Business Law

Ask a Business Lawyer. Get Business Law Questions Answered ASAP.

Ask a Lawyer,
Get an Answer ASAP!

Business Law

I have an LLC. One of the partners abandoned their interest

Customer Question
10 years ago. Then he...
I have an LLC. One of the partners abandoned their interest 10 years ago. Then he went out and started a new company doing the same thing. He made written defamatory statments about the partnership and competed with us. He also made claims in writing about his interest but never pursued them. There was a never a partnership Agreement. 10 years later he is asking for a third of the partnership. Is he entitled to it? Is there a statute of limitations that applies here?
Submitted: 9 years ago.Category: Business Law
Show More
Show Less
Ask Your Own Business Law Question
Answered in 48 minutes by:
11/17/2008
Business Lawyer: dkennedy, Attorney replied 9 years ago
dkennedy
dkennedy, Attorney
Category: Business Law
Satisfied Customers: 6,009
Experience: JD degree, business owner
Verified

HelloCustomer

 

We need to get down to basics here. An LLC is a Limited Liability Company. It is NOT a partnership. There should be an operating agreement as to how to disperse funds. The operating agreement also should tell exactly what to do if one of the members want to pull out. They may or may not get their investment back. Once this type of company is set up and registered with the State of California, there are rules and regulations that must be followed. I would assume that your LLC is set up "perpetually" which means forever. I don't know how you pay out profits or anything like that, but perhaps the other members should figure out what your operating agreement says in a case like this (hopefully you have developed an operating agreement). He is not entitled to just get a check for a chunk of money.

Ask Your Own Business Law Question
Customer reply replied 9 years ago
Thanks. There is no operating Agreement. Just someone who is there at the begining made a lot of promises and never delivered.
Business Lawyer: dkennedy, Attorney replied 9 years ago

Hello again,

 

Yes, I have had several clients who have experienced the same thing. It sounds like a good deal at first, but they put nothing into the business, or worse yet, take from the business.

 

FYI--It is not too late to compose an operating agreement. It does not have to be registered or filed with the State. You just need to check with the Sec. of State's website (Cal.) and see if the laws require you to keep a copy at the principal place of business, or some other rules. Other than that, the cooperating members can formulate the Operating Agreement and that is what the business will have to go by. Good luck.

Ask Your Own Business Law Question
Customer reply replied 9 years ago
Is there a statute of limitations that bars recovery after an ownership intrest is abandodned. This person will never sign it.
Business Lawyer: dkennedy, Attorney replied 9 years ago

Hello again,

 

You are using the term "ownership interest", but I don't know that it applies to an LLC. If you set up the LLC with such stipulations, then possibly it does. But, think of the LLC as similar to a corporation. If you buy a thousand shares in a new corporation and decide you don't want to own the shares any longer, the corporation is not obligated to pay you a portion of what the corporation is worth. You have to go by the rules and try to sell your shares. Who "owns" IBM, Microsoft, or GMAC? No one in particular. If they had to pay a chunk of money from the company everytime someone felt like asking for it, the companies would go under and a corporation, or even an LLC would be worthless.

 

In an LLC, if you want out, you have to go by the rules. No one is necessarily obligated to pay you a portion of the company's value.

 

Again, I want to emphasize--this is not a partnership where everyone is an individual owner. You may set up the LLC like that, but it would be foolish to do so. The company would be unstable. Example: What if I wanted to start an LLC as some sort of a Legal Business. Myself and 2 other people put in $50,000 each and registered with the state and all. I buy furniture, rent a building, put advertising out there, hire help, etc. Then, a few weeks later, the other 2 want me to pay them back their money because they changed their mind. The business would be "out of business". That is one of the advantages of these types of business organizations. They can go on even if one of the members does not. He took the chance. I'm not saying he doesn't have something coming, but he needs to go through whatever channels your LLC requires and get paid whatever the members (through the Operating Agreement) decide he has coming.

 

dkennedy
dkennedy, Attorney
Category: Business Law
Satisfied Customers: 6,009
Experience: JD degree, business owner
Verified
dkennedy and 87 other Business Law Specialists are ready to help you
Ask your own question now
Ask dkennedy Your Own Question
dkennedy
dkennedy
dkennedy, Attorney
Category: Business Law
Satisfied Customers: 6,009
6,009 Satisfied Customers
Experience: JD degree, business owner

dkennedy is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises!

Gary B.Edmond, OK

My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer.

EricRedwood City, CA

I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight.

MichaelWichita, KS

PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent.

Three H.Houston, TX

Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!!

ElaineAtlanta, GA

It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem.

TonyApopka, FL

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

< Previous | Next >

Meet the Experts:

Infolawyer

Infolawyer

Attorney

1,851 satisfied customers

Experienced lawyer

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

1,611 satisfied customers

Run my own successful business/contract law practice.

MShore Law

MShore Law

Attorney

1,233 satisfied customers

Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

RGMacEsq

RGMacEsq

Attorney

751 satisfied customers

Licensed Texas General Practice Attorney

Barrister

Barrister

Attorney

646 satisfied customers

17 years practicing attorney, JD, BA, MBA

Ely

Ely

Attorney

577 satisfied customers

Counselor at Law.

