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kattorney
kattorney, Attorney
Category: Business Law
Satisfied Customers: 1142
Experience:  16 years experience with a concentration in business, corporate and contracts law
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My company is incorporated in the State of Georgia as a LLC.

Customer Question

My company is incorporated in the State of Georgia as a LLC. One of the Consultant (a single member LLC from Wisconsin), after working for 18 months for my Client, started working through our competitor on the same project she was working under our contract. In fact she has allowed our competitor to represent her while she was on our contract (before the project completion date).

At the end of 18 months, my Client's contract was ready for another 12 months renewal. Due to her
improper action, I lost the contract and incurred a loss. Thought of going after her for non-compete
clause but the "Service Area" to be mentioned in the contract for non-compete was not strong enough to proceed. So I had to drop that idea.

Our Contract terms says: Payments will be processed after receiving following documents: (1) Duly Filled and signed Master Services Agreement, (2) Signed Work Order, and (3) Insurance Certificate. The insurance is for General Liability insurance and workers compensation. She (her LLC) has not provided the insurance certificate.

We have sent two letters to her LLC, well before the due date for last payment stating, she has not
provided the certificate and she has to provide the Certificate of Insurance and must maintain the
required insurance during the term of the agreement. Upon receipt of the certificate, we will process
payment.

We didn't receive the insurance certificate for the fact she didn't take insurance at all. So we didn't
release the payment for last invoice (around $20,000). In Sep 2011 she went to a collection agency and the collection agency's attorney has filed a complaint in our county's superior court (in Georgia). My attorney has filed the response, interrogatories and produced the documents. Her attorney has also filed a response for which my attorney filed a response. Finally her attorney submitted another resonse with wrong affidavit (the affidavit was for a different case) and filed a motion for Summary Judgement.

In May 2012, the Judge DENIED the motion for Summary Judgement stating: "Upon consideration of
Plaintiff's Motion for Summary Judgement, the record and applicable law, this Court finds that there
remain genuine issues of material fact to be determined by the trier of fact. O.C.G.A. 9-11-56.
Wherefore, Plaintiff's motion for Summary Judgement is hereby DENIED".

Then her attorney requested for non-jury trial and since we denied, now he has filed for jury-trial. The
judge has notified the available date for jury-trial and her attorney has agreed to that date in Oct
2012.

My company is not generating any revenue now. Should I proceed with my attorney for jury trial? What are my chances? Is it better to settle before jury trial or any other options like chapter 13? Pls advise.
Submitted: 2 years ago.
Category: Business Law
Expert:  kattorney replied 2 years ago.

Kathie Russell :

Hi and thanks for your question.

Kathie Russell :

If your company has no income and no assets, and the agreement with her was entirely between the LLC and her LLC (with no personal guaranties from you) then you may wish to consider doing nothing further.

Kathie Russell :

Assuming she gets a judgment against your LLC, if it has no assets from which to pay the judgment, she will only have a judgment that's worth the paper it's written on.

Kathie Russell :

A jury trial will be expensive.

Kathie Russell :

If the LLC does have assets, you might want to consider trying to settle with her. Tell her attorney that your LLC has no assets and no income, and offer $________telling them they will get that or nothing.

Kathie Russell :

If the business truly has no assets or income, it may want to consider a Chapter 7.

Kathie Russell :

If the LLC does have assets or cash, make sure not to improperly transfer them out of the LLC and let her get a judgment, because if you do her attorney may trace those transfers and they could be "called back" to your LLC in order to be available to pay a judgment from.

Kathie Russell :

So the botXXXXX XXXXXne is if you have assets or cash in the LLC, you may want to settle or seek bankruptcy protection, or to decide to defend the lawsuit on the grounds that she was out of compliance and also that she violated the noncompete and harmed you. If you don't have cash or assets in the LLC, you may decide to let her get a judgment against the LLC if you don't intend on doing business through that LLC any longer.

Kathie Russell :

I can't really accurately assess your chances at trial with the knowledge I have, but given what you have written, your chances sound pretty good to me.

Kathie Russell :

Does this information answer your question, or would you like additional information?

Kathie Russell :

Are you able to read my responses here?

Customer:

The LLC asset is computers and a old 1998 car


 


 


 

Customer:

My company is into staffing and I have a good set of Clients with whom I would like to do business in the future.


