Legal Question in Business Law in California

Re: Changing to Corporation to protect assets

If they created the corporation just to hide/protect assets from your potential judgment, they also may be liable for a fraudulent conveyance.

However, since they appeared to have been operating as a partnership, you should pursue a judgment against the partnership as well. Who knows, you may be able to get a judgment against the individuals and the corporation, depending on the specific facts of your case.

It may benefit you greatly to find a lawyer you are comfortable with.

Good luck! Feel free to contact my office if you need assistance.

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Re: Changing to Corporation to protect assets

Regardless of their motive, it would not protect them, because they presumably entered into the contract as individuals (partners) and did the work while individuals. If anything, the corporation may be an additional party in the lawsuit (assuming that you proceed to suit).

Re: Changing to Corporation to protect assets

If the contract was signed while they were a partnership, then the partnership and each partner is equally liable for any damages that you may suffered. If you file a lawsuit, you would name each partner individually as well as the partnership itself.

If you obtain a judgment, you could go after the assets of each individual partner and this includes their shares of stock on the new corporation. Furthermore, unpaid judgments relating to a construction contract can be grounds for suspension of a contractor's license. If the license of the qualifying individual was suspended, so would the corporate license.

Depending on the facts of the case, the new corporation might be an appropriate party as well. Please feel free to contact my office if you need further assistance.