Injunctive Relief In California

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An injunction is a legal remedy which orders a person to do something or stop doing something. It is a difficult burden to overcome and requires certain factors to be met before it can be awarded. An injunction can be granted, subject to conditions imposed by applicable statutes, on a showing of the following:

  • An inadequate remedy at law, meaning that compensation would be insufficient.
  • A serious risk of irreparable harm absent injunctive relief.
  • A likelihood that the plaintiff will prevail on the merits of the underlying controversy.
  • A comparison of the harm to defendant in issuing an injunction versus the harm to plaintiff in withholding it, which on balance favors the plaintiff.

There are three main types of injunctive relief and each is governed by specific Code sections. They include:

  • Temporary restraining order, also known as a TRO [Code Civ. Proc. §§527, 528].
  • Preliminary [Code Civ. Proc. §527] or provisional [Civ. Code §3420] injunction.
  • Permanent or final injunction [Civ. Code §§3420, 3422].

Each of these Code sections contains highly technical language and it is recommended you have the services of a qualified civil litigation attorney to help you parse this language. The Civil Code and Code of Civil Procedure also outlines various instances in which injunctive relief is appropriate. An injunction is authorized [Code Civ. Proc. §526(a)]:

  1. When it appears by the complaint that the plaintiff is entitled to the relief demanded, and any part of the relief consists in restraining the commission or continuance of the act complained of;
  2. when it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste or great or irreparable injury to a party to the action;
  3. when it appears during the litigation that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual; or
    on any of the four grounds provided in Civ. Code §3422;
  4. on any of the four grounds provided in Civ. Code §3422.

In certain cases, a specific situation may apply to you and allow you to obtain injunctive relief, such as:

  1. To prevent harassment [Code Civ. Proc. §527.6, CRC 363] or domestic violence [Civ. Code §§4359, 5102, Code Civ. Proc. §§540–553, CRC 1225];
  2. to preserve peace and property during marital dissolution proceedings [Civ. Code §4359];
  3. to preserve peace during Uniform Parentage Act proceedings [Civ. Code §7020];
  4. to restrain expenditure or waste of public funds or property [Code Civ. Proc. §526a];
  5. to enjoin concerted acts of violence [Code Civ. Proc. §527.7], or to prohibit unlawful violence or threats of violence in the workplace [Code Civ. Proc. §527.8];
  6. to restrain fraudulent conveyances [Civ. Code §3439.07];
  7. to prohibit false advertising [Bus. & Prof. Code §§17531.9, 17535];
  8. to abate a nuisance [see, for example, Code Civ. Proc. §731(nuisance), Health & Saf. Code §§100170 (public health), 116670 (drinking water), Wat. Code §13304(pollution)];
  9. to enjoin waste pending foreclosure [Code Civ. Proc. §745];
  10. to prevent the use of a misleading corporate name [Corp. Code §201];
  11. in the context of the breach of a marketing contract [Corp. Code §13354];
  12. to enjoin health and safety violations [Health & Saf. Code §§1291 (unlicensed health facility), 116670(drinking water), 5460 (sewage disposal), 114735 (radioactive waste)];
  13. in the context of labor disputes [Lab. Code §§1116(jurisdictional strikes), 1126 (enforcement of collective bargaining agreement)];
  14. to suspend the powers of the executor of a prior will [Prob. Code §9614];
  15. to prevent wasteful production of natural gas [Pub. Res. Code §3314];
  16. in the context of water rights [see Code Civ. Proc. §534(actions to enjoin diversion), Wat. Code §§1052 (unlawful diversion), 1845(enforcement of cease and desist order), 2020 (restrain pumping of underground water), 4160(correcting distribution by watermaster), 13304 (pollution or nuisance)];
  17. to prevent unfair competition [Bus. & Prof. Code §§17200 et seq.];
  18. to stay criminal conduct which is a public nuisance [Civ. Code §§3369, 3480];
  19. to prevent the removal of public officers [Gov. Code §1366];
  20. to prevent breach of a statutorily specified contract that is not otherwise specifically enforceable [Code Civ. Proc. §526(b)(5)].

As you can see, injunctive relief is a very powerful tool. But, it is also rife with technicalities and must be carefully navigated with an experienced civil litigation attorney in order to have a chance of prevailing on case merits. Contact us at Beverly Hills Law Corp., PC now for further assistance. We have broad experience with injunctive relief in business, real estate, and general civil matters. Your consultation is free.

