CJT: Knowledgeable, Strategic, and Able to Read a Poker Face


CJT: Knowledgeable, Strategic, and Able to Read a Poker Face

Client Business is a business specializing in the import and sales of certain goods. Due to the economic downturn, Client Business was no longer earning a profit and was in the process of winding down its business. During the winding down period, Client Business and Client Officer (an officer of Client Business) were sued by Overseas Manufacturer for failure to pay certain invoices. In an attempt to pierce the corporate veil, Client Officer was sued in his personal capacity. This means that if Overseas Manufacturer was successful, it could enforce its judgment against Client Officer’s personal assets. Both Client Business and Client Officer retained CJT to defend them in the matter. Overseas Manufacturer was successful in obtaining and Order for Attachment to Client Business’s property in the amount of approximately $250,000. Although Client Business was closing down business, Client Officer was very concerned that a judgment in the case would be enforced against him personally.

In an attempt to have Client Officer dismissed from the litigation, the parties agreed to mediation. At mediation, CJT argued that there was no basis to hold Client Officer personally liable, and therefore, Overseas Manufacturer could only recover against Client Business. Since Client Business had closed business and was winding down, Client Business’s assets at that point were as great as they were ever going to be. Any further litigation would reduce those assets, and consequently, reduce any amount Overseas Manufacturer would be able to collect. With this in mind, Client Business offered approximately $40,000, which was everything Client Business had left, and Client Officer offered an additional $25,000 out of his own pocket for a full settlement and release of all claims. Overseas Manufacturer rejected the offer on the ground that even if Client Business was winding down and had no assets, Overseas Manufacturer could go after Client Officer personally for any deficiency. This deficiency likely would have been the full $250,000 judgment. In all, Overseas Manufacturer turned down approximately $60,000 at settlement.

In forming a focused and cost-effective defense, CJT filed a Motion for Summary Judgment to have Client Officer dismissed from the case on the grounds that Overseas Manufacturer had no evidence to allow it to pierce the corporate veil and sue Client Officer personally. By that point it had become clear that Overseas Manufacturer did not want to spend much time or money litigating the case. In fact, it had conducted almost no discovery and CJT believed it had absolutely no evidence to support its claim against Client Officer. Since Client Business was finished winding down and, by that time, had no assets left, CJT determined the most fiscally prudent strategy was to defend only Client Officer. To file a Motion for Summary Judgment on behalf of both Client Business and Client Officer would have been very time-consuming and likely would have cost Client Officer an additional $15,000. If Client Officer was dismissed from the lawsuit, the best Overseas Manufacturer could do was obtain a worthless judgment against Client Business. Moreover, to successfully oppose the Motion for Summary Judgment, Overseas Manufacturer would be required to conduct extensive discovery and prepare very costly and voluminous Opposition papers. CJT predicted Overseas Manufacturer would not be willing to do that.

CJT’s strategy paid off. When the deadline for Overseas Manufacturer to file its Opposition approached, Overseas Manufacturer simply dismissed Client Officer from the case. It did not have any evidence to sue Client Officer personally and did not want to spend the money to litigate further. As CJT had predicted, Overseas Manufacturer’s entire position in the case was only a bluff. Client Officer was dismissed from the case and Client Business was completely wound down with no assets left. In essence, Overseas Manufacturer left approximately $60,000 on the table at settlement, but due to CJT’s strategy, ultimately was not able to collect a single penny from either Client Business or Client Officer.

CJT’s legal knowledge, ability to detect Overseas Manufacturer’s bluff, and strategy to file a Motion for Summary Judgment on behalf of Client Officer only saved Client Officer tens of thousands of dollars. Not only was Client Officer spared from expending funds to defend Client Business, but all the money that would have been spent settling the matter at mediation was saved. Further, CJT’s efficient and well-researched Motion for Summary Judgment allowed Client Officer to get out from underneath the threat of a judgment exceeding a quarter of a million dollars.

Posted in: Articles, Case Studies

Leave a response