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Legal Eagle Esq.
Legal Eagle Esq., Attorney
Category: Business Law
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In 05, I set up DBA under my name/SS# XXXXX A Pomegranate

Customer Question

In ''05, I set up DBA under my name/SS# XXXXX A Pomegranate (www.apomegranate.com). I had a loose business agreement with a friend and verbally agreed to split profits 50:50. We referred to each other as partners. The company name is XXXXX XXXXX my name & web hosting is also under my name. All income & expenditure came through my bank & she received a 1099, as an outside consultant. Recently I discovered she was doing outside business & not sharing profits & was actively chasing my personal biz contacts competitively. If I cut her out of A Pomegranate, took her off the web & email, what do I leave myself open to in terms of legal/financial/other repercussions? She set up a DBA in CA under the name, uses the name on all her paperwork, refers to herself as 'owner'. Can I send her a C&D order? What would that entail/cost?
Submitted: 6 years ago.
Category: Business Law
Expert:  Legal Eagle Esq. replied 6 years ago.
Hello-

What state are you located in?

Can you provide a little more detail about the "loose business arrangement" (did you intend to sell nationally or just locally, was this ever discussed with your partner?). It sounds from what you describe that although you referred to her as a partner she was in fact an independent contract but you indicate that you referred to each other as partners- was there in fact a partnership? Once I get a better understanding of your relationship I can provide some information regarding the possible repurcussions.

One thing you can do, is demand the she account for all revenues resulting from the California sales (if you are of the opinion that they fall under your "loose business arrangement") and/or provide her with a cease and desist letter wherein you demand she terminate the use of your trademark and/or pay you royalties for the use of the trademark.

I look forward to answering your question.
Customer: replied 6 years ago.
New York.

We do market research and brand strategy consulting and we work on national business (you can see the list of clients on our website). We never had a legal partnership, by her request ("friends should trust each other"!) and we also verbally agreed to share the work and net profit. There was NO partnership agreement but we referred to each other as partners.

We briefly opened an LLC under both our names last year but did not use it and declared $0 on our 2007 tax returns. I have since opened an S Corp under the name of A Pom East Corp and A Pomegranate Limited in the UK - as I intend to work on either side of the pond.

I know for a fact that she was tutoring part of 2006 and/or 2007 but she declared on a phone call with our accountant, accidentally, that she had declared $40k more on her tax returns than I did. I am not expecting to be able to go back and ask for my share on this, but I would like to stop her working under the A Pomegranate name in future.
Customer: replied 6 years ago.
At the beginning of this year, she set up her own Sole Proprietorship in CA (probably under the name of A Pomegranate) and we continued to use the web and email url but work on our own business. I had 'got over' being stiffed on the finances and obviously doing over my half of the workload but since I am planning to spend some time building the business in London, once she got wind of this, she took the mailing list I had compiled (which included a few of her own contacts but mostly mine) and invited them all to join her LinkedIn Site. My very real fear is that the next step is that she will mail them to tell them I've left the country and that she is handling my business!!! She was aware that I'd continue to handle my own business regardless of where it was located and do this invisibly. My current client such as Mars & BBDO are my bread and butter until I get in business in the UK. Nasty, eh!
Customer: replied 6 years ago.
How much would it cost to send her a cease and desist order on her .... ? Since I don't have the funds to go into litigation and thus I don't want to open up the doors for anything beyond that.
Expert:  Legal Eagle Esq. replied 6 years ago.
Hello-

1) The costs of the cease and desist letter should be minimal (although each lawyer has different fees, it could range from $500 - $2,000) - although you can significantly minimize it if you draft it yourself.
2) The letter you draft should include
(a) demand that she account for all sales she has generated;
(b) demand that she discontinue use of the trademark until such time as she produce the revenue resulting from any and all sales;
(c) remind her that she does not have a license for the trademark independent of the previously established business arrangement;
(d) threaten legal action if she does not fulfill your demands within a short timeframe (appx. 7 business days).

You are definitely in a difficult situation primarily because you do not have an written partnership agreement. Unfortunately, the scope of your issue may be well served by actually meeting with an attorney because you want to insure you protect the entire scope of your rights. While I can provide you with many suggestions, ultimately you have a recognized brand and you should really seek to protect this income producing asset with an attorney that can fully delve into the entire set of issues you are presenting.

Not trying to pass the buck- but I do think you are best served by actually retaining an attorney and giving yourself the best opportunity to protect your rights.
Legal Eagle Esq., Attorney
Category: Business Law
Satisfied Customers: 70
Experience: Business / Corporate / Real Estate
Legal Eagle Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 6 years ago.
But the first question is, if I take her off the web site and email url, do I have any resource?
Expert:  Legal Eagle Esq. replied 6 years ago.
It's unclear what your relationship is with her to determine whether you have an obligation to continue to have her listed on the website. Arguably since she is not abiding by the terms of the "loose business arrangement" you could remove her but she may have a different view of the business arrangement and challenge your position that she couldn't otherwise develop and retain business on her own.

Unfortunately without a written agreement detailing each parties obligations and responsibilities to the other it is difficult to determine the repurcussions. To add to the confusion you have mentioned her as a partner (thereby arguably she is an owner) but then have treated her as an independent cotnractor.

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