Answering a criticism with alter ego allegations in California is the subject of this text. The allegations are additionally recognized within the authorized discipline as company veil piercing allegations as a result of they’re used to “pierce the company veil” and have a courtroom disregard the company entity, which is able to permit a plaintiff so as to add a person particular person, or individuals, and even one other company as a defendant and search to carry them liable for the money owed or different liabilities of the principle company.

Alter ego allegations are usually used in opposition to smaller companies, significantly companies with just one or two house owners. Within the expertise of the writer, many collectors will file a criticism with alter ego allegations with little, if any, proof to help the allegations of the criticism within the hopes that this may by some means give them leverage.

A celebration can’t completely keep away from the chance that somebody might search to carry them personally answerable for the money owed for an organization which they personal or management, significantly in California. However they should file a solution to any criticism searching for to impose alter ego legal responsibility on them, and be sure you declare indemnity from the company within the reply, and probably in a cross-complaint as properly, pursuant to subdivisions a via c of Part 317 of the California Companies Code, as many if not most California company bylaws do permit the company administrators and officers to assert indemnity from the company to the fullest extent of the regulation.

Anybody answering an alter ego criticism ought to embrace all the particular info they’ve of their affirmative defenses as to why the Court docket shouldn’t deviate from the standard authorized doctrine of the separation of company and particular person authorized identification and existence, comparable to they didn’t personally assure any money owed to the Plaintiff, and so forth. They need to additionally be sure you ship specifically ready interrogatories to the plaintiff asking them to state all information that help their alter ego allegations, determine all individuals with private data of these information, and all paperwork, and so forth. Additionally request to examine all paperwork that help their alter ego allegations as properly.

Many occasions the Plaintiff will reply with a boilerplate response comparable to allegations are made on the recommendation of counsel, info and perception, and so forth. Sending supplemental discovery requests a month or two later requesting if any new info has been acquired which might require supplemental responses to interrogatories or doc requests is a sensible transfer in such conditions. That is so as a result of a celebration responding that their earlier responses are nonetheless true and proper is principally admitting that they don’t have any proof, no truth, no individuals with private data, and no paperwork to help their allegations. In that case a celebration would possibly need to look into probably submitting a movement for abstract adjudication on the problem of alter ego legal responsibility, or even perhaps abstract judgment. Within the opinion of the writer, anybody who responds to a supplemental discovery request that they’ve NO new info, paperwork or the rest is simply asking for a abstract adjudication/judgment movement. They need to have thought of that earlier than making these allegations with no supporting proof.

The writer sincerely hopes you might have loved this text and located it informative.


Stan Burman

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