Contract Litigation - Fraud

[Wesker]

What is the name of your state (only U.S. law)? New York

Keeping it short.

• Statue of limitations is running out.
• Individual in violation currently resides in Maryland.
• Individual representing Company based in New York and we signed 1st Agreement in February 2008.
• Paid a sum of around $12k during a 2 month period.
• No results so we requested a refund. Individual ceased communications.
• We later found out that he had been fired from that company PRIOR to signing the agreement and using the company e-mail and information.
• We confronted him and he agreed to work with us to try to meet our needs still. However shortly after he ceased communications again in Late 2008.
• We went back to the company again and they made legal threats.

My questions are:

1). What is the best type of action we should take here?
2). What is the most affordable way we can go about obtaining a judgment?
3). We will likely of course try to reach an agreement again but want to proceed with enforcing the agreement if unable to settle?
4). Would anyone do this lawsuit on a commission basis?
5). The company I assume should be liable as well since they allowed the former employee to use their e-mail to conduct communications even after firing him, is this correct?

 

[sandyclaus]

What is the name of your state (only U.S. law)? New York

Keeping it short.

• Statue of limitations is running out.
• Individual in violation currently resides in Maryland.
• Individual representing Company based in New York and we signed 1st Agreement in February 2008.
• Paid a sum of around $12k during a 2 month period.
• No results so we requested a refund. Individual ceased communications.
• We later found out that he had been fired from that company PRIOR to signing the agreement and using the company e-mail and information.
• We confronted him and he agreed to work with us to try to meet our needs still. However shortly after he ceased communications again in Late 2008.
• We went back to the company again and they made legal threats.

My questions are:

1). What is the best type of action we should take here?
2). What is the most affordable way we can go about obtaining a judgment?
3). We will likely of course try to reach an agreement again but want to proceed with enforcing the agreement if unable to settle?
4). Would anyone do this lawsuit on a commission basis?
5). The company I assume should be liable as well since they allowed the former employee to use their e-mail to conduct communications even after firing him, is this correct?

As you have said, the individual was found to no longer be working for the company at the time you entered into a contract with them for the services he was to provide. That makes the company NOT liable, unless it can be proven that they allowed him to continue using the company name (which, I suspect, they won't admit to even if they did).

You'd have to sue the individual.

I wouldn't know about whether or not this kind of case could be taken on contingency, but I seriously doubt it. We are not an attorney referral service here, so I would suggest contacting your local Bar Association for a referral.

 

[Wesker]

As you have said, the individual was found to no longer be working for the company at the time you entered into a contract with them for the services he was to provide. That makes the company NOT liable, unless it can be proven that they allowed him to continue using the company name (which, I suspect, they won't admit to even if they did).

You'd have to sue the individual.

I wouldn't know about whether or not this kind of case could be taken on contingency, but I seriously doubt it. We are not an attorney referral service here, so I would suggest contacting your local Bar Association for a referral.

The plan was to sue the individual and company. The company I figured would be potentially liable because well over a year after the employee was fired, he still had access to everything including the company e-mail (example say he works for microsoft, @microsoft.com).

I've never had good referrals from the Local Bar Association. Is there something specifically I should be asking them?

 

[tranquility]

The plan was to sue the individual and company. The company I figured would be potentially liable because well over a year after the employee was fired, he still had access to everything including the company e-mail (example say he works for microsoft, @microsoft.com).

I've never had good referrals from the Local Bar Association. Is there something specifically I should be asking them?

It seems like you have some facts that might indicate apparent authority, but that is going to be a hard case to make. How much do you have in damages?

 

[Wesker]

It seems like you have some facts that might indicate apparent authority, but that is going to be a hard case to make. How much do you have in damages?

Roughly $12k in fees paid to them. Not sure if I can collect much more than that unless you have some ideas here. It's simply a contract that was never completed and then later we find out that the individual fraudulently claimed he worked for the company and used all their documents and even had access to their company e-mail.

The company is a medium size marketing firm in downtown Manhattan. The individual resides in Maryland but the contract states all litigation should be held in New York.

 

[tranquility]

You're going to need an attorney. This is not going to be easy.

 

[Wesker]

After reviewing the contract once more, I made a mistake. The contract doesn't state where to have litigation. The contract was initially signed when I was located in North Carolina. It does list the company name and address (New York) in the contract.

Where would I hire an attorney. Which state?

 

[quincy]

After reviewing the contract once more, I made a mistake. The contract doesn't state where to have litigation. The contract was initially signed when I was located in North Carolina. It does list the company name and address (New York) in the contract.

Where would I hire an attorney. Which state?

Sue the individual in Maryland, where he resides. Maryland has personal jurisdiction over its own state residents.

It does not sound as if the company can be held liable. The individual was no longer employed by the company when you entered into the contract agreement and an email address does not alone create for the company any liability for the acts committed by a rogue ex-employee.

