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Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24870
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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Can a vendor that I did business with and I owe money to sue

Customer Question

Can a vendor that I did business with and I owe money to sue me personally after my company was closed? it was an Scorp.
Submitted: 7 years ago.
Category: Business Law
Expert:  Law Pro replied 7 years ago.

It all depends on how you signed the agreement -


1) as an officer of the corp




2) personally



Only a reading of the contract would be able to determine such.





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Customer: replied 7 years ago.
can I send you the Contract so you can look at it? I beleive it was as an officer of the Corporation.
Expert:  Law Pro replied 7 years ago.
How many pages is it?
Customer: replied 7 years ago.

Applicant agrees all invoices will be paid within the terms. CB reserves the right to change terms. If placed in collections for non-payment of account, applicant will be responsible for attorney fees and collection costs. The of any lawsuit to collect shall be in King County.


This is the only thing that I Signed. I can send you the whole contract if you can tell me how to do that.

Expert:  Law Pro replied 7 years ago.
Do you have a facsimile?
Customer: replied 7 years ago.

Here is the latest from the Collector.


The debt is yours; you incurred it, took delivery of my client's product and had the benefit of same. The debt was incurred under the name of Pine Lakes. Our client listed it incorrectly under the name of Pros and the f/d/b/a Pine Lakes was added when the facts came to light. Pine Lakes did not exist at the time you incurred this debt and hence the liability falls to you.


There is no contract under Pros. If you believe a contract with Pros exists then produce it.


You need to focus on the real issue here; your personal liability to the debt and spend less time looking for a rock to crawl under.


Get serious and settle this debt or suit will proceed.


Customer: replied 7 years ago.
Expert:  Law Pro replied 7 years ago.

Do they have the notices - that this is an attempt to collect a debt, etc., etc. - within that letter?


What was the name of your company?


Did you ever go by Pine Lakes or what? Is that true Pine Lakes didn't exist at the time you entered the contract?

Customer: replied 7 years ago.
Yes they do. They are a collection agency that is trying to tell me that I owe this debt. Company A had a contract with CB and then Comapny A went out of business and then Company B put an order in with CB and CB used the same terms as Company A had. I am telling them that I had no contract with them and that only Company A Pine Lake had a contract with them.
Customer: replied 7 years ago.

Pine Lake and the 2nd Company was Prolific

Expert:  Law Pro replied 7 years ago.

Then I would agree with you under the facts that you described.


As such, I would inform the collections company that if they continue to send you threatening letters or any type of communications you will file a harassment complaint with the police AND with the courts against them.


To, I would inform them that if they do file suit against you in the matter and that the case is dismissed - you will file a malicious prosecution suit against them.


An action for malicious prosecution has three elements. The plaintiff must establish that the prior underlying action (1) was commenced by or at the direction of the defendant and it was pursued to a legal termination in the plaintiffs favor; (2) was brought without probable cause; and (3) was initiated with malice. (These are the elements in all malicious prosecution cases.)



Plaintiff must therefore present evidence to satisfy three primary elements of the malicious prosecution cause of action:

1) Probable Cause -- The California Supreme Court employs an objective test for determining probable cause, i.e., whether based on the facts upon which the attorney acted would lead a reasonable attorney to believe that the action was tenable. (Sheldon Appel Co. supra,47 Cal.3d at p. 878). This element is decided as a question of law by the court. The attorney defendant and the client may not be aligned on this element if the client asserts the "advice of counsel" defense. This defense waives the attorney-client privilege regarding communications between the client and the attorney on the advice given and relied on.

2) Malice -- Plaintiff must plead and prove either ill will or some ulterior purpose distinct from that of enforcement of the alleged cause of action. (5 Witkin, Summary of California Law 9th Ed 1988 § 450 p. 534, citing Restatement 2d. Torts, 676.) This element is a question of fact.


Here it's economic extorsion - that theythink they can just buffalo into paying them for monies you don't owe.


3) Favorable Termination -- It calls for a termination reflecting on the merits of the action and the plaintiff's innocence of the misconduct alleged. (Lackner v. LaCroix 1979) 25 Cal.3d 747, 750-751; Pattiz v. Minye, 61 Cal.App.4th 826-827.) When the termination of the proceeding does not obviously reflect on the merits, the court must examine the reasons for termination to see if the disposition reflects the opinion of the court or the prosecuting party that the action would not succeed. If resolution of the underlying action leaves a residue of doubt about the plaintiff's innocence or liability, it is not a favorable termination sufficient to support a cause of action for malicious prosecution. ( p. 827.)

Customer: replied 7 years ago.
Is there any more information that you need from me that would help you understand more about this situation? So should I just respond back to the Collection agency with the information you sent.
Expert:  Law Pro replied 7 years ago.

No, I don't think I need any more information. It seems very clear that you didn't sign the contract to be held personally liable.


You stated:


Company A had a contract with CB and then Comapny A went out of business and then Company B put an order in with CB and CB used the same terms as Company A had. I am telling them that I had no contract with them and that only Company A Pine Lake had a contract with them.


That although Company B has the same terms with CB - that doesn't hold you personally liable for the debts of A or B.


No, they must look to the corporation for their monies.


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