Articles Posted in COMMERCIAL LITIGATION

As an Atlanta, Georgia commercial dispute attorney, I have know Georgia defamation lawsuits are commonly reported in the media involving movie stars, professional athletes and other celebrities who claim that false statements have been made about them. But defamation lawsuits can also blindside Georgia business owners who may be unaware of how communications made by their employees can be interpreted under the law. Even false statements innocently made by employees about competitors or other third parties put businesses at risk. Statements made verbally in a business meeting or communicated via written documents, such as letters, advertising, press releases and emails, can be a source for damaging lawsuits. As a result, it is imperative that all communications, especially those intended for wide distribution, be checked for fairness and accuracy.

Georgia law outlines the four main elements of a defamation claim. The first is the false statement, which may be spoken (known as “slander”) or written (known as “libel”). Secondly, the statement must be spoken or communicated in writing to a third party. Thirdly, the defendant must be shown to have acted with negligence or, in some cases, malice. Lastly, the law requires that damage to the plaintiff be proven, unless the suit is classified as “per se” defamation. “Per se” defamation is based on false statements that are so egregious that they are automatically presumed to be harmful. Examples under which Georgia law considers a statement to be defamatory “per se” include statements that charge the plaintiff with a crime punishable under the law, or statements intended to damage the office or profession of the plaintiff.

The personnel departments of companies must be extremely careful about defamation concerning former employees. For this reason, it is critical to have an experienced North Georgia Business Lawyer review the policies and procedures concerning employee hiring and termination. The company’s communication policy should be reviewed as well, with the prevention of defamation lawsuits in mind. Additionally, it may be wise to consider insurance coverage in the event that any defamation claims are filed against the company.
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The focus of this Blog Article will be Self-Dealing and Breach of Fiduciary Duties in this scenario. However, it is important to note that that Self-Dealing is just one way a breach of fiduciary duty can occur.

There are numerous situations where breach of fiduciary duties can arise. There are also many types of fiduciary duties, which can arise. Some of the most commonly breached fiduciary duties are as follows:

• Self Dealing


• Misappropriation of Funds


• Neglect of Fiduciary Duty


• Usurping Business Opportunities for Personal Gain


• Abuse of Power


• Shareholder Oppression


• Shareholder Squeeze Out


• Shareholder Freeze Out


• Conversion of Funds


• Failure to Act When Fiduciary Duty Imposes Such A Requirement

There are also a number of relationships that give rise to fiduciary duties. Some are as follows:

• Directors and Officers in Corporations


• Partners in Business


• Real Estate Brokers


• Real Estate Agents


• Stockholders/Shareholders


• Financial Advisors


• Financial Brokers


• Executors of Estates


• Trustees of Trusts


• Administrators of Estates


• Personal Representatives of Estates


• Guardianships of Wards


• Conservatorshops of Wards


• Powers of Attorney


• Health Care Situations

These different types of breaches of fiduciary duties will be addressed throughout this Atlanta Business Lawyer Blog over the course of time. However, for the purpose of this Blog Article, we will concentrate on one of the most frequently breached fiduciary duties, the classic case of “Self Dealing“.

Self-dealing is often occurs between officers and directors of Georgia corporations have a fiduciary duty of care and loyalty to the shareholders of those organizations. As such, under Georgia law they are obligated to act in good faith and in the corporation’s best interests. When officers or directors put their own personal interests above those of the corporation and shareholders (i.e. by using corporate assets for their own benefit), this is considered self-dealing. Issues such as self-dealing are a growing issue and occurrence in corporations. The Atlanta Fiduciary Law Attorneys in my Atlanta, Georgia Business Firm have represented numerous clients who have made with claims concerning self-dealing against the “higher-ups” and/or other “shareholders” in the corporation.

When this type of allegation is brought forward, the plaintiff must provide proof that the officer or director derived personal benefit from the transaction. If this is shown, then the officer or director must defend their actions by demonstrating that the transaction was for the benefit of the Georgia Corporation, and any perceived self-dealing was just happenstance and circumstantial. Even when the director or officer does prove that the action was favorable to the corporation, and ultimately the shareholders, it still may be considered a breach of fiduciary duty.

Self-dealing and other breaches of fiduciary duty can financially destroy a corporation. Thus, it is essential to have an operating agreement that clearly defines the obligations of all members and interested parties to a corporation. An experienced Atlanta, Georgia Fiduciary Law Attorney can put a stop to the self-dealing and adequately assist in imposing remedies in equity and at law upon the self-dealing party. Nevertheless, to dispense with arguments that self-dealing did or did not occur; it is wise to have an Georgia operating agreement that defines the responsibilities among members of the company, both for shareholders, directors and officers, and employees. A comprehensive operating agreement should be part of the beginning and day to day operation of any corporation.
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The majority of the businesses in the United States are close corporations. Georgia close corporations are classified as having a maximum of fifty shareholders, no publicly traded stock and active management by shareholders. Because close corporations usually employ the shareholders, these companies generally have a more relaxed management style. The downside is that this management model puts the minority shareholders in a situation where they quickly can be faced with “squeeze out” or “freeze out” tactics, that typically result in termination of employment with the company.