Fraudulent Transfers In California

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When a debtor transfers away his or her assets, or attempts to conceal his or her assets so as to avoid paying creditors, it may constitute a fraudulent transfer.

The Uniform Fraudulent Transfer Act (UFTA) is generally what governs this area of law. Under California law, a fraudulent transfer exists if:

  • a debtor makes a transfer or incurs an obligation with actual intent to hinder, delay or defraud any creditor; or,
  • a debtor receives less than reasonably equivalent value for the transfer or obligation and the debtor is insolvent or is reasonably expected to become insolvent.

There are powerful remedies available to creditors if a debtor has conducted a fraudulent transfer:

  • Under Section 3439.07 of the California Civil Code, a creditor can bring an action to undo the fraudulent transfer, to obtain an attachment against the debtor’s assets, to prevent the debtor from further transfers of assets, to appoint a receiver to oversee and control the debtor’s assets, or to provide other relief a court may find appropriate.

Under bankruptcy law, there are two main types of fraudulent transfers:

  • Actual Fraud. This occurs before a bankruptcy filing and is a transfer done with the intent to “hinder, delay or defraud” creditors. By making the transfer, the person who filed for bankruptcy specifically intended to defraud a person or company to which he or she owed money. Intent can be inferred in a number of different ways.
  • Constructive Fraud. This occurs when a person comes into possession of transferred property and paid less than “reasonably equivalent value” for the transfer when the transferor was insolvent, or the transfer caused the transferor to become insolvent.

If you need guidance in these matters, we at Beverly Hills Law Corp., PC are uniquely qualified to defend against and to collect such judgments. Moreover, we can advise you as to whether or not an action could be a fraudulent transfer.

Should You Incorporate Your New Business In California Or Another State?

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If you are starting a new business venture, it is likely you are going to incorporate as an LLC, corporation, or some type of partnership. It’s important that you understand why incorporation is crucial to starting a new business and generally advisable for all types of business ventures.

One of the first questions that arise is, “Which is the ‘best state’ to incorporate my new business entity?” Unfortunately, there is no such thing as the “best state.” Generally speaking, if your business is going to be located in California, it should be incorporated in California. There are reasons for this. While states like Nevada, Wyoming, and Delaware may offer tax and privacy advantages, if you are doing business in California you will have to register your business entity in California—regardless of which state you incorporate in. Thus, if you are located in California or doing business in California, you will have to pay all the filing fees and taxes associated with California—as well as the filing fees, registration fees, and any other applicable fees that are required by the state in which your business was incorporated. Consequently, as corporate and business attorneys practicing throughout the state of California, we at Beverly Hills Law Corp., PC advise our clients that it is in their best interest to incorporate in California if they are based and doing business here.

The next question you may have is, “What constitutes ’doing business’ in California?” California law defines it as follows:

  • If the business engages in any transaction in California for the purpose of financial gain or profit.
  • If the business is incorporated or organized in California.
  • If the business has qualified or registered to do business in California.
  • If the business is “doing business” in California, whether or not it is incorporated, organized, qualified or registered under California law.

Under the Franchise Tax Board’s regulations, “doing business” in California occurs when your business entity:

  • Has a member of an LLC that does business in California.
  • Has a general partner in a partnership that does business in California.
  • Has any of the LLC’s or corporation’s members, managers, shareholders or officers or other agents conducting business in California on behalf of the LLC or corporation.

Regarding a LLC, it is “doing business” in California if:

  • The LLC is commercially domiciled in California (i.e., California is the place where realistic control of the LLC’s functions is centered).
  • Sales, including sales by the LLC’s agents and independent contractors, in California exceed the lesser of $500,000 or 25% of the LLC’s total sales.
  • Real or tangible property of the LLC in California exceeds the lesser of $50,000 or 25% of the LLC’s total real and tangible property.
  • The amount paid in California by the LLC for compensation exceeds the lesser of $50,000 or 25% of the total compensation paid by the LLC.

If you are a “foreign business entity” (an out-of-state business entity) not registered in California but doing business in California, it is imperative that you register in California. Failure to do so can lead to the imposition of penalties, fines, back taxes, and registration fees.

