Q: A former client sued my business. If they win a settlement, but my business has no assets, can they come after me for
money personally?
A: Yes and no. If you are not personally a defendant they can only get to you by "piercing the corporate veil" and proving commingling of funds. This requires a subsequent motion by them.
Barry E. Janay agrees with this answer
A: They would need to obtain vicarious liability between you and the corporation, essentially show that the corporation was a sham enterprise or was an alter ego of yourself. There are many factors taken into account in so called "piercing the corporate veil," but if you had a legitimate business purpose and your actions were all in line with legitimate business purposes as opposed to personal ones than you should have a good defense to any attempt for the plaintiff to attach personal liability upon you.
A:
You do not indicate what type of business entity you were operating under and what type of a business. The answer, therefore, is "maybe". Also, a settlement would imply an agreement to resolve the issue, rather than a judgment issued by the court. If you make a settlemet agreement to pay from assets you know the business entity does not have, you may very well be personally liable.
#LegalQ&A
A: It depends on the facts, whether you commingled funds, whether the business was authentic, and other factors. More details are necessary to provide a professional analysis of your issue. The best first step is an Initial Consultation with an Attorney. You can read more about me, my credentials, awards, honors, testimonials, and media appearances/ publications on my law practice website, www.AEesq.com. I practice law in CA, NY, MA, and DC in the following areas of law: Business & Contracts, Criminal Defense, Divorce & Child Custody, and Education Law. This answer does not constitute legal advice; make any predictions, guarantees, or warranties; or create any Attorney-Client relationship.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.