Investor Claims That Business Partners Intentionally Caused Business Venture to Fail
When business projects fall apart, it is easy for each partner to blame the others’ mistakes for what went wrong. While many businesses end with hard feelings among the partners, most people do not have grounds to sue their former business partners simply because the project did not succeed. If you and a partner opened up a live music venue together, but it closed during the COVID-19 pandemic, this is clearly not your partner’s fault. If your restaurant closed, it probably is not entirely because your partner thought customers would be willing to pay more for vegan sausages than you thought was reasonable, and the vegan sausages did not, in fact, sell well. If your business partner lied to you about the company’s finances and used company funds for purposes unrelated to business activities, though, this counts as a breach of fiduciary duty, among others, and you have the right to sue your former partner to recover damages for the financial losses you incurred. If you are considering suing a former business partner whose dishonesty caused the business to fail, contact a Los Angeles business litigation lawyer.
Defendants Allegedly Squandered Plaintiff’s Investment While Planning to File for Bankruptcy
The plaintiff in this lawsuit invested in a business venture using money she inherited from her late husband, a Hollywood star, but she was by no means naïve about business. She had successfully operated a flower shop before she met her famous husband. In 2014, she formed a company with the two defendants; the purpose of the company was to open a concert venue that used augmented reality technology to add a unique spin on live performances.
The plaintiff alleges that, throughout the business relationship, the defendants were dishonest with her. After the plaintiff made the initial investment, one of the defendants asked her for more money to use as startup capital; the plaintiff provided the money, but the defendant allegedly used it for his own personal purchases. She claims that they falsified the company’s financial records and showed her forged documents when she demanded more transparency. She also claims that the defendants depleted the company’s assets on purpose, as they had planned to file for chapter 11 bankruptcy on behalf of the company without the plaintiff’s knowledge. By the time the company dissolved, the plaintiff had incurred nearly $4 million in financial losses. In 2018, the plaintiff filed a lawsuit against the defendants in Los Angeles County court, alleging fraud, breach of contract, and breach of fiduciary duty. As of the summer of 2023, the case was scheduled to go to trial.
Speak With a Los Angeles Business Dispute Lawyer
A Los Angeles business litigation lawyer can help you recover damages for your financial losses if you discovered that your business partners were not being honest with you about their intentions or about the company’s finances. Contact Obagi Law Group, P.C. in Los Angeles, California to discuss your situation or call 424-284-2401.