We can help you register your business entity, answer any questions you may have about the incorporation or registration process, assist you with filing your corporate paperwork, or help you deal with the Franchise Tax Board and Secretary of State. Contact us today for a free consultation with your business or corporate legal matters. As business owners in our own right, we pride ourselves in representing small business owners throughout Los Angeles, Beverly Hills, Santa Monica, Pasadena, Glendale, West Hollywood—and the rest of California.

Differences Between Grant Deeds and Quitclaim Deeds

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A common question from potential clients is what the differences between grant deeds and quitclaim deeds happen to be.

Both of these legal instruments are commonly used in California. The one to use in your situation depends on specific facts and circumstances. This blog will provide general information about which may suit your needs. However, this information is only for general guidance. A full consultation with a qualified real estate attorney would be necessary to properly advise you.

Both grant deeds and quitclaim deeds convey ownership in a piece of property to another person. However, the fundamental difference between the two is that a grant deed conveys the property interest the grantor has in the property, but also warrants that the grantor actually owns the property and the new owner will not be liable for any unknown ownership claims. Thus, the grantee (new owner) can be protected that the property he or she just purchased does actually contain a marketable title.

A quitclaim deed only conveys whatever interest the grantor may have or may not have. There is no implied warranty contained in a quitclaim deed stating whether there may be unknown ownership claims and whether the grantor even owns the rights to the property conveyed.

In California, quitclaim deeds are commonly used between spouses, relatives, or if a property owner is transferring his or her property into his or her trust. A grant deed is commonly used in most arms-length real estate transactions not involving family members or spouses.

A grant deed and quitclaim deed, regardless of which is one used, can be complicated to execute and you should consult a real estate attorney before attempting to do one on your own. If you are selling a home here in California, the buyer will likely want you to convey a grant deed warranting that the home the buyer is purchasing actually belongs to you and you have good and marketable title to the home that is being sold. If you are in a situation where you have bought a home that does not have marketable title, we can help you. Our founder, Mr. Sagar Parikh, is uniquely qualified. He is both a real estate broker and a real estate attorney who practices throughout Beverly Hills, Los Angeles, and Orange County. Contact us today for a free consultation.

Judicial Dissolution of a Partnership, LLC, or Corporation in California

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It is not uncommon for business partners to have a falling out. There are various reasons why this occurs. When it does, often the partners are not on speaking terms and have ceased to cooperate in operating the business. Consequently, one partner may elect to dissolve the business. Judicial dissolution is an effective remedy when the partners cannot reach agreement–either on voluntarily closing down the business or selling out to the other partner.

Even when a partnership agreement, LLC operating agreement, or corporate articles/bylaws exist for your business and they lay out the terms in which your business may be closed, you may not be able to get your business partner(s) to follow the procedures laid out in your governing documents and a judicial dissolution may be necessary.

Dissolving a partnership, such as a limited partnership (LP) or general partnership, only requires an individual partner to show the court that it is no longer practical to carry on the activities of the business pursuant to what is laid out in the partnership agreement. There are many reasons why this may be the case: one of the partners is not fulfilling his or her duties to the partnership; the activities of the partnership have become illegal; the partnership is not adequately funded; and various other reasons.

Asking for judicial dissolution of a California LLC or California corporation however, specifically requires that one of the five following elements is met (they are determined and governed by the California Corporations Code):

  • It is not reasonably practicable to carry on the business in conformity with the Article or Operating Agreement.
    • This means that the LLC or corporation’s business activities cannot be done in a manner that follows the governing documents. This may be because the entity is under-capitalized and the partners refuse to further capitalize it, because of the economy changing, or other reasons.
  • Dissolution is reasonably necessary for the protection of the rights or interest of the complaining members.
    • An example of this may be a minority shareholder or interest holder of the business having his or her rights infringed upon by the majority.
  • The business of the entity has been abandoned.
    • This simply means that the LLC or corporation has stopped doing business and the court must order it to wind down and close out its business affairs.
  • The management of the business is deadlocked or subject to internal dissention.
    • This is a broad category which can include any issue on which the partners or members of the business cannot come to a decision and this failure to come to a decision has left the business unable to carry out its activities.
  • Parties in control have been guilty of, or knowingly permitted, persistent and persuasive fraud, mismanagement, or abuse of authority.
    • This occurs when a partner or member of the business is embezzling funds, committing fraud upon the other members or partners, mismanaging the business, or abusing his or her authority.

