Posted on 11/10/2006 7:53:47 PM PST by lmr
You're on the right track, RW. "Federal question" (civil rights, fair labor standards, etc) is one way for federal courts to obtain subject matter jurisdiction, but that typically arises in employment settings, not contract settings.
The fact that a corporation or LLC is chartered by a state is irrelevant. If they fire someone, for example, for racial reasons, the complaint can be filed in state or federal court.
Contract issues (over the operating agreement, for example) are the subject matter of state courts, except that federal courts can hear contract matters on "diversity" jurisdiction - i.e., all defendants live in a different state from all the plaintiffs. Then the federal court can hear anything (except probate and divorce cases, which are only state court jurisdiction), and the federal court uses the applicable state court's laws.
And now, since our FRiend lmr has decided on bankruptcy, he will for sure be in a federal court and all matters and challenges will be decided there.
And for what its worth, lmr, I may very well have advised a client to do that after a cost-benefit-risk analysis. And possibly with decent results. Keep in mind that when you use federal exemptions in your personal bankruptcy case, you have a "wildcard" exemption of around $10,000.00 ($20,000.00 in a joint husband and wife case) so long as you didn't use it up in your exemption for your personal residence (which is up to about $40,000 for a married couple).
Then you let the creditors go after the LLC members for the rest. And no, you won't be liable for their costs in doing so except to the extent that your assets exceed your exemptions.
As long as you didn't get into debt by fraud, of course. And most taxes and child support obligations don't get discharged.
That would be the purpose of the consultation with at least 2 attys. One could walk away with more than less...
Yep, I always recommend they see someone for a second opinion. Where I wouldn't have taken the case on contingency, someone else might, changing the whole risk dynamic to the client.
Plus, there are lots of people out there smarter than me, strange as that may sound. :-)
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