Expert Advice When You Need It Most

What is the procedure for taking a business dispute into arbitration

Asked over 3 years ago - San Jose, CA

I am a CPA who contracted to purchase the clients of a C Corp and then the deal fell through and I will likely be considered in breach. I operated the business for 2 days and then told the seller I wanted out. He agreed 2 days later to take the practice back. The seller has retained my 95K deposit for over 1 year. Now he is close to selling the practice to another buyer.

#1. How can I arbitrate this matter to attach any claim against the individual seller. I am concerned that he will sell the Corp or its assets and then declare BK or that the Corp has no assets to repay my 95K. I have to have a means to attach the individual.

#2. If I am adjudged in breach, is my exposure limited to my 5K down payment? The opposing attorney is asking that I pay the sellers commission, the sellers attorney and split the difference for any remainer of the 95K. I likely need a citation to take to the arbitration.

Would appreciate a email contact with your response. May need professional help.

Flag

Save

Share with:

Attorney answers (2)

Joshua M King

Answered over 3 years ago. Communications / Media Law Attorney in Seattle, WA.

Flag

If you breached the agreement (and you may not have here, if the seller agreed to rescind the deal), you will be liable for the damages the seller suffered as a result of the breach. These may be limited by the purchase agreement you signed, but as a general rule such damages would include any difference in the purchase price between your deal and the replacement deal, and any transactional costs associated with the replacement deal (including the commissions and attorneys fees you reference).

You should talk to good local counsel to help you get this situation righted. I'd highly recommend Scott Hartley. He practices in San Mateo but regularly represents clients in San Jose. See link below for his Avvo profile.

http://www.avvo.com/attorneys/94403-ca-scott-hartley-351487.html

Mark as good answer

3 people marked this answer as good

Add comment

Elena Rivkin Franz

Reputation Level 9

Answered over 3 years ago. Business Attorney in Santa Clara, CA.

Flag

The above answer was me; I wasn't signed in - you are welcome to use this as a link to my profile.

Mark as good answer

3 people marked this answer as good

Add comment

Other answers (1)

Elena Rivkin Franz

Answered by a user, over 3 years ago.

Flag

To get this matter to arbitration, you have to either get the seller to agree to go, or look to your purchase contract to see if that is that was the avenue you chose at the time of purchase. If the seller doesn't agree to go to arbitration, you may have to get a court order to get him there. If the seller won't agree and the contract does not provide for arbitration in the event of a dispute, courts will encourage parties to try and resole things through alternative dispute resolution, like arbitration, in order to settle their claims. A judge may encourage both parties to go to arbitration in the event you cannot get there on your own. In order to attach any potential recovery to an individual, you may also have to see if the contract provided for an individual guaranty by the seller.

As far as your exposure is concerned, the contract may provide some info on how deep your exposure may be. Generally, if you were in breach of your agreement, you may have to pay the sellers reasonable damages. However, here, it sounds like the seller agreed to let you out and that may bode well for you.

I'm a local San Jose attorney, you are welcome to contact me at elena@franzlawoffice.com.

Mark as good answer

3 people marked this answer as good

Elena Rivkin Franz, licensed in California

Add comment