Being sued can be an unsettling and frightening experience. However, it you are not careful, it can be a haunting one, even when you win. That is because court records about the lawsuit are available to the public - and in many cases over the internet.

A search of court records, which is an increasingly common part of background checks for jobs or housing, can reveal details of a lawsuit that are embarrassing or unfairly prejudicial. California law provides some protections from being unfairly prejudiced by a civil suit that was dismissed or without merit, but you often need to be proactive in protecting your good name.

There are different rules for different types of cases and different rules for who is providing the information about you. This three part series will examine :
(1) how to seal information from a typical law suit,
(2) the special rules that apply to unlawful detainer actions (evictions), and
(3) what can and cannot be reported and by whom.


To understand how the records of a dismissed court case can cause haunt you consider the following scenario:

Jane, a software engineer, quit her job when she became uncomfortable with her employer over-billing clients. After she quit, Jane told the client about the over billing. Her former employer was infuriated and filed a lawsuit against Jane that claimed Jane defamed the company, stole company secrets and violated an agreement not to quit and compete against the employer. The court case was dismissed when the judge found the lawsuit was without merit.

Jane, who is now looking for a new job and is one of two finalists for a position with a local high-tech company. The company, which is concerned about protecting its technology secrets, performs a background check that searches surrounding counties for civil and criminal court cases. The company sees that Jane was recently sued by her former employer for stealing trade secrets. The company decides that Jane is not the best fit for the job. While Jane cannot prove it, she suspects that the record of the lawsuit cost her the job.

Jane could have eliminated the risk of being unfairly prejudiced if she was proactive and asked the court to seal the record of the dismissed lawsuit. California Court Rule 2.550 provides the constitutional standard and procedure a court will use when someone requests to seal a court record that would otherwise be public. Because of strong First Amendment support promoting public access to court records, sealing a record is an uphill battle.

California courts will use a balancing test in deciding whether or not to grant a request to seal a record. The court weighs the First Amendment right of public access to court records against any “overriding interests” that support sealing the record to determine if the request should be granted. While the Rules do not define what may qualify as an “overriding interest,” a person’s interest in housing or earning income definitely qualifies.

In the scenario above, Jane could have argued to the court that her “overriding interests” included protecting her ability to obtain a job and earn a living. Her argument would be strengthened because the claims in the dismissed lawsuit are taken very seriously by her prospective employers. The court would seal the record and prevent it from ever being disclosed if it found that the threat of potential harm to Jane’s career prospects outweighed the public’s interest in knowing about the dismissed lawsuit.

If you do not have the time or resources to petition a court to seal the record, you might be able to take advantage of special rules based on the nature of the case, or you may even be able to prevent a credit agency from reporting it. These options are discussed in part 2 and part 3 of this series on Keeping Old Law Suits From Haunting Your Future.

By: Mathew Higbee
By Mathew Higbee, the founder of RecordGone.com, a law firm that specializes in record clearing. Law clerk Melanie Bronny contributed to this article. court to seal the record.

Lemon laws are U.S. state laws that offer remedies to consumers for products such as boats, cars, computers, motorcycles, refrigerators, RVs, etc. that frequently fail to meet the set standards of quality and performance. These products are commonly referred to as “lemons”. There are both state and federal lemon laws that protect the interests of consumers. The rights afforded to consumers by lemon laws may exceed any warranties expressed in purchase contracts.

The California Lemon Law states that if a purchased vehicle turns out to be defective in the warranty period rendering it unfit for use or inflicts some serious injuries to the user, then the consumer has every right to ask for refund or replacement.

If you purchase or lease a vehicle in California and then discover that it has defects that substantially affect its safety, use or value, California State Lemon Law may help you gain satisfaction from the vehicle's manufacturer. Under the California Lemon Law, new cars, leased cars, pre-owned cars, RV's, motor homes, motorcycles, boats and other consumer vehicles qualify for protection if they were accompanied by a written warranty. While the law cannot help everyone with a "lemon", and some people may have to hire an attorney to get their cases resolved, the law does create important rights for the consumers.

Circumstances in which the consumers seek protection under California Lemon Law:

The defect of the product is a manufacturing defect
The vehicle has been repaired at least four times and still the defect persists.
The defect is detected but not repaired within the period of 18 months or 18,000 miles.

