Arkansas Code Annotated

Ark. Code Ann. § 4-32-304 (2026)

Liability of members to third parties

✓ current as of May 2026

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Except for the personal liability for acts or omissions of those providing professional service as set forth in § 4-32-308, a person who is a member, manager, agent, or employee of a limited liability company is not liable for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise or for the acts or omissions of any other member, manager, agent, or employee of the limited liability company.

History. Acts 1993, No. 1003, § 304.

Research References

ALR.

Construction and Application of Limited Liability Company Acts — Issues Relating to Personal Liability of Individual Members and Managers of Limited Liability Company as to Third Parties. 47 A.L.R.6th 1.

Ark. L. Rev.

Comment, Corporate Pre-Organization Liability in an LLC World, 61 Ark. L. Rev. 301.

Case Notes

Fraud.

Generally, the owner or agent of a limited liability company is not liable for the debts of that company under this section; however, the protections afforded to a limited liability company do not shield the owner or agent from liability for conduct that would justify a finding of fraud against that person individually. Under Arkansas law, a cause of action for fraud requires proof of five elements: (1) a false representation of material fact; (2) knowledge that the representation is false or that there is insufficient evidence upon which to make the representation; (3) intent to induce action or inaction in reliance upon the representation; (4) justifiable reliance on the representation; and (5) damage suffered as a result of the reliance. Myers v. Dewese (In re Dewese), 469 B.R. 314 (Bankr. E.D. Ark. 2012).

Member Liability.

Limited liability company and its member were bound by their pleadings, and because they admitted that both the company and its member were placing conditions on the release of insurance proceeds, they both were held liable for conversion. The circuit court did not clearly err in finding the member personally liable because the member exercised dominion and control over insurance checks in both the member's personal and business capacities as the member was personally obligated to maintain insurance on the damaged property under a lease. DWB, LLC v. D&T Pure Trust, 2018 Ark. App. 283, 550 S.W.3d 420 (2018).

Suit Against Other Members.

When both the language of this section and its title are read together, it is clear that the Arkansas Legislature has intended to prohibit suit by a third party against one member of a limited-liability company for another member's actions. K.C. Props. of N.W. Ark., Inc. v. Lowell Inv. Partners, LLC, 373 Ark. 14, 280 S.W.3d 1 (2008).

Although this section only prohibited a suit by a third party against one member of a limited liability company for another member's actions, a first member of a water park limited liability company had no cause of action against a second member or a manager where they did not commit gross negligence or willful misconduct. The sale of certain property in dispute was not effectuated by the member or the manager of the water park limited liability company. K.C. Props. of N.W. Ark., Inc. v. Lowell Inv. Partners, LLC, 373 Ark. 14, 280 S.W.3d 1 (2008).

Mere fact that a chief operating officer pursued other business ventures did not constitute a breach of the duty of loyalty and the employee's consulting business did not compete with the company in the trucking business or in any way injure the company; the evidence did not support the company's allegation that the damages they sought were proximately caused by the employee's conduct. DC Xpress, L.L.C. v. Briggs, 2009 Ark. App. 651, 343 S.W.3d 603 (2009).

Notes of Decisions

Cited in 7 cases (1 in the last 5 years), 2006–2021 · leading case: K.C. Props. of N.W. Arkansas, Inc. v. Lowell Inv. Partners, LLC, 280 S.W.3d 1 (Ark. 2008).

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K.C. Props. of N.W. Arkansas, Inc. v. Lowell Inv. Partners, LLC, 280 S.W.3d 1 (Ark. 2008). · cites it 14× “§ 4-32-304 For their first point on appeal, Appellants argue that the circuit court erred in holding that Ark. Code Ann. § 4-32-304 (Repl. 2001) prohibits a member of a limited-liability company from suing a fellow member and manager for breach of contract and breach of…”

DWB, LLC v. D & T Pure Trust, 550 S.W.3d 420 (Ark. Ct. App. 2018). · cites it 2× “For their final argument on appeal, appellants contend that the circuit *432 court erred by finding Brown and DWB jointly and severally liable for conversion; they argue it was error to find Brown personally liable.”

Anderson v. Stewart, 234 S.W.3d 295 (Ark. 2006). · cites it 2× “1 The court of appeals certified the case to this court, suggesting that we should “decide the extent of the protection that Ark. Code Ann. § 4-32-304 affords investors who chose [to operate as a LLC]” However, the appellants do not raise this broad argument in their brief;…”

Dc Xpress, LLC v. Briggs, 343 S.W.3d 603 (Ark. Ct. App. 2009). · cites it 4× “Ark.Code Ann. § 4-32-304. 5 . In pertinent part, the subsection states: The deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: (A) that the witness is dead; or (B) that the witness is at a greater distance than 100 miles…”

DWDubbell Arkansas, LLC v. Bushey (W.D. Ark. 2020). · cites it 2× “At the outset, this appears to be a point in favor of Dubbell’s argument, as the manager of an LLC is not liable for a debt, obligation, or liability of that company, see Ark. Code Ann. § 4-32-304 , and the manager of an LLC is treated as an agent of the LLC.”

DWDubbell Arkansas, LLC v. Bushey (W.D. Ark. 2021). · cites it 2× “In general, the manager of an LLC is not liable for a debt, obligation, or liability of that company, see Ark. Code Ann. § 4-32-304 , and the manager of an LLC often functions as the LLC’s agent, Ark.”

Myers v. Dewese (In re Dewese), 469 B.R. 314 (Bankr. E.D. Ark. 2012). · cites it 2× “Ark.Code Ann. § 4-32-304 (“[A] person who is a member, manager, agent or employee of a limited liability company is not liable for a debt, obligation, or liability of the limited liability company, whether arising in contract, tort, or otherwise-”).”

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