Legal Question in Business Law in California

Non Compete and Combining Entities

A couple of years ago I formed a CA LLC along with four partners. Four months later one partner resigned and the remaining four formed an S-Corp. We signed a non-compete for the LLC, but not the S-Corp. We'd been operating as an S-Corp for 10 months, when I spun off. Now the other three partners are suing for breach of contract, claiming that the non-compete clause from the LLC carried into the S Corp. Is this a valid argument?


Asked on 4/27/05, 4:34 pm

1 Answer from Attorneys
Terry A. Nelson Nelson & Lawless

Re: Non Compete and Combining Entities

Valid or not, you've been sued and will have to defend. It is probably a good argument, but lawsuits arise when both sides think they have good arguments. All the facts and documents will have a bearing on the outcome, blah, blah. If you need counsel, and the suit is in a Southern California court, feel free to contact me.

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Answered on 4/27/05, 5:32 pm


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