Tort – LLC doesn’t protect member from fraud claim

Where the single member of a limited liability corporation defrauded the plaintiff during an automobile sale, he could not escape liability by claiming his conduct was protected by the LLC. He was sued because of own fraudulent acts, not because of his status as the single member of the LLC.

Background

Defendant Autobahn Motors LLC is a single member LLC owned by defendant Shams Behgoman. Autobahn, a retail car dealer, purchased a used car at an auction and later sold it to Justin R. Luna. The auction house faithfully informed Autobahn that the car had structural rust. Behgoman was Autobahn’s salesman who made all the representations and omissions to Luna at issue in this case. Despite his knowledge that the car suffered structural rust, Behgoman vouched for the quality of the car.

After Luna purchased the car from Autobahn, the car immediately began having problems. Upon taking the car to a mechanic other than Autobahn, Luna learned of the structural rust among other defects. He sued Autobahn and Behgoman, individually, for fraud and violations of the Virginia Consumer Protection Act, or VCPA.

A jury issued a verdict in favor of Luna and against Autobahn and Behgoman on Luna’s claims under the VCPA. The jury found Luna did not prove his claims of fraud.

Before the verdict, Behgoman moved to strike Luna’s claims against him, individually, because the LLC sold the car, not him. He argues that since Luna never sought to pierce the corporate veil, he could not reach him individually for his acts on behalf of Autobahn. The court took the motion to strike under advisement and is now addressing it.

Liability

Generally, LLC members are not personally liable for the actions of their LLC. However, this liability protection is not absolute. Our Supreme Court held that an owner of a dental office LLC who fired an employee because she rejected his sexual advances at work was personally liable for the ensuing wrongful termination even though the LLC was technically the entity that fired the employee.

While the Court did not address the statutory liability protection of LLC members provided by § 13.1-1019, one can easily harmonize the two. The statute proscribes personal liability of LLC members “solely by reason of being a member.” In cases of torts committed by a member, liability attaches for something beyond “solely” being a member—it is because of the wrongful act. So, for example, in a two member LLC where only one member commits a tort, the innocent member enjoys liability protection because his liability would derive solely because of his membership. In contrast, the tortfeasor-member’s liability derives from his tort plus his membership.

Here, Behgoman, is the sole member of his LLC. He sold a car to Luna that he knew suffered structural rust because his supplier had told him so. When Luna inquired about the visible rust on the left rear wheel of the car, it was Behgoman who falsely assured Luna that the car was in good shape and there was no reason to worry. Behgoman did not disclose to Luna that the car suffered structural rust. Behgoman’s false statement and his factual omission triggered Luna’s VCPA claim against him individually. Luna sued Behgoman for Behgoman’s own fraudulent acts, not because of his status as the single member of Autobahn. Behgoman forfeited his individual liability protection by his own tort.

Supplier

The fact that Behgoman is individually liable for torts he committed on behalf of his company does not mean that the VCPA applies to his actions. Luna must prove that Behgoman is a “supplier” under the statute. Behgoman, by counsel, at his first argument on his motion to strike, admitted he is a “licensed dealer.” Thus, by a plain reading of the “supplier” definition, Behgoman is a “supplier.” He is a “professional” because he is licensed as one. He engaged in “consumer transactions” by offering for sale a car for Luna’s personal purposes. He committed VCPA fraud by misrepresenting the quality of the car.

Behgoman would have the court read the statute to mean that a professional who engages in consumer transactions on behalf of another—in this case his company—is excluded from the definition of “supplier” because his company sold the car, not him. However, that is not what the statute reads, certainly not if the court, as it must, applies remedial deference to the statutory interpretation. The statute is not limited as Behgoman asserts.

Behgoman’s motion to strike denied.

Luna v. Autobahn Motors LLC, Case No. CL-2023-16672, April 6, 2026. Fairfax County Circuit Court (Oblon). VLW 026-8-015. 8 pp.

Full-Text Opinion

VLW 026-8-015
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