As you can see, sometimes dissolving a business in California is not a voluntary endeavor and a court has to step in. When this occurs, you need a skilled business attorney on your side. Our founder, Mr. Sagar Parikh, handles business disputes in Los Angeles and the rest of California involving partnership, LLCs, and corporations. We represent business-owners in Los Angeles, Santa Monica, Malibu, Pasadena, Beverly Hills, West Hollywood, Glendale, Burbank, and the surrounding areas. If you need assistance pursuing dissolution of a corporation or LLC, contact us at Beverly Hills Law Corp., PC today for a free consultation. 

Creating a Privacy Policy For Your California Business Website

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If you are an entrepreneur who sells goods or provides a service, you know it’s a business imperative to have a website. However, there are various legal issues that need to be addressed. One such is having a proper privacy policy declaration on your website. This is especially true for California-based enterprises. The State of California has strict laws about website privacy policies.

You must disclose to your visitors what data your business collects and what it will be used for. At a minimum, your privacy policy should contain the following:

  • What data your website will collect from the user.
  • How the data will be used.
  • Whether the data will be shared with any third parties.
    • If the data is shared, your privacy policy should specify whether the shared data includes personal information, or whether visitors’ information is shared in a collective and anonymous form.
  • Whether or not your website is storing cookies.
  • How users of your business’ website can review or change their personal information.

Further, under California law, there are strict guidelines about where on your website you can post your privacy policy. To comply with this law, you must either:

  • Post the privacy policy on the Home page of the website.
  • Link the privacy policy to the Home page using a link that has the word “privacy” contained within it.
  • Link the privacy policy to the Homepage using an icon that includes the word “privacy.”

Drafting a website privacy policy is a process that needs to be custom-tailored to each business or enterprise. We at Beverly Hills Law Corp., PC assist businesses in Los Angeles and all of California with these and other such issues. Contact us today for a free consultation.

Buying Out A Business Partner In California

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Having a business partner is in many ways similar to a marital relationship. And, like a marriage, sometimes the partners need to “divorce” and go their separate ways. Buying out a business partner in California requires you to take into account various considerations. Doing so will generally require the guidance of a qualified business/corporate attorney.

There are many legitimate reasons why a partner may wish to leave a business, including:

  • Disagreement
  • Relocation
  • Divorce
  • Retirement
  • Disability
  • Death

There are many issues to consider when seeking to buyout a business partner in California. Amongst them:

  • Tax implications.
  • How the debts of the business will be allocated.
  • Whether the business is formally incorporated with the California Secretary of State or is a general partnership.
  • Whether the partner being bought out has made a capital contribution to the business, and if so, whether he/she is entitled to the return of this contribution.
  • Whether there are any pending lawsuits or legal issues that may affect the buyout.
  • Whether the buyout is amicable or acrimonious.
  • Whether the partner will continue to be an employee or continue to work in the business in some capacity.
  • Maintaining existing relationships the business has with its customers, vendors, suppliers, and other parties, as a consequence of the one of the partners leaving the business.

Here are some general steps you should take when buying out your business partner:

  • If there is a written partnership agreement, operating agreement, shareholders agreement, or other similar agreement, refer to it for instructions pertaining to a buyout. If there is no written agreement, but there is an oral agreement, refer to that agreement for the same purpose.
  • Engage a business consultant, accountant, or financial professional to help establish the value of your business.
  • Once you have agreed on the valuation, negotiate the terms of the buyout with your partner. In such an undertaking, you will likely want to retain a qualified business lawyer.
  • Once the terms of the buyout are agreed upon, you will need an agreement memorializing the understanding you and your partner have come to. Again, this is not a do-it-yourself project. You will want to retain an attorney experienced in this aspect of California law.

These–and other issues beyond the scope of this blog–require a skilled business attorney. We at Beverly Hills Law Corp., PC can evaluate your situation, assess your legal needs, and advise you accordingly. We provide business and corporate law services to clients in the Los Angeles, Beverly Hills, Santa Monica, Malibu, Encino, Sherman Oaks, Pasadena, Glendale, and other parts of Southern California. When the need arises, contact us for a free consultation.

