If you are running your business the right way, you are most likely resolving conflict appropriately and making your customers and business relationships feel appreciated and valued.
If you are in business for any period of time you may (knock on wood) eventually face either one of two situations:
1. You have a dispute with a business relationship over money/goods/services that you believe you are owed; (a/k/a you are considering filing a lawsuit) or
2. You received a nice package in the mail otherwise known as a summons and complaint. (a/k/a You are being sued).
How you handle these two scenarios can make a world of difference. Therefore, I’ve put together a summary of pointers to assist you in avoiding some of the pitfalls of associated with lawsuit – whether you are suing or being sued.
Regardless, as a general point, you should always consult with an attorney to discuss your rights and how best to proceed.
If You are Contemplating Filing Suit: You Need to Know What the Court Requires of You.
Lawyers call this “Civil Procedure”. Civil Procedure basically includes “what to file” “when to file” and “where to file.”
1. Where to File
If you have a claim that is $5,000 or less, you generally have the option of filing suit in small claims court. Small claims court has several distinct advantages, including that it is an informal and generally more efficient forum than district or circuit court.
Probably the biggest advantage for a business filing suit in small claims court is this: You cannot have an attorney represent you. This is particularly useful for businesses formed as limited liability companies or corporations, since:
officers or owners of businesses cannot, themselves, file suit (or defend suits) on behalf of their company. They MUST retain an attorney.
Therefore filing in small claims court can be cost-effective.
2. What to File
This point seems to go without much explanation, but when you are filing suit, you file a lawsuit (or “complaint”) with the Court. You also must file a “summons” along with the complaint. After filed, you will need to serve the complaint and summons on the party that you have a dispute with (the Defendant). You will also need to file proof with the court that you served the complaint and summons on the Defendant.
3. When to File
This point recognizes that you only have so much time to bring your claims to be resolved in court. Statutes of Limitations, “laches” and other defenses could be raised if you do not bring forth your claims promptly. Also, you should look to any written agreement between you and the opposing party – since it may further limit when you can bring your claims.
If You Have Been Served With a Lawsuit: You Need to Know What the Court Requires of You.
1. Who Can File
When you have been served with a lawsuit against your business, it is crucial to understand who can file a response to the lawsuit.
As indicated above, if your business is being sued, and it is not being sued in small claims court, then you must retain an attorney to respond to the lawsuit.
I have had way too many clients make the assumption that they could simply handle the matter themselves by sending the court their response to the lawsuit. This is a big mistake. The court will not accept your response, and likely, you will be held in default. This lead to the next point.
2. When to File
There are certain specific time frames stated in the Court Rules that provides when you must respond to a lawsuit. (Generally, 21 days if you personally were served, 28 days if you were served via certified mail).If you miss these deadlines, you will be held in default – essentially you lose automatically. An attorney might be able to assist in setting aside a default, but only by establishing with the court there was “good cause” for your failure to respond. This is another reason why you should consult with an attorney as soon as you are served with the lawsuit.
3. What to File.
Generally, you would file an “Answer”. But your attorney can review the facts and law and determine whether or not anything else should be filed to potentially make some or all of the claims against you go away. This would include “Affirmative Defenses” “Counter claims” or motions to dismiss.
The major pitfalls in dealing with lawsuits can be handled appropriately by acting promptly and by seeking good legal counsel about your best options.
This is a guest post from Attorney Jeshua T. Lauka. Jeshua is an attorney at David & Wierenga, P.C., a business law firm located in downtown Grand Rapids, Michigan. Jeshua practice in business, real estate, estate and trust work and related litigation.