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How can I prevent a defendant from hiding their assets in an LLC?

Sacramento, CA |
Filed under: Lawsuits and disputes

I'm going to be filing a small claims suit against somebody for $10K. She violated civ 51 civ 1942.5 and negligently inflicted emotional distress. I am afraid though that if I win and get a judgement in my favor that the defendant will use her LLC as a shelter. So I am considering if I should name the LLC as a defendant as well or if I should wait to file against it separately with an added fraud cause of action in a higher jurisdiction court. I'm awaiting an UD complaint to be filed against me just so I can have my motion to quash heard which will concretely prove that I've been paying rent to a fraudster.

A Demand Letter with a pay by date (same day I expect UD to be filed) was next week was sent to defendant earlier this week certified mail with return receipt.

Attorney Answers 4

Posted

Well, you can't prevent the defendant from hiding assets. And you should not name the LLC is the LLC has no legal liability for violating your civil rights or violating Civil Code section 1942.5.

Rather, once you obtain a judgment against the defendant, if the defendant transfers assets to the LLC, you can at that time sue the LLC and the defendant for fraudulent conveyance/fraudulent transfer.

http://www.avvo.com/legal-guides/ugc/fraudulent-transfer-and-fraudulent-conveyance-in-california?ref=kb_serp_title_3

http://www.avvo.com/legal-guides/ugc/fraudulent-transfers-in-california?ref=kb_serp_title_1

California's Fraudulent Transfer Act, is enacted at Civil Code sections 3439 to 3439.12.

Under Section 3439.04, a transfer is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:

1) With actual intent to hinder, delay, or defraud any creditor of the debtor.

2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:

A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.

B) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.

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Asker

Posted

Attorney Chen I am very grateful for you concise reply. Still though wouldn't the LLC be liable if my original rental agreement was signed with them, which happens to be the same LLC that the person (who specifically denied my rights and retaliated against me) is an officer of (her husband is listed by SOS as agent for service)?

Asker

Posted

"California Civil Code Section 52 (a) Whoever denies, aids or incites a denial, or makes any discrimination or distinction contrary to Section 51, ..." Wouldn't the LLC as the entity which I originally signed the rental agreement with be considered to be aiding the discrimination?

Posted

While you can't stop someone from hiding assets, you can break the llc once
the judgement is rendered

..
>

Eric Ridley can be reached by phone: (805) 244-5291, by email: ridley.eric@gmail.com, or at http://www.ridleylawoffices.com This answer is intended to provide general information only. It does not create an Attorney-Client relationship, nor should it be construed as legal advice or an opinion on specific situations. Eric D. Ridley is licensed to practice law in California. The Law Offices of Eric Ridley emphasizes Estate Planning, Bankruptcy and Consumer Law & Litigation.

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Posted

You can't name the LLC unless the LLC is at fault or she was working on behalf of the LLC when she committed the wrongdoing.

There's a law called "fraudulent conveyances" that allows you set aside any transfers that were made to the LLC to avoid paying creditors.

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Posted

Wouldn't the LLC be liable if my original rental agreement was signed with them, which happens to be the same LLC that the person (who specifically denied my rights and retaliated against me) is an officer of (her husband is listed by SOS as agent for service)?

William Bronchick

William Bronchick

Posted

In that case, the LLC would be liable if the claim relates to a contract or agreement in which you and the LLC were parties.

Posted

As already said, you cannot prevent your landlord from transferring assets. Be sure to sue the legal owner of the property, which may very well be an LLC. You may also have a claim against the individual person as well. You would be well advised to consult with a tenant's rights attorney regarding your specific situation before you or your landlord files a court action.

The above "answer" is for discussion purposes only and is neither intended as legal advice nor to create an attorney-client relationship. An attorney-client relationship is not created until after an in person consultation and I agree in writing to provide representation. I am licensed solely in the state of Arizona. You should consult with a knowledgeable attorney in your jurisdiction.

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Posted

Thanks for the reply. I already filed earlier today. Actually the LLC is not the owner nor the agent or lessee of the owner. I'm going to sue the LLC separately on a different cause of action.

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