Legal Question in Business Law in California

As a licensed contractor would i be incriminated by being subbed by a company that is in the middle of a law-suit? i need answers please. =/


Asked on 3/01/11, 11:34 pm

3 Answers from Attorneys

Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I can say a lot more information is needed. You really need to sit down and discuss the entire situation with a good business and possibly criminal law attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 3/02/11, 8:30 am
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

First, I don't know exactly what you mean by "being subbed." This could mean becoming a subcontractor, or being "substitutued" as the prime contractor by assignment of the contract rights and delegation of the prime's duties.

In either case, the answer is probably thst it depends upon the contract - which probably contains (or should contain) some provisions relating to subcontracting, assignment, etc.

The fact that the prime contractor is involved in litigation of some kind may or may not be important. Large contracting firms may have several lawsuits pending at any given time, with little or no impact on their ability to carry out their jobs. On the other hand, a small outfit may find it impossible to cope with a lawsuit and get its work done. Obviously, in the former case a "subbing" is unnecessary, and in the latter, something must be done to protect the owner's interest in getting the job done on time.

One possibility here is to have a three-way meeting between yourself, the other contractor, and the owner, to have a frank discussion of this lawsuit and whether its pendency suggests or requires that you, rather than the current contractor, should carry out the contract. If there is a resolution in your favor, get it in writing.

Without knowing what's going on here, I can't give you any better answers, but maybe you can figure out what ought to be done with the help of the foregoing. There's at least a 50-50 chance that I misunderstood the situation due to the limited info given.

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Answered on 3/02/11, 9:14 am
Timothy McCormick Libris Solutions - Dispute Resolution Services

I'm assuming when you say "being subbed" you mean entering into a subcontract with the company involved in the lawsuit. With that assumption, first a lawsuit is not a criminal proceeding, so you could never be "incriminated." Second, you cannot become liable for something that is already the subject of a lawsuit just by entering into a contract with someone who is being sued. Of course if a contractor is being sued, all the other cautions about entering into a contract with them and/or joining a troubled project apply. But you would not become liable for anything that has happened already.

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Answered on 3/03/11, 5:59 pm


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