California Corporate Legal Questions

Sales, marketing, and having customers are crucial to any business, even a law firm. Sales and marketing can require as much time and work as installation, maintenance and upgrade work. Finding a replacement for an ISP engineer is a lot easier than luring away customers and holding onto them. Distributing profits and distributions of cash in shares that are different from your contributions can have some surprising and unpleasant tax effects. For example, if a 45% share was worth $30K and a 20% share was worth $15K, then the IRS or FTB might decide that a 35% share was worth $20K-$25K. Since it was be earned by services, the IRS and FTB might treat it as a payment-in-kind of $20K-$25K for future services. Since it was not disclosed as income, there is no statute of limitation on the government claiming the taxes on it, plus penalties and interest. If this company was not structured by an attorney who understands these tax rules, you may want to consult with one right away. April 15 is two weeks away. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack  ... Read Answer

If you are doing this all without a lawyer you will probably not properly issue your membership interests. The protection you need can be in the Operating Agreement and/or a Buy-Sell Agreement between equity owners. Corporate squeeze-outs are particularly horrible lawsuits, so advance planning is a good idea. Normally a corporate squeeze out includes termination of one owner's employment. Equity ownership and employment may be totally independent or may be linked. ... Read Answer

I agree with Michael that you are not going to make any friends or any money by suing. Lawsuits have a way of getting out of control. He is correct that $10,000 and even $20,000 our the very least you would end up spending. It is also possible that the attorney fees of the President and other directors might be paid by insurance. So you would be paying, and they would be getting defended for free by an insurance company attorney chargin a lot less per hour than your attorney. That means they can bury you in legal paperwork, running up your bill, at little or no cost to the defendants. You have the right to attend Board Meetings. I would not encourage you to do so, because of the hostility you have described. It would not be a pleasant experience for you. You have the right to inspect and copy the records of the corporation, including the addresses fo all member. You could then start contacting member to campaign for their votes at the next annual meeting to elect the directors, assuming that the directors are elected by the members. In some non-profits, the directors elect replacement directors. With enough votes, you might still be able to force an election by the membership. I would need to do some research to answer that question. If you decide to conduct such a letter-writing campaign, I recommend that you have each letter reviewed by an attorney. The president will be itching to catch anything you say that she can claim is false, in order to dirty your reputation with the members or sue you for libel. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack  ... Read Answer

I don't know what Blizzard's policy is regarding ideas from outsiders. Many entertainment companies simply refuse to accept ideas in order to avoid the accusation of infringement. There is a lot of hard work, time, and monetary investment between coming up with an idea, building an outline of a game, producing the game, digitizing it, and then producing it for actual use. Most entertainment have more game design ideas than they can or want to produce. I would start by exploring their website for any instructions on how to submit ideas. If there are such instructions, follow them rigorously. Pay attention to every detail of the instructions. If they don't, then ask. Email support or Contact Us with the question, how would they like you to submit a design idea. Once they have told you how, consider asking them to sign a Nondisclosure Agreement. There are lots of such forms on the internet or you could hire me to prepare one for you. Nondisclosure Agreements are better for the moral and social inhibition created than any legal effect. Once in court, the plaintiff has the burden of proving the amount of the damage to the plaintiff. A court cannot award damages that are just speculation. You might have a hard time proving how much you could have made from your idea if Blizzard had not stolen it. What ability do you have to make any money off your idea if Blizzard doesn't buy it? If your idea is nothing more than a design idea, Blizzard might make so many changes to it that it might be able to prove the defense that their product is distinct and different than your idea. Given all of that, if they resist signing an NDA, you might prefer to give up and take credit for the game if they produce it, regardless of whether you get treated fairly on this idea. Maybe they'll treat you as a credible source of future ideas or even hire you. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack... Read Answer

Yes, probably. Most pension related savings plans are exempt from debt collection. For example, there was a case last year where a bank was required to return funds which the bank had deducted from a checking account into which the borrower had transferred Social Security payments. It would require some research to confirm it, but I am pretty sure that federal TSP funds are similarly protection. Dana Sack 510-286-2200  ... Read Answer

The ABC Board will want complete documentation so the sooner you get started the better. You need the entity formed for the city business license which the ABC willl want to see. Hope you have a team in place to help you do your "due diligence" in such an important acquisition and inorder to help you avoid unpleasant surprises after closing. ... Read Answer

