Should I sue the business or the business owner?

[JulesS]

I am about to file a civil case over $15,000 against a client that owes me for consultation and software development we had a contract for. He is being very stubborn and manipulative and he has had problems with others in the past I have found out, so he knows about getting sued. I am out quite a bit and looking to getting a judgement as quick as possible. I am assuming once he receives the court summons he will contact me and pay me what he owes because the contract we signed is very black and white, cut and dry and he does not have a leg to stand on.

He owns a successful business that makes over $5m/year profit and all the payments I have received have been checks from this business of his, even though the project I am working on with him might not be 100% related to his business. I have been in contact with his lawyer now and the lawyer is the one he has on retainer for his business, not a personal lawyer and the lawyer is specific to one type of industry (eg Enviromental Law).

I am wondering if it would be better for me to sue him, or his company that has been sending me the checks? I know he can delay judgment payments if I sue him and win, but if I win against the business it might help me get paid quicker. Is there any advantage I would gain by suing the business rather than the individual? I really want him to take this seriously, so if it would affect him greater to get notification that his business is being sued then I would rather sue the business instead of him.

Advantages?
Is there any difference in filing a claim against an individual or a business in Colorado?
His lawyer is from VA, he practices in Washington D.C. Will that lawyer be able to represent him for this case in Colorado?

Thanks to everyone for your time!

 

[tranquility]

You file against the person/entity the contract is with. To file against the other for faster payment or to make more of an impression is called malicious prosecution and would subject you to damages.

Why do you think you can file in Colorado?

 

[Mass_Shyster]

the contract we signed is very black and white, cut and dry

Sue the person (real or fictitious) with whom you contracted.

The parties to the contract are generally named in the first paragraph.

 

[JulesS]

You file against the person/entity the contract is with. To file against the other for faster payment or to make more of an impression is called malicious prosecution and would subject you to damages.

Why do you think you can file in Colorado?

Well the work I have been doing is obviously for the business he owns, and all the payments have been coming from that business. Isn't is also illegal for him to pay me for projects from the business, especially if they are for something not related to the business?

I am filing in Colorado because that is where he is from and that is where most of our business was conducted and where the contract was signed. I am filing in the county that he resides in and also that is the same county as the business address. Isn't that what I am supposed to do? Can I just file a claim anywhere I want?

 

[tranquility]

Well the work I have been doing is obviously for the business he owns, and all the payments have been coming from that business. Isn't is also illegal for him to pay me for projects from the business, especially if they are for something not related to the business?

Generally, a valid offer includes what is known as QTIPS. Quantity, Time of performance, Identity of parties, Price, Subject matter. If you are uncertain about the Identity of the Parties to the contract, I'm thinking it is not quite as, "black and white, cut and dry" as you believe. It makes no difference who the work was "for" or who was delegated the duty to "pay" it matters who the contract was with. Supposition about illegality is not going to be helpful to you.

As to the location to sue, from the way things were worded, I thought you were in Colorado and he or his business might have been somewhere else.

 

[JulesS]

The contract is very cut and dry. It basically just states that he owes me $x every month on the 5th of the month and if the amount is not paid by the 25th of the month then he owes me $xx extra. This was for marketing consultation and then he also paid me to develop a software with $x amount upfront and $xx amount due on a certain date.

All payments have been coming from the same source. The development is more related to his business and there was no written contract between the two of us, all the details were figured out and agreed to through email (I have every last email between us), then a specification agreement was signed by one of his other employees acting on behalf of the business.

If you check my other post I made there is more info on this situation. Can I sue him in small claims and the business separately?

Also again, will his lawyer be able to represent him here in Colorado?

 

[tranquility]

All your posts on the same matter should be in the same thread.

You don't know who you have the contract with and yet claim it is cut and dry. This is going to be a problem if you sue. What it is related to (the business) may give you some claim in quantum meruit. That the payments came from a certain place is of no meaning. The more you write here makes me think this is not going to be anywhere near as easy as you have planned.

No, you cannot sue for the same transaction and occurrence twice whether in different courts or not.

Yes, his attorney can be temporarily admitted to the CO bar. But, it would be far cheaper to hire a local attorney than have his attorney fly here.

 

[JulesS]

The consulting contract is very cut and dry. The development agreement is not under signed contract but everything we agreed upon was clearly spelled out if that makes sense. He agreed through email and text to all the very detailed guidelines.

Sorry I didn't know I was supposed to keep everything about the same case in the same thread, but that leads me to another question. The consultation agreement is lined out like described above- payment due on date and extra $7500 charge if not paid within 20 days of that day- but the client is also supposed to give me notice by certified mail by the 30th if they are not going to use me for the next month. They have not sent me that notification, how many months should I be able to collect on this for? I can send a blurred out photo of the contract if that helps.

