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Business Litigation Involving Family Business Transactions

On Behalf of | Jul 28, 2014 | Business Litigation

Buffington Law Firm’s business litigation team has represented numerous clients in business disputes involving family members.  Business transactions between family members has become a common source of business litigation lawsuits in California. These lawsuits frequently derive from situations where several family members contribute large amounts of cash to a business venture being proposed and created by a relative.  

Business ventures of this type often derive from a feeling of trust between the parties.  For this reason the transactions are often not documented well, i.e. how much each party was supposed to contribute, how much ownership each person was to have, issues of control, etc.  Often a corporation formed for purposes of the family venture does not have Bylaws to solidify important issues of control.  Even worse, sometimes expectations as regards profitability, owner’s distributions, and matters of this sort are not spelled out and clarified.  Sometimes one family member more or less seizes control of the venture and freezes the other investors out in terms of control and information. All of this can, and often does, lead to actual litigation in Superior Court.

Family owned ventures are an excellent example of the old aphorism that an ounce of prevention is worth a pound of cure.  As much as any other business venture, it is very important to document a family business venture with the help of a qualified attorney.  However, sometimes it is too late for that and litigation is the necessary solution.  

In situations of this type, litigation is properly viewed as a form of negotiation.    Sometimes one or more family members have contributed too much money in the venture to simply write off the investment, and yet the other party is stringing the investors along and not behaving properly.  In these situations, which are extremely common, a lawsuit in Superior Court will often bring the offending party to his or her senses, thereby enabling fruitful negotiations to occur.  Failing that, Buffington Law Firm is always prepared to litigate these business disputes to a verdict, where the goal is to achieve an order from the Court requiring the defendant to grant the relief sought by the Plaintiff.  If you have a legal claim of this type it is important to take action before a statute of limitation has passed.

If you are involved in a family business dispute, we invite you to call Buffington Law Firm for a free legal consultation.  In this discussion you will speak to an actual business litigation attorney to discuss your rights and options, and as always there is no obligation.