that language in the letters was sufficient to create a guaranty contract.

Had the individual consulted an attorney prior to writing the letters, he could have been advised appropriately and possibly might have avoided personal liability.