Incorporating the VW club to protect member liablity

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Chatting with some fellow VW enthusiasts. There was a discussion on liability of the club and it's members. Seems there was this VW club that caravanned to a show. During the trip one of the club members got in a wreck that ended in his demise. The relatives sued, and since the club was not incorporated, the relatives sued each member of the club and won serious money from some of these members.

So
Can someone verify the story?
If you know someone who was involved in something like this, point them to this conversation so they can chime in with an actual real-life bona-fide first person story.
Would some of you legal types verify if this risk is real.

[abritinthebay]

No idea if the story is true... but it makes sense.

That's the whole point of a LLC (limited liability company) - to limit liability.

[kreemoweet]

Sounds like a story some lawyer invented in order to drum up business. People should not do things they can
be sued for, club or no club, incorporated or not.
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[EverettB]

I'm not a lawyer but I can't see how they could prove liability of any of the members unless they were the cause or contributed to the accident in some way, apart from their membership in the club.

I would need to hear more about the facts and how/why they were sued.
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[abritinthebay]

While there is no obvious direct liability it could be argued that it was under official club business so they are liable for issues when members are involved.

Less has been used for liability before now.

This is why most things make you sign a liability waiver when you join them, or even attend some events. IF the story is true (and it's a big if) then the club a) wasn't an LLC, and b) didn't have a liability waiver.

That is EXACTLY why LLCs exist and why anyone forming a formal club of ANY kind should have legal advice. Frankly - anyone doing any kind of official club activity without a waiver is a goddamn idiot and doesn't know what they are doing.

Christ, kids need permission slips for a reason - and it's not because they want to ask nicely. Same deal here.

[kreemoweet]

Liability waivers are used to protect the organization from claims by the members. They do nothing to protect the members from claims
as a result of their own actions.

Clubs need "legal advice" only in a world run by lawyers.
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[skills@eurocarsplus]

[abritinthebay]

[Gary]

An LLC is like a corporation in that it is a creature of statute. The LLC was first created by law in 1977 by the State of Wyoming and the interpretation for taxation was formally laid out by the IRS in the early 1980s. Once the IRS regulations were in place, US States quickly adopted LLC statutes. The advantage of the LLC is to create limited liability like that of a corporation while eliminating the double taxation corporations endure. In essence, the LLC is a pass through entity that is more flexible and easier to establish than an S-Corp. LLCs are taxed like partnerships unless it is a single owner corporations, which is then taxed like a sole-proprietorship.

There is no universally adopted LLC code like the Uniform Commercial Code. For example: LLCs are exempt from double taxation except for Washington DC, which taxes the LLC and also the income of the owner(s).

A corporation exists to generate a profit for the shareholders. The means of creating a corporation are similar from State to State; however, neither the corporate structure nor the LLC would benefit a club or association. Directors and officers have to be chosen and there must be a person of record to accept service on behalf of the LLC or corporation in the even legal conflict arises.

The best option for a club or an association is to form a non-profit in accordance with the laws of the State it will operate. Should the club or association operate beyond the borders of its home State, then it will have to apply to operate in conformance with the laws of the foreign State. Operating as a non-profit will make filing of tax returns much easier as any excess monies can be disposed of to the charity of the association's choice. If a club or association wishes to conduct an event where the general public is invited to attend, liability insurance can be purchased at an affordable price.

[hitest]

If this case is indeed factual, it's likely an attorney approached them. If they said "ka ching!" then the family deserved to lose their loved one. The caliber of person who thinks they should sue club members from such an event thus victimizing others would quickly be bankrupted in their own right.

Now, if a guy was racing or towing him, that's different- go after that guy.

I agree that every club should have release of liability included in membership papers. Too sue happy we are.
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[Malokin Martin]

Given the proper circumstance, every single one of us is a terrible person who would step on the next guy to get that paycheck.

People are terrible. Even with a consent form or fancy LLC you could and will still be found negligent if they throw more money at it then you. Consents forms just mean they MAY get less out of you.

Your choices are half chance.

[Brian]

I think we all need disclaimers: "Not responsible for your arse"
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[Erik G]

my club has a pretty hefty insurance policy through Hagerty that covers us, show participants, etc. I highly recommend that clubs look into it, it was actually pretty cheap. We take care of it as part of our dues now
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[abritinthebay]

Exactly - all of this is why clubs should ALWAYS consult a lawyer.

Most don't.

[raygreenwood]

Yes...consult a lawyer....but bear in mind.....is it a club....or a "club".

If you charge membership or have any legal requirements whatsoever...then yes.. you should look at some sort of incorporation.

Outside of that....its far easier to have the club just be a club. A loose, informal gathering of like minded individuals, no chapter leaders/governors, president etc.....just people.

If it were that way in the first place no matter if you call your informal gathering by a name or have a logo.....its not a legal entity controlled by anyone. There would be no one to sue. In short....keep it simple.

Incorporation is a pain in the ass filled with just as many huge issues as anything else.
Unless you are an individual under and S-corporation.....you WILL be held liable if someone wants to sue and anything was the fault of something the organization or one of its officers did.

Anymore....an LLC is worthless if someone really wants to go after you. You will still spend your life savings defending the fact that your liability is limited......and yes....after they go after the LLC and drain it of everything trying to hold you accountable...they usually just sue you as a civil matter for poor organization or negligence....and that is not shielded by the LLC.

With a normal C-corp or non-profit status, you will need a board of directors, charter, officers....and alll of them must be attentive and trustworthy....because 90% of the time....clubs and orgs get sued because of tax issues, improper legal filings of all kinds.....usually because the officers of the corporation....just think of it as a club they like to play with....and not a serious responsibility.

Ray

[wythac]

Look up the phrase "Tilting at windmills".

In the example given (real or fabricated, doesnt matter), all that any attorney worth his pay would do is add the LLC to the number of individual members and entities named in any suit. You can catch more fish with a net than with a spear.