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Fact: I have C corporation where there are 65 voting/active shares and 35 Treasury stock shs. There are 35 non voting shares or Preferred stock- not sure as to the right term No stock certificates have been issued. There is a paper on file, signed by alll parties acknowledging these facts. In addition: A contract was signed by 3 of the voting shareholders that represent the 65 shares: 30 shs- Shareholder A, /22 shares to B (plaintiff) and /13 shares for C To facilitate the decision process the contract "specifically" states: Shareholder A makes all decisions concerning the dance studio's operations. Shareholder B makes all decisions concerning Administartion and Event venues. Shareholder A & B are responsible for any deficit in the monthly expenditures. Shareholder C is not responsible for any monetary shortfalls. Shareholder C would only be involved with non related issues and would be the deciding vote if A & B could not agree to these unrelated issues. All three guarantee the lease for the property in which the company was operating from. Shareholder A in conjunction with C representing 43 shares decided to remove B (22 shs)from the checking account and changed the locks on the facility. There was no reason given, no meeting held and no minutes recording their action. To add insult to injury, because of correspondence that was initiated by Shareholder B, A & C hired an attorney and the back and forth letters have produced nothing but back and forth accusations. In addition A & C have opened and have been operating under a similar name, and potentially using a different bank account under such name in the same operation of business at the same location. There is only one debt of $12,000 since all purchases and construction totalling $250,000 was paid in cash. They claim the business is worth zero. I made an offer to buy their shares out. They never asked for how much. They want the corporation and it appears they want to do me out of my investment of $40,000. There is also a provision in the lease which B is responsible for, that no sub lease can be arranged unless approved by the landlord and naturally by B. Landlord was informed and is following through. Shareholder B now has to either seek council or go it alone on a solid case. Shareholder B realizes that Civil Court is for amounts up to $15,000 and will seek that amount, and if the initial law suit does not get their attention, a request will be made to transfer it to circuit court where the amount is in excess of $15,000. Here is what shareholder B wishes to present to the courts in the action: 1. Breach of Contract 2. Fraud for opening another corporation and claiming the company is worth nothing. 3. Embezzlement- for the use of previous accounts income to fund the new corporation and make payment to their employees and personal income to A. Questions: 1. Are the charges accurate? 2. Are there any additional charges applicable? 3. Since the courts determine how to proceed, does a specific monetary amount necessary since there are potential criminal charges. 4. How does B get a court order (immediately) to cease the illegal operation of anothe corporation If B could afford $10,000 (initially) in legal cost an attorney would be hired. I believe getting their attention and having them incur legal cost in hiring an attorney for the corporation, may do the trick. If not B will not proceed without legal representation. I hope I covered it all. I am waiting for your input. Thank You Joe
I am willing to pay a bonus. How much?
You can claim fraud, but you should add a claim for conversion - taking your property, also breach of fiduciary duty, breach of duty of loyalty, there are probably more, but those are the first that come to mind. They did not have the authority to change the locks. You are on the lease and would have to be evicted, which would be very tough in this case when you own the tenant as a shareholder.
You need an injunction to stop them form stealing your business. The are doing irreparable harm to your business interests and reputation.
Also known as a cease and desist. You will need a lawyer for this.
You have a good case. Would you consider hiring someone on a contingency basis?
I would go straight to the circuit court and claim in excess of $15,000. You should take these guys to the cleaners. They totally ripped you off and you can prove it. Changing the locks was over the top.
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You can win. Go for $1 million. They stole your business and acted in total bad faith.
Yes, contingency is an option I would entertain.
In addition, there is one partner who has a house worth $250,000, age 74 and the other one has maybe $25,000.
Now you need to find the right lawyer to take the case and run with it. Agree to pay court costs and give them 25-33%. They both have cash too. You also have the restraining order route, which should get you back in there.
I realize the severity of their actions, and the amount of a financial recovery is minimal and that is the reason I am questioning the cost factor.
Does your organization have any lawyers that would take this on a contingency basis?
Yes, but we are not admitted in FL. Try the local bar association lawyer referral service for starters.
You may have to hunt around for a while, but when you tell them that the defendants have money and a profitable business is involved, you will get their attention. They have to see money to be interested, sad to say.
What about the injuction? Would you be happy taking the business back?
Other then what I mentioned, what would be the easiest way to proceed to initiate a court action?
Court action under $15000 on my own?
Go straight to suing them. That is the only kind of logic they will understand. You could enjoin them from running the business but that will ultimately hurt their ability to pay.
If that is all you think is worth, then yes.
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