Business Law

Ask a business lLawyer. Get business law questions answered ASAP.

Ask a Lawyer,
Get an Answer ASAP!

This answer was rated:

I know this situation is getting old to you, it definitely…

Hi Roy,I know this situation...
Hi Roy,I know this situation is getting old to you, it definitely is for us. However, we have taken your advice again and our investor is still not satisfied. She had her lawyer draw up an agreement that has some "recitals" in it. I have attached the document in this message.In herrecitals she states that she became a member with our company in December of 2016. Although this is technically true... that's all it really is... a technicality. Her money came into our company October of 2015, as I've told you in past messages. She invested with a company called I-Strategy LLC who invested some of her money with us. However, in the middle of her 2-year investment (December 2016), I-Strategy LLC dissolved it's company and left the investor directly with the companies they invested her money in. There was a new subscription agreement signed and we did fail to send her an operating agreement because we were under the impression she already had one when she first invested.Also, in the "agreements section" There is a clause in this agreement that says each shall bear his/her own costs and attorneys fees. However, there is also another "attorneys fees clause". This is confusing to us. We are new and don't know what that means.Lastly, We have expressed to her multiple times that our company is dissolving after she receives her money. We told her we wanted to keep the money until she is able to review the accounting and decide weather or not she wants to go to court. We did this because if she does, we will use her money to go to court with because it's all the money that the company has.She wants us to send her the money back and then take a few months to review the accounting we sent her and she wants us to agree to maintain our positions as Managers of Creating Rhodes LLC in order to answer all of her questions regarding the accounting.I don't believe she is telling her lawyer the full truth. We would hire an in person lawyer to help us but we are opting to use this service because we are trying to reserve as much of her money that is left to send back to her and you've given pretty good advice.Here are my direct questions -1. I will admit that her lawyers document looks a lot more formal than ours did. However, are the "recitals" normal and necessary? If so, how should it be re-worded to reflect the full truth that I stated above in the beginning of this message.2. With the two different, and seemingly conflicting, "lawyers fee" clauses, are we protected against any and all legal costs in the event that we go to court and she loses. We are willing to release her money to her and we have even agreed to a modified version of section 1542 of the California Civil Code. However, we really want to make sure that she doesn't get her money back, leave us broke and at some point down the line decided to sue without merit simply because they know we don't have the money to defend ourselves.3. While we are willing to answer questions she may have regarding the accounting (although the numbers will speak for themselves) we don't find it necessary to leave the company open. Every year that the LLC is open, we incur a state tax cost that we cannot afford. As we have stated before. After we release her funds, we (Creating Rhodes LLC) will have no money left at all. How should we proceed regarding this?
Show More
Show Less
Ask Your Own Business Law Question
Answered in 3 minutes by:
11/17/2017
Roy Hadavi
Category: Business Law
Satisfied Customers: 1,393
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified

Hi. I see that another attorney was assisting you. Did you mean to re-post this message a second time for me to assist?

Ask Your Own Business Law Question
Customer reply replied 8 months ago
I did
Customer reply replied 8 months ago
Are you available for a phone call?

Just wanted to make sure that you would not be double charged. Please give me a moment to review all of the information. Thank you for giving me the opportunity to assist you once more.

I would be happy to jump on a phone call, but let me review the information you provided so far and see if I can answer you through the chat. I prefer to save you the money on a phone call. If you feel a phone call would be beneficial, after I answer you through this thread, let me know and we can jump on a call.

Ask Your Own Business Law Question
Customer reply replied 8 months ago
Ok. I signed up fo the 7 day free trial and the app is saying that it is gifting me a free phone call
Customer reply replied 8 months ago
However, I will wait for you to respond first

Oh, okay. I am not familiar with the promotions that the site offers. I am a user, just like you. Let's see if I can save you the phone call for a better use though.

Ask Your Own Business Law Question
Customer reply replied 8 months ago
Ok

1. I will admit that her lawyers document looks a lot more formal than ours did. However, are the "recitals" normal and necessary? If so, how should it be re-worded to reflect the full truth that I stated above in the beginning of this message.

Recitals are a normal part of agreements. They are intended to give the "story" of the purpose of the agreement and the reason the parties are entering into the agreement. You can add in a recital providing the information you stated above, in order to flesh out the recital more properly. However, it is not 100% necessary.
2. With the two different, and seemingly conflicting, "lawyers fee" clauses, are we protected against any and all legal costs in the event that we go to court and she loses. We are willing to release her money to her and we have even agreed to a modified version of section 1542 of the California Civil Code. However, we really want to make sure that she doesn't get her money back, leave us broke and at some point down the line decided to sue without merit simply because they know we don't have the money to defend ourselves.

