Legal Question in Business Law in California

Re: im being sued

You should defend the lawsuit. We can help you and would have to review your documents. Please contact us if you have any questions. You have to respond within 30 days if the lawsuit was filed in State Court and noramlly 20 days if you were sued in Federal Court.

Re: im being sued

If you have been served with a summons and complaint, you need to prepare, file and serve an answer or other permissible responsive pleading within the allowed 30 days after service of the summons and complaint on you, or you may lose by default.

As to specific defenses that might be available to you, this will depend on the facts of your particular case, such as what the complaint accuses you of doing, and what you actually did or did not do. Most suits by investors against business promoters will allege either fraudulent failure to disclose or a breach of fiduciary duty in management of the business.

Business success is never a certainty for the investor or the operator, so in some cases the loss of investment is just the breaks of the game, but unhappy investors are prone to look for crabs under every rock. The slightest misrepresentation or mis-step in management can be blown up into fraud or breach of duty.

Another issue is whether this was an equity investment (as your question suggests) or a loan. Loans must be repaid, whether or not the business has earnings.

The fact that the business is an LLC probably would not protect you from most well-written causes of action from an investor. The suit will make allegations against your conduct, not that of the business.

Re: im being sued

Settle, or defend, or ignore it and allow a default judgment against you and/or the company, or file bankruptcy if it is appropriate. That was easy.

If you have defenses that could keep him from obtaining a judgment against you or the company, then consider defending and litigating it. Those defenses might also be used to force a 'reasonable' settlement, whatever that means under your circumstances. If you intend to defend it, file your responsive pleadings within 30 days of service to avoid default.

Feel free to contact me if serious about getting the legal help you'll need.