Shop Products
Houzz Logo Print
polly929

Need legal advice, in regards to my late father's business. Help!

polly929
9 years ago

Long story. Please bear with me.

In 2010 my dad informed me he was buying a bar with a friend. I had a lot of reservations with this because he was retired, 64 years old, not a business man and I personally thought he had a drinking problem. We had a big disagreement about it, but my brother was getting married, and for family's sake, we agreed to disagree.

The bar opened in 10/2010. I did not attend the opening, as I did not approve of this business.

In late 2011, my father confided in me he felt he was conned. He fronted his business partner $40k to open the bar, obtain the liquor license and secure the rent for the business. At the time he didn't tell me details because he knew I'd say, I told you so.

In 1/2012 my grandfather fell ill at age 90. My dad cared for him and spent almost every day with him until he passed the end if April 2012. At this point in 1/2012 his business partner and him had a falling out, she would not share any details in regards to the business and her boyfriend threatened my dad that he'd break his legs if he came near her. My father meets with a detective and posts it to his Facebook.
Soon after my grandfather passed, my father learns his fathers bank account was wiped clean of 200k by my grandfathers trusted care taker. My father then puts the bar on the back burner and hires an attorney to sue the caretaker and press charges. This was in June 2012.
July 24th 2012, we cannot get in touch with my father. My uncle breaks into his house and we find him dead from an apparent heart attack. We are devastated.
My parents were divorced and my father did not have a will. I hire an attorney (expensive) and petition the surrogate court to appoint me administrator of my dads estate. In September 2012 I am granted administrator. But hurricane Sandy happens and devastates my fathers home, neighborhood and I don't hear from my attorney till late October. I am left with a huge mess cleaning up my dads house after a tree fell on it and took down the fence, roof and pool. He lived on the water and the neighborhood is destroyed.
In January 2013 my attorney attempts to contact his business partner. The business was incorporated with my dad owning 50% of the shares. His partner tells my attorney via telephone she bought out his shares for 25k before he died. She then does not respond to any further attempts to contact her. My attorney then requests another hefty retainer to fight her in court. I decline because I cannot find any proof in the paperwork in my dads house of his investment in the business and feel it may cost me more to fight her in court than his initial investment. My father died with $300 in his checking account, and had no liquid assets.

During the last 2 years, I found out the partner renewed the liquor license on the contingency she file for a corporate change. My fathers name was on the liquor license. She attempted to change it without my signature and was denied. I knew the license would expire in 10/2014. And I knew she needed my signature to renew, but since she declined to settle this back in 2012, I decided to just wait and see. My dad owned a home but had a hefty mortgage. During this time, I cleaned out the home, repaired it to the best of my ability and sold it. I split the measly profit with my 3 siblings and held back a little money in his estate account in case this issue of the bar ever came back.

Well today, I received a letter that his business partner wants me to sign over his shares or take over the debt the bar has accumulated since being in business. Her attorney says my father is liable for $150k of debt. I spoke with my attorney but they want another 8k retainer and will bill $400/hr to work on the case.

I am livid. I have now looked through my dads papers and have proof he withdrew 40k from his retirement account to start this business. He was pushed out soon after. So essentially she convinced him to go into business and he fronted the $ to start the business because she didn't have it but once the business was up and running she pushed him out and then he died. Then when I tried to settle it she lied to my attorney, avoided phone calls all while she continued on with the business and has lived off of it. All while I've seen no benefit from it. Now that she can't renew her liquor license, I receive a threatening letter that I owe $150k to the business? What?

So what I need to know is, am I liable for this debt? After selling my fathers home, my siblings and I each received 25k. Can she come after us as individuals for that money because the business is in debt? Shouldn't she have to buy out my fathers shares of the business in order to keep the business going? How is this legal? Please help!!

Comments (20)

  • 4boys2
    9 years ago
    last modified: 9 years ago

    The debt would only encompass the 2010-2012 years.
    She would have had to petitioned the estate within months of death.
    Google her attorneys name and find out what kind of guy he is.
    She'll have to open her books and turn over all sales and tax paperwork.
    If you feel that the business is not doing well...Please note that your fathers shares may not be worth the 40,000 he invested.

    I think that a probate attorney can ease you mind about her coming after any moneys form the 2yo estate.

    PLEASE PLEASE NOTE : This is not legal advice.
    Just some thoughts to put out there.

    This post was edited by forboystoo on Fri, Oct 24, 14 at 22:31

  • neetsiepie
    9 years ago
    last modified: 9 years ago

    Incorporating a business leaves no personal liability, generally. So if your dad owned 50% of the shares, it's like any person who owns stock-they don't retain liability in the business, but they can earn $ off their investment, no guarantees on return.

