Legal Question in Business Law in California

Business owner reneges on settlement

I settled a contract dispute with a one-man corporation and its owner. This guy signed the settlement agreement twice, both individually and as president. Certain business revenue streams were to be held in a trust account for me. All the revenues needed to pay me were generated, but nothing was paid or set aside for me. Then the owner put the business in Chapter 7. Now he says tough luck, these were all things the corporation was supposed to do. I don't think I can raise alter ego based on the way the corporation was run. Is the owner also liable, can I sue him personally and hope to win? What is the legal principle called? Are there any cases on this?


Asked on 4/29/06, 2:06 pm

2 Answers from Attorneys
Matthew Mickelson Law Offices of Matthew C. Mickelson

Re: Business owner reneges on settlement

If the owner signed personally, he is personally liable under the agreement, and the fact that the business no longer has assets is irrelevant (although it may be the case that he personally owns few assets either.) It sounds from your description that you may have a good case. Please feel free to contact me if you would like to discuss this.

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Answered on 5/01/06, 1:20 pm
Robert F. Cohen Law Office of Robert F. Cohen

Re: Business owner reneges on settlement

If the guy entered the agreement as an individual, as well as corporation president, you can sue him individually. Don't be surprised if he files for bankruptcy, too. Then you would have to allege that he entered into the agreement fraudulently, and/or you performed the services fraudulently, to exclude the debt from bankruptcy. Good luck! Let me know if I can help.

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Answered on 4/29/06, 2:15 pm


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