## Facts

- Ann Shannon formed Elegant Interiors, LLC in Kentucky in 2000 and was its sole member.
- In 2004, Elegant Interiors, LLC leased commercial space from landlord Rick Pannell; Shannon signed on the LLC’s behalf.
- In 2005, the Secretary of State administratively dissolved the LLC for failure to file an annual report and pay a fee.
- During the dissolution period, Pannell and Shannon executed (1) a written release modifying the prior arrangement and (2) a new lease for a smaller space.
- The release used first-person and individual language (e.g., references to “my” space and that “Ann Shannon will not be held responsible” for certain costs) and did not expressly name the LLC.
- The new lease expressly identified Elegant Interiors, LLC as the tenant, and Shannon signed in a representative capacity as “member.”
- In 2006, Shannon reinstated the LLC with the Secretary of State.
- The tenant later stopped paying rent, and Pannell sued Shannon individually, asserting personal liability based on the documents and on the LLC’s dissolved status when the new lease was executed.

## Issues

1. Whether a sole LLC member is personally liable under a lease that expressly names the LLC as tenant when an associated release uses individual language and does not clearly identify the LLC.
2. Whether an LLC member can be held personally liable for obligations incurred while the LLC was administratively dissolved when the LLC is later reinstated before final judgment.
3. Whether the member is personally liable as an agent for purportedly acting without authority on behalf of a dissolved entity.

## Decision

- The Supreme Court of Kentucky affirmed the Court of Appeals and rejected personal liability.
- Shannon did not incur individual contractual liability because the operative lease unambiguously identified the LLC as tenant and Shannon signed only in a representative capacity.
- Administrative dissolution did not eliminate member immunity where the LLC was reinstated before final judgment; reinstatement operated retroactively to restore the entity’s continuous existence for the relevant period.
- Shannon was not personally liable under an agency theory for acting for a dissolved entity because reinstatement related back and treated the LLC as continuously existing.

## Legal Principles

- A person who signs a contract in a clear representative capacity for a disclosed LLC is not personally liable absent clear language imposing individual responsibility.
- When transaction documents are read together, stray personal pronouns or individual references in a related document do not override an unambiguous lease naming the LLC as the contracting tenant.
- Under Kentucky LLC law, a member’s statutory immunity from company debts continues for actions taken during administrative dissolution if the LLC is reinstated before final judgment.
- Retroactive reinstatement prevents treating the LLC as a non-existent principal for purposes of imposing personal liability on the member under an agency-without-authority theory.

## Conclusion

Because the lease expressly bound the LLC and Shannon signed only as the LLC’s representative, and because the LLC’s reinstatement related back and preserved member immunity for actions during administrative dissolution, Shannon was not personally liable for the lease obligations.


Pannell v. Shannon, 425 S.W.3d 58 (Ky. 2014)