Read Legislative Updates
Read Case Summaries
Read General Notices

Legislative updates

House Bill 2645, effective September 23, 2022, increases from a class 1 misdemeanor to a class 3 felony, the penalty for a person who causes an unauthorized UCC secured transaction record to be filed and who knows that the record is unauthorized or contains a material misstatement or false claim.

Case summaries

Unauthorized Financing Statement
Nava-Cruz v. Wallace, No. 1 CA-CV 22-035, decided February 14, 2023. The Arizona Court of Appeals affirmed the trial court’s decision in favor of an LLC that sued a former member under a provision of the Arizona UCC law prohibiting the filing of a record without authority. The former member filed a financing statement claiming a security interest in the LLC’s liquor license and other property, and claimed it was authorized by his bill of sale in buying his membership interest and by the operating agreement. However, the court noted that neither document gave the member an interest in the LLC’s property or authorized the filing of a financing statement.

Updating Statutory Agent Information
4QTKidz, LLC v. HNT Holdings, LLC, No. 2 CA-CV-0817, 0188, 0190, decided December 8, 2022. The Arizona Court of Appeals held that service of process on an LLC by serving the Arizona Corporation Commission was proper where the plaintiffs attempted to serve the LLC’s statutory agent but could not do so because of the LLC’s failure to update the information on file. The LLC law expressly provides that if an LLC fails to maintain a current address for its statutory agent, the Arizona Corporation Commission becomes its agent for service of process. The court also rejected the LLC’s argument that its due process rights were violated because the plaintiffs knew that service at the address on record would not reach their statutory agent.

LLC Dissolution
Brown v. Hope, No. 1 CA-CV 20-0059, decided February 11, 2021. The Arizona Court of Appeals held that an individual who was not an attorney lacked standing to set aside a default judgment foreclosing on a Nevada LLC’s property. The court rejected her argument that she had standing because the LLC was defunct and revoked and that when it ceased to exist the property became hers. The court pointed out that she has not shown that the LLC filed articles of dissolution in Nevada or wound up and distributed the LLC’s property. Therefore the LLC continued to exist.

CEO Liability
Jes Solar Co. v. Matinee Energy, Inc., No. 19-16748, decided October 1, 2020. The U.S. Court of Appeals, 9th Circuit, affirmed summary judgment in favor of two CEOs of an energy company in a suit claiming they were involved in a civil conspiracy involving the company. The court held that their status as CEOs was insufficient evidence that they knew about the fraudulent scheme involving the company or that the corporation was their alter ego.

Corporate Form
JTF Aviation Holding Inc. v. CliftonLarsenAllen LLP, No. CV-19-0209, decided September 18, 2020. The Arizona Supreme Court held that an asset buyer that was not a party to an engagement agreement between the asset seller and its accountants was not bound by the engagement agreement based on the “closely related party doctrine.” The court held that the importance of the corporate form and protections afforded it weighed against Arizona adopting that doctrine under these circumstances.

Member Liability for an LLC’s Taxes
State ex rel. Arizona Department of Revenue v. Tunberg, No. 1 CA-TX 18-0008, decided April 21, 2020. The Arizona Court of Appeals held that the member/CEO of an LLC could be held personally liable for the LLC’s unpaid transaction privilege tax where he had assumed a duty to remit what the LLC had collected from customers. The court pointed out that the member knew the CFO had stopped paying the taxes and although he had the power and authority to delegate the task to someone else he failed to do so.

Alter Ego Claim
Specialty Companies Group LLC v. Meritage Homes of Arizona Inc., No. 1 CA-CV 18-0708, decided February 25, 2020. The Arizona Court of Appeals held that an alter ego claim is not a separate cause of action but a means of imposing liability on an underlying cause of action and as such is governed by the statute of limitations applicable to the underlying cause of action to which the claim the piercing of the corporate veil is tied.

Other notices

September 22, 2020 — The Arizona Corporation Commission has posted a notice on its website indicating that statutory changes to the LLC law regarding the duration of LLCs and the street and mailing address of statutory agents will not be implemented until November 1. See the notice for details.

March 9, 2020 — The Arizona Corporation Commission issued a release reminding investors to be on the lookout for scam artists looking to profit from fear and uncertainty caused by the market downturn and coronavirus scare. Read the release, which contains information on how to identify possible investment fraud.

Back To Top