Legal Question in Business Law in California

My company (sole proprietorship) and approximately 6-10 others are strongly considering filing a lawsuit against a San Diego county-based company we purchased medical equipment and a service contract from. The suit would involve 2 components, (1) breach of the service contract (they provide the results from the medical test and are taking 2-4 months versus 1-2 weeks as promised for over a year) and (2) failure to deliver the equipment (4-5 of the companies have paid over $25k for the equipment and have not received it in over 6 months).

I'm aware that the company is effectively bankrupt (@$350k+ in debt) and the purpose of the lawsuit is to stop the company from selling equipment the do not intend to deliver and facilitating the end of the company so that someone can acquire the assets and restart the operations under a new company. We do not expect to be able to collect anything substantial on a judgement. Simultaneously, we will be filing complaints with the FBI, IRS, AG and DA's office because of a number of serious irregularities we are aware of that are likely criminal. The situation is a bit complex because about 1/2 the companies likely to enjoin in a suit are outside of California, including 1 outside the US in Australia.

I'm trying to understand:

1. We are trying to keep the cost to a minimum, especially because we do not expect the company to have any money. Is this something a general practice attorney should be able to handle?

2. What kind of costs should we generally expect to be able to bring something like this to trial, if necessary?

3. Does the attorney need to be in San Diego county or just in California to file suit?

4. If there is anyone you recommend that would suit our needs. Thanks, Bill


Asked on 10/01/09, 5:16 pm

2 Answers from Attorneys
Cathy Cowin Law Offices of Cathy Cowin

(1) Yes, a general civil litigation practice attorney can file the lawsuit you've described;

(2) Costs to bring a lawsuit to trial are not predictable. The reason is that the other side may file any number of numerous responses, motions, etc. that would require a response. We could discuss general concepts regarding costs in more detail.

(3) The attorney can be located anywhere. If the lawsuit is being filed in a California court, the attorney must have a license to practice in California. The consideration I've run into is that my rates may be more affordable than those in larger cities and legal work can usually be done from anywhere. On the flip side, if you have a non-local attorney handling a case that requires frequent court appearances (personally and not through Courtcall telephonic appearances), then you're paying a travel fee. If you have the ability to recover attorney fees, judges sometimes will not award these travel fees as it was a choice to retain non-local counsel. These costs/savings need to be considered in making a decision who to retain.

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Answered on 10/01/09, 5:33 pm
Edward Hoffman Law Offices of Edward A. Hoffman

You may want to consider forcing the company into bankruptcy. If you can do that, a trustee would step in to run its affairs. She would make sure it did not dispose of assets unless it got a fair price in return, and would try to get the company's creditors as much of what they are owed as possible.

(Note, though, that other creditors' claims may have priority over yours even if you file suit and they don't.)

You should consult with a bankruptcy attorney about this approach. You may also want to re-post your question under bankruptcy law so it will reach lawyers with a background in that area.

Good luck.

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Answered on 10/01/09, 6:11 pm


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