What to Expect During the Business Litigation Process: A Guide for Owners
When a business dispute arises, the thought of a lawsuit can be a stressful prospect for any business owner. Seeking legal help early is the best way to protect what you have built and to find a clear path forward.
At North Carolina Estate Planning & Fiduciary Law, we bring a steady hand to these situations. With substantial experience helping business owners through challenging disagreements, we offer clear, direct guidance tailored to your company's needs. We strive to protect your interests and help you move forward effectively. If your business is located in Charlotte, North Carolina, or the surrounding communities, you can depend on our team for support when you need it most.
The First Steps: Filing a Complaint and Receiving a Summons
The business litigation process formally begins when one party, the plaintiff, files a "complaint" with the court. This legal document outlines the plaintiff's allegations against the defendant. It explains the factual background of the dispute, the legal basis for the claims, and what the plaintiff is seeking, such as monetary damages or a court order to perform a specific action.
If you are the one initiating the lawsuit, we will work with you to draft a complaint that clearly and strongly presents your case. We will gather all the necessary facts, identify the relevant laws, and formulate a compelling argument to submit to the court.
If your business is served with a complaint and a "summons," this means you are the defendant. The summons is an official notice from the court informing you that a lawsuit has been filed against you and that you have a specific amount of time to respond. It is very important to act quickly.
Ignoring a summons can lead to a default judgment, where the court rules in favor of the plaintiff simply because you did not respond. Once you receive these documents, the best course of action is to contact a business litigation attorney immediately to discuss your defense.
The Discovery Phase: Gathering Information
After the initial complaint and response, the litigation process moves into the discovery phase. This is often the longest part of a lawsuit. During discovery, both sides have the opportunity to request and obtain evidence from each other. The goal is to enable each party to understand the strengths and weaknesses of the other's case, which facilitates preparation for trial or negotiation of a settlement.
There are several tools used during discovery:
Interrogatories: These are written questions that one party sends to the other, which must be answered in writing under oath. They are often used to get basic factual information about the case.
Requests for production of documents: Parties can request relevant documents from each other. This can include contracts, emails, financial records, internal memos, and any other paperwork related to the dispute.
Depositions: A deposition is an out-of-court testimony given under oath. Attorneys for both sides are present to ask questions of a witness or one of the parties. A court reporter transcribes everything that is said, creating a written record that can be used later in court.
Requests for admission: These are written statements that one party asks the other to admit or deny. The purpose is to narrow down the issues that are actually in dispute, which can make the trial process more efficient.
The discovery phase requires careful management of information and strict adherence to deadlines. We help our clients collect and organize responsive documents, prepare for depositions, and craft strategic questions to uncover the key facts of the case.
Understanding North Carolina Business Litigation Laws
In North Carolina, business disputes are primarily governed by the state’s statutes and case law established by the North Carolina Business Court. This specialized court was created to handle complex business and corporate law cases. Having judges with a background in business matters helps provide more consistent and predictable rulings for commercial disputes.
One key area is breach of contract. Under North Carolina law, to win a breach of contract claim, a plaintiff must prove: 1) the existence of a valid contract; 2) that the plaintiff performed its obligations under the contract; 3) that the defendant failed to perform its obligations; and 4) that the plaintiff suffered damages as a result. The state also recognizes the "duty of good faith and fair dealing" in contracts, meaning parties cannot act in a way that undermines the spirit of the agreement.
For disputes between business partners or shareholders, North Carolina has specific statutes covering corporate governance. These laws specify the rights and responsibilities of directors, officers, and shareholders.
Disputes can involve claims of a breach of fiduciary duty, where a person in a position of trust is alleged to have acted against the best interests of the company or its owners. North Carolina laws provide remedies for such situations, including the potential dissolution of the business if conflicts cannot be resolved.
Motions, Mediation, and Settlement Negotiations
Throughout the litigation process, either party can file motions with the court. A motion is a formal request for the court to take a specific action. For example, a "motion to dismiss" requests that the court dismiss the case due to a legal deficiency in the complaint. A "motion for summary judgment" asks the court to rule in one party's favor without a full trial, arguing that the undisputed facts of the case are so clear that one side is entitled to win as a matter of law.
Many business disputes are resolved before they ever reach a trial. Courts in North Carolina often require parties to attempt mediation. In mediation, a neutral third party, the mediator, helps the opposing sides communicate and try to reach a mutually agreeable settlement. The mediator does not make a decision; instead, they facilitate a conversation aimed at finding common ground.
Settlement negotiations can happen at any point during the litigation process, even on the courthouse steps just before trial begins. A settlement is a voluntary agreement that resolves the dispute. It usually involves a payment of money, but can also include other terms. Reaching a settlement can save both parties the time, expense, and uncertainty of a trial. We will advise you on the merits of any settlement offer and negotiate firmly on your behalf.
Going to Trial
If a settlement cannot be reached, the case will proceed to trial. At trial, both sides will present their evidence and arguments to a judge or a jury. The process includes opening statements, witness testimony, cross-examination, and closing arguments.
Opening statements: Each attorney provides an overview of their case and what they intend to prove.
Presentation of evidence: The plaintiff presents their case first, calling witnesses and submitting documents into evidence. The defendant’s attorney has the opportunity to cross-examine the plaintiff’s witnesses. Then, the defendant presents their case.
Closing arguments: The attorneys summarize their arguments and try to persuade the judge or jury to rule in their favor.
Verdict and judgment: After hearing all the evidence and arguments, the jury (or judge, in a bench trial) will deliberate and render a verdict. The court then issues a final judgment, which is the official decision in the case.
If one party is unhappy with the outcome, they may have the right to appeal the decision to a higher court. An appeal requests that the appellate court review the trial court's proceedings for errors of law.
Business Litigation Attorneys in Charlotte, North Carolina
At North Carolina Estate Planning & Fiduciary Law, we assist business owners and other individuals in dealing with business litigation and other complex legal challenges. Our attorneys have the knowledge and experience necessary to guide you through the planning process for a merger or acquisition, making sure that everything is handled in accordance with state law and your specific goals. Located in Charlotte, North Carolina, our firm focuses on helping local businesses thrive. Call today to schedule a consultation.