Your money is gone. There is no such thing as not being able to access money. It's just an account in their records. If nothing else, they should be able to access it the old fashioned way, by sending you a check, preferrably a cashier's check. They have their own funds. They should pay you from their own funds or line of credit, and reimburse themselves from your account when they "fix" it. The fact that they haven't given you your money from their own funds or LOC is why I don't think your money is there. If you took this up with the SEC, they might shut them down and take over, but that won't get you your money. Ask them when you can come by to pick up a check. If they're in another town, they can send it to you by FedEx. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack  ... Read Answer

In order to keep the bad member from stealing more from the LLC and incurring debts in the name of the LLC, I suggest that you close down this LLC and transfer all of its assets to a new LLC in which the bad member has no interest, connection or control, assuming that your landlord, lender, and any other vendors and customers will let you. This does not sound like someone who is going to pay the LLC back voluntarily. Does the Operating Agreement include an arbitration clause? If it does, you need to initiate the arbitration as soon as possible. It will take months to get a hearing and an award. Then you'll need to go to court to get the award confirmed as a court judgment. After that, you can use all the usual court procedures to collect the judgment, including attaching assets, garnishing wages, and compelling the bad member to come to court and reveal where all his assets are. If there's no arbitration clause, then the sooner you get a lawsuit filed, the better. It will take a yeat to get to trial. We have done such lawsuits and therefore know how to do them efficiently and effectively. If you would like to meet me or talk on the phone about possibly hiring our law firm, please call me. Dana Sack  ... Read Answer

  I don't know the answer. I suspect that technically it probably could be found to be an illegal lottery. The definition probably talks about anything of value given to a random winner, and the opportunity to buy something at a favorable, below-market price, counts as something of value. Who is going to complain? I don't see any government bothering you about it. A consumer could only sue you for the difference between the full market price and your bargain price. Even as a class action, it woud be that difference multiplied by the number of units of the item which you disclosed on your website as being available for sale. If you did not disclose that number, I guess it could be the price difference times the total number of people who asked for the item and were turned down. That could be a big number. Maybe your website should reserve the right to withdraw sales. If too many people respond and are going to be rejected, then you could cancel the sale and re-offer it at a higher price, and cut down the number of people asking for it and getting rejected. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack... Read Answer

The statute of limitation for such an injury is two years. That means that if you don't file a lawsuit sooner than two years after the date of the accident, you lose the right to bring such a lawsuit. Did your daughter require medical attention? Did you take her to a doctor or emergency room? Does she have any permanent injury from the slip? If so, you should talk to a personal injury attorney. They advertise in the Yellow Pages and on www.lawyers.com. You can sue in small claims court for up to $10,000.00. No attorneys. You could sue for negligence for the pain and suffering your daughter experienced, even if she has no permanent or still lingering injury, or even if she did not require medical attention. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack... Read Answer

Your lawyer is going to need a lot more facts in order to answer this one. Who actually made the statement? Who heard it? In what context was it made? In what context was it heard? What did the person actually say? Many fraud cases die, because the false statement did not cause any actual harm. If you catch them lying and don't do business with them, how have you been injured? What kind of class poses an open-ended question like this? Please feel free to call me. Dana Sack  ... Read Answer

As a general rule, the directors hire and fire the officers, including the president. That's why you hear in the media about CEOs with "golden parachutes," big bonuses if they are fired. If you would like to pay me to review your corporation's prior articles, bylaws, and employment contract with you, my partner and I can see if there is anything we can do for you. The directors of non-profits are either elected by members or by the remaining directors. Each corporation does it either one way or the other. Which way is it in your corporation? If the members elect the directors, and you are popular among the members, you might be able to wage an election to vote your own slate of directors onto the board so that they can rehire you. Another choice is to start a new corporation and ask all your members to leave the old corporation and come with you to the new one. Even as a fired president, you owe a fiduciary duty to the corporation regarding confidential information you have regarding the corporation, which might include its membership list. Before starting to carry out any of these strategies, you really need to hire and obtain advice from an attorney with knowledge and experience regarding such corporate battles. Dana Sack  ... Read Answer

