COMMERCIAL LITIGATION SECTION
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Commercial Litigation Section in Berryville & Clarke County, VA
Commercial litigation concerns nearly any kind of litigation related to a business's governance, operations, and transactions. Lawsuits can come up in the contexts of ownership disputes, employment, contract breaches with other vendors or customers, regulatory actions, and many other scenarios that can affect a company's bottom line and subject its owners to personal liability. Recognizing potential legal risks within a business's activities before a complaint is ever served can save a company from a devastating lawsuit, and prepare it to be in the best position possible to defend itself should a lawsuit ever be filed. Effective legal risk management should include developing effective risk-reductive policies and procedures, and in the event of a probable lawsuit, developing an early litigation strategy.
BREACHES OF CONTRACT
Contract law is a pervasive feature of commercial litigation since it governs most business relationships. Contracts typically define relationships between:
- single and/or recurring transactions for goods or services between businesses;
- employment agreements for management and other specialty positions;
- confidentiality agreements with prospective investors, employees, and other third-parties; and
- insurance policies between the insurer and the insured (and third-parties).
At its most basic level, a breach of contract in Virginia requires the plaintiff to prove: (1) the existence of a contract; (2) performance or offers to perform by the plaintiff under the contract; (3) the defendant's failure to perform under the contract or breach of the agreement; and (4) actual damage to the plaintiff caused by the breach.
Although the elements of a breach of contract case are straightforward, proving the breach and assessing the appropriate amount of damages can become complicated, and significantly increase the cost for both sides of the parties become embroiled in litigation. An early, honest assessment of potential damages, expected litigation costs, and potential business disruptions due to court involvement can provide a business with insight as to how best to resolve a contractual dispute.
COMPANY GOVERNANCE DISPUTES
Although business partners often start businesses together on good terms, it is common for owners' relationships to deteriorate within a few years. When business partners can no longer resolve governance disputes amicably between themselves, they turn to the company's governing documents such as their by-laws. Unfortunately, many businesses either do not adopt bylaws, or use a template version that was not adhered to throughout the company's history. The template either mirrors the state's automatic governing law for the entity, or otherwise provides an unjust answer because the by-laws do not comport with the company's years of practices. This often leads to the beginning of a years-long embittered litigation between a company's governing body that will leave everyone poorer.
Company governance disputes that typically require legal services often come up when the owners have tried to resolve their disputes between themselves first, and either a majority or minority ownership interest holder then wishes to use the legal system to enforce their will upon the business. Some situations where legal action can be taken to affect a company's governance include:
- minority shareholder's desire to have shares bought out or dissolve company;
- moid transactions by officer or directors who had a financial interest in the transaction;
- enforcement of partnership/shareholder agreements;
- removal of directors or officers;
- breaches of fiduciary duties.
Different business entities (associations, corporations, limited liability companies, partnerships, etc.) have different minimal governance requirements, and different means of affecting change in a business through use of the legal system. It is important for all business owners and managers to know how their particular business entity will be affected by law in the event of a legal dispute, how the governing documents will play a role in litigation, and what policies and procedures can be created and adhered to in order to mitigate legal risk related to corporate governance.
Lawsuits arising out of an employee's termination or wage & labor law violation can impact the morale of other employees, and expect changes in company policies that will affect them positively, if the suing employee's demands are appropriate. Like most other commercial litigation issues, the best means of defending a lawsuit is to never have one. Developing policies and procedures that will foster a non-discriminatory, wage law compliant, and overall respectful work environment, will be a company's best line of defense against employment-based lawsuits. Developing a contract form for managerial or other highly sought after employees which provides a business favorable terms also controls risk. The Labor & Employment section of this website provides more information about employment-related litigation.
Sometimes a business's activities can infringe upon the personal or property rights of others, and give rise to lawsuits based on tort law. Commercial torts arise in many areas of business practice, and can be controlled by federal and/or state law. Generally, these cases arise out of a business's "bad behavior" where the company neglects to fulfill its duties under the law or to others. Typical examples of tortious commercial cases include:
- false advertising;
- intellectual property infringement (copyright violations, trademark violations);
- product liability (defective and dangerous goods);
- misappropriation of trade secrets;
- negligently providing services that cause injury to persons or damage property;
- securities law violations (accounting fraud, insider trading, etc.); and
- tortious interference with contract.
Tort lawsuits typically are limited to compensatory damages (damages that the other party has suffered), but if a company's conduct is so reprehensible, in some limited cases, a business may be subject to punitive damages (damages used to punish). If a business's activities rise to a criminal level, its owners or managers may be subject to criminal action. To avoid costly commercial lawsuits, the best course is to assure compliance with statutory obligations, and conduct business in a safe manner consistent with industry safety standards. If a proposed activity appears questionable whether it could violate another party's rights, consult with an attorney before taking action.
Besides private lawsuits, all businesses are subject to governmental regulatory review. Depending on the nature of the business, a company may be monitored by multiple agencies such as the Department of Labor (employment), Department of Health Professions (healthcare businesses), Department of Health (food safety), Alcohol Beverage Control (liquor sales), and local zoning boards (construction and safe design compliance). Regulatory violations can often result in some form of an administrative agency dispute resolution hearing.
Please contact our office to discuss possibly prosecuting or defending a commercial lawsuit, or to discuss managing risk in your company.