Legal Question in Business Law in California

I recently resigned from the board of directors for a Nevada based corporation. I am owed a large sum of back pay and stock. Is it possible for me to put a lien on the assets of the corporation for my back pay?


Asked on 4/29/10, 6:50 am

5 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

There is a limited number of situations in which a creditor may have an involuntary lien on someone else's property. If this turned out to be a California case, you have a pretty comprehensive list in the Civil Code - sections 3046 through 3066 cover laundrymen's liens, carriers' liens, threshermen's liens, vendors' liens, purchasers' liens, and a bunch of others. I'd say none of them fits (a purchaser's lien applies only to real property).

The usual way for a creditor to obtain a lien against a debtor is to go to court, win a judgment, then record an abstract of judgment in counties where the judgment debtor(s) may have property. This creates a judgment lien. The judgment lien can then be enforced through a variety of statutory techniques.

As your debtor is a Nevada corporation, two major threshold questions are raised: whether Nevada law will apply, and whether jurisdiction of the lawsuit would be in Nevada. Among other things, a lawyer would need to know where the board of directors met and whether this is a bona fide Nevada business or merely chose to incorporate there because of the mystique of being a Nevada corporation doing business in California.

Also, some analysis of your two claims (stock and pay) might show separate remedies for each........there are administrative shortcuts for enforcing a claim for salary or wages that may not require a lawsuit. Did you work in Nevada or California? If the latter, contact an office of the Labor Commissioner.

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Answered on 5/04/10, 8:27 am
Jonathan Reich De Castro, West, Chodorow, Glickfeld & Nass, Inc.

It is not clear from your question whether jurisdiction is going to be in California or Nevada (or both). In either case, you probably can not just impose an involutary lien against their assets and you will have to sue first. You should also look to see if there is a way to fit your claims under the attachment statutes of what ever state you end up suing in. Good luck.

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Answered on 5/04/10, 9:01 am
Anthony Roach Law Office of Anthony A. Roach

Not without a judgment or their consent. This is a Nevada question, because you are dealing with Nevada law. I suggest reposting in the Nevada forum.

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Answered on 5/04/10, 9:06 am

As the other attorneys have said, you don't give enough information to let us know if you would be enforcing your rights in California or Nevada. Just because a company incorporates in Nevada, doesn't mean that is where jurisdiction lies. A great many publically traded companies incorporate in Deleware due to its corporate governance laws which control the corporation no matter where it does business. If, however, a Deleware corporation with headquarters in California enters into a contract in Florida to be performed in New York, the contract could be enforced in California, Florida or New York, and a choice of law analysis would be needed to determine whether Florida or New York law applied.

With all that said, however, I do not know of any state that allows an involuntary lien in the situation you describe. The other attorneys who say you have to get a judgment first, however, are not necessarily correct. Every jurisdiction I know of has some form of pre-judgment asset attachment law. An attachment is much like a lien. It is a court order that a particular asset be held and not transferred or sold without the court's permission, until the lawsuit is over. In California, in order to get a pre-judgment writ of attachment you must first file a lawsuit for money owed, and then prove that it is more likely than not that you will win the suit, and that the defendant may not have enough money to pay the judgment if the court does not hold onto the asset until judgment can be had. If you can establish those things, the court will issue the writ which is, in many ways, even stronger than a lien, since property subject to a lien can be sold either subject to the lien or to a bonafide purchaser for value who does not know of the lien.

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Answered on 5/05/10, 9:53 am
Alden Knisbacher knisbacher law offices

You will likely have to sue -- again, not clear if in CA or in Nevada. But, if you worked in CA you would be owed wages, interest, penalties and attorney's fees under the CA labor code.

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Answered on 5/06/10, 8:23 am


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