Legal Question in Business Law in California

Re: Pending Lawsuit

You need to respond to the lawsuit. The attorney you retain will know how to best defend your interests.

Re: Pending Lawsuit

First, I think you should adopt the point of view that, whether it is just or fair or warranted by the facts, the suit accuses the individuals of some personal wrongdoing apart for the corporation, and ALL named defendants need to respond to the allegations of the Complaint. When you say "recent," I hope it wasn't more than 30 days ago, because that's how long after being served each defendant has to file and serve a response - usually an Answer, but sometimes a Demurrer or Motion to Quash, etc. may be appropriate.

Suits where officers are named as defendants in addition to the corporation itself probably fall into four categories: (1) where the legal theory for naming the individuals as defendants is "all wet" and shows a mistake of the plaintiff or its attorney; (2) where the plaintiff is alleging an "alter ego" theory, telling the court that the corporate entity should be disregarded and the corporate "veil" pierced; (3) a shareholders' derivative action; and (4) where the things complained of might have been done by, or liability might rest with, either the corporation or the officer(s), or both.

An example of #4 might be breach of a lease in the name of the corporation, but personally guaranteed by the officer(s). There are many other possible examples.

Whether this case is a #1, #2, #3 or type #4 may determine whther the individual defendants can be dismissed early in the case or, on the other hand, may turn out to be the legitimate primary targets of the lawsuit.

Finally, the question of whether the officers are legitimately joined in this suit is pretty much a separate question from whether they are liable or not liable as alleged.

Once a suit is filed and a defendant is served, getting names "removed" can be done by dismissal or by judgment for defendant. A party can be dismissed voluntarily, e.g., when the plaintiff realizes the claims against that defendant are baseless, or involuntarily by the court, perhaps after a successful demurrer based on misjoinder of that defendant.

Re: Pending Lawsuit

Officers can sometimes be held liable for the acts of the corporation if they actively participated and/or directed the alleged offense. You should hire a defense lawyer quickly. If the complaint has garbage claims against the officers then it should not be too difficult to get out of it. But, be careful, if there are facts that are in dispute it may be impossible to get out except after a trial.

Good luck.

Re: Pending Lawsuit

I can only add a couple of comments to the prior responses. First, it is sometimes possible to attack the complaint in the response if there are sham, weak, or incorrectly plead claims. Second, if you are very close to the 30-day response period and need additional time to get counsel, call opposing counsel and get an extension of time to respond (not just answer)... and get the extension of time confirmed in WRITING. Then run, do not walk, to a local attorney's office who is familiar with business law complaints involving corporations.

Re: Pending Lawsuit

The defendants will have to file appropriate pleadings and motions if there are grounds to do so, as part of defending the lawsuit. Hire an attorney, who will know what to do.

Re: Pending Lawsuit

At trial or at a Motion for Summary Judgment, you will have to prove that the corporation followed required protocal and that the individual officers were not liable. Did the officers of the corporation sign a personal guarantee?