Legal Question in Civil Litigation in California

Re: Employee protection when employer is sued for breach of contract

Yes, the employer should provide to you a lawyer, it can be their own attorney as long as their is no conflict and they agree to indemnify you. They should provide a written agrement to indemnify.

In any event, you must answer the complaint, that is file a responsive document with the Court or there will be a default against you. Do not let this happen.

You may be protected from liability but probably not. Get a lawyer.

JOEL SELIK

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Re: Employee protection when employer is sued for breach of contract

If you do not answer or your employer on your behalf a default judgment will be sought against you. Get representation immediately. Call me directly at (619) 222-3504.

Re: Employee protection when employer is sued for breach of contract

Your employer has the duty to defend you. If you incurred any legal fees or costs or were subject to damages, an action or motion for indemnification can be filed. Please call us if you have any other questions.

Re: Employee protection when employer is sued for breach of contract

If you signed the contract on your employer's (corporation's) behalf, you are not personally liable for the employer's breach of it. Although there are theories of "alter ego" to "pierce the corporate veil" to reach shareholders, it is not used to reach officers (unless they are also shareholders). The theories are disfavored and very difficult to prove. Officers are liable only for torts they commit. They are not liable on corporate contract obligations. You should demand that your employer defend and indemnify you in the lawsuit. If the employer does not, you can sue them for indemnity and recover defense costs, which include attorney's fees. Give us a call to discuss this further (the call is free).

Re: Employee protection when employer is sued for breach of contract

Generally employers are not required to defend individual employees when both are named as defendants. Most offer such a defense anyway, since the employee will generally be able to sue the company successfully if he wins the case and since paying a second set of lawyers is very expensive. But if the company is broke and can't do this, you are on your own. The fact that you worked for a company does not immunize you from personal liability.

But if the lawsuit alleges only breach of contract it will be hard for the plaintiff to justify his claim against you. Presumably the company was a party to the contract and you were not; a non-party can't breach any contract. Does the lawsuit also allege fraud? Does it say that you and the company were alter-egos of each other? Does it accuse you of interfering with the contract? Allegations like these might support naming you as a defendant.

If you haven't already done so, you should demand that the company defend and indemnify you. Hopefully it will agree. If you have homeowner's insurance, you might want to ask the insurer to defend you as well. Your policy may not cover this type of suit, but it shouldn't hurt to ask.

In the meantime, you need to protect your rights. If you don't answer the complaint within 30 days and don't get an agreement from the other side to give you more time, the plaintiff will probably have a default entered against you. Later, this default might lead to an actual judgment against you.

There are ways to have defaults set aside, but they don't always succeed and they do always take time and money. Default judgments are harder to remove. It's better to avoid a default in the first place than to have to deal with it later.

You really should have an attorney working for you. Hopefully the company will agree to help you out and you won't need your own lawyer for long, but it would be unwise to presume you won't need one and to just ignore the case.

Feel free to contact me directly if you want to discuss this further.