Commercial Litigation

Commercial Litigation

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Every business dispute, however minor it may seem at the time, has the potential to become a troublesome, and expensive, lawsuit. In today’s business environment, your best course of action is to have a tough commercial litigation attorney on your side.

At Sanders & Parks, our attorneys have been helping businesses locally in Phoenix, Arizona, and throughout the country since 1973. Our goal is to help you achieve your goals. To do that, we take the time to learn about your business. Our business and commercial law lawyers will help you build a legal strategy that is specifically built around your company.

Overview


Commercial transactions and business relationships often go bad and turn into disputes, resulting in costly litigation. Unable to resolve the dispute through negotiations or discussions between the parties, one party may find that litigation is the only way to end the matter. Unfortunately, litigation is often a fact of modern business life.


What is "commercial litigation?"

Commercial litigation is a general term that applies to any type of litigation or controversy related to business issues. Examples of areas included under the general heading of commercial litigation include:

  • Contract disputes, including breach of contract
  • Tortious interference with contracts or business relationships
  • Uniform Commercial Code (UCC) disputes
  • Shareholder and partnership disputes
  • Breach of fiduciary duty cases
  • Disputes over corporate management and control
  • Business dissolutions
  • Employment disputes
  • Disputes over non-compete agreements
  • Franchise disputes
  • Antitrust and trade actions
  • Consumer fraud and consumer protection issues
  • Debt collection actions
  • Civil RICO (Racketeer Influenced and Corrupt Organization) actions

The list gives you an idea of the broad scope of commercial litigation. It also provides an idea of how commercial litigation matters can range from relatively simple, uncomplicated matters, to highly complex matters that could take several years to resolve. Improperly handled litigation can lead to additional, unnecessary expense for you and your business. If you lose, you may be subject to a large damages award. In addition, even if you are successful, the amount of money and time you spent fighting may exceed the amount of damages you are ultimately able to collect. Further, protracted litigation can have a negative impact on the operations of your business.

Speak to a commercial litigation lawyer

Any litigation matter can have a serious impact on your business. It is vital that you have capable legal counsel at your side, so that you know your interests will be protected. An experienced commercial litigation attorney at Sanders & Parks in Phoenix, AZ, can provide the advice and strong representation your company needs.

The Mechanics of Commercial Litigation


Litigation can be worrisome for any businessperson. The stakes may be high, and the future of your business may be uncertain. Much of the worry is caused by the unfamiliarity of the process. Most people have little or no knowledge of how litigation works, unless they have been through it.


How a lawsuit starts

The first legal documents in most lawsuits are the summons and complaint. The summons is a short document that informs a defendant that he or she is being sued, in which court and how much time there is to reply (the time to reply is set by law). The summons also lets a defendant know who is bringing the suit.

The complaint should contain a short statement of the reason the court has jurisdiction over the case and the reasons for the claim showing that the plaintiff is entitled to relief. The complaint should also contain a demand for judgment for the relief the plaintiff is seeking. The plaintiff may seek alternative forms of relief, including monetary relief, injunctive relief or specific performance.

If the defendant does not reply to the complaint within the time allowed, judgment by default may be entered against him or her. A judgment by default is final, usually grants the plaintiff everything asked for and is entered without any testimony or argument from the defendant. If a defendant does reply, it is by serving an answer on the plaintiff’s attorney. The answer should contain the defenses to each claim asserted by the plaintiff and the defendant should admit or deny the allegations upon which the plaintiff relies. If the defendant is without knowledge or information sufficient to form a belief as to the truth of a statement in the plaintiff’s complaint, the defendant should state that, and such a statement will have the effect of a denial.

Instead of filing an answer, a defendant may file a motion in which it raises all its defenses, asking the court to dismiss the plaintiff’s complaint. A motion to dismiss can raise the following defenses: lack of jurisdiction over the subject matter, lack of jurisdiction over the person, insufficiency of process, insufficiency of service of process, failure to state a claim upon which relief can be granted and failure to join a party.