There are several steps that the consumer must take to effectively use the lemon laws of California State. (1) Keep a detailed repair record, complete with dates of the repair attempts, when the vehicle was out of service, and a list that explains exactly what the trouble is, such as "cutting off" or "stalling"; (2) send a certified, return receipt requested letter to the manufacturer's consumer relations office and the manufacturer's nearest regional office listed in your manual; (3) after you have followed the previous steps and met the criteria as defined by your state's lemon law, request a refund or replacement, less depreciation, of the vehicle.

Differing from some laws in other states, the California Lemon Law allows unsatisfied car buyers to sell the defective vehicle, or to trade it in for a different automobile. To preserve the consumer rights outlined in the California Lemon Law, vehicles with warranty defects offered for sale must be accompanied by a written disclosure that declares the owner is aware of the automobiles defects (a written statement from a professional inspector is better), and the vehicle's manufacturer needs to be notified of the unsatisfied buyer's intention of sale or trade.

By: Ronaldo Wagh
Visit http://www.LemonLawAmerica.com for more information on State Lemon Laws and consumer protection tips from the well experienced attorney’s.

An affordable and very effective method to shield your assets from attack is to transfer your rental property to a Limited Liability Company (LLC). Holding title to investment property through an LLC limits the liabilities of the business to only those assets held within the LLC. In the same way as shareholders of a corporation are shielded from liability, a properly formed LLC will guard its owners from lawsuit liability, including liability from acts of its employees and agents.

There are several significant benefits the California LLC can provide to you or your investors. The LLC creates a risk barrier which encourages apartment ownership, yet shields the owner's personal assets from lawsuits and seizure. The double taxation and extensive formalities inherent with traditional corporations are eliminated. When legal action such as an eviction is required against a tenant, it is the LLC, rather than the individual owner, that pursues the claim. In addition, the landlord’s privacy is enhanced because rent checks are made payable to the LLC, lease agreements are between the LLC and the tenant, and correspondence comes from the LLC.

While high limit liability insurance is important, it is still not adequate to protect the property owner(s) from loss of assets. Most insurance policies contain exclusions for mold, lead-based paint and other environmental hazards. Additionally, they rarely cover judgments arising out of discrimination claims. Even with expensive high-limit insurance coverage, a major incident such as a fire or balcony collapse resulting in numerous claims, could create liability far exceeding your policy limit. Even with the best of intentions regarding your tenants, the LLC has become a necessary tool in limiting liability not only for legitimate claims, but also for those in which only a brainwashed jury could see merit. The deductible $800 annual State franchise tax on LLCs is small compared to the huge benefit provided.

In recent years, the State of Nevada LLC has been touted as an asset protection alternative to the California LLC, since the annual tax is relatively small compared to California. However, in most cases there is little or no financial benefit to forming a Nevada LLC for your California rental property, because the ownership of the California property necessarily means business is transacted in California. As such, the Nevada LLC also must be registered with the California Secretary of State and pay the initial California registration fee and $800 annual franchise tax, along with California income tax. (Ca. Rev & Tax Code Sec. 17941, Ca. Corp. Code Sec. 17050). For business ventures other than California real estate, where the principal business is not transacted in California, the Nevada LLC/Corporation may be an attractive option for investors.

Additional benefits of the LLC include the ability of LLCs to utilize 1031 exchanges and exemption from the 3 1/3 withholding on sale of real estate for multi-member LLCs. Furthermore, a separate federal tax return is usually not required for single-member LLCs, including those owned by a husband-wife or living trust, and the property transfer to the LLC is almost always exempt from tax reassessment. And the LLC will work very well in conjunction with a living trust to simultaneously protect and preserve estate assets.

Many apartment owners have executed a living trust in order to provide for the distribution of their assets after they die, as well as to avoid huge probate costs, reduce or eliminate estate taxes when they die, and prevent court control of their assets should they become incapacitated. The living trust, however, will not protect against lawsuits. If an apartment building is held directly by a living trust, then all other assets in the trust will be exposed to lawsuit liabilities generated by the building. A much better approach is to place your apartment in an LLC, creating a liability barrier in order to protect all of the other trust assets. The LLC membership interests may then be safely added to the trust.