    I'd tell her to take a flying leap. She shouldn't need your signature to renew the license-if she can show that your father died, the State should accept the death certificate and release the renewal to her alone-also, why would your Dad need to sign the renewal if he's a share holder? Is he also listed as an officer of the Corporation? Upon his death the Corporations division should have noted that and if he was an officer, someone else would have been listed.

    The whole thing sounds fishy to me-do you know that it was actually incorporated or is the partner telling you a whopper? I think I'd try to find that out first. Check with your state's Secretary of State-that is where the Corporations division should be housed. And try a different attorney. If your Dad's estate is settled, she may be SOL-I can't imagine you and your sibs are still liable for any business debts if the estate was settled.

    Definitely get different legal advice from a different attorney-maybe even check with your state's estates division. Good luck!

  • PRO
    Whitelacey
    9 years ago
    last modified: 9 years ago

    Just a thought-most states have legal aid who will care for an elderly person's affairs for no cost. I believe it is funded by the United Appeal.

    I used them to figure out my parent's estate and it was a god-send. In Ohio, they are called Pro Seniors.

    One thing I did learn from them-you are not responsible for anyone's debts except your own. Someone may try to come after the estate, but you, personally, are not responsible.

    I'm not an attorney; this is just my experience.

    Linda

  • justgotabme
    9 years ago
    last modified: 9 years ago

    I'm so sorry for the loss of your Dad and now having to deal with all this too.
    I'm not an attorney either, but it sounds like this woman that once scammed your Dad, is now trying to scam you.

  • mitchdesj
    9 years ago
    last modified: 9 years ago

    I have no advice but I sincerely wish you good luck in settling this, it must be so stressful to be in the midst of this situation.

  • Annie Deighnaugh
    9 years ago
    last modified: 9 years ago

    So sorry to hear about your dad.

    A good attorney well versed in both estate and corporate law should be able to help you here...maybe one that isn't so expensive.... I am certainly no attorney so all of my thoughts below are fundamentally BS...so take it for what it's worth.

    Was his share of the corporation ever probated as part of his estate? If so, it would've needed to be evaluated at that time. If not, then I'm thinking it still resides with his estate. I think what counts is the value of the corporation upon his death, not the amount of money he put into it in the beginning as he agreed to 50% ownership but frankly, I don't really know...and the point of incorporating is to protect the owner from personal liability, so I don't see how this debt, if it exists, can become your problem.

    I suppose you can always ask her to buy you out of your half of the corporation...maybe for the $40k he put into it...

    I suspect your alternative is to walk away...this gal is going to have to open her books and demonstrate lots of stuff she'd probably never want to see light of day if she pursues this. Regardless, don't take her word for it for how much debt the business is in...she has to have credible proof.

    I'm also not sure of this liquor license thing...in our state, only one person's name has to be on the license...I'm wondering if there's another reason, like something in her past, that would prevent her from getting one in her own name...wouldn't be surprising given your assessment of her character...

  • polly929
    Original Author
    9 years ago
    last modified: 9 years ago

    Pesky the reason she needs my signature is because my father's name is on the liquor license. She was advised by the NYS liquor authority this would need to be changed in 1/2013. I called the bureau myself to find out how she renewed with him being deceased and this is what they told me. She attempted to fill out the paperwork for a corporate change and it was denied because she needs me to sign off as administratrix. She never contacted me, I found this all out myself and knew I'd have the upper hand when she tried to renew. What I wasn't prepared for was being threatened with legal action that if I don't sign over my shares his estate will owe $150k to the corporation. I have the tax forms for 2011 on the business and there was no such debt back then when my dad was actively involved. I am hoping someone who is an attorney can advise me because I really do not want to pay my estate attorney another 8 thousand. The only thing he did was petition the surrogate court for me, I have had to do everything else myself and have spent hours and hours tracking things down, getting bank statements, speaking to people in the offices of the NYS liquor authority, selling his house and cars. When I spoke with my attorney, he seems to think she can sue me and my siblings for that money from the sale of my fathers home. It was $100k split 4 ways and the rest has gone towards paying back ourselves for the money we paid for the attorney and the funeral. I'm really hoping this is not true. At the same time I refuse to sign over his shares for nothing. He invested a significant amount of his retirement savings to start it (I have proof) and saw no benefit. I would like to recoup that money and if not I'd rather see her lose the liquor license altogether. I also spoke with the paralegal from the attorneys office that is handling the licensure, she told me his partner told them, my father abandoned the business and never gave money to start it. This is not true because I have the withdrawal statements from his IRA for 3 separate withdrawals and I'm soon to get my hands on the bank statements to the account he transferred the money to. I will then have all of his cancelled checks in hand. From his online banking I found a printout in his house of it but was not able to view the checks.
    I just cannot believe how low people will sink to get their way. This woman lied to my father, lied to the NYS liquor authority, lied to my attorney, and lied to another attorney handling the licensure and I'm sure she's lying to her own attorney as well. At this point every one has a different story from her. I may have to bite the bullet and pay my attorney more money and go to court, I really wanted to avoid this but I received a letter yesterday telling me if I failed to respond I would be brought to Supreme Court. Is that even true?

