Business Law

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

Ask a Lawyer,
Get an Answer ASAP!

Business Law

I am a 50% owner with my partner in an S-Corp in California.

Customer Question
We have both grown our...
I am a 50% owner with my partner in an S-Corp in California. We have both grown our separate ways and recently, I discovered my partner has started another company with a similar product that we currently sell without telling me. He has repeatedly lied to me about it and I have heard from other employees and outside contacts that he has only said negative things about me. I believe there are some jealousy issues at play but that is another story. I am concerned with the direction that this is going and fear that should his other business start producing a viable income for him that he will already spend less time on the business than he is now. I have to make sure that I don't leave myself and my family exposed should that happen and and ready to move on and possible start another business without dealing with any partners. We currently have about $120K in debt and $140k in receivables. Much of that debt is to his uncle so he will never voluntarily dissolve the corporation and is trying to do anything he can to bad mouth my reputation so in his mind, I don't have a chance to find a better opportunity. I am ready to move on, put this behind me and start again but am unsure as to what the next steps are.

We have no buy/sell agreement and I have recently started the other company following my discovery of his other business. I've had to generate all new customers with that business and even though they are very similar (products sold etc.) they have totally different customer bases. It generally takes a good 120 days for the accounts to start paying regularly so I had to start it before I left otherwise I would be left with no income. With the knowledge of certain facts about his business that he is unaware of my knowledge (had to do my due diligence) he has lied to my face looking me in the eye so I fear there is not going to be an amicable split (especially considering the debt that is owed to his uncle that I never personally signed on and wasn't even aware of much of the loan until after it was already given to my partner and I saw it in our bank account. I want to protect myself personally and the new business should he ever find out about it legally and also make sure that my past 5 years of effort didn't go to waste in the dissolution.
Submitted: 7 years ago.Category: Business Law
Show More
Show Less
Ask Your Own Business Law Question
Answered in 9 minutes by:
10/4/2010
Business Lawyer: Dwayne B., Attorney replied 7 years ago
Dwayne B.
Dwayne B., Attorney
Category: Business Law
Satisfied Customers: 34,318
Experience: Practicing for over 20 years and helped a number of businesses with litigation.
Verified
Is there a specific question I could help you with?
Ask Your Own Business Law Question
Customer reply replied 7 years ago
Sorry, I know I gave you a lot of information and the question may have been lost amidst all of it. My question is, should I go to my partner and tell him that I want out and he tells me that he doesn't agree, what are my options, how would we decide on what we each split (there is inventory, equipment, outstanding debt, plus receivables), and can he try to sue me if he finds out about my other new business that has a totally separate customer base (even though he started his own company as well)?
Business Lawyer: Dwayne B., Attorney replied 7 years ago
I'll start with your last question first, he can certainly sue you but based on the facts he isn't likely to win. If you decide to split and your partner doesn't agree you have to sue for a division of the company and assets. Realistically what you both should consider is probably mediation or arbitration to keep from spending a lot on attorney's fees while you're arguing. Arbitration is where a person acts like a judge and divides the property whereas mediation both of you sit down with a trained mediator and try to come to an agreement as to division. You can, and probably should, have lawyers represent you in this as well because they often can tell you from a semi-neutral position what is likely to happen in court and the costs involved.



Thank you for allowing me to assist you. As you know, we work on the honor system here and cannot always provide you answers that you like. I believe I have answered all of the questions you asked so I would request that you please click the ACCEPT button so I receive credit for my work and leave feedback if you have a chance. Please consider clicking "BONUS" as a nice way of saying "thanks" for a job well done, although this is neither required nor expected. Please remember that we can only base our answers on the information you provide and sometimes a misunderstanding as to what you are looking for or already know occurs so feel free to ask additional questions. Please be aware that my answer is not legal advice, it is merely information. You should always contact a local attorney for legal advice.



Several customers have asked how they direct a question to me in particular. If you specifically want me to provide information for you just put “FOR JD 1992” in the subject line and I will pick up the next time I am online.



Ask Your Own Business Law Question
Customer reply replied 7 years ago
A little more clarification on the dissolution side, if I were to go to him today and tell him of my decision and he tells me he doesn't agree, what form/process do I need to follow up with to start the involuntary dissolution process?
Business Lawyer: Dwayne B., Attorney replied 7 years ago
You have to file a lawsuit and as far as I know I've never seen a form for that type of suit although there is form site that would have it if anyone would. There is a problem going directly there but of you go to www.TexasParoleNow.com and click on the link on the left sidebar that says "Why Pay More" it will take you to the site. The suit you will file is usually titled Petition for Dissolution of Corporation. They are a little technical and so if there isn't a specific form you should consider hiring a lawyer or at least a paralegal to draft it for you. After you serve him with a copy of the lawsuit you can then file a Motion for Mediation and ask the court to order the case to mediation to try and resolve.



Thank you for allowing me to assist you. As you know, we work on the honor system here and cannot always provide you answers that you like. I believe I have answered all of the questions you asked so I would request that you please click the ACCEPT button so I receive credit for my work and leave feedback if you have a chance. Please consider clicking "BONUS" as a nice way of saying "thanks" for a job well done, although this is neither required nor expected. Please remember that we can only base our answers on the information you provide and sometimes a misunderstanding as to what you are looking for or already know occurs so feel free to ask additional questions. Please be aware that my answer is not legal advice, it is merely information. You should always contact a local attorney for legal advice.



