Piercing the Veil of a Texas LLC

Good news for members of Texas limited liability companies ("LLCs"):

As a general rule, a member or a manager of a Texas LLC may not be held liable for the debts or obligations of the LLC unless the LLC's company agreement provides otherwise.  In fact, the Texas Business Organizations Code ("TBOC") makes that point explicitly in Section 101.114. 

On the other hand, Texas corporate law has long recognized the concept of "veil-piercing" in which a corporation's shareholder may be held liable for obligations of the corporation in extraordinary circumstances, such as when the shareholder has used the corporation as an instrument of fraud.  Texas corporate law statutes provide strict limits on such corporate veil piercing, however.  See Sections 21.223 through 21.226 of the TBOC. 

So are members of a Texas LLC entitled to enjoy the same limits of veil piercing as those enjoyed by shareholders of a Texas corporation under Texas corporate law statutes? 

Although logic would dictate that the answer should be "yes," at least two out-of-state courts interpreting the TBOC have concluded that the Texas corporate law anti-veil piercing statutes by their own terms apply only to Texas corporations and thus have no application to Texas LLCs. 

The Texas legislature recently corrected the potential for unequal treatment for members of Texas LLCs by adopting a new Section 101.002 to the TBOC.  The new provision explicitly provides that the anti-veil piercing provisions enjoyed by shareholders of Texas corporations under Sections 21.233-21.236 of the TBOC will apply to members of Texas LLCs as well.  The new provision took effect September 1, 2011.