Expert: Timmy Chou - 8/8/2009

Question
QUESTION: I have a client that owes my company approximately $300,000. That client (company) have 2 partners, and both agreed to post date checks for me about half year ago, and expects money to come about September 2009. Their money arrived early (yesterday), and partner A told me to deposit the post dated checks since money is now available. Therefore I deposited the checks. Immediately today I receive a call from partner A telling me that his partner B have wired all the money into his personal account (partner B's personal account) without partner A's approval or notice.  Now I am expecting my checks to bounce, although the bank have not notify me yet. What can I do???  And what can the partner A do???  PLEASE HELP.  We've been struggling to survive and really need this debt to be paid back to us for us to continue.  We are a contractor, and these money are needed to pay Sub contractors.

ANSWER: Thank you for your question!

Mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

Note that this issue may have legal factors and you may wish to consult an attorney as I cannot give you legal advice.

First let me urge you to observe all lien laws in your State, especially notice deadlines, in order to preserve your ability to file liens on active projects and protect your rights.

At present you have only the rights any creditor has with any debtor.  You do not have the standing or ability to team up with Partner A against Partner B.  If Partner B has the authority to write checks, no one will get involved unless Partner A is willing to do something.

You would only have the usual collection or lien rights remedies available to you.  If you have subs that remain unpaid, you could encourage them to file liens as well.  Only increased pressure is likely to get any results at this point.  


These are some ideas.  Feel free to follow up with additional questions.


For your general information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

   Confidential, no public record
   Limited exchange of documentation, information
   Quick, don't have to wait for a court date
   Arbitrators have expertise in the subject matter and are trained in conflict resolution
   Cheaper than litigation
   Preserves business relationships

Negatives of Arbitration

   It's a compromise, no 0 winner
   Complex arbitration can be costly
   If not satisfied, may litigate the arbitration procedure
   Poor results with an unskilled arbitrator
   Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

   Neutral mediator can objectively suggest alternatives not considered before
   Parties are directly engaged in negotiating the settlement
   Can be quicker than litigation
   Less costly than litigation
   Preserves business relationships
   85 of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

   may not reach a binding decision
   unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

   a clear winner and loser
   uses a prescribed set of procedures
   more predictable outcomes
   is final

Negatives of Litigation:

   waiting for court dates can do more harm
   usually more expensive than mediation and arbitration
   part of the public record


---------- FOLLOW-UP ----------

QUESTION: Thank you but seems like there's not much options right now.  Is there good attorneys that you can recommend?

Answer
You will need someone in your city to assist you, not a recommendation from me.  The BAR Association in most cities has a program where you can meet with a lawyer for free and get some advice.  Call them.  It would seem though that you have a very straight-up construction collection case that will either be prosecuted by filing liens or through usual bad debt collection methods.  

Call your subs or construction colleagues for tips on good lawyers.

Good Luck