 

Kathie Russell :

Do you want to continue to do business through this LLC or do you want to start another company for future business?

Customer:

Most of the Clients are govt. entities and their contracts are good for two more years. Starting another company and becoming vendors is a long drwan process.


 

Kathie Russell :

OK. In that instance, you will not want to let them get a judgment.

Kathie Russell :

The bankruptcy would still be an option, but I believe that could be impacted by your ongoing contracts, which would be considered an asset.

Kathie Russell :

Therefore, it seems to me that your best course of action is to either defend the lawsuit or seek to settle.

Kathie Russell :

You should talk to your attorney about your chances, and then discuss the settlement option with the attorney.

Kathie Russell :

Many states have mandatory mediation, so you may be required by the court to mediate the case.

Kathie Russell :

This would be done with a neutral third party mediator who has no decision making capability but will try to see if the two sides can find common ground. Mediators are usually very successful in helping cases settle and avoid trial.

Kathie Russell :

You should ask your attorney if your case will be referred to mandatory mediation. If it will, you may want to wait to see how that turns out before making any further decisions.

Kathie Russell :

If the mediation does not go well, you could then consult a bankruptcy attorney to see what your options are, and then make a final decision as to whether or not you wish to proceed with the defense of your case.

Customer:

The Judge has sent the Notice of Calender Call and her attorney has sent a letter to the Judge to accept this announcement in liue of appearance at the Sep 25th Calender call


 


 

Customer:

Is it possibe at this stage to handle it with a neutral third party mediator?


 

Customer:

Are you able to read my response?

Kathie Russell :

Absolutely, it is always possible to handle with a mediator

Kathie Russell :

However, it would have to be set up quickly if you have a Sept. 25 court date. And, if it's not mandatory in your state, both sides would have to agree to mediate.

Kathie Russell :

I thought before you said the court date was in October.

Kathie Russell :

At any rate, if you wish to mediate, you'll have to ask the other side to agree and then find a mediator pretty quickly. Mediation can often bring very good results for far less expensive than a trial, so I'd think everyone would be agreeable.

Customer:

Sep 25th is the Calender call. Pre-Trail Orders / Motion are due in Judge's offcie by Oct 12th

Kathie Russell :

I see. You have some time, then. Definitely time to mediate.

Customer:

My attorney one time has asked if we are open to negotiate for a settlement. Not sure if he wants to do or thru a mediator. Can my attorney do the negotiation?

Customer:

or it is better with a mediator. Will the mediator be from the court?

Kathie Russell :

Not as the neutral mediator. A mediator cannot represent either side. However, your attorney will represent you at the mediation and her attorney will represent her.

Kathie Russell :

You can also negotiate without a mediator, by simply having the attorneys send offers back and forth. However, in my experience, a trained mediator can go a long way in helping to settle the case.

Customer:

The payment is around $20,000. I incurred a huge loss. What would be a fair amount to settle in your opinion? In case of jury-trial...approximately how much would it cost?

Kathie Russell :

I can't estimate charges since I don't know your attorney's hourly rate, but I believe a jury trial could easily reach the amount in dispute in your case.

Customer:

That means I may end up in attorney/court fees of $20,000 plus paying her $20,000 totalling around $40,000?

Kathie Russell :

Here is some information that may be helpful to you. It's from the Georgia Alternate Dispute Resolution Commission.


 


http://www.godr.org/index.php?option=com_content&view=article&id=58&Itemid=57

Kathie Russell :

Yes, that is a possiblity.

Kathie Russell :

Of course, there is also the possibility that you could win, and even though you win your attorney fees could consume the amount of the judgment.

Kathie Russell :

But remember that she will also have to be looking at these worst case scenarios. That is what makes mediation so appealing, both sides realize they could spend a lot of money and lose - so they are both usually willing to settle for something less in order to have certainty in the outcome and avoid the cost of trial.

Customer:

The payment in dispute is around $20,000. I incurred a huge loss. She comfortably worked for another 12 months and made good money. What would be a fair amount to settle in your opinion?