  • kswl2
    9 years ago
    last modified: 9 years ago

    Polly, no legal advice here but I do want you to know that in my experience people will do anything for money, and that includes business partners and trusted attorneys with good reputations. I'm so sorry you are in this situation!

  • badgergal
    9 years ago
    last modified: 9 years ago

    Who was the letter from that threatened you with Supreme Court action?
    State Supreme Courts (and the U.S. Supreme Court) rarely consider cases that are not first heard in lower courts, usually a district court and then appellate courts. Parties dissatisfied with the decision of the trial court may take their cases to an intermediate court of appeals and after it is ruled on in the appeals court, if still dissatisfied they could ask for a hearing in Supreme Court.

    The US Supreme Court hears three types of cases:
    2/3 are cases appealed from lower federal courts
    1/3 are cases appealed from state supreme courts
    Rarely, they hear cases that have not been previously heard by a lower court, such as between one state's government and another.

    I highly doubt that your situation would involve going directly to your State Supreme Court. And most certainly it would not go to the US Supreme Court.

    In my opionion, threatening you with Supreme Court action is just blowing smoke.

    Also, needing your fathers signature to get a liquor license leads me to believe there is some reason why the partner could not get the license in her own name. You should be able to check with your community or state liquor lisence department to find out why she could not get a lisence in her own name. Sounds like she was just using your dad to get the license (and of course his money)

    Good luck in getting this resolved

    This post was edited by badgergal on Sat, Oct 25, 14 at 16:56

  • 4boys2
    9 years ago
    last modified: 9 years ago

    "When I spoke with my attorney, he seems to think she can sue me and my siblings for that money from the sale of my fathers home"
    Get another attorney.........
    >>>It's not like he's a grocery checker
    and has just told you that he "thinks" pickles are on isle 3.

    If her attorney thought that there was a case for 150k debt -
    he would have placed a lien on your property by now.

  • runninginplace
    9 years ago
    last modified: 9 years ago

    You have to talk to an attorney as soon as possible; this isn't something to settle in an internet forum. Really, if you're being threatened with a potential 150K probate/business/legal court case what a bunch of us tell you online is absolutely useless; you need to pay a real live lawyer for some solid guidance. As the saying goes, nobody wants to deal with lawyers until you need a lawyer. You need one now.

    Whatever you have paid out already is a sunk cost, in other words it's done, spent and has no relevance to what you may need to do at this time for this problem.

    Good luck.
    Ann

  • gsciencechick
    9 years ago
    last modified: 9 years ago

    You need an attorney who understands your local and state laws. NYS has very specific laws; that's why they don't allow reciprocity with other state bar exams and every attorney needs to take the bar to practice there.

    I once saw on a show that a liquor license was in the other partner's name because the first partner had a DUI or other felony and was ineligible for it. There is a good reason this person could not get a liquor license on his/her own.

    Badger is correct about the Supreme Court. You have to go through local/district first, then appellate. Who is threatening you with that? If it's an attorney, I'd consider reporting him/her to the local bar association.

  • missingtheobvious
    9 years ago
    last modified: 9 years ago

    I thought perhaps the letter might have said "Superior Court" rather than "Supreme Court", but apparently New York State has its own "Supreme Court":

    Supreme Court

    Civil & Criminal Terms, New York City

    Supreme Court Civil Term, 60 Centre Street

    The Supreme Court is the trial court of unlimited original jurisdiction; but it generally hears cases that are outside the jurisdiction of other trial courts of more limited jurisdiction. In New York City, the Court exercises civil jurisdiction and jurisdiction over felony charges.

    http://courts.state.ny.us/courts/nyc/supreme/index.shtml

  • sushipup1
    9 years ago
    last modified: 9 years ago

    "Just a thought-most states have legal aid who will care for an elderly person's affairs for no cost. I believe it is funded by the United Appeal.

    "I used them to figure out my parent's estate and it was a god-send. In Ohio, they are called Pro Seniors."

    Just a clarification. I think you are talking about Legal Services, funded by the federal government (in part, most local office have their own fund-raising to augment) thru the Older Americans Act. It is a national program, called by many different names in different locations, and a wonderful resource for seniors.