The first attorneys' fees sections relates specifically to the costs of preparing the agreement and settling this matter. The second attorneys' fees clause relates to any dispute that arises regarding this matter. As I previously mentioned in our discussions, if you close down the LLC, short of her proving that you should be held personally liable, she will not be able to pursue any claim against you. Also, this agreement releases you as an employee, representative, etc. of the LLC.
3. While we are willing to answer questions she may have regarding the accounting (although the numbers will speak for themselves) we don't find it necessary to leave the company open. Every year that the LLC is open, we incur a state tax cost that we cannot afford. As we have stated before. After we release her funds, we (Creating Rhodes LLC) will have no money left at all. How should we proceed regarding this?

Close down the LLC after she has reviewed the accounting, signed the agreement and you have disbursed the funds. You can even include a recital stating that you intend to close down the LLC after the agreement is signed.

Ask Your Own Business Law Question
Customer reply replied 8 months ago
If our accounting (bank statements, etc.) show real business and real estate transactions that account for every penny from the time her money came in until the time we closed out her investment, how will she be able to prove that we are personally liable?

There are two ways that she could prove personal liability.

  1. If she can show that you committed fraud, which you did not.
  2. If she can show that you did not properly maintain the LLC, which you did.
Ask Your Own Business Law Question
Customer reply replied 8 months ago
I feel she is upset because of her loss, understandably. However, she isn't being realistic in terms of her request for us to sign an agreement that allows her to receive her money while promising to remain the managers of Creating Rhodes LLC until she has time to review the company accounting which she says may take a few months. We find this request to be unreasonable. What are your thoughts about that? If you find it as unreasonable as we do, how would you suggest we go about this? We have already bent on Section 1542. Are we obligated to wait until she reviews the accounting since she is planning to take months to do so? Should we even sign any agreement and send her the money before she reviews the accounting?

I would not release the money, until after she has reviewed the accounting and agreed that the LLC may be closed down.

Ask Your Own Business Law Question
Customer reply replied 8 months ago
I agree with that. However, when we went that route the first time she said that made her feel as if we were not being honest and that she will be extra vigilant to try and find fraud. She also threatened that she could pierce the corporate veil and so there's no use in us holding her money anyway. But at this point, we realize that our accounting is line by line and she will do probably do that any way. We really have nothing to hide. I'm assuming that threats like this are common place when there's a loss. Am I right? Either way, you would still suggest that we hold the money, correct?

Sorry, I forgot that she had threatened the extra vigilance if you held the money.

No, if she signs the agreement and you release the funds and you know that there is no issue with the accounting, there is no harm in waiting to close the LLC. You should just let her know that you will be holding the necessary money for the franchise taxes for the LLC, so that if she waits until 1/2018, you are not personally out of pocket for any of the LLC costs.

Ask Your Own Business Law Question
Customer reply replied 8 months ago
How long is reasonable for us to wait?
Customer reply replied 8 months ago
She says months but that’s just what she says. It could be another year.

You should include a set amount of time in the agreement for her to review and release.

Ask Your Own Business Law Question

1 month at most, I would think.

Roy Hadavi
Category: Business Law
Satisfied Customers: 1,393
Experience: Attorney at Law Offices of Rosenstein & Associates
Verified
Roy Hadavi and 87 other Business Law Specialists are ready to help you
Ask your own question now
Customer reply replied 8 months ago
How much would it cost to hire you as our actual lawyer?
Customer reply replied 8 months ago
We need a lawyer and you pretty much know what’s going on

Hi. Responding to everything in the new thread you created.

Ask Your Own Business Law Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a business lawyerLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Roy Hadavi Your Own Question
Roy Hadavi
Roy Hadavi
Roy Hadavi
Category: Business Law
Satisfied Customers: 1,393
1,393 Satisfied Customers
Experience: Attorney at Law Offices of Rosenstein & Associates

