QUESTIONS RELATIVE TO PRESENTATION ON RANDOM LEGAL QUESTIONS #13-15

There are a number of different dot.com services that rate lawyers through peer solicitation approvals and other such devices. One such dot.com business is styled Avvo;
As an adjunct to their rating services they have an open forum for various legal questions to which many answers are provided by various lawyers seeking to be rated by Avvo.

So, I am utilizing a number of those questions in this presentation/ article for the blog of Steven H. Wilhelm, APC

QUESTION #13
Do I need a license to operate a small painting business in South Carolina?

ANSWER TO QUESTION #13

Well first key in answering any legal question is to make sure that you are aware of the laws of the State to which the Question is addressed.

Here the questioning party is asking in particular to the rules of South Carolina. Unless you have a law license in the State of South Carolina it is probably best to not try to give legal advice regarding the question posed.

So, without going out to far on the limb, my best estimated legal input regarding this question would be that there most likely is some level of licensure to operate a painting business in the State of South Carolina. Having said that, there very well could be a State licensing authority, such as the California Contractor’s Licensing Bureau; additionally, there would be a separate business license for a City or a County within the State, which likely will be simply a locality taxing bureau vs a substantive subject matter testing body; this would be in addition to the one body who governed licensing of the substantive credibility of licensees.

QUESTION #14
Can you overturn a business settlement agreement in Michigan? Value of $2M settled a case for significantly less that what the company was worth (about 6x8x) due to severity of oppression and withheld information.
During negotiations, information about company’s health and financials were misappropriated and falsely provided from one party.
In addition, strong case of oppression that went against the company’s by-laws. Strong story if heard by a judge, but also strong settlement agreement signed by both parties. Can this be overturned? If so, how do you approach such a matter?

ANSWER TO QUESTION #14

Wow this is quite a loaded gun;
Well, anything can be challenged; the question is can you win a challenge?

So, generally speaking a duly represented settlement agreement usually is very difficult to rescind; or undo;

There would need to be fraud in the inducement or fraudulent misrepresentation; or possibly mutual mistake before you could persuade a judge to set aside a settlement document.

So, could it be done? Yes; how likely is it that you will be able to establish the burden of proof through the evidence? Well that hinges on what evidence you have of the fraud or misrepresentations as set forth above, and what defense that they might have to the same?

Given the question there might be evidence that there were items that were withheld during the settlement negotiations.
But if both sides were represented by counsel at the time, setting aside the settlement agreement will take a mountain of evidence.
More likely you might be able to file suit against the party who manipulated the evidence, i.e. the financials; or misdirected the financials etc.
But that is a different result than setting aside a settlement agreement.

So, my two cents worth as it were, is that it would be an uphill battle to set the settlement agreement aside;
Not impossible but very improbable, especially if both sides were represented by counsel at the time of the settlement.

QUESTION #15
I am part of 4 directors who won 25% shares each in a company with no employees. What process can they use to force me out? I’m not sure but I believe there is some method that can be used to force a director out of a company because the director may be there doing nothing or some other reason. The problem is that 2 directors own 50% of the company and have expressed that they would not like to be a part of the company any more for dissatisfaction of how the company is being run, but they have taken no action. So essentially, they are just sitting there doing nothing. Is there something that the other 2 directors can do to make them leave or force them to leave?

ANSWER TO QUESTION #15

This item once again will hinge on the laws of Corporations in the State in which the parties do business.
A curiosity arises from the statement in the facts to the effect that the party describing the facts says they ‘won’ a position in the company –
But we have no basis to satisfy that curiosity so on we push;

So, there are four directors ; two are dissatisfied with the progress of the company but are not taking any action to change the course of the company and our person, who is one of the other directors wonders if there is a way to ‘cast them out of the company’?

It usually boils down to who holds the majority shares in the company and how they want to cast their votes for the director positions;
Removal of directors requires some sort of bad acts involving the director before a removal gets triggered as a matter of right.

If the matter were in California, and assuming the vote of shares is 50-50 with relation to the election of directors, then the only way this author is aware of to effect a ‘de facto’ removal, would be for there to be a Petition/ complaint filed for Dissolution of the Corporation because of a deadlock on the board, which deadlock is causing the business to go into jeopardy vis a vis income/ expense/ operations/ succeeding/ failing and such.
The Court would have to be presented with evidence that carried the burden of proof by a preponderance of the evidence to the effect that the business continues to be ‘hamstrung’ with the deadlock resulting in the business heading in a downward spiral, which has to be undone by virtue of a corporate dissolution. In California there is a Corporations Code Section which allows for the petitioning for Involuntary Dissolution premise upon a deadlock among the directors of the company vis a vis critical decisions necessary for the forward progress of the business.
Assuming these facts could be established in a Court of law (by a preponderance of the evidence) , then the Court would be encouraged to dissolve the corporation resulting in a dismantling of the affairs of the corporation and a distribution of the assets to the shareholders once all liabilities and debts had been satisfied. In sum, the director deadlock is resolved by simply dissolving the entity.

In this way, the ‘directors’ would have not only been removed, but their positions would also be eliminated along with the business in which they were directors.
This would be my best shot at how the question could be satisfied.

Respectfully submitted,
Steven H. Wilhelm

By | 2016-03-01T11:58:24+00:00 March 1st, 2016|