Legal Question in Business Law in California

Hi.

Unfortunately, with the few facts that you have given there is no way to determine whether or not he has a case.

Given the fact that there is a threat of a lawsuit and you deem the threat serious enough to post a question, it would seem like he is going to be filing a lawsuit.

I think you should at least consult with an attorney to review the documentation and go over the facts with you in order to get a better idea of whether there is a valid basis for a lawsuit and/or to discuss defenses to any such lawsuit.

J Caleb Donner

email: [email protected]

We cannot follow the facts given, much less evaluate the potential plaintiff's chances for success, if and when he files a suit. Nevertheless, as a general rule, a court will find a theory upon which to enforce a written agreement of the sort you mention. For example, is it crystal clear that you signed as an officer of the defunct corporation, or could it be interpreted as your personal obligation? Also, between the Corporations Code and the common law, there is almost no way a corporation can go out of business without corporate and shareholder liability to creditors IF the shareholders get preferential distributions of corporate assets.

From the facts you lay out, it also sounds like he may have a good case for fraud, if you signed the deal and at the time planned to close the original business and open a new one to avoid the agreement.