Articles Posted in Business Litigation

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AdobeStock_257476584-300x200Litigation is a costly enterprise for any business owner. It is important to work with an experienced business litigator who knows how to mitigate litigation expenses wherever possible. New statutes – such as the one that creates informal discovery conferences – can be used to help resolve discovery disputes and mitigate the over cost of business litigation.

What is an Informal Discovery Conference?

Recently, the California Code of Civil Procedure was amended to allow civil litigants to request an informal discovery conference. While the discovery process is governed by clear rules and procedures, the parties are often expected to resolve differences amongst themselves. If they cannot, they must let the court decide their differences. This is traditionally done by discovery motions. If, for example, one party refused to procedure a document requested by the other, the requesting party could file a motion to compel with the court. The attorneys would then prepare written motions to the court, make arguments at the hearing, and wait for the judge’s ruling. All of this results in added attorney’s’ fees.

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AdobeStock_343368495-300x200The coronavirus has created many new legal issues with unclear answers. Courts across the country will spend months – and likely years – sorting through a backlog of civil cases involving legal questions about the financial losses created by COVID-19. While it is not possible to predict the outcome in every case, there is some guidance from prior case law that can help business owners effectively plan to mitigate their liability. The experienced business lawyers at Structure Law Group can help develop a mitigation strategy that is tailored to your business. Learn more about the history of breach of contract case law – and how it can help you make informed decisions about your company’s contracts in the era of coronavirus.

Is COVID-19 a Valid Excuse to Breach a Contract?

Case law involving breach of contract goes back hundreds of years. Many different reasons for breach have been explored by the courts, but, of course, they have never before faced COVID-19. This is a new global phenomenon that has created unique challenges for business owners all over the world. To predict how courts will treat breach of contract related to COVID-19, one must examine the reasons they have excused breach in the past – or not excused it, imposing liability on the breaching party.

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AdobeStock_316499043-300x199In California litigation, each side is generally expected to pay their own attorney’s fees. This can be a significant amount – one that is especially hard for businesses to bear when they are new, or small or subject to difficult market conditions (such as the coronavirus pandemics). There are, however, certain situations in which a party can recover attorney’s fees. Learn more about how you can mitigate the expenses of litigation.

Recovery Through Statutes

There are certain statutes that specifically provide for attorney’s fees. If a party successfully pursues a claim under a specific statute, the court can award attorney’s fees at the end of the case. This is why it is important to work with an experienced business litigator who knows which claims you can pursue under state statutes that specifically allow for attorney’s fees. These statutes typically involve cases of serious misconduct, such as fraud, concealing evidence from the other party, or lying to the court. One frequent example is California’s “Anti SLAPP” statute. Section 425.16 of the California Code of Civil Procedure prohibits frivolous lawsuits that use the judicial process to restrict another party’s right to free speech. The statute also specifically allows attorney’s fees to be awarded to a prevailing party on motions to strike filed under this statute.

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AdobeStock_311306025-300x200Many business owners are familiar with the discovery process. When a lawsuit is filed, it triggers a formal process of exchanging evidence between the parties to the case. The discovery process has specific rules governed by law. These rules are designed to protect litigants from opposing parties who would misuse – or blatantly abuse – the discovery process. Unfortunately, if your lawyer is not experienced with the discovery process, your business can be hurt by these strategies. The experienced corporate litigators at Structure Law Group know how to protect litigants from discovery abuse. They are familiar with the tricks and strategies that are used, know how to call out other attorney’s misconduct, and know how to seek sanctions from the court when necessary. Learn more about the tactics for discovery misuse that can hurt your business.

Abuse Can Run Rampant

There are many ways in which an opposing party can abuse the discovery system. One strategy is the “war of attrition.” This can happen when one party is a large business with plenty of funds for litigation, and the other party is a smaller business that has limited resources to pay legal expenses. In this case, an opponent may attempt to drag out the discovery process as long as possible in order to run up the opponent’s legal fees. They might request depositions of unnecessary witnesses, or ask for far more documents than they reasonably need, or insist that documents be organized in a different order or format than how they were originally received. They might file frivolous discovery motions with the court in order to delay discovery and increase your attorney’s fees. All of these requests add up. The discovery process can last for months, so if your attorney is working to manage a lot of frivolous requests, your legal fees can become overwhelming very quickly. In this case, your attorney may need to file a motion with the court to curtail the unnecessary discovery requests – and seek monetary sanctions for misuse of the discovery system.

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AdobeStock_151536590-300x214When filing a lawsuit in California, the original complaint may be either verified or unverified. If it is verified, the plaintiff makes assertions under the pains and penalties of perjury. A verified complaint also forces the defendant to respond to the lawsuit with a verified answer. This tactic forces the defendant to immediately make statements about the allegations under oath. There are strategic reasons to use – and not use – a verified complaint when filing a business lawsuit in California. Learn more about this litigation tactic so you can ask your litigator if it is right for your case.

Pros and Cons

As with anything in life, there are pros and cons to using a verified complaint. As discussed, the most pressing pro is that it forces the defendant to submit a verified answer. These statements can be disproven in litigation – which means your attorney can ask for the defendant to be penalized for lying under oath. You might be awarded attorney’s fees or discovery sanctions for the perjured evidence. At trial, the defendant will be made to look like a witness who is not credible to the jury. By starting your lawsuit with a strong hand, you can have more control over the direction that discovery takes throughout the case.