Several customers have asked how they direct a question to me in particular. If you specifically want me to provide information for you just put “FOR JD 1992” in the subject line and I will pick up the next time I am online.



Ask Your Own Business Law Question
Customer reply replied 7 years ago
Thank you for your repsonse. Just to clarify a few things you answered...

1. It is my understanding that unless we had something explicity written in the buy/sell agreement that is non-existant, it is not illegal to start another business without my partner's knowledge as long as I am not raiding the client list and have a separate client base, he doesn't really have anything to base a lawsuit off of (even if both businesses have similar business models). (I know anybody can sue for any reason but I am more concerned about any possible viable lawsuits.

2. If I want to end my partnership with my partner (both of us are 50/50 owners) then unless he consents and we come to some sort of agreement, I would have to hire an attorney who would file a Petition for Dissolution of Corporation.

3. Just like when I found out about his other business other than hurt feelings there is nothing legally that either of us are doing wrong as long as we are not taking the companies' client lists and employees, inventory, etc...

4. Since it is a corporation, unless there were any debts that I personally guaranteed, then it would not pierce the corporate veil unless it is tax related or it appears that the corporation is running "sideline" to an indivual (basically one and the same), which it is not.

Business Lawyer: Dwayne B., Attorney replied 7 years ago
1) Basically this is a correct statement. You each have a duty to the company, but this doesn't automatically mean you can't have another business, particularly if it is unrelated or doesn't have the same customers.


2) Correct.


3) Correct, to the extent that you are not doing something that is hurting the company you both belong to.


4) That is correct as long as it was operated as a corporation and not as an "alter ego" or "shell" corporation. If you followed the formalities then it provides protection.



Thank you for allowing me to assist you. As you know, we work on the honor system here and cannot always provide you answers that you like. I believe I have answered all of the questions you asked so I would request that you please click the ACCEPT button so I receive credit for my work and leave feedback if you have a chance. Please consider clicking "BONUS" as a nice way of saying "thanks" for a job well done, although this is neither required nor expected. Please remember that we can only base our answers on the information you provide and sometimes a misunderstanding as to what you are looking for or already know occurs so feel free to ask additional questions. Please be aware that my answer is not legal advice, it is merely information. You should always contact a local attorney for legal advice.



Several customers have asked how they direct a question to me in particular. If you specifically want me to provide information for you just put “FOR JD 1992” in the subject line and I will pick up the next time I am online.









Ask Your Own Business Law Question
Ask Dwayne B. Your Own Question
Dwayne B.
Dwayne B.
Dwayne B., Attorney
Category: Business Law
Satisfied Customers: 34,318
34,318 Satisfied Customers
Experience: Practicing for over 20 years and helped a number of businesses with litigation.

Dwayne B. 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
In California, can I close a partnership account. And if my
Second opinion] In California , can I close a partnership biz account. And if my partner opened up a dba with a bank using this companies name and I close it will his dba still be "good"?… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,700 satisfied customers
In California, can I close a partnership account. And if my
In California , can I close a partnership biz account. And if my partner opened up a dba with a bank using this companies name and I close it will his dba still be "good"?… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 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
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
My partner is a 50% owner, in partnership with her
Hi, My partner is a 50% owner, in partnership with her ex-husband, of an LLC registered in California, The company owned several properties which have all been sold and proceeds have been distributed.… read more
PaulmoJD
PaulmoJD
Attorney At Law
Doctoral Degree
106 satisfied customers
Wanting to expand my business from one corporation to 2 or 3
wanting to expand my business from one corporation to 2 or 3 for further protection for each individual business. looking for someone to help … read more
Ely
Ely
Attorney
Juris Doctor
577 satisfied customers
Can the president of a partnership not send a check to a
Hello, can the president of a partnership not send a check to a shareholder because the shareholder does not reply via email, text or phone if he or she has received the check from the president? … read more
WiseOwl58
WiseOwl58
JD Honors Graduate
3,723 satisfied customers
I am in a limited partnership and all of the utilities are
I am in a limited partnership and all of the utilities are in my partners name. We have fuel cards for our trucks also. They are in his name. I own four of the 18 wheelers in the Fleet myself and my p… read more
Alex Esquire
Alex Esquire
Managing Attorney
Doctoral Degree
153 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
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
Do informal Partnerships need to register with a State or
Do informal Partnerships need to register with a State or Federal entity? … read more
LawGuy
LawGuy
Juris Doctor
123 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
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
30,899 satisfied customers
I am in a business partnership that is dissolving. my
I am in a business partnership that is dissolving. my partner is grumpy. what do i need to do to protect myself? … read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
7,403 satisfied customers
I have a business that doesn't have a partnership agreement.
I have a business that doesn't have a partnership agreement. My other partner has just blocked me from everything(email, invoices). What do I do?… read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
1,851 satisfied customers
Question: Is a "general" partnership formed for the purposes
Question: Is a "general" partnership formed for the purposes of renting residential property not "transferred" to the partnership, required to be registered by the Division of Corporations under Flori… read more
Irwin Law
Irwin Law
Juris Doctor JD
7,089 satisfied customers
My question is regarding corporations/partnerships and
My question is regarding corporations/partnerships and verbal agreements. … read more
Legal Eagle
Legal Eagle
Attorney
Doctoral Degree
7,403 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