Legal Question in Business Law in California

Re: Suing company out of business?

Sure, if you are timely in doing so, if it makes financial sense to do so [possible insurance coverage at the time, potentially assets of company distributed to principles, possible assets of broker/agent, etc]. If you are willing to spend some attorney fees at risk, on the hope of collecting something, then I would be happy to discuss the facts with you.

Re: Suing company out of business?

Of course you can. You sue the company and the individual agent. The company may be defunct, but a default judgment may serve some significance. More important, if the company had an E&O policy, then the agent will turn over your suit to the insurance company, and if you have a valid claim, eventually, it will be paid by the insurer.

I will need more facts to give you a more firm opinion. We are real estate litigators with much experience in suing brokers/agents. Please call or email for a no charge consult.

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Re: Suing company out of business?

Corporate real estate companies always have indibidual licensed brokers who are responsible for the conduct of the corporation's business. In addition, they usually have licensed salespersons (agents).

Your question suggests that you dealt with an agent. So, you would probably want to name three defendants - the corporation, the responsible broker, and the agent.

A corporation which is suspended can be sued, but cannot defend. This increases the likelihood of prevailing against it - you would still have to put forth some evidence in support of your claims against it. Collecting a judgment against a suspended corporation is a dicey proposition, as suspension is often a sign that there are no assets.

The broker, the agent, and/or the corporation may have, or have had, insurance that would still cover your claims, in which case, filing your suit soomer rather than later might be a good idea.

The Department of Real Estate also has a victims of fraud fund that can pay victims up to $25,000 of unsatisfied judgments against licensees and former licensees.

A suspended corporation can get relief from suspension by rectifying the problem that caused it to be suspended, which is usually failure to pay its franchise tax and/or failure to file lists of officers and directors.

If the corporation was suspended at the time it did business with you, the contracts between it and you may be void, and you might be entitled to refund of any commissions you paid it. This is a somewhat remote possibility but worth researching if and when you sue.

Finally, when a corporation goes out of business, it must pay its creditors before making any distributions (returns of capital) to insiders (shareholders, directors, officers). Failure to do so may subject the insiders to personal liability. This is not on an "alter ego" or lifing the corporate veil theory, but on the theory that the insiders are fiduciaries of the creditors at that point.