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An Oppression Case Can Get You More Than Just Monetary Damages

A business dispute with your co-owner can often be resolved in litigation.  But the question remains – if you sued your business partner because of improper action on his part, what remedy would you seek?

Many people assume that, when you sue your business partner, it is like any other case in which you are suing for damages.  For example, I have been approached by numerous prospective clients seeking to sue a business partner for damages after finding out that he was being – to put it charitably-“overly generous” in giving himself corporate benefits (cars, bonuses and the like).   But a case for damages may not be the best available option.

In most cases, the business partner (often a majority owner, or at least a 50/50 owner) took excess funds from the company.  Although this may in effect damage the other owners, the claim (at least under New Jersey law) belongs to the company.  In other words, if your 50/50 partner helped himself to $100,000 worth of personal benefits, he effectively stole $50,000 from you, and $50,000 from himself.  Usually, the right to seek reimbursement of the funds improperly taken belongs to the company.

However, a better remedy may be available.  A co-owner instead may allege shareholder oppression, and seek the right either to buy out his business partner or to be bought out.  This may not always be the plaintiff’s option, as it is up to the judge to determine who will be the buyer, and who the seller.  Therefore, a business owner must understand that he may file the suit looking to buy out his co-equal shareholder, only to have the judge rule that he must sell, instead.

An attorney experienced in such lawsuits can often help a client assess what the most likely outcome in such a case may be, and how to focus the case to help achieve the desired result.  For example, careful attention must be paid to facts showing why you are the one who, deserves to maintain ownership of the company, and why your partner should be judicially compelled to sell to you.  Obviously, this will be easier if you can actually show that your business partner was embezzling or stealing from the company, but most cases are not so black-and-white. An experienced attorney can help you determine what facts should be emphasized, and how to obtain the evidence you will need.