If the defendant believes the plaintiff is liable to the defendant, he or she may serve what is known as a counterclaim on the plaintiff. A counterclaim is generally served along with the answer, and it sets forth the defendant’s claims against the plaintiff.

Pre-trial procedures and discovery

Most of the work in commercial litigation is done during the pre-trial stage. Discovery, in particular, can be a time-consuming, labor-intensive process. Discovery is the process of learning all possible information about the facts of the case and the opposing party. Each party to a lawsuit is required, upon a proper request, to respond to requests for information from any of the other parties in the lawsuit. Methods of discovery include:

  • Interrogatories, or written questions
  • Depositions, or live testimony, usually recorded by a court reporter
  • Requests for admissions, which ask a party to admit the truth of certain statements
  • Requests for production of documents

Disputes over discovery issues will often be brought into court, and decided by a judge. In addition, the court will hear many other procedural disputes before a trial is scheduled.

Trial and judgment

Trials of commercial disputes are usually before a jury, unless the parties agree that a judge alone may hear the case. The jury or judge hears all of the evidence presented in the case, and decides all of the factual questions involved. The jury also decides how much money, if any, the parties owe one another.

The judgment entered is the legal statement of what is owed, and to whom. A properly entered judgment will give a party the right to pursue remedies such as garnishment, execution or attachment of bank accounts.

Speak to a commercial litigation lawyer

While lawsuits vary in complexity and the exact procedures followed, the description above sets out the basic framework of a typical commercial lawsuit. Even a simple litigation matter is made up of intricate procedures that call for a high level of knowledge and skill. A commercial litigation attorney at Sanders & Parks in Phoenix has the knowledge and experience needed to protect your interests.

Deciding Whether to Sue


Some business disputes end up in litigation, but many others do not go to court. The decision of whether to bring a lawsuit in a particular case is both a legal and a business decision.


The amount of money involved

Many business disputes involve fairly small amounts of money. When you consider the time and expense involved, you may not feel it is worth pursuing the case.

Unless your contract or a particular statute applicable to your case says otherwise, you will be responsible for your own legal fees involved in pursuing a claim. Even a relatively uncomplicated lawsuit can turn quickly into an expensive undertaking. You may find yourself spending more money on attorneys’ fees and costs than you would recover if you win the case.

There may be reasons for pursuing a matter other than the money you might realize at the end. The case may involve an unresolved question of law that is important to your business, or you may want to show the business community that you will react strongly when another company or individual has harmed your business. The decision as to whether you should engage in this type of litigation is as much a business decision as a legal one.

The parties involved

The circumstances of the party you would be suing also will have a bearing on your decision whether to sue. You may be reluctant to sue a customer or supplier who has otherwise proven reliable for fear that litigation would poison your future relationship. However strong your legal position, you may not wish to press the point too aggressively — especially if the other party’s goodwill is crucial to the continued success or operation of your business.

Before bringing a lawsuit, you should try to learn whether the party you contemplate suing has the means to pay any judgment entered against him or her. In other words, it is one thing to hold someone liable for something. It is another thing to collect the money, even with a judgment. You may not want to go through the time and trouble of litigation if there is nothing to collect at the end of it all. In such a case, it may be in your best interests to settle your claim quickly.

Speak to a commercial litigation lawyer

The decision of whether to bring a lawsuit in a particular case is one that deserves careful consideration. A commercial litigation attorney at Sanders & Parks in Phoenix can advise you on your options, and help you make a decision that meets both your legal and your business needs.

Alternative Dispute Resolution


Commercial litigation can be very costly, not only in terms of the money that may be expended, but also the time and energy involved. Consequently, many attorneys and businesspeople have looked for different ways of resolving disputes. An experienced commercial litigation attorney can help you determine if one of these alternative dispute resolution (ADR) methods is right for your case. In some cases, courts have ordered parties to participate in some form of alternative dispute resolution.


