Usually, avoiding litigation saves your business time and money. In some situations, however, a business finds that it needs to take someone to court to protect itself. A damaged reputation could cost far more than the legal costs.
Proof of damage to your business
California business litigation law seeks proof that the defendant damaged your business. This could be either directly or indirectly. The law recognizes damage to your reputation and business relationships as well as financial losses. Harm to your business’s reputation must have a reasonable potential to cause financial loss. Other reasons you could raise a business lawsuit are breach of contract, fraud, misappropriation of trade secrets, Uniform Commercial Code issues, shareholder disputes, securities disputes and commercial real estate conflict.
Statute of limitations
The statute of limitations for breach of oral contract in California is two years. Fraud-related conflict has a statute of limitations of three years. For a breach of a written contract, you have up to four years to file a lawsuit.
File a complaint
You may file a complaint at the trial court in your business’s county, the defendant’s county or in the county where you had the dispute. If your case’s value is under $7,500, then it will go through small claims court. Cases with a value above $7,500 go through California Superior Court.
Serve a copy of the complaint
California gives you up to 60 days to serve a copy of the complaint to the defendant. You can’t, however, serve the papers directly. California requires that you send the papers through a neutral third party.
To file a business lawsuit, you must prove that the other party caused or will cause financial loss to your business. You also have to serve a copy of the complaint that you file and make sure that you file the complaint within the statute of limitations for the specific issue that you have.