Collecting from a business

[tempusfugit]

What is the name of your state? VT

I have a small claims judgment against a business for about $1800. I regret to say I did not do my research before filing the complaint, and I sued the dba, rather than the formally incorporated name.

Since the defendant/creditor has been non-responsive in the months since the judgment, I attempted a summons to trustee in an effort to collect the money from the business account. This was ineffective. Since this summons also had the dba name on it, I suspect the accounts are held in the name of the corporation.

What is my best route forward in this case? Should I file some kind of discovery motion with the trustee to discover the name on the account? Or should I file a post-judgment motion with the court in an effort to include the 'proper' business name in future summons?

(I suspect I was given a gift by the defendant, who used both his dba and his incorporated name in one of his written responses to my subpoena.)

 

[dcatz]

File a motion to amend the name on the judgment. I haven't looked at your statutes to see the appropriate authority, but it may be the same statute that would give you a right to vacate. In any event, every state has some statute to address this type of problem.

The difficulty for you is that, if you didn't do your homework and you would have known the truth if you had, the court may find that you were inexcusably negligent and refuse the relief that you seek. You probably have a better chance of success in Small Claims, but you'll have to address the issue.

If the defendant was properly served, had notice and a chance to raise the defect, point that out. Point out that you're foreclosed from effecting recovery on a proper judgment and that equity requires the amendment. Hope it persuades the court.

You probably were given a gift for just that reason.

Third post this month concerning properly designating defendants. People should learn.

 

[dcatz]

If you amend, add the additional name, don't ask to substitute one for the other. You'd be asking to substitute a defendant who was never named and served, and that won't work.

 

[tempusfugit]

Thanks

Thanks for your help.

I wish I'd found this forum before I filed.

 

[tempusfugit]

financial disclosure hearing result

Despite the unresolved naming difficulty, I proceeded with a financial disclosure hearing yesterday. The defendant did not show, and the judge issued an order for payment.

My question is, how does this order have any more force than the previous default judgment? I recognize that this order is backed by the threat of civil contempt for non-compliance. How would this contempt be enforced in the case of a business? Can the officers of the business be charged if they fail to comply?

 

[dcatz]

the judge issued an order for payment

Against what? The already misnamed dba or did the court give you a gift and make the order applicable to the corporation?

If the Order pertained to the dba (as I would expect), nothing is changed. If the Order added the corporation, you have your enforcement rights.

Candidly, civil contempt is pretty empty. Don't know what might happen in VT, but you can't put a corporation in jail. The specific individual who was ordered to appear now has a civil contempt warrant. It's unlikely that will be pursued like a criminal warrant and will probably expire in a fixed period of time (6 mos. in my state - don't know yours). No, other individuals in the corporation are not subject to being charged. You only summoned one person into court.

 

[tempusfugit]

strengthening case

Several questions:


1)Checks written from this business list both the corporation and the dba-would presenting this to the judge strengthen my case?

2)Is it possible to serve a summons to trustee to a payroll company?

3)Is it possible to 'pierce the corporate veil' in a small claims case? ( Suppose I can demonstrate that the defendant regularly comingles corporate and personal funds, uses corporate resources for personal ends, etc.)

 

[dcatz]

(Disclaimer: Let me preface all of this with the comment that I think some of your questions are touching on matters that should also be discussed with local counsel. VT is not my state; I can only rely on your statutory language. You might also look at the thread I posted on designating defendants. You were one of the inspirations.)

Checks written from this business list both the corporation and the dba-would presenting this to the judge strengthen my case?

The problem for me is that I haven’t entirely figured out what this “my case” is. If you are referring to a Motion to Amend the Judgment to add additional names, then yes, I think it would, as would the fact that he used both a dba and an incorporated name on responses to the information subpoena. A corporation can have a dba, but a sole proprietorship can’t also be a corporation. You would need to determine which came first in time. “Joe Blow dba Excellent Stuff” can’t simultaneously be “Excellent Stuff, Inc.”, but “Excellent Stuff, Inc. dba GoodiesGalore” is possible. I would argue that purporting to be the former is an attempt to perpetrate a fraud on the court”. If “my case” is something different, you’ll have to clarify.

Is it possible to serve a summons to trustee to a payroll company?

From my reading of your statute, I would say yes to the question as phrased, BUT I would expect several problems. First, the Summons to Trustee applies to “goods, effects or credits of the defendant which are in the hands of such trustee at the time of service of the writ upon the trustee, or which come into the trustee's hands or possession before disclosure”. Since disclosure must be made when the writ goes for service, you could only catch what the payroll company had at the time of service. Unless your timing was perfect, that may be nothing. Second, “no such summons shall be issued with respect to earnings”. Apparently, a Summons to Trustee cannot be used for wages, and that’s all you are discussing with payroll. Third, even if the Summons did not exclude earnings, I think there is an argument to be made for the proposition that, once delivered to the payroll company, monies are held in a fiduciary capacity for the benefit of employees and are transformed into wages that are not considered assets of the debtor company. So my opinion is that you can do it – you aren’t legally prohibited - but you can’t get anything by doing it, and a person adjudged a trustee can recover costs and charges from you, when they are discharged.

Is it possible to 'pierce the corporate veil' in a small claims case?

While I’m tempted to say “anything is possible”, I don’t think so. My reading is that your statute doesn’t allow for discovery in Small Claims. “Piercing the veil” is almost invariably dependent on the development of a compilation of bit and pieces of circumstantial evidence that is sufficient to support an alter ego theory. It is normally pretty hard in any court and probably impossible in one in which discovery is limited or precluded. Aside from that, it just doesn’t happen that often. It’s easier to comply with corporate requirements than to knowingly and intentionally skirt them.