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Standing to argue statute of fraud as an affirmative defense

Torrance, CA |

I lent money to a company owned and managed by 2 people (father and son). The Father orally guaranteed that he would repay the loan if the company could not pay. (The Son did not guarantee). The company defaulted on payment and filed for bankruptcy. I sued the father on his personal guarantee for the loan to the company. I also sued father and son for fraudulent transfer because the father transferred money to his son to buy a house after the company became insolvent.

Default has been entered against the Father. I understand once a default is entered, all allegations are taken as true - i.e., he guaranteed payment of loan. The Son is challenging the claim on the basis of statue of fraud - i.e., the oral guarantee is invalid. Can the son challenge allegations taken as true?

Attorney Answers 4


Unless the son is an attorney he cannot raise claims for legally belonging to his father. It is a matter of standing. There is time to set aside the default by father to raise the defense.

A guaranty to answer for the debt of another in California must be in writing.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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"I understand once a default is entered, all allegations are taken as true" -- Your understanding is incorrect. You must still prove each element of your case, including a writing which evidences the guarantee you allege.

If there was no guarantee by the father you have no claim against the father. I do not see how you get to a fraudulent transfer by the father when father had no underlying obligation to you. I see a judgment for the defense.

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you may have a lot of problems, how much is the loan for?

My name is Stephen R. Cohen and have practiced since 1974. I practice in Los Angeles and Orange County, CA. These answers do not create an attorney client relationship. My answers may offend I believe in telling the truth, I use common sense as well as the law. Other state's laws may differ.. There are a lot of really good attorneys on this site, I will do limited appearances which are preparation of court documents it is , less expensive. However generally I believe an attorney is better than none.

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If the underlying amounts are enough to buy a house you are best served hiring a strong litigation attorney to vigorously prosecute your claims against father and son and try to attach their assets pre judgement if grounds exists.

Good luck.

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