Often times, income from employment is the most valuable stake that these minority shareholders have as shareholders. Shares held have no value on the open market. That, coupled with the fact that majority shareholders are unlikely to buy the minority’s shares at a fair price, leaves the minority shareholder with little or nothing upon being terminated. Georgia business law statutes provide protection for minority shareholders faced with this situation. Just as in ordinary corporations, all shareholders in close corporations have the right to inspect the documents pertaining to the company, including, but not limited to, bylaws, shareholder meeting minutes, documentation of actions taken outside of meetings and resolutions related to share classification. In the case of wrongdoing, documents discovered during inspection can provide the required evidence to file a lawsuit against the company.

Additionally, Georgia law states that the majority shareholders have a fiduciary duty to the minority, allowing for minority shareholders to sue for dissolution of the close corporation when these duties are not fulfilled. These suits can be filed if the majority shareholders have acted, are acting or are expected to act in an illegal, fraudulent, oppressive or unfair fashion toward the minority. Minority shareholders also can sue for fair valuation of their shares. Whatever the circumstance, it is critical to seek the counsel of an experienced Atlanta, Georgia Business litigation attorney to resolve shareholder complaints. Having a properly drafted operational agreement can prevent these types of disputes from developing, but if conflicts do arise, a qualified lawyer will ensure that all possible legal avenues are pursued to help the minority shareholder receive fair treatment and compensation under Georgia law.
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The Atlanta business lawyers at The Libby Law Firm have noticed that in these tough economic times when everyone is trying to save money, a lot of consumer offers seem to good to pass up. When we complete a purchase, sometimes we come to the realization that we have been mislead or a contract has been breached, and by this time it is often too late to return the product or we are left with what seems to be no recourse. So what can an ordinary consumer do when faced with a deceptive business practice? It is common to feel powerless, but fortunately Georgia has a law to help consumers fight back.

The law is called the Georgia Fair Business Practices Act and it protects Georgia consumers against many types of unfair and unscrupulous practices related to transactions made on personal, family and household products. The protection that this law gives to the consumer is broad, including, but not limited to, provisions on health spa and gym memberships, credit reports, insurance, telemarketing, multilevel marketing opportunities, “going out of business” sales and specific types of promotional activities, such as vacation prize offerings, contests and giveaways.

The Georgia act (O.C.G.A. Sections 10-1-390 et seq.) is enforced by the Governor’s Office of Consumer Affairs and specifically prohibits the following:

1) Misrepresenting who the actual manufacturer is of the good or service
2) Claiming that goods come from a geographical location, when they actually come from a different location
3) Representing used goods as new

4) Falsely stating the quality, grade or model of goods and services
5) Making false or misleading statements about a business or its product or service
6) Advertising goods or services with the intent of not honoring the advertising claim
7) Advertising goods or services without enough product on hand to satisfy consumer demand, except when the advertisement states that quantities are limited
8) Making untrue statements about sale prices

If you feel that you have purchased a product or service that is not living up to the claims stated by the seller, contact a qualified Atlanta, Georgia Business Attorney. Your attorney will work with you to recover damages and fight to stop the offending seller from continuing the unfair or deceptive practice.
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In my practice as a commercial real estate lease lawyer, I have found the majority business owners will have to deal with the reality of entering into a Georgia commercial lease agreement at some point in during the course doing business. Commercial leases can be lengthy, complicated, convoluted, and practically impossible for even the most sophisticated businessperson to understand. They may utilize industry standard terms such as “triple net lease”, “Subordination”, “Estoppel Certificates”, “Tenant Improvement Allowance”, all of which have legal significance and significant legal implications. There are also always practical issues such as parking, signage and business hours, indemnification and insurance issues, which seem to look harmless in the lease, but may have widespread significant and destructive consequences to the business tenant and even the landlord if not thought through and considered during the due diligence period. The due diligence period is the period in which the parties to a contract, agreement or other business matter are negotiate, research, investigate and consider all issues which can be thought of before any business transaction should take place. During this due diligence period, all commercial leases should be carefully reviewed and scrutinized by an experienced Georgia lease attorney from a Georgia real estate contract law firm. This should be done prior to signing and by both the property owner, prospective tenant and any other party to the contract or agreement.

Remember that once you or your authorized representative signs a commercial lease, you will be bound by its terms. It is common for commercial leases to bind parties for many years on end or even decades or more. There are oftentimes options for additional terms in the lease or agreement that can be exercised and should be carefully thought through. That being the case, a commercial lease can be worth hundreds or thousands of dollars or more, and as such, may be a substantial asset or a liability to any business depending on your position.

There are many working parts in a commercial lease. Often times, many of these parts are negotiable and it is customary and wise to have an experienced Georgia real estate contract attorney to protect your business and personal interests. As such, each of these elements should be understood and considered when negotiating and/or entering into a lease and prior to signing. If you have concerns or fail to address them, you are likely setting yourself up for prospective trouble in the future. As you would expect, commercial landlords usually have ready and offer the initial Georgia real estate agreement to the prospective tenant. They have already paid their experienced GA real estate contracts attorney to draft these agreements in their best interests and with all terms most favorable to their interests. Both landlords and prospective tenants need someone in their corner to protect their best interests when proposing and entering into these specialized real estate contract agreements in Georgia.
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