    But the time to consult with these people would be when you father was still alive. Far as I know, they can't represent an estate, only living people. But they could have been helpful when he first got pulled into this scam.

    I agree with the others, You have talked to lousy lawyers, Find a new one.

    Here is a link that might be useful: Legal sevcies thru Old Americans Act

  • beaglesdoitbetter1
    9 years ago
    last modified: 9 years ago

    missingtheobvious is correct. In New York, the supreme court is the court of general jurisdiction that hears cases. It is the opposite of most states and the opposite of the federal court system.

    I have a law degree but don't practice law and am not well versed in estate law. THIS IS NOT LEGAL ADVICE.

    However, as far as I know, she can't come after you personally. She can only make a claim on the estate. I believe if the estate is probated already and sufficient time has passed without her making a claim on the estate, she is out of luck.

    See e.g. http://codes.lp.findlaw.com/nycode/SCP/18
    § 1802. Effect of failure to present claim
    If any claim is not presented on or before the day fixed in the notice published pursuant to the preceding section or if no notice is so published, within 7 months from the date of issue of letters, the fiduciary shall not be chargeable for any assets or moneys that he may have paid in good faith in satisfaction of any lawful claims or of any legacies or distributions to the legatees or distributees of the
    decedent before such claim was presented. Such 7 month period shall begin on the date letters were first issued to any fiduciary, including a temporary administrator or a preliminary executor, and shall not be interrupted by any subsequent issue of letters, except that the time
    during which there is no fiduciary in office shall not be counted as part of such period.

    and § 1803:
    Every claim against the estate of a decedent other than claims for expenses of administration and claims of the United States or the state of New York must be in writing, contain a statement of the facts upon which it is based and the amount thereof. In addition the fiduciary may require the claimant to present proof by affidavit that the amount of the claim is justly due, that all payments thereon, if any, have been credited, that the claimant knows of no offsets and no evidence of indebtedness and holds no security, except as specifically described in the affidavit.

  • Oakley
    9 years ago
    last modified: 9 years ago

    You need another attorney asap. No way no how can your father's estate be touched from the bar because it was incorporated. That's why people incorporate!

    I am so sorry for what you're going through. Find a reputable attorney who is familiar with these types of cases.

    Most of them give you free consultation on your first visit.

    Good luck!

  • cole_robbie
    9 years ago
    last modified: 9 years ago

    Like beaglesdoitbetter, I also have a law degree, but do not practice. And of course this is not legal advice.

    First of all, not that it matters now, but for every partnership there should be a written partnership agreement that spells out each partner's rights and duties. Unfortunately, I doubt that one existed.

    I think of legal battles like a fistfight. Hit every spot you can, until you find one that hurts. File a courthouse lien against the bar's real estate. Turn the bar partner into the state attorney general for elder abuse. If the state won't prosecute, sue her for $40k for elder abuse - financial exploitation of the elderly.

    You seem plenty intelligent enough to me to file your own lawsuits. I have met very few licensed attorneys who impress me. All the ones I have met seem like they just want as much money as possible for as little work as possible.

  • polly929
    Original Author
    9 years ago
    last modified: 9 years ago

    Hi all. Just an update: I spoke with 2 other attorneys who agreed with how my current attorney has handled it. They agreed with me by not pursuing her in court. I spoke with her attorney myself, apparently she has not showed her attorney any paperwork and according to this attorney she had not filed income taxes on the bar for the past 2 years. The license expires on Friday. I will see what happens. I went back and read the 2011 tax returns that showed the business in debt for $1500. Nowhere near the $150,000 she claims. The business partner has lied and told so many stories she can't keep them straight anymore. Oh and apparently there is an investigation going on with the liquor authority. I will update everyone again when the story plays out. Thank you all for your comments.

  • camlan
    9 years ago
    last modified: 9 years ago

    You know, that liquor license might be invalid any way. I don't know what state you are in, but I checked the regulations for several states and they all said that if the licensee dies, someone must be appointed to hold the license in their stead until the estate has gone through probate. After that, a new licensee is needed, and they have to apply for a new license.

    Which is to say, I think the owner knows they have broken the law and is trying anyway they can to fix the situation. That's why they are pressuring you--a last-ditch effort to correct some of the mistakes they have made and which will get them in big trouble.

    I'd just hold tight and let this person try to squirm her way out of the mess she has created for herself.

  • justgotabme
    9 years ago
    last modified: 9 years ago

    Thanks for the update Polly. Still praying all goes well for you.

Sponsored
Bull Run Kitchen and Bath
Average rating: 4.9 out of 5 stars271 Reviews
Virginia's Top Rated Kitchen & Bath Renovation Firm I Best of Houzz