As far as multiple investments are concerned, it is better to have a separate LLC for each rental property so that liability arising from one property cannot attach to any other properties. Even single-family homes with tenants should be held by their own LLC. If paying $800 annually each for multiple LLCs is not a viable option, then properties could be grouped together. Owning a total of six investment properties with three in one LLC and three in the other would afford significantly more protection than owning all the properties in one’s personal name. For those investors wishing to transfer multiple properties with annual gross rental receipts totaling more than $500,000 into a single entity, the use of a limited partnership should be considered. Both the limited partnership and the LLC must pay the $800 franchise tax, but the LLC must pay an additional gross receipts tax if the gross annual receipts exceed $250,000.

Because landlords are subject to virtually unlimited lawsuit exposure and financial liability arising out of ownership of their rental property, they must take advantage of every lawful means to protect their assets. Once a competent attorney prepares and files the array of legal documents required for the initial formation of the LLC, personal assets will no longer be reachable to satisfy any debts or judgments against the LLC.

By: Michael Elson
Michael K. Elson is the principal of The Law Offices of Michael K. Elson and specializes in business formation, asset protection and estate planning, including the formation of corporations, LLCs, and living trusts. He may be reached at (818) 763-8831 or (800) 781-7038 or by visiting http://www.LimitLiability.com.

Featured as a California Law resource, by California Personal Injury Attorneys, a California personal injury attorney / accident lawyer directory, listing hundreds of links to California personal injury attorney / accident lawyer websites and over 1,500 non website courtesy listings.

Are you interested in politics? If so visit Politics In America - Political Viewpoints

Feeling down or stressed out? Take a break have a few laughs. Visit Lawyer Jokes, a selection of legal, lawyer and attorney jokes, humor and satire.

The information contained in the above post is not intended as a source of legal advice. You should not act upon or rely on information in this or any other post without the advice of competent legal counsel.

Most shareholders believe a corporation protects them from personal liability. This is generally true unless alter ego is successfully asserted.

Alter ego is an equitable claim that a corporation should be set aside in a lawsuit and the shareholders held personally liable for a debt. The theory was antiquated and rarely used. In recent years, it has seen a rebirth as many small business corporations are formed using cheap online services. While these services file the entity with the state, there is no real follow up or guidance in regard to how the entity is actually supposed to function. This, of course, leads to alter ego claims and disaster for the shareholders.

To prove alter ego, plaintiffs must paint a picture of misuse of the corporate entity by shareholders. There are many factors that can be looked at, but the following are commonly addressed:

1. Commingling of corporate and personal funds is very strong evidence against shareholders. The same goes for corporate and personal property.

2. Payment of shareholder debts by the corporate entity is another area ripe for examination. The classic situations that arise concern the corporation paying the mortgage or credit card debt of a shareholder. This can also lead to severe tax problems.

3. The failure to maintain corporate books is another problem area. Most cheap online services will send a number of blank forms along with the corporate filing, but most shareholders have no idea what to do with them and thus do nothing at all.

4. The failure to issue stock is another problem area. Stock certificates represent the ownership of the corporate entity. If stock is not issued, the corporation has no legal owners, which is a might bit hard to explain.

5. Failure to properly incorporate is another area that can be problematic. Every state has different rules, but many allow for the use of an incorporator. This is typically an attorney or the online service you might select. The issue that arises is how said incorporator transfers ownership to the shareholders. Some states, such as California, have fairly strong views on this subject. If done incorrectly, the transfer can lead to the odd situation where the shareholders are held not to be the owners of the corporation! It then gets very messy!

There are literally hundreds of other factors that can be looked at when it comes to evaluating whether a corporate entity should be set aside. The exact factors often depend upon the law in your state or whether you are being sued in federal court.

Whatever your situation, it is vital that you gain an understanding on how a corporation must be run and follow said guidelines. You are not “done” when you receive your corporate book in the mail. You are only beginning.

By: Richard Chapo
Incorporate in California with SanDiegoBusinessLawFirm.com.

Featured as a California Law resource, by California Personal Injury Attorneys, a California personal injury attorney / accident lawyer directory, listing hundreds of links to California personal injury attorney / accident lawyer websites and over 1,500 non website courtesy listings.

Are you interested in politics? If so visit Politics In America - Political Viewpoints

Feeling down or stressed out? Take a break have a few laughs. Visit Lawyer Jokes, a selection of legal, lawyer and attorney jokes, humor and satire.

The information contained in the above post is not intended as a source of legal advice. You should not act upon or rely on information in this or any other post without the advice of competent legal counsel.