Legal Question in Business Law in California
Suspended Corp - how to answer in Lawsuit
I conducted a real estate transaction a few years ago under a corporation. The year the transaction was conducted, i operated under an active calif. c-corp. I was the sole officer and broker. A few months after that transaction closed, the corp was suspended by ftb.
A few years after suspension, the company and me as broker get named as defendants in a lawsuit from former client regarding that transaction. (the lawsuit has a ''doe'' for company name as the defendent is not sure of what type entity company is).
Since corp suspended, i file one answer in pro per for both myself as an ''individual'' and as ''dba the company name.'' The lawsuit has been going on for almost 2 years, no trial yet.
I'm not sure if i answered complaint correctly, as it's not answered as a corporation. How do i fix this? Or can I? Can answer be amended to state that corporation is currently suspended & that i was an agent of corp? Corp is still suspended, but at the same time it is of no use to me and i want to close it completely, so bringing it out of suspension may not be necessary or better.
No E&O insurance available and I'm representing myself.
Please advise.
1 Answer from Attorneys
Re: Suspended Corp - how to answer in Lawsuit
You are facing several distinct problems.
Fist, you cannot represent your corporation in court under any circumstances. Only attorneys are allowed to represent the legal interests of others, including business entities.
Second, a suspended corporation cannot participate in a lawsuit as either a plaintiff or a defendant. They regain this right when the suspension comes to an end.
Third, having delayed revealing the true status of the corporate defendant and having falsely claimed it is a dba, you may have forfeited your corporation's rights in the case. That probably did not happen, but it might have depending upon what you have said and done during the litigation.
Fourth, even if the corporation has not forfeited its rights, you may be hit with heavy sanctions for falsely claiming it was a dba and for letting the plaintiffs and the court proceed under this misapprehension.
Fifth, it is possible that the plaintiffs have already taken the corporation's default and even obtained a default judgment against it as to some aspects of the case. You would probably know if this had happened, but you might not. Under the circumstances it might be too late to get relief from such developments.
You need a lawyer. Your corporation also needs one, and there is a chance you will each need separate counsel.
Please feel free to contact me directly if you want to discuss this further.
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