Legal Question in Business Law in California

Re: Law Suit Just Received

You either convince the plaintiff's attorney to drop you from the case, or you file appropriate responsive pleadings sufficient to convince the court you should be removed by court order. You have 30 days from service to file them. If you don't know how to do that, you need counsel.

Re: Law Suit Just Received

You should never ignore a lawsuit. We would have to review it and learn any facts from you that it concerns. We can help you defend it. It seems odd that it was filed in San Diego. Do you know any contract between you and the Plaintiff? Please call us if you have any questions.

Re: Law Suit Just Received

You should show the summons and complaint to a lawyer and determine whether and how you should respond.

If the only named defendant is the business's prior owner than you probably don't have to do anything. Additionally, even if you and/or your business have been named as defendants it sounds as if you were not properly served. I base these comments on very limited information and I might see things differently if I knew more about the lawsuit and about how you received the documents.

Re: Law Suit Just Received

Like Mr. Hoffman, I can't possibly give you a comprehensive answer without reading the document or documents you received and asking you a few follow-up questions after reading them. However, I can give you some basic and general pointers:

(1) The 30 days time to respond runs from the date you were served, not the date the suit was filed and the summons issued.

(2) In some cases, you get an additional ten days to respond due to the method of service.

(3) Sueing a business as a corporation when it is not is unlikely to be an adequate defense for the business. The suit will proceed anyway and when the plaintiff figures out what kind of entity the defendant really is, it will just amend the complaint or identify the business as one of the Doe defendants.

(4) Although service MAY have been improper, hiding behind an improper service probably just delays the inevitable. The plaintiff will just re-serve you.

(5) Do not send the papers back to the court. That will accomplish nothing.

(6) Not giving "them" (who is "them," the plaintiff?) information is not going to keep you uninvolved. Failing to answer a complaint usually results in the planitiff obtaining a default judgment against you, which the plaintiff will then attempt to enforce against you by recording an abstract of judgment which puts a lien on your real property and by summoning you into court for a debtor examination where you will be forced to disclose all sorts of information about your assets, income, bank accounts etc. under threat of contempt of court if you don't answer.

My answer exceeds LawGuru's 3000 character limit, so I'm cutting it and will post it as two responses.....

Re: Law Suit Just Received

This is the balance of my response...

(7) If the business is not incorporated, what is it? An LLC? A partnership? A sole proprietorship? If either of the last two, you may be personally liable, a factor warranting extra caution in deciding whether and how to respond to the suit.

(8) You say you have "no idea what it is about." This is hard to believe, if you've read it. Some complaints are rather short on specifics, but I have never read a complaint that didn't leave me with at least SOME idea what the plaintiff is after, and why the plaintiff thinks it is entitled to whatever is sought (money damages, a declaration of the law, an injunction, a divorce, etc.).

(9) If you bought this business on 1/1/08 and a lawsuit was filed against it more that three weeks before the sale, there's an excellent possibility that the person who sold you the business was aware of the suit, or at least the strong possibility that it was about to be sued. Did the seller disclose this information to you during negotiations for sale of the business? If not, I would consider this a likely fraudulent withholding of vital facts. Contact the attorney who negotiated the purchase for you. Your should have an indemnity in your purchase agreement that will require the seller to handle this for you, or assume responsibility for your costs.

(10) An interesting aspect of this suit is that the plaintiff didn't "specify an amount." If the plaintiff truly didn't ask for any specific relief, it's possible you could ignore the suit safely, because the court cannot award money damages on default in an amount greater that a specific amount demanded in the complaint. However, that is not my advice.

(11) If the suit names only the person who sold you the business, you certainly need to bring it to his attention immediately.

I think you need to go after the seller of the business, sooner or later, in one way or another, for indemnity, fraud or something of that nature based on the duties of the seller of a business to disclose and to provide for the payment of creditors.

I guess you are in or near Sacramento, and if you would like a further consultation by e-mail please feel free to contact me directly.