Court Rules An LLC To Be An Unincorporated Association, But Is That Correct?

Allen Matkins
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Allen Matkins

Cal. Serv. Emples. Health & Welfare Trust Fund v. Greenbox Servs. LLC, 2021 U.S. Dist. LEXIS 93477 involved a plaintiff's attempt to serve a limited liability company.   After thrice failing to serve personally the LLC's agent for service of process, the plaintiff sought the District Court's permission to serve by mail.  While I don't normally get very interested in questions of service, this statement by U.S. Magistrate Judge Laurel Beeler caught my eye:

Greenbox Services, as an LLC, is an unincorporated association.

Is this correct?  Section 18035(a) of the California Corporations Code defines an "unincorporated association", with certain exceptions not applicable here,  as "an unincorporated group of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not".   An LLC is within this definition.

Does this mean that an LLC is subject to California' Unincorporated Association Law (Title 3 of the California Corporations Code)?  No, because Section 18055(d) excludes LLCs from the application of Title 3.  It is for this reason that I take issue with one part of the court's ruling.   Judge Beeler's writes:

A plaintiff may serve an unincorporated association by delivering a copy of the summons and the complaint to "the person designated as agent for service of process in a statement filed with the Secretary of State."  Cal. Civ. Proc. Code § 416.40.   Where the designated agent cannot with reasonable diligence be found at the designated address, California Corporations Code § 18220 permits the court to authorize service "by delivery of a copy of the process to one or more the association's members . . . and by mailing a copy of the process to the association at its last known address."

Section 18220 is part of Title 3 of the Corporations Code and therefore not applicable to LLCs by virtue of Section 18055(d) even though LLCs are unincorporated associations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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