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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41220
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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State of Idaho. Being sued by a company weve done business

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State of Idaho. Being sued by a company we've done business with for several years, because our account is $8000 in arrears. We originally operated as a sole proprietorship, but moved to LLC starting Jan 1 2011. All transactions since have been through the LLC. The suit is suing "Company Name, an individual". (I have withheld our company name). What does this mean? Are they suing the LLC or me as an individual? Do I respond with "Company Name, the sole proprietorship, has not done business with plaintiff since 2010 and at that time was in good standing, with all accounts paid in full." Is this an attempt to get around LLC protection?

Thank you for your question. Please permit me to assist you with your concerns.

What this means is that they are suing both the company via company name, and yourself as an individual. Both parties are listed as co-defendants. This is likely a means to get around LLC protection especially if they initially started to work with you directly back before there was LLC protection in place. That, unfortunately, grants them the right to sue directly since they ca claim that the initial agreements under which you breached and collected arrears was done as a sole proprietorship and without LLC protection, making you personally liable for any breach. Creating an LLC is wise for any debts going forward, but any contracts or obligations that you have created before an LLC was put in place is still deemed to not fall under the LLC protection. Furthermore, this could still give them the right to sue via claiming that you and the LLC are the same 'alter ego', and use that as a means of starting a 'piercing the corporate veil' claim against you.

Good luck.

Customer: replied 3 years ago.

Interesting. If our goal is just to delay the lawsuit, while we pursue a pending bankruptcy (and avoid attachment of our bank accounts in the interim), could we respond with the objection that this is only applicable to the LLC as a way to get a court date down the road, instead of an automatic judgment (we do not dispute the amount, but wish to hold them off as long as possible...) ... or what would be a good response to slow the judgment?

Thank you for your follow-up.

You can potentially object and file a motion requesting that you as an individual be removed as a defendant since the contract took place solely with the LLC (if that happens to be true, of course). That should delay the hearing a bit since a special pre-trial hearing has to take place to evaluate the validity of your request and a decision must be provided by the judge before the trial moves forward.

Good luck.

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