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Our small business is being sued in small claims court in

Los Angeles Cal. for $5000...
Our small business is being sued in small claims court in Los Angeles Cal. for $5000. by our ex sales rep. who we informed Jan. of this year that we could no longer afford his services unless he would negotiate down to 5% commission, which he did not accept. He presently has$10,000. of our property that we asked to be returned at our expense. We have tried to negotiate a settlement but he refers us to his attorny. Question is do we automatically lose if we don`t go all the way to Cal.? Do we have to sue him for our property? Is it legal that he holds our propery hostage?
Thanks
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Answered in 9 minutes by:
6/2/2010
J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4,385
Experience: Experienced and trained in the area of business law.
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If you don't appear and defend the California suit, then a default judgment could be entered against you, regardless of whether the plaintiff's suit has merit or not and whether you have defenses or counterclaims. Once a default judgment is entered, the plaintiff (now judgment-creditor) can come to the state where your operations/assets are, have the judgment certified by a local court and seek to enforce it through bank account levies and property liens.

If you choose to fight it, you will need to hire an attorney if you are legal entity. If not, then you can represent yourself.

One of the defenses you might have is lack of personal jurisdiction. This challenges the court's right to entertain a case against you because you don't have sufficient ties to the state of California. That depends on your specific situation. In addition, if you were to defend the case, then you could raise any claims that you have. The failure to return the equipment would constitute "conversion", which is the civil version of theft. But, again, this is civil and you would have to sue or raise as a counterclaim in his suit in order to recover the property.

Please let me know what follow-up questions you have.
J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4,385
Experience: Experienced and trained in the area of business law.
Verified
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