A business dispute lawsuit is a type of legal action that a party can take when they have a disagreement about a business-related matter or with the business itself, and that disagreement violated the law. Business dispute lawsuits can arise from various business law issues and may involve many different parties. For example, a business can be sued by a consumer, a client, another business, or by a state or federal government agency.
The following is a list of some common examples of the types of claims that can provide the basis of a business dispute lawsuit. These include:
- Breach of a business contract or a specific provision within that contract;
- Unfair competition lawsuits;
- Disputes over debt and debt collection;
- Fraud or misrepresentation of facts;
- Insider trading issues or violations of other securities laws;
- Infringement of intellectual property (e.g., trademarks, trade secrets, copyrighted materials, or patents);
- Breach of a confidentiality or non-disclosure agreement (“NDA”);
- Zoning and land use disputes;
- Damage to the reputation of a business;
- Distribution of business assets (e.g., when dissolving a company);
- Data breaches;
- Antitrust lawsuits; and/or
- Disputes over the sale or transfer of a business (e.g., mergers and acquisitions).
As is evident from the above list, businesses are vulnerable to a lot of potential legal risks and liability. Each one of those claims can be combined into a single lawsuit, increasing the likelihood that the business will be liable for some kind of damages or will receive some sort of legal penalty.
On the other hand, if you are the individual or entity who is filing the business dispute lawsuit, each one of those claims have different laws, deadlines, and requirements that you must comply with or else the case can be dismissed. If you miss a filing deadline or a court dismisses your case, then you could potentially lose your chances of recovering damages or other forms of relief (e.g., injunctions).
In order to protect your business from being held liable or to ensure that you will have a fair chance to argue your case and recover damages, it is strongly recommended that you consult a local business attorney for further advice.
Depending on the facts of your case, your lawyer will be able to either help your company file a lawsuit or defend your business against one, can discuss the types of remedies your business can receive or the damages that your company might be liable for, and can advise you on your legal options and inform you of your legal rights under the relevant laws.
How are Business Dispute Lawsuits Litigated?
The majority of business dispute lawsuits are not litigated, but rather result in settlements that take place outside of the courtroom.
The reason as to why more business dispute lawsuits end up as out-of-court settlements and not in front of a judge or jury, is because many companies have business contracts that contain provisions requiring legal disputes to be settled through alternative dispute resolution methods. In most cases, the method selected is usually arbitration.
In cases where an alternative dispute resolution method fails (e.g., the parties cannot reach an agreement) or a legal issue must be decided by a court, the parties may have to litigate the dispute. A party can initiate a lawsuit by filing a claim in the appropriate court. From there, they will need to follow standard civil law procedures, including:
- Serving the opposing party with copies of the complaint and filing a proof of service document with the court after the complaint has been served;
- Responding to the complaint or a counterclaim;
- Making requests for discovery and responding to requests for discovery;
- Reviewing all discovery materials (e.g., documents relevant to the business dispute like contracts, receipts, account statements, correspondence, etc.) and complying with discovery rules;
- Producing physical evidence related to the claim (such as a faulty product and proof of the damages sustained from that product);
- Hiring both expert and lay witnesses to provide testimony at trial or to be deposed before trial;
- Performing legal research for laws and cases that will support or discredit the claim;
- Attending pre-trial hearings and conferences;
- Preparing for trial and conducting a trial; and
- Various other steps that are necessary when litigating a dispute.
In some instances, a party may discover they are in the wrong or another issue may come to light. This may encourage a party who previously refused to settle out of court to abandon their litigation strategy and to participate in settlement negotiations instead. Other times, a court may dismiss a lawsuit because no claim exists. If a court dismisses the case, then neither litigation nor a settlement will occur.
If a business dispute involves a criminal matter, however, this process will be slightly different in a number of ways, including the parties involved, the kinds of consequences the outcome of the case can lead to, the legal terminology, and the type of court that will oversee the matter. Also, in criminal cases, the option to use alternative dispute resolution methods is generally not available for adult criminal defendants; only plea bargains or deals.
Finally, as previously mentioned, business dispute lawsuits often result in a monetary damages award for the prevailing party. Depending on the facts of a case, this award can sometimes be a significant amount of compensation.
The money can then be used to cover any financial losses that the non-violating party suffered, such as loss of profits or future earnings, loss of clients or reputation, and various other losses caused by the violating party's actions.
In addition, a violating party may face criminal consequences as well. This may include having to pay criminal fines or restitution, serving a prison sentence, and/or having a business license suspended or revoked. Thus, a business that is being sued for a dispute or a violation should strongly consider retaining counsel to assist in defending them against a claim.
What Type of Liability Can Businesses Face? What are Some General Liability Disputes in a Business?
In a business setting, “general liability” refers to businesses being held liable for damages caused to visitors who are injured while visiting the premises. Examples of such visitors include customers and vendors. These types of accidents are generally covered by the business' commercial insurance policy, which is also referred to as a Commercial General Liability (“CGL”) policy. Commercial insurance protects businesses from financial losses associated with running their business. It is important to note that these insurance policies do not apply to any harmful actions done by employees while working.