Kathie Russell :

There is no certain number that I could give. However, you should first determine what is your botXXXXX XXXXXne (what you are willing to settle for). Perhaps this amount would be the $20K minus your losses. However, never make that your opening position. It's best if you can get the other side to make the first offer. Then, depending upon what they ask for, you get an idea of what your opening offer should be. (General rule of thumb is that parties tend to settle in the middle of their opening positions, or close to it).

Kathie Russell :

So, if her first offer is $30,000 and you want to settle for $10,000, you would start with a very low offer of a token amount such as $1000. This will make your position clear from the start. Then you work toward a middle ground.

Kathie Russell :

The way it generally works is that everyone is together in the same room, and each side makes a statement of their case (plaintiff's attorney going first). Then you break out into separate rooms, where you remain for the rest of the mediation session. The mediator goes back and forth between the two, carrying information and urging settlement.

Customer:

Did you mean her first offer to be $20,000?

Kathie Russell :

No, she could very well open her demand with more than she is due, as she might request attorney fees and interest, etc.

Kathie Russell :

Although it may only be $20K. I am just conjecturing here.

Customer:

Got it. Now if we choose to go with neutral mediator, will that mediator be appointed by court? Will both side attorneys meet in person with teh mediator or can be worked out from theor respective offices?

Kathie Russell :

No, as stated above, you would all meet in one room. Then you would break out into separate rooms with the mediator going back and forth to try to achieve settlement. It is an in person event.

Kathie Russell :

If both sides agree to mediate, you would both agree upon a mediator. Your attorneys may have recommendations, or the state keeps a list which you could choose from.

Kathie Russell :

Rely on your attorney for a good recommendation, becasue a good mediator can make all the difference in your case.

Kathie Russell :

Check out that link I sent you for lots of good information.

Customer:

Once the case is in a neutral mediators hand, should my attorney visit the mediators office? Want to make sure if my attorney fees will be keep adding or my attoerney can handle it from his own office working with the mediator

Kathie Russell :

No, again, it is an in person event. I have explained this twice above, I am wondering if you are able to read all my posts?

Kathie Russell :

I will copy and paste it again:

Kathie Russell :

The way it generally works is that everyone is together in the same room, and each side makes a statement of their case (plaintiff's attorney going first). Then you break out into separate rooms, where you remain for the rest of the mediation session. The mediator goes back and forth between the two, carrying information and urging settlement.


Kathie Russell :

You wil be paying attorney fees PLUS half of the mediator fee. However, it costs far, far less than going to court.

Kathie Russell :

You will pay hourly fees for your attorney and half of the hourly fees for the mediator. The other side pays the other half of the mediator fees - for as long as the mediation lasts. But you are talking in the $1000 range or $2000 range, not the $20,000 range.

Kathie Russell :

Please let me know if you can read everything I've posted. Scroll up to make sure you haven't missed anything. Did you recieve the link I sent?

Customer:

I did and i will take a look at the link later.

Kathie Russell :

Great. Let me know if there is any more information you need. Sometimes there are glitches in the system, so I wanted to make sure you could see everything.

Customer:

Once we agree to a settlement amount, is it possible to pay 'X' amount per month for 3 to 6 months or more depending on the settlement amount?

Kathie Russell :

Yes, anything is possible as long as the two sides agree. That would be part of your negotiating process - when you get down to the final negotiations, you would propose the terms.

Customer:

Even though her attorney has made the announcement for jury trial, my attorney can still request mediation. Just wanted to make sure before brining this up to my attorney.

Kathie Russell :

Yes, absolutely. Parties can settle at any time before trial.

Kathie Russell :

I've even had cases that settle on the day of trial, before it begins.

Customer:

Any additional suggestions / information from your end that I may need to know before contacting my attorney. I would like to keep it easy and simple with my attorney as his fees are high (:<

Kathie Russell :

I understand! No, I have given you everything I can think of. I would just call and tell him that you are interested in mediating the case, and ask if he could set it up. In fact, if you contact his paralegal about it, it may save you in feees. :)

Customer:

Great....after contacting his office....if I have any follow-up question.....how do I reach out to you?

Kathie Russell :

You can send another question and begin it with "for Kattorney only"

Kathie Russell :

I'll also follow up with you in a few days to see how it went.

Customer:

Thank you so much!

