## Facts

- Water, Waste & Land, Inc., doing business as Westec, was contacted in March 1995 by Larry Clark about engineering work for a development project to build a Taco Cabana restaurant.
- During early discussions, Clark provided a business card listing an address associated with Donald Lanham and showing the letters “P.I.I.” above the address, without stating what “P.I.I.” meant or that it was a limited liability company.
- Westec and Clark reached an oral agreement for Westec’s work; Clark instructed Westec to send a written proposal to Lanham, which Westec did in April 1995.
- On August 2, 1995, Westec sent Lanham a written contract for execution and return; Westec did not receive a signed copy but received verbal authorization from Clark in mid-August to begin work.
- Westec completed the engineering services and invoiced $9,183.40 to Lanham; the invoice was not paid.
- Westec addressed correspondence and contract documents to Lanham personally and did not know Clark and Lanham were acting for an LLC.
- The county court entered judgment against Lanham and Preferred Income Investors, L.L.C. (P.I.I.), and dismissed Clark as an agent.
- The district court reversed, holding Westec had constructive notice of the LLC due to the “P.I.I.” notation and publicly filed articles of organization, and that Lanham was shielded from personal liability.
- The Colorado Supreme Court granted review.

## Issues

1. Whether an LLC statute providing that filed articles of organization constitute constructive notice of LLC status bars personal contractual liability of members/managers when the counterparty lacked notice that they were acting for an LLC at contracting.
2. Whether common-law agency rules imposing liability on an agent for an undisclosed or partially disclosed principal apply to LLC members/managers who fail to disclose the principal’s existence and identity.

## Decision

- The Colorado Supreme Court reversed the district court and remanded with directions to reinstate the county court judgment for Westec.
- The court held the LLC Act’s constructive-notice provision did not displace common-law agency rules governing undisclosed or partially disclosed principals.
- The court concluded Westec lacked actual notice and lacked sufficient constructive notice that it was contracting with an LLC, so Lanham could be held personally liable on the contract.

## Legal Principles

- An agent who does not fully disclose both the existence and identity of the principal is personally liable on the contract.
- Statutory constructive notice from filing LLC articles does not, by itself, excuse an agent’s personal liability where the agent failed to disclose that an LLC was the contracting principal.
- A notation such as an unexplained acronym on a business card, without identifying the entity as an LLC or clearly indicating agency, may be insufficient to disclose the principal to the contracting party.
- Appellate review must respect supported trial-level factual findings when the reviewing court does not take additional evidence or make new findings.

## Conclusion

Because Westec did not know it was dealing with an LLC and Lanham and Clark did not adequately disclose the LLC’s existence and identity at contracting, common-law agency rules permitted holding Lanham personally liable notwithstanding statutory constructive notice based on the LLC’s public filing.


Water, Waste & Land, Inc. d/b/a Westec v. Lanham, 955 P.2d 997 (Colo. 1998)