Don't try to hide from the process server. Eventually, a good process server will either find you or provide the attorney with a lengthy and thorough description of all the efforts to serve you and how you have hidden, which will convince a judge to authorize serving you by publication. This is expensive, and if you lose the case, you will end up owing the other side reimbursement for that expense, too. If the judge authorizes service by publication, you won't see it in the newspaper, the trial will go ahead without you, judgment will be entered against you, and the other side will be entitled to sieze your bank account, garnish your wages, and record the judgment in any county where you own or might someday own real property. That means you won't be able to buy or sell real estate or borrow or refinance any loan secured by real estate, without paying off the judgment. The judgment will appear on your credit report. This could interfere with buying a car on credit, applying for a job, or even to rent an apartment. If you have owner's insurance or renter's insurance on your home, it should provide you with a lawyer to defend the case, even if the insurance company might not pay any ultimate judgment. You might need to hire your own attorney to convince the insurance company that it must defend you. If you appreciate this free advice, please remember to refer me to any of your friends or acquaintences who need a lawyer. Referrals are still our best source of new business. Dana Sack... Read Answer

Giving your stock to your brother is a bad idea. If your brother inherits the stock from you, he gets a stepped-up basis in the stock and can turn around and sell it with no capital gains tax. If you make a gift of the same stock to him now, his basis will be the same as your tax basis in the stock, probably very low, close to zero. When he tries to sell the corporation, he will have to pay tax on the difference between the selling price and your old tax basis. There are a variety of ways to separate the right to received the profits from the company and day-to-day control of the company. Ultimately, whoever owns the stock can get control of the company. As long as your brother goes along, it can be done, but once he owns the stock, he will have the right to kick you out, even if he elects not to do so. If you appreciate this free advice, please remember to refer me to anyone you know who needs a lawyer. Referrals are still our best source of business. My firm and I are described at www.sackrosendin.com. Do you have a revocable living trust to avoid probate, instead of a will? Probate takes too long, is expensive, and is annoying. Save your family a lot of trouble by having a revocable living trust. Some people refer to it as a living will. Revocable means you can change it, add and subtract property from it, and even cancel it completely, whenever you want. For $1500.00 I write such a trust, plus a back-up pour-over will to cover any property that somehow doesn't make it into the trust, and convey one parcel of real property to the trust, usually the family home. Dana Sack Sack Rosendin, LLP One Kaiser Plaza, Suite 340 Oakland CA 94612 510-286-2200... Read Answer

As long as your son agrees, yes, you or the corporation can sell shares to new investors. Any such shares are "securities." Any sale of securities, including stock in your corporation, must comply with both state and federal securities laws. The sale must comply with the securities laws of every state where any of your investors live. These state and federal securities laws require that the stock be "registered," unless the sale qualifies for an exemption. Registration requires a huge amount of paperwork. It is complicated, time consuming, and expensive. You want to make sure that every sale qualifies for an exemption. The biggest penalty for failing to register stock which is not exempt, is that you will be personally liable for return to the purchasers of any money they invest. There are also fines and penalties. In order to protect you and your investors, you want to get signed documents from every investor to assure that the sale of stock to each of them is exempt. I can prepare those documents for you. I would prepare a stock subscription agreement and an investor questionnaire for each investor, and I would review each signed questionniare, in order to make sure that each investor qualifies for some exemption. I would also prepare a shareholders agreement restricting everyone's right to sell or transfer their shares and providing for annual distributions that were at least enough to cover everyone's tax liability for their shares of the corporation's taxable income. Depending on anything else you want to include and the number of different states where you investors live, I can probably write all three agreements and review the questionnaires for less than but close to $2000.00. If you would like to discuss this with me directly, please call me at 510-286-2200. You can learn more about me and my law firm at www.sackrosendin.com. What business is your company in? Dana Sack  ... Read Answer