Kathie Russell :

You are very welcome!

kattorney, Attorney
Category: Business Law
Satisfied Customers: 1142
Experience: 16 years experience with a concentration in business, corporate and contracts law
kattorney and 8 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.


He is a follow-up question Ms. Russell. Hope you can help me.


 


As you know, In May 2012, the Judge DENIED the motion for Summary Judgement stating: "Upon consideration of Plaintiff's Motion for Summary Judgement, the record and applicable law, this Court finds that there remain genuine issues of material fact to be determined by the trier of fact. O.C.G.A. 9-11-56. Wherefore, Plaintiff's motion for Summary Judgement is hereby DENIED".


 


Then her attorney requested for non-jury trial and since we denied, now he has filed for jury-trial. The judge has notified the available date for jury-trial and her attorney has agreed to that date in April 2013.


 


My company is not generating any revenue now and we can't afford to go for a trial. Most of my company Clients are govt. entities and we are approved (getting this approval is a complex process) to do business with them (even though presently we have not engaged on a contract) for next two years until 2015. The company has NO assests except for 2 old computers. We have no options to do a settlement.


 


My attorney said, since we don't have money to go for trial, he need to notify the judge and he did through a letter yesterday. His letter to the Judge says, my client is insolvent and has shut down the business and we are not ready for trial.


 


Today he has sent me another document that says 'Final Order' and Consent to Judgement - It states: Defendent hereby gives notice to the court that it consents to judgement being entered against the Defendant for sum of $21,155 principal plus accured interest of $8,439.96 plus sourt costs in the amount of $260, with post-judgement interest at legal rate.


 


I am confused as why he want to file these documents in plaintiff's favour well in advance before the judge/court makes a decision. Kindly let me know:


 


1. Since I can't afford to pay my attorney on this case, at this stage, can I send any letter explaining my position to the jduge?


2. Why does my attorney want to file the 'Final Order' and 'Consent to Judgement'? I thought the Judge / court needs to decide that and I feel that I don't have to pay her LLC as she was not in compliance with the contract agreement.


3. Since we are not in a position to go for trial, will this situation lead ONLY to a default judgement in their favour or there is any little chance they may not get default judgement?


4. Any suggestions, last minute advise?


 


Please help!

Customer: replied 1 year ago.

 


Ms. Russell,



I have some follow-up questions. Hope you can help me.


 


As you know, In May 2012, the Judge DENIED the motion for Summary Judgement stating: "Upon consideration of Plaintiff's Motion for Summary Judgement, the record and applicable law, this Court finds that there remain genuine issues of material fact to be determined by the trier of fact. O.C.G.A. 9-11-56. Wherefore, Plaintiff's motion for Summary Judgement is hereby DENIED".


 


Then her attorney requested for non-jury trial and since we denied, now he has filed for jury-trial. The judge has notified the available date for jury-trial and her attorney has agreed to that date in April 2013.


 


My company is not generating any revenue now and we can't afford to go for a trial. Most of my company Clients are govt. entities and we are approved (getting this approval is a complex process) to do business with them (even though presently we have not engaged on a contract) for next two years until 2015. The company has NO assests except for 2 old computers. We have no options to do a settlement.


 


My attorney said, since we don't have money to go for trial, he need to notify the judge and he did through a letter yesterday. His letter to the Judge says, my client is insolvent and has shut down the business and we are not ready for trial.


 


Today he has sent me another document that says 'Final Order' and Consent to Judgement - It states: Defendent hereby gives notice to the court that it consents to judgement being entered against the Defendant for sum of $21,155 principal plus accured interest of $8,439.96 plus sourt costs in the amount of $260, with post-judgement interest at legal rate.


 


I am confused as why he want to file these documents in plaintiff's favour well in advance before the judge/court makes a decision. Kindly let me know:


 


1. Since I can't afford to pay my attorney on this case, at this stage, can I send any letter explaining my position to the jduge?


2. Why does my attorney want to file the 'Final Order' and 'Consent to Judgement'? I thought the Judge / court needs to decide that and I feel that I don't have to pay her LLC as she was not in compliance with the contract agreement.


3. Since we are not in a position to go for trial, will this situation lead ONLY to a default judgement in their favour or there is any little chance they may not get default judgement?


4. Any suggestions, last minute advise?


 


Please help!

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