Roy Hadavi 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

2,002 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

778 satisfied customers

Licensed Texas General Practice Attorney

Barrister

Barrister

Attorney

678 satisfied customers

17 years practicing attorney, JD, BA, MBA

Ely

Ely

Attorney

604 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
We are at what seems to be the tail end here. We have
Hey Roy,We are at what seems to be the tail end here. We have answered all of our investors questions. However she is hung up on the $7500 that the we the managers paid ourselves. She is upset because… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
I believe we are getting close to finishing up with our
Hi Roy.I believe we are getting close to finishing up with our investor. We have sent them the accounting for the last two years of the company. As expected, they have a lot of questions and are askin… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
In our last thread, we discussed adding the full story to
Hi Roy.In our last thread, we discussed adding the full story to the "recitals" section of our agreement. I did that. I wanted you to read over it and make sure it sounds "official enough". I attached… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
My business partner and I are splitting up. We started an
My business partner and I are splitting up. We started an LLC together for TV production and have not made any money yet. However, I've put in a total of $167k… prior to this LLC he started a music li… read more
Law Educator, Esq.
Law Educator, Esq.
Attorney At Law
Doctoral Degree
244 satisfied customers
We followed your advice again and she responded with this.
Hey Roy, we followed your advice again and she responded with this.So we sent her an email saying this,"Hi Elyse,We have been advised by our legal council that the California Civil Code Section 1542 w… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
You have answered many of my questions in another thread. I
Hi Roy,You have answered many of my questions in another thread. I am starting a new one because I asked another question and I didn't get an answer so I'm starting a new thread in hopes that you will… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
I have an LLC with my brother to do real estate. We didn't
I have an LLC with my brother to do real estate. We didn't have much money at all to start with but an investor invested money into us and we started business. We are due to give the investor their mo… read more
Roy Hadavi
Roy Hadavi
Juris Doctorate
1,393 satisfied customers
I have a business I am trying to dissolve. I have 1 investor
I have a business I am trying to dissolve. I have 1 investor with a 10% stake, am I able to dissolve without her consent eventhough our agreement states I need consent? … read more
Infolawyer
Infolawyer
Attorney
Doctoral Degree
2,002 satisfied customers
New buisness rookie mistake: A friend/colleague to whom in
New buisness rookie mistake: A friend/colleague to whom in Fall of 2014 I told I was going to start a business. The business is a service. I created the business plan which did not include to expand t… read more
Irwin Law
Irwin Law
Juris Doctor JD
7,176 satisfied customers
I have a linen service registered as a LLC(1). I start some
I have a linen service registered as a LLC(1). I start some new customers financial by an investor for LLC(2) where I would have 50% ownership. LLC(1) would do the processing of the new customers, do … read more
PhillipsEsq.
PhillipsEsq.
Attorney
JD
822 satisfied customers
I am the owner of an LLC with one other member. The 2nd member
I am the owner of an LLC with one other member. The 2nd member invested money from his LLC (and his LLC name is ***** ***** "Operating Agreement") for stock in my company. His LLC was dissolved as par… read more
Attorney2020
Attorney2020
Lawyer
2,480 satisfied customers
Mr. Warren. We have a FL LLC that is going trough some very
Mr. Warren. We have a FL LLC that is going trough some very tough situation that we will brief following 1. One of the members of our LLC did a commitment with one of his CPA firm client to invest 150… read more
socrateaser
socrateaser
1,452 satisfied customers
I have an LLC that didnt work out. I intend on keeping the
I have an LLC that didn't work out. I intend on keeping the business name as we have built up a small clientele. I have emailed her to tell her I want to continue on and that I will pay her back all o… read more
TexLaw
TexLaw
Attorney
Post-Doctoral Degree
4,347 satisfied customers
We have a toxic investor whom we dont have the money to buy
We have a toxic investor whom we don't have the money to buy out. Our books are such that it would not be unreasonable for us to declare bankruptcy. The question is Chapter 11 or Chapter 7 -- how do w… read more
MShore Law
MShore Law
Attorney
Doctoral Degree
1,233 satisfied customers
I started a corporation with my business partner that was going
I started a corporation with my business partner that was going to be a cafe in a community space. We split the company 50/50 yet I was the sole investor, first bad idea, second bad idea was we had no… read more
RGMacEsq
RGMacEsq
Attorney
Doctoral Degree
778 satisfied customers
I approach an investor with an opportunity to invest in a franchise
I approach an investor with an opportunity to invest in a franchise that I will be opening. I approach the investor and he is willing to invest. I send an offer of the terms. We don't have an agreemen… read more
socrateaser
socrateaser
1,452 satisfied customers
I have a potential investor in Australia willing to invest
I have a potential investor in Australia willing to invest in my Arizona based media company. 1. Is there a simple agreement template I can work from to draft the framework for the transaction? $xxxxx… read more
Richard - Bizlaw
Richard - Bizlaw
Juris Doctor
3,770 satisfied customers
Our start up LLC company took non-membership investments from
Our start up LLC company took non-membership investments from friends and family through a subscription agreement that offered an incentive plus annual interest. The company finally ended up in dissol… read more
Richard
Richard
Owner
Doctoral Degree
4,518 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