I'm an online legal provider. Texas has a 6.25% sales tax and no income tax, until your company gets above $1 million of sales minus costs of goods sold, and even then, that franchise tax is around 1% California sales taxes vary by county, but all are over 8%, and the income tax is 10.4%. As a California resident, you pay state income tax on your taxable income worldwide. Personally, you might want to "reside" in an apartment or condo near one of your Texas offices, and vote, pay your income taxes, and register your drivers license there, and spend a lot of time at your "vacation second home" in California. Check with whoever prepares your tax return regarding what that person will require in order to treat you as a Texas "resident" and not a Californian. As a Subchapter S corporation, you have to file a federal income tax return, even though you don't pay any federal income tax. If you or you and your spouse are the only owners of a limited liabiltiy company, the IRS disregards the entity, you don't file or pay for a separate tax return for the company, and you just show the company's income and expenses on your 1040. Corporations also require that you keep corporate paperwork. You must hold an annual meeting of the shareholder or adopt shareholder resolutions by unanimous written consent, at least once per year, and you must hold at least one director's meeting or adopt director's resolutions by unanimous written consent at least once per year. I once had to charge a client nearly $2000 to prepare 24 years of backdated resolutions. Limited liability companies don't have to have meetings or pass resolutions. The manager or managers just decide things and document their decisions any way they want. Off the top of my head, I don't remember whether or not Texas requires an Operating Agreement to govern the operations of a single-owner Texas LLC. California does not. If you needed an Operating Agreement, either because you have a partner in the business or because Texas might require one, I would charge $1200.00 to prepare it and file the form with State of Texas to establish the LLC.  If you don't need an Operating Agreement, you can do it yourself on the Texas Secretary of State's website. I write all kinds of contracts. I have studied lots of online contracts for webservices and written several. I'm sure I could do a great job for you writing such a contract for $1000.00, paid in advance. To learn more about my law firm and see my personal resumé, go to www.sackrosendin.com. If you would like to discuss this further or meet together, please call me. Dana Sack 510-286-2200    ... Read Answer

If you hired me to do this, I would start by reviewing the Articles of Incorporation and the Minute Book for the corporation to determine whether or not the corporation really is a "close corporation" or a regular corporation with only one shareholder. To document the transfer, I would prepare a certificate under penalty of perjury for the owner to sign, swearing that he has never sold, assigned, mortgaged, or otherwise transfered any interest in any of the shares to any person. Next, I would need to find out whether it is an S-corporation for state and federal income tax purposes. If it is then I would want to review the trust to make sure the trust qualifies to own shares in an S-corporation. Finally, I would have him sign resolutions adopted by unanimous consent, cancelling the lost share certificate, providing that the shares represented by the cancelled share certificate and all future shares should be registered shares only, recorded on the stock register in the corporation's minute book, and for the registration of those lost shares. If the corporation is not a "close corporation," then it is important to have a complete minute book with Shareholder resolutions adopted each year electing the director and Director resolutions appointing officers and approving any major actions that occurred. Maybe there is a family history of the company that can be used to scatter some approvals of new activities through the 45 years the corporation has existed. The last 5-10 years are the most important. I have recently been doing this kind of catch-up for several companies. One of the grounds for persuading a judge to hold the owner of a corporation personally liable for the debts of the corporation is when the corporation has failed to follow corporate formalities. The most dangerous such failure is signing things with the owner's personal name instead of the name of the corporation and labeling the owner as President or Chief Executive Officer. That's because that mistake can mislead the other side to that transaction regarding who is signing, the corporation or the individual. Corporate minutes are another form of corporate formality which a lawyer will make a huge big deal about to argue that the owner was playing fast and loose with the corporation's assets and credit. If you would like to discuss having me check your minute book and provide the services described above, please call me. Dana Sack 510-286-2200... Read Answer

If you do the arithmetic to calculate the difference between the value of the loan they offered before and the two loans they are offering you now, you will find that there is not much difference. You are correct that they have defrauded you, but that difference is the total amount of your damages. Those new rates are still great low rates. If you still want to sue them for that small difference, you qualify for small claims court. No lawyers, trials are scheduled very fast, but the defendant can appeal and get a whole new trial, but the plaintiff waives any right to appeal by choosing small claims court. Good luck. Dana Sack 510-286-2200  ... Read Answer

No. Your HOA should hold the new election ASAP. Any contracts the HOA enters into that are favorable to it and that it wants to keep and enforce, might not be enforceable, since any action by the current board and any action by any officer appointed since the election might be held by a court to be without authority and voidable by the other side. It is also possible that anyone with a claim against the HOA, such as service providers or anyone injured on the common area, might not be limited to suing the HOA and might be able to sue and collect from the individual owners themselves. There are a lot of rules and many of them are not obvious and there justification might not be obvious, but they have been enacted and are required in order to protect the homeowners. None of them are designed to protect anyone else. So learn and follow all the rules and be grateful for them. If you would like me to help your HOA Board or members understand what is required of them, please give me a call. Dana Sack 510-286-2200  ... Read Answer