## Facts

- At E.A. Collins’s request, his son Michael Collins formed CBS of Idaho, LLC (CBS), an Idaho limited liability company.
- CBS’s articles of organization provided that the company would be managed by managers and identified Michael Collins and Russell Purcell as the initial managers.
- About a year later, Michael filed articles of amendment that (1) changed the LLC’s name to Kanaka Rapids Ranch, LLC (Kanaka Rapids), (2) removed Purcell as a manager, and (3) added E.A. Collins as a manager; the filings did not remove Michael as a manager.
- The record was unclear whether E.A. Collins was also a member of Kanaka Rapids, but he lived in Nevada and did not take part in Kanaka Rapids’s operations.
- Kanaka Rapids held Idaho real property and began conveying lots to multiple purchasers (the defendants).
- Between late 2000 and 2001, Michael executed and delivered numerous deeds conveying Kanaka Rapids’s real property to the defendants, signing on behalf of the LLC as “manager.”
- E.A. Collins died in January 2001.
- E.A. Collins’s estate sued to set aside the conveyances, alleging Michael lacked authority to convey Kanaka Rapids property because no operating agreement existed naming him as a manager (and thus, in the estate’s view, he could not bind the LLC).
- Michael submitted an affidavit stating that he and E.A. Collins had agreed that Michael would be the manager of Kanaka Rapids.
- The district court granted summary judgment to the defendant purchasers, concluding Michael had apparent authority to execute the deeds on Kanaka Rapids’s behalf; the estate appealed.

## Issues

1. Whether, in a manager-managed Idaho LLC, publicly filed organizational documents and the company’s course of dealing can establish Michael Collins’s authority—at least apparent authority—to convey LLC real property to third-party purchasers.
2. Whether the estate could set aside recorded deeds by arguing internal defects in managerial authorization (including the claimed absence of an operating agreement), where the purchasers lacked notice of any limitation on Michael’s authority.
3. Whether summary judgment was proper because no genuine dispute of material fact existed on the facts material to the purchasers’ ability to rely on Michael’s authority.

## Decision

- The Idaho Supreme Court affirmed the summary judgments entered in favor of the defendants.
- The Court held that the record supported, at minimum, Michael Collins’s apparent authority to execute the deeds on behalf of Kanaka Rapids.
- The Court rejected the estate’s attempt to invalidate the conveyances based on internal governance arguments not communicated to the purchasers.
- Because the material facts relevant to apparent authority and third-party reliance were not genuinely disputed, the defendants were entitled to judgment as a matter of law.

## Legal Principles

- When an LLC’s articles of organization provide for manager management and identify a person as a manager in public filings, that designation is a significant manifestation of authority to third parties dealing with the LLC.
- An LLC may be bound by acts of a person who appears authorized to act for the LLC, when the LLC’s filings and conduct cause third parties reasonably to believe the person has authority (apparent authority).
- Internal arrangements or limits on authority that are not reflected in public filings and are not communicated to third parties generally do not defeat the rights of purchasers who take without notice of those limits.
- Summary judgment is appropriate when the material facts about the entity’s public manifestations of authority and the third party’s lack of notice are not subject to a genuine dispute.

## Conclusion

Estate of Collins v. Geist holds that a manager-managed LLC can be bound to real-property deeds executed by a person held out as a manager through the LLC’s filed documents and conduct, and an estate cannot unwind those conveyances by relying on internal authorization disputes where the purchasers had no notice; the Idaho Supreme Court therefore affirmed summary judgment for the grantee-purchasers.


Estate of Collins v. Geist, 153 P.3d 1167 (2007)