Posts by Richard Burt
Timely Dissolution Can Protect Shareholders
When a California corporation dissolves, it continues to exist for the purpose of defending claims against it (and prosecuting claims in its name), though a claim by a creditor against a shareholder to recover assets distributed in the distribution must be filed within four years of the date of dissolution, or the claim will be…
Read MoreCalifornia rejects “zone of insolvency” theory of director liability
The general rule is that directors of a corporation owe no duty to creditors because it is the shareholders who own a corporation. From an economic perspective, when a corporation is solvent, it is the shareholders who are the residual claimants of the corporation’s assets and who are the residual risk bearers. As long as…
Read MoreA Risk of Making Threats in Disputes
When there is a business dispute, a party sometimes wants to use the maximum leverage possible. Caution should be exercised to make sure that the effort to exercise leverage does not boomerang. One of the common ways that parties seek to exert leverage is to have their attorneys make threats of legal action. In Waldron…
Read MoreWhom Does an Attorney Represent When a Number of Parties Are Involved?
The case of Chang v. Lederman (2009) 172 Cal. App. 4th 67, while dealing with the obligations of an estate planning lawyer to beneficiaries of the estate, may be of interest to participants in business transactions or business enterprises. Facts Raphael Schumert, a physician, and Myung Chang, a registered nurse, met while working at a…
Read MoreCareful Drafting Pays off in Contracts
Flint Hills Resources, LP v. Jag Energy, Inc., 559 F.3d 373 (5th Cir. 2009) doesn’t establish any particularly important principle of law. Instead it’s being mentioned because it illustrates the value of good drafting. Flint Hills, a refiner of crude oil products, agreed to purchase “[a]pproximately 1,000 barrels per day” of “Mexican Condensate” from JAG,…
Read MoreInspection Rights of Directors and Shareholders
Corporations Code section 1602 provides that: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind … of the corporation of which such person is a director….” [Emphasis added.] That right of inspection would include the right to inspect documents prepared by counsel…
Read MoreA disclaimer can be worth its weight in lawyers
Doe v. SexSearch.com, 551 F. 3d 412 (6th Cir. 2008). Plaintiff John Doe, filing under a pseudonym, appealed the dismissal of his complaint against defendant, SexSearch.com (“SexSearch”), an online adult dating service that facilitates sexual encounters between its members. In October 2005, John Doe became a “Gold Member” of SexSearch, which required him to pay…
Read MorePersonal Liability of Officers for Corporate Obligations
In People v. Roscoe (2008) 169 Cal. App. 4th 829, two individuals (John F. Roscoe and Ned F. Roscoe) were officers, directors, and shareholders of a family company for an underground storage tank that leaked over 3,000 gallons of gasoline into the ground. The Sacramento County District Attorney filed a civil lawsuit against the company…
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