Paul Horton: Business Litigation

Business torts (also known as economic torts) are wrongful acts that cause financial harm. They include misconduct such as fraud, unfair competition, breach of fiduciary duty, and interference with a business relationship.

Businesses that suffer financial losses due to another’s misconduct may be able to bring a business tort claim and recover damages. The losses need not have occurred in the past. In many business tort cases, damages are sought for harm that may occur in the future, such as lost business opportunities. Losses can also extend beyond tangible assets and include harm to intangible assets such as reputation and relationships. Because losses can be so great, you need a Business Litigation Lawyer on your side, to help you along the way, should you decide a lawsuit is necessary.

Because business torts are often complex—involving multiple parties, numerous legal issues, and a comprehensive reckoning of losses— it is important to hire a law firm with experience prosecuting sophisticated business tort lawsuits.

The Business Trial Group specializes in complex commercial litigation on a contingency-fee basis. You will never pay up-front hourly attorney fees, and you will pay nothing unless and until we are successful. Our pricing structure allows business, regardless of their size or financial strength, to achieve justice—even against much wealthier opponents.

COMMON BUSINESS LITIGATION

Our attorneys regularly represent clients with a wide variety of business tort matters that include:

FRAUD

Business fraud involves one party knowingly making false statements to, or intentionally omitting information from, another party during the course of a business transaction. For fraud to occur, the victim must have relied on the false statement or omission to make a decision that is relevant to the transaction.

Deals induced through fraud can potentially be voided and, if the fraud victim loses money, the money may be recoverable through legal action.

NEGLIGENT MISREPRESENTATION

Negligent misrepresentation is a type of fraud that deals with unintentional false statements or claims. To prove fraud, the plaintiff must generally show that the defendant knew their statement was false or misleading. In a misrepresentation case, however, it’s not necessary to show bad-faith intention. The misrepresented claim can arise from ignorance or negligence.

If a party is induced to enter into a transaction or a contract based on misrepresentation, the transaction or contract may be voidable, and the misled party may also be entitled to damages.

BREACH OF FIDUCIARY DUTY

A fiduciary duty is a duty of care owed by one party (“the fiduciary”) to another (the “beneficiary”). The duty obliges the fiduciary to act in the beneficiary’s best interests.

Fiduciary duties commonly appear within the framework of contracts, trusts and estates, securities and investments, and shareholder and partnership arrangements. For example, estate administrators owe heirs a fiduciary duty, and brokers may owe investment clients a fiduciary duty.

When a fiduciary does not act in the beneficiary’s best interests and the beneficiary suffers monetary loses as a result, he or she may be entitled to recover damages.

CIVIL THEFT

If a business is the victim of theft, criminal charges alone may be insufficient, because a criminal penalty (e.g. imprisonment) may not help recoup the theft’s costs. Handling business theft as a civil manner, however, can provide financial restitution.

For example, if an employee steals a trade secret from a company, the company may seek civil theft charges in order to recover lost profits and royalties.

Other situations that may constitute civil theft include misappropriation of shareholder investments, nonpayment, and fraud. Victims of civil theft may be able to recover triple the amount of their damages, as well as their attorneys’ fees.

CONVERSION

Conversion is similar to civil theft, but it does not require the intent to permanently deprive the rightful owner of their property. Conversion is defined as an act of dominion wrongfully asserted over another’s property inconsistent with his ownership therein.

In earlier times, only tangible property could be converted, but modern courts accept conversion cases arising from tangible property as well as intangible property (including investments and intellectual property).

CONSPIRACY

Civil conspiracy occurs when two or more parties agree to act together with the purpose of committing an unlawful act that economically harms another party.

Typically, conspiracy occurs in combination with a separate tort, such as fraud. For example, two or more companies may engage in a price-fixing scheme in order to drive a competitor out of business, or a group of majority shareholders may collude to force out a minority shareholder.

In a civil conspiracy, each conspirator is liable for the torts of other co-conspirators.

DEFAMATION

Businesses rely on their reputation, honesty, and integrity. If these are harmed through a false and damaging statement, the business can sue the party that made the statement to recover financial losses.

Defamation can be spoken statements or published statements. False and damaging statements made about a business’ products or services (including fake product reviews) are known as “trade libel.” Commercial disparagement, for example, describes derogatory statements made about a business that are intended to discourage others from dealing with the business.

A defamation claim is only actionable if the statements in question are false. True statements, although they can damage a business, are protected speech.

TORTIOUS INTERFERENCE

Tortious interference occurs when one party unlawfully interferes with another party’s contract or business relationship. To prove tortious interference, the plaintiff must show that the defendant knew about a valid contract/business relationship between two parties, intended to disrupt the parties’ relationship, and by disrupting the relationship caused the plaintiff to suffer financial losses.

Suppose that Business A has an exclusive service contract with Business B. Business C falsely informs B that A charges too much for their services, causing B to cancel the deal. A, which suffered profit losses from the canceled contract, may have a claim for tortious interference against C.

In addition to business relationships, tortious interference can arise in employment and trust & estate contexts.

Free Consultation with a Business Litigation Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.