New Laws Affecting California Businesses

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As 2015 begins, there are important laws of which a business owner in California should be aware. Each of them can affect how you conduct business and possibly your bottom line. Here are some of the most important laws enacted by the California legislature that took effect 1 January 2015:

  • Mandatory Paid Sick Leave
    • All California employers must provide paid sick leave to any employee who has worked in California for at least 30 days. One hour of paid sick leave must be provided for every 30 days worked. If you are a business with employees or you are considering hiring employees, contact us to be sure you properly follow this new law.
  • Discrimination, Harassment, and Retaliation Laws Now Protect Interns and Volunteers
    • Unpaid interns and volunteers to those employees are now covered by the Fair Housing and Employment Act (FEHA).
  • Discrimination Against Undocumented Persons With Driver’s Licenses Prohibited
    • It is now illegal for employers in California to discriminate against an individual because he or she holds a driver’s license that was issued to an undocumented person.
  • Additional Requirements For Sexual Harassment Prevention Training
    • If you are a business that is subject to mandatory sexual harassment prevention training, you are now required to have your supervisors trained in the prevention of abusive conduct. Abusive conduct is specifically defined by this new law.

These are just some of the applicable laws that have taken effect in 2015 and will affect you. The attorneys at Beverly Hills Law Corp., PC are experienced business and corporate attorneys serving clients in Los Angeles, Beverly Hills, Santa Monica, and the neighboring area. We act as in-house counsel for a variety of small and medium sized Los Angeles-area businesses. Let us help your business stay in compliance and protect your bottom line. Contact us today for a free consultation.

Trade Libel In California

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Trade libel is essentially the defamation of a business. It is a business tort and is defined as the publication of a false statement of fact that is an intentional disparagement of the quality of the services or products of the plaintiff’s business and that results in pecuniary damages to the plaintiff. It allows the injured business to seek both compensatory damages and punitive damages.

The difference between trade libel and just general business competition statements is that trade libel involves making knowingly false statements about the business—with the intent of damaging the business.

The elements of trade libel are as follows:

  • Defendant’s false statement;
    • Similar to defamation, truth is an absolute defense to trade libel.
  • Publication;
    • Publication does not necessarily mean actually “published” in a written document or website blog. It simply means the statement must have been communicated to a third party. The communication can be oral (slander) or written (libel).
  • Of matter disparaging the quality of another person’s property or services;
    • which the publisher intended to cause harm to the owner, or should have recognized as being likely to cause it; and
    • defendant must have made the communications knowing they were false or with reckless disregard of the truth.
  • Causation of pecuniary harm or loss.
    • The business must have actually suffered a loss of business or have suffered a tangible damage to its reputation such that such damage would lead to future lost business.

There are many defenses to trade libel, the most common being that the statement was not untruthful. Additionally, defendants often use the argument that the statement was ambiguous and vague, thus not disparaging.

Trade libel and other business torts are a regular part of Beverly Hills Law Corp., PC’s practice. We handle all types of business matters and business disputes–including trade libel. These can be complicated and require a thorough analysis of the facts using the elements above. Contact us today for a free consultation. We represent small business owners in all types of business torts and business disputes, in Los Angeles, Beverly Hills, Santa Monica, and Orange County, as well as the rest of California.

California Trade Secrets Law

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If you are a business owner in California, you know how important it is to preserve the confidentiality of your special business processes, recipes, formulas, schematics, procedures, and other proprietary material. However, it is important to be aware of exactly what constitutes a trade secret. Some of what you believe to be protected may not actually constitute a trade secret under California law. California’s trade secrets laws are governed by the California Uniform Trade Secrets Act (CUTSA), which is part of the California Civil Code. It has a three-year statute of limitations. We at Beverly Hills Law Corp., PC can guide you through the complexities of this body of law.

The CUTSA prohibits misappropriation of trade secrets and provides certain remedies. To understand the applicable statute, let’s clarify the definitions:

  • “Improper” means includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
  • “Misappropriation” means:
    • Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
    • Disclosure or use of a trade secret of another without express or implied consent by a person who:
      • Used improper means to acquire knowledge of the trade secret; or
      • At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
        • Derived from or through a person who had utilized improper means to acquire it;
        • Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
        • Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
      • Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
  • “Person” means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.
  • “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
    • Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
    • Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
  • The “remedies” provided by CUTSA included attorney’s fees, injunctive relief, and damages.

As can you can see from the wording of the statute, there is some ambiguity, leaving room for interpretation. If you are unsure of whether something is a trade secret and whether you can pursue claims if someone misappropriates it, contact us at Beverly Hills Law Corp., PC for a free consultation. We can also advise as to how to properly protect your trade secrets so as to meet the CTUSA requirement that the trade secret not be generally known throughout your company.