Arbitration

Arbitration is required by contract in some industries. In addition, contracts between two parties often contain an arbitration clause providing that any dispute related to the contract will be resolved through arbitration. In others cases, parties may agree to submit their cases to arbitration or a court may order arbitration as a means of helping to manage an overloaded court calendar.

Arbitration is similar to a trial. A neutral party, known as an arbitrator (in some cases, there may be more than one), is chosen to hear the case. He or she hears the case, much as a judge would. The arbitrator evaluates the evidence, and makes a decision based on that evidence. If the parties have agreed in advance, the arbitrator’s decision is binding on both parties. If the decision is binding, it will be enforced by the courts, and will be overturned only in limited circumstances. Although arbitration is not a trial, you still need legal counsel to make an effective presentation of your case to the arbitrator.

Arbitration is convenient and informal, compared to a trial and offers a number of other benefits. First, arbitration is confidential, so there will be no public record of the proceedings, unlike court records, which are often available to the public unless they are sealed. Arbitration is quicker than a trial. There is limited discovery in arbitration, so there is no need for extensive discovery, which can get rather costly. Further, the arbitrator often has expertise in the subject matter of the dispute. Next, the parties will save money on legal fees and costs due to the limited discovery, informal hearings and shorter duration. Finally, arbitration may allow the parties to preserve their business relationship. Whereas litigation often destroys a relationship, because arbitration is less adversarial and more informal, it may be possible for the parties to continue their business dealings.

Mediation

Mediation is sometimes confused with arbitration, but the two are distinct processes, and have different purposes. Mediation is a consensual process in which a mediator facilitates the parties’ negotiations and helps them reach a voluntary agreement that will end their dispute.

Like arbitration, mediation starts with the appointment or selection of a neutral third party to conduct the process. The mediator’s job is not to make a decision. The purpose of the mediator is to help the parties reach a settlement agreement in their case.

A mediator will listen to the parties, offer suggestions and generally do whatever he or she can to help the parties come to their own resolution of the dispute. The mediator generally shuttles back and forth between the parties, relaying their positions to the other side and helping them reach a resolution. No decision is handed down, and nothing is imposed on either party without consent. The goal is for the parties to reach an agreement. If they do not reach an agreement, the mediation concludes. Effective presentation of your case is as important in trying to reach a settlement as it is in arguing before the court, and an experienced attorney will be able to present your case in the best possible light.

Speak to a commercial litigation lawyer

The use of ADR is spreading. Whether you undertake arbitration or mediation because of a court order or by agreement with the other parties to your dispute, the use of ADR is likely to reduce both the time and cost of litigation. A commercial litigation attorney at Sanders & Parks in Phoenix can represent you and your interests in alternative dispute resolution proceedings, and help you obtain the best outcome possible.

Types of Commercial Disputes


Commercial litigation is an umbrella term that covers a number of distinct business-related issues and disputes. This article provides general information on a number of common commercial litigation situations. Being involved in any sort of commercial dispute can have a negative impact on your business and on your individual livelihood.


Contract disputes

Contract disputes can arise in a number of situations — from a supplier’s failure to deliver goods to your company according to the terms of your agreement to a dispute with a former employee over a non-compete agreement or employment contract. A contract is a legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things. Once a valid contract exists, a party is under the duty to perform the agreed upon contractual duty. A breach of contract occurs when a party fails to perform. In a breach of contract action, the main remedies that the non-breaching party may pursue depend largely on the injury suffered. Some remedies include: damages aimed at putting the non-breaching party in the position that it would have been but for the breach, specific performance, cancellation and restitution and quasi-contractual remedies.

Tortious interference

Generally, business torts are claims for either intentional or negligent wrongdoing in a business relationship. These claims can be based either on statutes or on common law. One such tort is known as interference with contract or interference with prospective economic advantage. Though the elements of this tort vary from state to state, generally, a plaintiff must establish the existence of a contract or some economic relationship between the plaintiff and a third party; that the defendant knows about that relationship; intent by the defendant to disrupt or harm that relationship; actual disruption of the relationship; and damage to the plaintiff. Other business torts include unfair competition and conversion.