J.Hazelbaker

J.Hazelbaker

Attorney

393 satisfied customers

Experienced and trained in the area of business law.

< Previous | Next >

Related Business Law Questions
When a partnership owns a business and one of the partners
When a partnership owns a business and one of the partners works in the business is that partner considered an employee?… read more
LegalGems
LegalGems
Juris Doctorate
10,720 satisfied customers
I have a business partnership, and we I have agreed to not
I have a business partnership, and we I have agreed to not do external business in the area where our partnership is doing business. As our partnership produces products, they could easily create new … read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
My business is registered in Delaware as an LLC with a
Hi Pearl, my business is registered in Delaware as an LLC with a partner. My partner is no longer with the company. I would like to move the business to PA where I live. I am also changing the name of… read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
1,015 satisfied customers
I need help with a business partnership dissolution. I can
I need help with a business partnership dissolution. I can give a detailed account of what I am asking on this or should I wait until I am connected with a lawyer?… read more
DrakeLAW
DrakeLAW
Juris Doctorate
984 satisfied customers
I have a Tennessee corporation LLC that is being sued in
I have a Tennessee corporation LLC that is being sued in Colorado. If they want to pierce the veil of the LLC do they have to pursue that in Tennessee or can they do that in Colorado? … read more
Ray
Ray
Lawyer
Doctoral Degree
30,914 satisfied customers
What skill or tape does the real estate LLC investment need
What skill or tape does the real estate LLC investment need a full prospectus or to be a registered security? I'm doing my first non-residential commercial project and one of the potential investors p… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,700 satisfied customers
Is there a rule which requires that a corporation (or LLC)
Is there a rule which requires that a corporation (or LLC) must have a lawyer in a civil case?… read more
Damien Bosco
Damien Bosco
3,395 satisfied customers
The 60% business owner to an LLC with no articles of
the 60% business owner to an LLC with no articles of organization, has done things that makes all of us want to separate. however the 40% owners hold all MHIC licenses. Can the 60% just move the compa… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 satisfied customers
I want to create an operating agreement for an existing LLC
I want to create an operating agreement for an existing LLC in Ketchikan, Alaska. This LLC is principally involved in cultivating cannabis and manufacturing cannabis products. This LLC is a legal and … read more
WiseOwl58
WiseOwl58
JD Honors Graduate
3,723 satisfied customers
I am the 20% owner of an LLC partnership and my partner
I am the 20% owner of an LLC partnership and my partner (super majority) has not paid me for work done in 12 weeks. Our business agreement states that a member can resign with written notice but I wan… read more
KLAW
KLAW
Juris Doctorate
1,773 satisfied customers
I have a LLC business in the state of Texas. It is currently
I have a LLC business in the state of Texas. It is currently a sole proprioter. If I want to add 2 partners do I need to change it to a corporation? Or can I leave as is and just generate an agreement… read more
Ray
Ray
Lawyer
Doctoral Degree
30,914 satisfied customers
I am in a Partnership LLC in PA and my business partner has
I am in a Partnership LLC in PA and my business partner has never paid me her share of the initial purchase of inventory as I paid for it on my personal credit card. Since she has never paid if it her… read more
LegalGems
LegalGems
Juris Doctorate
10,720 satisfied customers
Converting my llc business to a c corporation and looking
Converting my llc business to a c corporation and looking for a lawyer to sign the paperwork … read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,700 satisfied customers
Is an LLC operating agreement between 4 members valid if
Is an LLC operating agreement between 4 members valid if only 3 members signed it ? … read more
Roy Hadavi
Roy Hadavi
Attorney
Juris Doctorate
1,015 satisfied customers
I have a partnership with a business partner. We sell goods
Hello. I have a partnership with a business partner. We sell goods online and formed an S corp. We both have put equal amounts of investment and we have spent somewhat close to the same amount of time… read more
Ray
Ray
Lawyer
Doctoral Degree
30,914 satisfied customers
IS A "C" CORPORATION REQUIRED TO HAVE AN OPERATING AGREEMENT
IS A "C" CORPORATION REQUIRED TO HAVE AN OPERATING AGREEMENT WITH ITS SHAREHOLDERS OR OFFICERS?… read more
TaxAttorneytoHelp
TaxAttorneytoHelp
Owner
Doctoral Degree
2,542 satisfied customers
I am covered under an LLC operating agreement with a
I am covered under an LLC operating agreement with a noncompete clause. I have been told in an email (by the managing partner) that I am no longer a member due to a freeze-out merger but I have not se… read more
Ely
Ely
Attorney
Juris Doctor
577 satisfied customers
My LLC in does not have an Operating Agreement and 2 of the
My LLC in Virginia does not have an Operating Agreement and 2 of the members would like to voluntarily withdraw leaving myself and 1 other member with the LLC. Do we need an Operating agreement before… read more
LawGuy
LawGuy
Juris Doctor
123 satisfied customers

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.

The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).

Show MoreShow Less

Ask Your Question

x