While most businesses carry general liability insurance in order to protect themselves, legal disputes often still arise between the business and visitors who are injured while on the business premises. As such, a lawsuit may be filed if the amount of insurance does not cover the injured party's medical bills, or if the insurance company denies coverage for the accident.
Some of the most common examples in which a business may face general liability include the following:
- Slip and Fall Accidents: This is very likely the most common claim that is raised against businesses, especially in retail stores. Slip and fall is a general term used to refer to a variety of personal injury claims that occur when someone slips or falls on another's property. This would be due to some kind of dangerous condition being present. The dangerous condition could be nearly anything, such as poor lighting or broken handrails to a staircase;
- Accidents Caused by a Dangerous Structure: Structures themselves can sometimes present dangers to visitors, if they break or are displayed in an unsafe manner. Some examples are display shelves, tables, overhanging ledges, and broken furniture. If a property owner's building, property, or structure are dangerous, and someone visiting their property becomes injured, the property owner may be held legally liable. Any dangerous property or building that a property owner has control over may be labeled as a dangerous structure. Additionally, dangerous property may also include things such as hazardous waste spills;
- Stairway Accidents: Poorly maintained stairways and walkways can present various hazards for guests, customers, and visitors. Generally speaking, a business owner needs to maintain all stairways. If any potential dangers are present, the business should put out a warning sign to put visitors on notice of the condition; and/or
- Structures that Have Not Been Properly Repaired: If a structure is kept in disrepair, and it injures another person, the injured party may be able to take legal action against the property owner. “Disrepair” is generally defined as a condition presenting a threat of harm or danger to those who enter the property. Disrepair could happen because of neglect, failure to repair, faulty construction or decay/dilapidation of the structure. Even though it would generally be considered safe otherwise, the business will be held liable if the structure injures a third party. Some common examples of this are rotting wood, broken glass and unstable structures.
What If Business Owners Have a Commercial Lease?
Landlords of commercial units will often require businesses to carry a CGL policy. However, this does not mean that the business owner is fully responsible for all care and maintenance of the unit. While these terms can vary greatly depending on the content of the lease, if there is a major problem and it causes injury to a visitor, it is possible for the landlord to be held responsible instead of the business owner.
An example of this would be if a pipe burst in the building in the unit or a nearby unit, and the flooding caused water to pool around the entrance of the store. A visitor slips and falls, and then becomes badly injured. Most likely, both the landlord and the business owner would hold some level of responsibility in such circumstances. The business owner may not have had access to shut off the water. Or, they tried to control the amount of flooding and kept the area as clear as possible, and made every good faith attempt possible to contact the landlord. In such circumstances, the business owner acted responsibly and may not be held liable for resulting injuries.
However, the business owner could have also closed the store for the day in order to avoid injuries. While they would have lost profit by doing so, they could have then held the landlord liable if the landlord refuses to repair. If the landlord is avoiding the issue or completely refuses to fix the situation, and their delay was one of the causes for this disaster, they could also be held liable.
Although an example such as this sounds a bit contrived, things like flooding can happen, and often people and property can be badly damaged as a result. It is important to know that in situations such as these, business owners that are facing a lawsuit for injuries in their store need not always accept the blame. Of course, this would greatly be dependent upon the circumstances.
What if the Insurance Company Denies Coverage?
As was just discussed, a business may find itself in a situation in which the insurance company declines to pay any money for an accident that happens at a business. This will generally occur if the insurance carrier determines that the business was directly liable for the injuries caused, or acted with gross negligence in some way. Additionally, the business and insurance company may disagree about what types of losses are covered under the contract covering the insurance policy.
In nearly all cases, there will be a written contract which governs the insurance terms. Should a dispute arise, the courts will most commonly review the terms contained within the contract in order to determine the extent of the coverage. This will also determine the rights of each party involved. It is not uncommon that the written contract may not be clear, or that the parties may be attempting to rely on oral agreements. In such circumstances, the court may intervene in order to provide a suggested course of action.
This may include issuing a damages award if a breach is found, or an order which requires the parties to rewrite or redo part of the contract. As always, this will depend on the details of each agreement, as well as state and local laws on the subject.
Do I Need an Attorney for General Liability Business Disputes?
If you are being sued by a visitor who has been injured on your premises, your insurance carrier will most likely maintain in-house or other retained attorneys to deal with the matter. However, it is imperative that you make sure that this is part of your contract before choosing a carrier.
In order to help resolve a dispute about insurance coverage, you should consult with a local business attorney. An experienced and local business attorney will be able to analyze the contract which covers the insurance policy, and offer their opinions about what types of claims are covered under the policy. A local attorney would be best suited for the task of helping you understand local business laws and how they may affect your case. Additionally, an attorney can also represent you in court as needed.
Call our office today at 212-994-7777 or complete the convenient online contact form to set up a consultation.