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AdobeStock_335918168-300x200A civil lawsuit is a common experience for business owners. Whether you are filing or defending a lawsuit, it is important to work with an experienced litigator who knows how to protect your legal rights throughout the discovery process. The experienced business lawyers at Structure Law Group, LLP know how to protect both you and your business from inappropriate discovery requests by seeking a protective order. Here are a few examples of tools our experienced attorneys can employ to protect your rights.

Privacy

Certain information must be exchanged during the discovery process. This is not, however, an unlimited right for the other party to learn every detail about your personal life. Discovery requests must pertain to information that are admissible at trial – or “reasonably calculated to lead to admissible evidence.” If you are asked about personal information that does not pertain to the lawsuit, your attorney can object. Objections can be made to written requests, such as interrogatories, requests for admission, or requests for documents.   Objections can also be made to questions posed at a deposition.  By following up with a protective order, your rights to preserve your objections can be protected throughout the remainder of the case.

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AdobeStock_368546040-300x200Litigation is a reality in the life of a business owner. Most business owners will, at some point, have to engage in litigation in order to protect their legal rights. Litigation can result in a monetary judgment that is enforceable by court order. A judgment is the first step to collecting what is owed.  Unfortunately, many defendants are either unable or unwilling to pay.  Luckily,  there are many ways in which a business lawyer can enforce money judgments through the legal system. Here are some of the legal tools at a creditor’s disposal that can help collect money owed pursuant to a lawful court order:

Writs of Execution

A writ of execution is a court order to the local sheriff that directs his (or her) deputies to seize a debtor’s assets in order to satisfy an existing money judgment. For example: if your company has a judgment against another company, you can ask the court to issue a writ of execution against the debtor company’s business accounts in the amount of your judgment.

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AdobeStock_282672626-300x200Sadly, it is not uncommon for litigants to abuse the discovery system in a civil lawsuit. Sometimes it is an attempt to make an opponent’s legal fees too high to continue litigation. Other times, a party might be trying to drag out a lawsuit and force the opponent to settle rather than continue indefinitely. These tactics are especially common when a business knows that a competing business is undercapitalized and cannot afford litigation that is costly or lengthy. But business owners do not have to succumb to these tactics. Learn more about what an experienced litigator can do to protect your business throughout the discovery process.

What RFAs Do – And What It Costs to Prove Them

Requests for Admission (RFAs) are a specific type of discovery tool that can be very effective when used properly. An attorney submits RFAs to the opposing party. These are formed as questions that the answering party must either: 1) admit, 2) deny, 3) admit in part, 4) deny in part, or 5) explain why it is unable to answer.  It is also possible to object to the request entirely, but courts do not take kindly to gamesmanship in the discovery process. If the answering party fails to answer these questions, it is considered an admission that they are true. It might not come as a surprise to learn that parties sometimes lie on these questionnaires. When this happens, the asking party or “Propounding Party” has an opportunity to prove that the question should have been admitted as true. This can be done in many ways. Your attorney might, for example, hire a forensic investigator to review the other party’s financial statements. You might find a former employee who can testify that the statement should have been admitted as true. Your attorney might even hire a private investigator to uncover evidence of the truth. However done, it almost always costs the Propounding Party money to prove that the RFA should have been admitted in the first place.

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AdobeStock_69411638-300x200A breached contract can result in significant business losses. The amount of the contract may not reflect lost business, missed opportunities, and other financial losses that can seriously hurt your bottom line. Unfortunately, these losses are not adequately reflected by the value of the breached contract. In some cases, the contract actually specifies a value for breach – an estimate known as “liquidated damages.” This pre-breach estimate rarely reflects the full value of your company’s financial losses. This is why many companies seek punitive damages in addition to their specific losses under the contract. Punitive damages are designed to punish the defendant for misconduct in order to deter such conduct in the future. They are not, however, available in most breach of contract cases. Learn more about punitive damages – and when they might be available to help mitigate your losses under a breached contract.

Can You Get Punitive Damages for Intentional or Malicious Breach?

In California, punitive damages are only available in a breach of contract case if the defendant has also committed an intentional tort. This means that mere negligence, or a poor choice to breach the contract, will not justify punitive damages on its own.

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AdobeStock_271469937-300x200In general, shareholders are protected from liability for the debts of the corporation. This is because the corporation is viewed as a separate legal entity with its own assets and liabilities. This “corporate veil” of protection can, however, be pierced in certain situations, and personal liability imposed on the shareholders. Creditors use this legal tactic strategically to be sure they can access funds for what they are owed. The experienced California business attorneys at the Structure Law Group can help advise creditors on how to effectively pierce the corporate veil in order to satisfy the debts they are owed.

Elements of Alter Ego Liability

In order to pierce the corporate veil, the plaintiff must prove “alter ego liability.” Alter ego literally translates to “other self.” In alter ego liability, the corporation has been treated as an extension of shareholders’ personal interests, so the courts find it fair to hold shareholders liable for the corporation’s debts, as well. Plaintiffs in California must establish: (1) that there is a unity of ownership and interest between the owners (or shareholders) and the corporation, and (2) that it would be unfair to only hold the corporation accountable for its debts in order to establish alter ego liability.

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