@Jeff Greenberg Ideally, asset protection comes into play well ahead of the lawsuit even being filed. I don't know that there's any 100% guaranteed method for everyone or the details of your ownership, so I'm just throwing that out there as a caveat to some thoughts.
If this property had been structured inside of a Series LLC (as a child series) or inside of a land trust, or a Series LLC/Land Trust combo, the plaintiff would have had a harder time initiating the suit at all. Most attorneys don't WANT to take cases that take on SLLC structures. Now I don't know that your deal structure would have allowed for that, so please understand this isn't a criticism of what you've done so much as a thought experiment/post-mortem on how asset protection could prevent someone else from falling into a similar situation. If you do end up in court over real estate, it's a pretty common argument that when you buy the property you buy the liability. That's why the contingency solution you mentioned is so important. Obviously it's BS that you could have predicted this particular situation, but it's a liability inherent to owning a complex that, well, stuff pops off.
Insurance definitely wouldn't have made a difference, even if you'd had the mightiest policy in the world. The difference an SLLC/Anonymous Trust structure *could have* made is just making the initial suit more of a pain. I don't know how many properties you have inside of that LLC that has been named in the suit, but if it's just the one--good. But for investors pooling multiple properties inside of a single traditional LLC are doing so at great personal risk. A suit like yours would then place ALL of those properties on the line in the event of a judgment. A Series LLC, by contrast, would limit the judgment an opposing attorney could possibly collect to the property within that series (just the one property associated with the suit), rather than everything. It sounds like your lawyer's a smart one who made sure you aren't personally liable--any properly structured LLC can take care of that. But by limiting the amount possible to "win" in judgment, motivation to sue is sucked away. This brings us full circle back to the original point.
If a lawyer is checking you out, with a pissed off client in their office ready to sue, the first step is to research what assets are associated with your name. In this case, they saw the LLC that owns your property. For most attorneys to even sue a Traditional LLC, they need strong motivation, usually in the form of a client with cash to throw into it or a juicy asset to collect in judgment. Ideal asset protection strategies make you a bigger pain in the *** to sue in the first place, and limit what they can get on their (almost always hypothetical/potential) "payday." The Series LLC/Anonymous Trust structure can make an investor a more difficult target all around, and usually will stop the lawsuit before it even starts. It is true that in asset protection, the law absolutely favors the proactive.
Again, I'm not saying that this would definitely have made a difference or even been the best option in your case. I don't know the details of your deal structure, purchase, partner agreements, property, etc., and am obviously not your lawyer. But all of us who own property can be held responsible for liabilities inherent to the property, whether that's grandma crashing through the staircase of a recent remodel or nutjobs showing up and causing drama at apartment complexes. In theory, ANY LLC structure *should* take care of this where there is no intentional fraud/outright negligence. Obviously neither is the case here. All that said, I'm truly sorry you're in this situation. It's so absurd that if your stuff weren't on the line, it would almost be funny. Here's hoping you've got an absolutely zero BS judge who understands liability can't be incurred by your failure to be psychic or Superman. It sounds like your attorney is on the ball--I'd be using the same argument to distance your LLC from the liability. No liability, no case. Then it's your call on whether to contersue, and hell, I would! (That's my opinion as a human, not a legal professional. I'd be personally pissed off at someone wasting mine and my partner's time, money, and energy, and want them to pay the bill.) Frankly, the "likelihood of an occurrence" of this is remote, even WITH a previous but totally unrelated incident. I mean, did you even own the property when the seven-years-prior incident occurred?
Thanks for your thoughtful comments and genuinely entertaining write-up of what must be a terribly frustrating situation! LMAO @ your speculation about the medical costs. Sounds like the ER took this about as seriously as they would a nasty case of itchy feet. Here's hoping you don't have to pay for the $800 Ibuprofen or anything else!
Edit: It's entirely possible that you have a really stupid opposing attorney that took this case on a "long shot," just based on the value of the asset alone, and will give up pretty quickly. It doesn't sound like a situation where the plaintiff has a lot of cash. Hell, if they did they probably wouldn't be suing over an ER bill! Here's hoping the gods of law and reason smile upon you.