If you do not like going through the Maryland State Bar Association for assistance in finding an attorney to help you (http://www.msba.org), then you can use the "Find a Lawyer" feature on this site, or you can contact a few firms in Maryland, or you can ask for references from friends or acquaintances in Maryland, or you can do a computer search, or you can use the Yellow Pages.

Good luck.

 

[OHRoadwarrior]

Can you prove the email address was not being spoofed?

http://en.wikipedia.org/wiki/Website_spoofing

 

[quincy]

Can you prove the email address was not being spoofed?

http://en.wikipedia.org/wiki/Website_spoofing

Good point although, even if it hadn't been spoofed, it should not on its own create liability for the former company.

 

[tranquility]

It does not sound as if the company can be held liable. The individual was no longer employed by the company when you entered into the contract agreement and an email address does not alone create for the company any liability for the acts committed by a rogue ex-employee.

While "alone", you may be right. May be. There seems more than some random employee getting business after being fired here soliciting business. Apparent authority may certainly apply and it would be foolish to let it go at this point as the OP clearly thought he was dealing with the company.

http://www.wbsonline.com/resources/the-problem-with-apparent-authority/

In most cases, apparent authority arises when there has been what is termed a "past course of dealing" with a creditor. In this situation, the agent, acting with actual authority, has on many prior occasions contracted with this particular creditor on behalf of the principal. In each of these cases, a bill was sent to the principal, and the bill was paid.

Subsequently, the employee's authority is revoked or curtailed. It is easy to see that, because of the past course of dealing, the creditor can reasonably believe that the agent is still authorized to represent the principal, if the creditor is not notified otherwise. Thus, if the agent subsequently forms a contract with the creditor, while representing that he is acting for the principal, the principal is liable on the contract because of apparent authority. In short, an employee may be fired, or a partner may withdraw from a business, and still bind the business to contracts.

http://www.law.cornell.edu/wex/apparent_authority?quicktabs_3=0#quicktabs-3

The condition that arises if a third party believes that an agent has the authority to act for another person or company (called the principal) when that authority has not in reality been granted. If an agent acts with apparent authority, the agent's acts legally bind the principal. For example, a customer may believe that an employee who presents a contract on company stationery is authorized to sign that contract on behalf of the company. Even if the employee does not have the authority to enter into contracts, the company will be legally bound by the signed agreement.

http://www.bizfilings.com/toolkit/sbg/run-a-business/assets/take-steps-to-limit-liability-for-contracts.aspx

Apparent authority. While caution should be exercised with both actual and implied authority, the biggest problem for the small business owner is apparent authority. If apparent authority exists, an agent or employee can bind the business to a contract, even though the agent or employee has no actual right to act for the business. Apparent authority can represent a significant source of liability for the business.

If it reasonably appears to a creditor that an agent has authority to represent a principal on a contract, then the principal is legally bound to the contract, based on the apparent authority theory. This is true even though the agent had no actual authority at all to represent the principal.

This is frequently a problem when an employee is fired or the scope of his authority is curtailed, and creditors of the business are not properly notified of this fact. Clearly, this can especially be a problem when the agent had significant authority (e.g., an officer in a corporation, a manager in an LLC or an employee such as a purchasing agent).

http://www.gross.com/apptauth-page-1534.html

An act is within the apparent scope of the employee's authority if, in the view of the character of his actual and known duties, an ordinarily prudent person, having a reasonable knowledge of the usage's of the business in which the agent is engaged, would be justified in believing that he is authorized to perform the act in question,"

If the employee was working for the company and was fired during negotiations or after establishing a relationship with the OP and presented the contract on the company's forms/letterhead and while continuing to have access to the company email, that would be a clear example of apparent authority. If the employee never met the OP and started to contact him after being fired, but used official forms/letterhead and continued to have access to the email, that might very well be apparent authority. A good case could be made it wasn't, but it would be a fight where more facts would come in. (Like the person's knowledge of the account and how many sales people the OP had to deal with during the time of their relationship.)

If some guy said he was with the company and there was nothing else indicating he was beyond an email address, I would agree there is no apparent authority.

 

[Wesker]

Can you prove the email address was not being spoofed?

http://en.wikipedia.org/wiki/Website_spoofing

Yes he admitted to the entire scheme and said he would make up for it. The email servers are definitely from the companies. They simply didn't cut off access to his email.

 

[Wesker]

Well I'm going to file this next month in the State of New York even though he lives in Maryland. The statue has expired in Maryland and the contract said all litigation has to happen in New York despite the contract being fraudulent it's still the only contract we have.

 

[quincy]

Well I'm going to file this next month in the State of New York even though he lives in Maryland. The statue has expired in Maryland and the contract said all litigation has to happen in New York despite the contract being fraudulent it's still the only contract we have.

Sounds like a plan. You might find he fights jurisdiction.

Good luck.