Hi, I was contracted to do graphic design and branding work for "friends" of our for over 30 years that have an LLC. They paid the first invoice no problem and asked for more work, it added up to $5,000. They acted like they were trying to pay but kept getting declined on multiple attempts using various payment methods. Then suddenly they gave up trying to pay and started using excuses like illness, lack of business and so forth but continued to promise to pay. Since they are friends I let it slide but after trying to get them to just make very small payments to chip away at it and they declined I filed a small claims court case against them. The first "hearing" was just to see if we could work something out. I offered once again, make small payments but I won't lower the total and I won't add any sort of late fees. They declined that offer. The hearing is tomorrow and I have every single email, text message you name it proving they asked for this work, every bit of it. In fact they asked me to be a partner in their business at the time they owed me the money, I declined until they made good and would make that decision at that point. Now I know they are trying to hide behind their LLC so they are not obligated to pay me even when I win tomorrow. My question is, do I have a fraud case against them for contracting me to do work they knew full well they had no way to pay me for? Clearly they didn't have the money and they are not about to use their personal money they have and their property they own to do anything to pay me. One of them bragged about their cash out refinance on their half million dollar home and the great rate they got. Is this something I could pursue to the municipal court and file a fraud case against them? I don't see any way I am going to make them obligated to pay me, nor do I see any way I can get a lien of their personal property in order to be made whole. Any info would be greatly appreciated.
1 Answer from Attorneys
There's no fraud here. If you have written contract who is that between? their entity or did they guarantee it personally? If no written contract, then who did you invoice? An individual or the LLC?
In the future, if you extend yourself and want a personal guarantee for payment you need to get that in writing otherwise you are correct that they will likely just take the LLC bankrupt and you can hop on line as a creditor.
But this doesn't mean you can't make your best argument here. Lay it all out, make your case for why the liability shied should be vitiated and see how the court rules.
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