Legal Question in Business Law in California

Re: 50/50 worker-investor partnership gone bad

O.K. You've got homework to do to round up documents to support your position. First, you said that the CPA drew up the agreement. Does s/he have a copy of the agreement, whether signed or not? Did the CPA see or hear that either of you signed the agreement? If so, that would be evidence of the existence of the agreement. Their unsigned copy would then be evidence of the terms of the agreement.

Then there are other things like bank accounts, signature authority, contracts with third parties, corporate minutes, etc.

What has happened with past distribution of income from the company and how it has been distributed?

All of these things go towards showing the existence and terms of the agreement between you and your "partner".

Unfortunately, the reality is that if you want to sue the attorney's fees and costs are likely to be very high. So, you should consider whether the company has significant value.

I would be happy to consult with you and discuss your options.

Caleb

Re: 50/50 worker-investor partnership gone bad

You worked your butt off based on a contract. You didn't demand a copy of the contract at the time it was signed. Now you have bupkis. Were you maybe expecting some other result?

The good news is that you might possibly still have enough written evidence to try and prove the existence and terms of the contract.

Re: 50/50 worker-investor partnership gone bad

Either you negotiate a resolution, or you sue, or you walk away. Those are your options. If you want legal help, feel free to contact me. You'll need evidence to back up your allegations, so begin rounding it up.

Re: 50/50 worker-investor partnership gone bad

I think the previous answers are unnecessarily hard on you and do not give you useful legal advice. As I see it, the essentially 50-50 nature of your business, first as a partnership, later as a corporation, produces enforceable rights based on statutory partnership law, the rules that co-owners of a corporation are fiduciaries of the corporation and of each other, and so on.

Among other things, tearing up a contract does not rescind it - it remains in effect, just as originally written. The only thing that has changed is the ease or difficulty of proving the existence and terms of the contract.

Presumably, this business has filed numerous documents, such as tax returns and statements of officers (Form SO-200) which would be the starting point for documentary proof of the co-ownership and your rights as an equal co-owner.

Also, does your corporation have bylaws? By whom drafted? When and how adopted? Most corporate bylaws have provisions govering when and how it may be dissolved, and I doubt that dissolution by a 50% owner without the knowledge or consent of the other 50% owner is legal. Probably an actionable fraud on you. Probably also a breach of fiduciary duty.

This heavy-handed and grossly inequitable treatment of a co-owner should be addressed in the strongest possible legal language and at the earliest possible moment, particularly since the "partner" now has a lawyer taking up the cudgels on her behalf.

I would be more than willing to review all the facts and documents pertaining to this mess, including but not limited to the letter you got from the attorney, and give you a quick and personalized (and free) analysis of your rights along with a suggested counter-attack. Please contact me directly. You did not provide a Zip code which would give me a clue as to what county legal matters pertaining to this business would have jurisdiction, but in this era of electronic communications, I can handle it economically anywhere in California.