Legal Question in Business Law in New Jersey

Frivolous suit, LLC protection?

I did consulting work for a client that inherited several million dollars (organizing estate paperwork and documents). Unfortunately, this person is very unstable and, as she's done to MANY others in the past, refused to pay me and accused me of stealing from her. I sued in small claims and won (she never showed). She also stiffed a mutual friend, who went to see her to try and collect. During a rant she brought up my name and said she was going to sue me because ''I have millions and want the enjoyment of making him pay the legal fees to defend.'' If she carries through with her threat, what recourse do I have? Am I truly stuck paying to defend against a baseless and frivolous suit? Also, would it be wise to set-up an LLC (vs. my current sole proprietorship) - and does an LLC afford protection if formed AFTER an event such as this? Thanks!!


Asked on 4/19/03, 10:58 am

1 Answer from Attorneys
Walter LeVine Walter D. LeVine, Esq.

Re: Frivolous suit, LLC protection?

Defend claiming frivolous litigation. If successful and you meet the criteria, you get costs and legal fees reimbursed. A new LLC will not protect you from prior activities, only those covered by the new entity. In many instances LLC's do not protect you (e.g., where you give personal guaranttes or from personal negligence). They mostly apply to contract actions where the LLC has assumed responsibility.

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Answered on 4/19/03, 2:20 pm


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