LLC members are often curious about what’s happening with their limited liability company. What types of information are LLC members allowed to request? And how should those requests be made?
This issue is governed by RCW 25.15.136. It was discussed in an unpublished opinion by Division 3 of the Washington Court of Appeals, Lott v. Lott, 38712-7-III (Wash. App. Mar 02, 2023). The Lott case is quite entertaining and offers many lessons for business owners. Jeremy Lott (“Lott”) owned a twelve percent interest in Blue Mountain Farms, LLC (“BM Farms”). Lott sent an email to Shirley Mason (formerly known as Shirley Lott) (“Mason”), the Operations Manager of BM Farms, asking her to “provide all financial statements to ‘company partners’ on an annual and quarterly basis.” Mason denied Lott’s request. The superior court agreed that this denial was proper, and the Washington Court of Appeals affirmed the lower court’s ruling. Why couldn’t Lott receive the LLC documents he requested? Isn’t it reasonable for an LLC member to request financial statements?
When an LLC member requests information, that request must conform to RCW 25.15.136. Specifically, Section 2 of the statute states that “[o]n ten days’ demand, made in a record received by the limited liability company, a member may inspect and copy, during regular business hours at the limited liability company’s principal office, the records required by subsection (1) of this section to be kept by a limited liability company.” Here, as stated by the Washington Court of Appeals, “Lott did not request an opportunity to inspect or copy the records. Rather, he requested that they be provided to him, and he failed to give any notice. Accordingly, Lott failed to follow the requirements of the statute in making his request.”
The Court pointed out additional problems with Lott’s emailed request: “[T]he statute allows for a member to inspect and obtain copies of records already in existence because it pertains to records from the three most recent years. See RCW 25.15.136(1). It does not allow a member to make an ongoing request for records that are not yet in existence. Because Lott’s request was forward looking and pertained to documents that were not yet in existence, it fell outside the scope of the statute.”
Are you an LLC member who needs help requesting company information? Please let us know. We’d be happy to help you to make a request that complies with Washington law.
Phone: (206) 784-5305
