Legal Question in Business Law in New York

Re: Collecting actual damages in suit against dissolved corporation

As my colleagues indicated, the language of the contract is of paramount importance in determining your rights.

You said not only the corporation, but "officers, etc." can't open a store within a 5 mile radius. Thus, if these officers or shareholders signed the contract in their individual capacities, you can sue them individually and your problem is solved because you do not have to sue an entity that no longer exists.

As for damages, you may (not can, but may) be entitled to recover attorneys' fees if the contract so provides. If it does not make such a provision, you will not be able to recover attorneys' fees.

As for other damages, you potentially might be able to disgorge the new store of its profits. But let's be more practical here - if such a store threatened to open, the safer route is for you to immediately seek a temporary restraining order, then preliminary injunction, preventing the store from operating while your lawsuit is pending. There is a high burden to meet to get an injunction, but if you have a contract that prevents the opening of such a store, you should be on solid ground.

One other thought - you said a 5 mile radius, but you did not say for how long they must forbear from opening a competing business. The court will not permit you to have an indefinite period of time to operate free from competition, even if it's from one individual. There must be a reasonable duration of time. If the agreement is silent on the time frame, or the time frame is too broad - like 10 years - the court might decline to enforce this noncompetition agreement as an unfair restriction on commerce, and your chances of recovering damages may be very slight indeed. Therefore, you should consult with an attorney who can ask the right questions and give you the most appropriate advice, because you don't even want to think of bringing a lawsuit if you don't have a decent chance of success.

Re: Collecting actual damages in suit against dissolved corporation

Generally, the fiduciaries of a corporation owe specific duties to the corporation, here meaning the executives of the corporation. Several issues may come up, such as whether this was a small corporation, Closed, or whether it was a larger corporation with various shareholders.

However, there exists the possibility that you could sue and recover damages, or seek an injunction to stop the competitor from continuing to operate his shop with the agree upon border.

Please feel free to contact my office for further assistance on this matter. # 2127098303

Re: Collecting actual damages in suit against dissolved corporation

For any attorney to give you worthwhile advice more information is required and the relevant documents reviewed.

In your case, it sounds like you can sue the individual to stop him or her from violating the agreement. As far as recovering your fees, unless the agreement discusses that, and it should, it is unlikely that you will recover your fees.

Feel free to contact me with any questions.

Re: Collecting actual damages in suit against dissolved corporation

This is an interesting and complex question involving the nature of the seller corporation and its shareholders. If it was a "close" corp with few shareholders, or 1 only, you probably have a better chance of enforcing the agreement

against the individual(s) by obtaining an injunction. Without specifics it is hard to say more, but generally one cannot do indirectly

something one has contracted not to do directly.

As to damages there is a concept known as "piercing the corporate veil" that would also depend on the identity and nature of the corp.

You have not indicated whether fraud is involved here: for instance, another potential way out would be to recover the purchase price by claiming "fraud in the inducment of the contrtact" if it is provable that the intent to defraud you was there throughout.

If you wish to discuss this further please advise some additional facts.

Re: Collecting actual damages in suit against dissolved corporation

It would depend on what the contract specifically says and you really need a lawyer to review the agreement for an answer.

Should you like to discuss this or any other legal matter you can e-mail me for more information about low cost face-to-face, on-line or a telephone consultation with a lawyer in our office.