Legal Question in Business Law in California

I am, was, a silent business partner in a technology business in Irvine, ca. I came aboard to help secure loans to help build and grow the business. There were 3 other partners in the business at the time. And there were two other cosigners authorized to use the accounts. In October of 2009, the banks began calling as the bills were not being paid. I come to find out the partners formed a new company housed in the building i cosigned the lease on. The lease is under the previous company, and the new company is basically the old business with a different name. They have left me with the bills and the financial mess to deal with. All of this was going on behind my back without my knowledge. My credit has been affected as I am trying to get a handle on this situation. I would like to sue for fraud, breach of fidicuary duty, breach of oral contract, coversion, etc. I need some advice here.

Asked on 4/02/10, 10:25 pm

5 Answers from Attorneys

Daniel Bakondi The Law Office of Daniel Bakondi

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I would consider taking the case. How much is their business worth now - how much do you think they owe you had they given you the partnership share you expected? Send me an email and let me know. I have experience in these matters.

Best,

Daniel Bakondi, Esq.

[email protected]

415-450-0424

The Law Office of Daniel Bakondi

870 Market Street, Suite 1161

San Francisco CA 94102

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Answered on 4/07/10, 10:39 pm

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Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

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They have a lawyer advising them, and you don't. Whether it is worthwhile to sue depends on how well they've hidden their assets. If you can prove up your allegations without having to subpena any documents, you should be able to get an order freezing their bank accounts and assets (a "right to attach order") without prior notice to them. Unfortunately the legal work you require will cost you something. Retain an attorney here in OC. Watch out for legal time limits. I'd be happy to talk to you anytime.

Answered on 4/07/10, 11:04 pm

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

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Was the business really a general partnership? Sometimes people associated together in an LLC or small corporation speak of themselves as partners, but aren't.

If this is a partnership, and you truly became a partner, lack of a written agreement is not fatal, because partnerships can be formed and exist with or without an express agreement, much less do they need a written agreement. Obviously, the more you have in writing the easier it will be to show you were a partner (and not just a lender or gurarantor), your contribution to partnership capital, and the other terms of your role.

Your list of proposed causes of action should include some of those created by the California Revised Uniform Partnership Act, In addition to particularized fiduciary duty requirements that are obviously breached by the usurpation of business opportunity, the RUPA provides means to require an accounting and a buy-out of your capital account including your share of net assets and your investment.

My wife's technology company acquired an Irvine-based outfit to expand into Southern California a couple of years ago, and in the process we kind of learned about the Irvine hi-tech milieu. Can be rough-and-tumble, to put a pretty face on it. I have cases scattered from Siskiyou County to Imperial, and would invite you to contact me, perhaps among others, to allow me to comment in greater depth based on more information.

Answered on 4/08/10, 12:22 am

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