Thanks again for the advice!

 

[Zigner]

The consulting contract is very cut and dry. The development agreement is not under signed contract but everything we agreed upon was clearly spelled out if that makes sense. He agreed through email and text to all the very detailed guidelines.

Sorry I didn't know I was supposed to keep everything about the same case in the same thread, but that leads me to another question. The consultation agreement is lined out like described above- payment due on date and extra $7500 charge if not paid within 20 days of that day- but the client is also supposed to give me notice by certified mail by the 30th if they are not going to use me for the next month. They have not sent me that notification, how many months should I be able to collect on this for? I can send a blurred out photo of the contract if that helps.

Thanks again for the advice!

Your $7,500 charge may be found invalid.

 

[tranquility]

Your $7,500 charge may be found invalid.

I agree. That sounds too much like a penalty and not liquidated damages.

To the OP, how long has this purported contract been in existence?

 

[JulesS]

How is the $7500 fee invalid especially when the client agreed to it 100%? They weren't forced to sign the contract!

The contract has been going on since June of last year without any hiccups until January.

 

[You Are Guilty]

My wife can sign a contract that says I can stuff her in an oven and eat her, but if she backs out, no court on the planet will enforce it, even though she signed it voluntarily. In this case, your $7500 clause can be seen as an invalid penalty, and, depending on the overall time and value of the contract, usurious as well (which can carry criminal consequences).

Not saying it is (or absolutely will be), but the possibility exists.

 

[tranquility]

How is the $7500 fee invalid especially when the client agreed to it 100%? They weren't forced to sign the contract!

Penalties are disfavored in contract law. When a monetary amount is listed as liquidated damages, it usually must be a reasonable amount for something that is difficult to ascertain the actual damages of.

The contract has been going on since June of last year without any hiccups until January.

This could be a problem as well if you don't have something "subscribed" by the party you want to enforce it against. (Used to be signature.)

Colorado statutes:
§ 38-10-112. Void agreements

(1) Except for contracts for the sale of goods which are governed by section 4-2-201, C.R.S., and lease contracts which are governed by section 4-2.5-201, C.R.S., in the following cases every agreement shall be void, unless such agreement or some note or memorandum thereof is in writing and subscribed by the party charged therewith:
(a) Every agreement that by the terms is not to be performed within one year after the making thereof;

While this usually means contracts that cannot be performed in one year, a couple of the case notes under the statute includes:

Agreement not performed within one year invalid generally. An agreement that by its terms is not to be performed within one year from the making thereof shall be invalid or void unless the agreement or some note or memorandum thereof is in writing and signed by the party to be charged. Lucas v. Whittaker Corp., 335 F. Supp. 889 (D. Colo. 1971), aff'd, 470 F.2d 326 (10th Cir. 1972).

Oral agreement for at-will employment. Where defense of statute of frauds raised, neither partial performance nor payment of compensation deemed sufficient to avoid bar of statute as to enforcement of entire contract. Chidester v. E. Gas & Fuel Assoc., 859 P.2d 222 (Colo. App. 1992).

Now, there are certainly case notes in your favor that can take the contract out of the statute of frauds, but I just want to point out this is not a slam-dunk easy case. There are always arguments.

 

[KeyWestDan]

You sue the company and the individual.

First, you sue the company and the individual. It is not a matter of one or the other. You always sue both.

You have to serve both.

However, I am not clear on who is where. If you are both in the same state, no problem, sue in county/circuit court where you live.

If you are in different states, it gets much more complicated. It makes NO DIFFERENCE where the lawyer is. There is no jurisdiction based on a lawyer's location. If you sued in your state, the company is going to hire a local attorney. He might be directed by the corporate counsel, but you can be sue nobody is going to be flying from DC to Colorado for your civil action.

If you are doing this pro se, and the parties are in different states, you need to research what is necessary to create the long arm jurisdiction. Also, is there a choice of forum in the contract?

If there is diversity of citizenship between the parties, then you could sue in U.S. District Court, but NOT when the claim is as small as yours. The minimum amount in controversy is $75,000.

I doubt you would be able to collect on a penalty clause in the contract in any case. You can be pretty sure that any court anywhere would declare that paragraph invalid (contrary to public policy), and the defendant(s) are certainly going to fight you on that. At most you will get a legal amount of interest on the unpaid balance.

Talk to a local business lawyer to see if your contract is efforceable at all and how you can enforce it if it is.

 

[tranquility]

Should he sue anyone else too? How about the email transmitter?

If he is uncertain as to the identity of parties in a contract suit, does he have a contract?

Reread his first post and see why he wants to sue the business rather than the person.