Antitrust and trade regulation

Generally, antitrust laws prohibit anticompetitive behavior and unfair business practices that harm consumers and businesses. Two of the main federal antitrust laws are the Sherman Act and the Robinson-Patman Act. Section 1 of the Sherman Act prohibits any contract, combination or conspiracy that restrains trade unreasonably. Section 2 of the Sherman Act makes it unlawful for companies to monopolize or attempt to monopolize trade or commerce. The Robinson-Patman Act prohibits price discrimination that threatens to harm competition. In order for the Robinson-Patman Act to be implicated, there must be two or more sales, by the same seller, of commodities of like grade and quality, that occurred reasonably close in time, with a difference in price, to two or more different purchasers for use, consumption or resale within the United States or any territory thereof, which may result in competitive injury.

RICO

The Racketeer Influenced and Corrupt Organizations (RICO) Act (18 U.S.C. §§ 1961-68) was passed in 1970 to fight organized crime. Today, it has a much broader application, and has been used against businesses, individuals and charities. There are four liability provisions under section 1962. Section 1962(c) is the most commonly used provision, and under that section, it is unlawful for a person to manipulate an enterprise for purposes of engaging in, concealing or benefiting from a pattern of racketeering activity. Under section 1962(a), it is illegal for a person to use an enterprise to launder money that was acquired through a pattern of racketeering activity. Section 1962(b) makes it unlawful for a person to acquire or maintain an interest in an enterprise through a pattern of racketeering activity. Under 1962(d), it is unlawful for a person to conspire to violate sections (a), (b) or (c).

Uniform Commercial Code (UCC)

The Uniform Commercial Code (UCC) governs commercial transactions. The UCC is divided into the following articles: general provisions; sales; leases; commercial paper; bank deposits and collections; funds transfers; letters of credit; bulk transfers; warehouse receipts, bills of lading and other documents of title; investment securities; and secured transactions; sales of accounts and chattel papers. One of the more significant articles from a business perspective is Article 2, which governs contracts for the sale of goods. The UCC defines a sale as a contract in which title to goods passes from the seller to the buyer for a price. Goods are generally all things that are movable at the time of the contract for the sale. The UCC provides rules for sales contract formation, modification, performance and remedies. In addition, the UCC governs sales warranties, important to most parties involved in sales.

Corporate disputes

Businesses, including partnerships and corporations, can face a number of legal disputes that fall under the umbrella of commercial litigation. Perhaps a shareholder brings a suit alleging that a company’s officers or directors have breached their fiduciary duties or had a conflict of interest in a transaction that harmed the company. There could be a dispute among the partners or shareholders of a business. Corporate litigation that seeks to challenge mergers, acquisitions and financing arrangements are also common.

Speak to a commercial litigation lawyer

There are many types of commercial litigation. In addition to the types of disputes listed above, franchise dispute, debt collection actions, consumer fraud matters and employment disputes also fall under the heading of commercial litigation. Regardless of the issue you or your company is facing, it is important to have experienced representation from a lawyer who can guide you through the issues and work toward a result that will protect your bottom line. A commercial litigation attorney at Sanders & Parks in Phoenix can evaluate your situation and advise you on how best to proceed.

Resource Links

Federal Courts
Links to explanations of the structure and powers of the federal courts.

Commercial Law: An Overview
Review of various commercial law topics, sponsored by Cornell University Law School.

American Arbitration Association
Information about alternate dispute resolution, including arbitration and mediation.

Federal Trade Commission
G overnment website relating to fraud and antitrust law.

Uniform Commercial Code
Text of Articles 1 through 9 of the Uniform Commercial Code (UCC), sponsored by Cornell University Law School.

Breach of Contract and Lawsuits
Information from FindLaw about breach of contract actions.

FTC Guide to the Antitrust Laws
]Information about antitrust laws, provided by the Federal Trade Commission.