What You Need To Know About Being Sued

Personal Finance blogger Lazy Man & Money is being sued by a multi-level marketing company called MonaVie that sells a very expensive juice. The crux of the matter is that Lazy Man is highly skeptical of the claims the company makes about the product and the company is trying to shut down his freedom of speech on the basis of a very flimsy trademark infringement case.

While I am no lawyer and the extent of my legal knowledge is limited, I have been sued, involved in lawsuits and have been sent threatening letters that required legal opinion. Did I say I was sued – that’s only partially correct. The company I had a minority ownership stake in was sued.  My friends and I started an internet telephony company together to sell prepaid calling cards and pinless dialing services. When we started it several years ago, we were tired of paying outrageous per minute fees for international calls and we just wanted to make free telephone calls. We also wanted to make some money off of it and after raising about $30,000 and co-signing $75,000 worth of loans for telecommunications equipment we realized we didn’t have any money left for marketing. So we deliberately decided to infringe on an existing trademark of a foreign company that does not do any telephony or telecommunication business in the USA. We knew we were going to get sued in a year but since we didn’t have any money left we didn’t really care.

We were able to use the goodwill of the foreign company to bootstrap our small outfit to the point where we hired about a dozen people in India to do all the back-end work.  A year later the company sent us a cease-and-desist letter and we complied and changed the name. However, I didn’t know that the main partner re-inserted the company in to the website after a month or so. About 6 months later, the company came back and sued us for trademark infringement, all our domain names, $50,000 and 30% royalties on all income.  When you fight a legal battle against people with deep pockets, you usually lose! Especially when you are wrong. Long story short we lost our domain name and we settled for $1,000. Was it worth it? In terms of return-on-investment, yes. There’s no way we could have gained that sort of traction with a $1,000 marketing budget. But would I do it again – definitely not. However there is a lesson here, the same lesson I learned from working for Michael Robertson a few years ago – you should never back down from a good fight.

On to the next story. A few years ago, I had put down a deposit on a spec home in Florida. It was a small deposit and it was pure speculation. If the home prices increased, I would close on it else I would walk away from it and my deposit. Unfortunately for the builder, the market turned sour and it seems everyone was walking away from their deposits. So I got a letter in the mail saying that if I didn’t close on the home he would sue for damages on various technical aspects of the contract.  I showed it to my lawyer and he said its a shake-down. His advice was to ignore the letter since the cost of pursuing this line of reason was too expensive for the builder.  He was right. Unfortunately, I found out the hard way that this goes both ways. Someone I know embezzled money from me and some investors by arranging  a sale of assets to an out-of-state entity. He set up a dummy corporation with the same name and deposited the check from the buyer into that account. He was then nice enough to wire us some of the money but then he skipped town with the rest. After talking to lawyers and the DA’s office in that town we realized that it would probably cost us between $25,000 and $50,000 to get a judgment against him, and if he’s spent the money, we’re out of luck! The lesson here is that suing people can get to be very expensive.

The third story is about me and a group of investors suing a group of real estate developers for deliberately misleading investors on an investment. The gist is they lied and withheld materially important information. Obviously we formed a group and sued them all. 1 of them settled for a third of the amount owed (plus interest and legal fees), 1 of them went underground and the 3rd is claiming she has no assets. The legal cases involved the last two are still underway so I can’t really say much about it except that suing people really does get very expensive, especially when you’re paying an attorney $375/hour to fly to another city and take a deposition!

So what’s my 2 cents on Lazy Man’s case? I don’t think MonaVie has a strong case and they know it too. Otherwise they would be wasting time with multiple cease-and-desist letters, they’d just sue him. Secondly, I think its just going to create more bad publicity for the company as multiple bloggers write about this and link back to Lazy Man’s site (boosting his rankings in the search engine for the search term – MonaVie is a scam). However, they’re obviously well capitalized so they’ll probably take this a lot further than they should. If it was me, I’d just pay Lazy Man to advertise on his site. That would just make him lose credibility in the eyes of the “faithful” MonaVie followers.

Please go visit Lazy Man’s site and try to link to it with the word MonaVie in the anchor text! Or if you want some entertainment, go visit Help You Sue.

$11,428.32 Judgement Against Tenant

I have two rental properties in the mid-west. They were supposed to be cash-cows but with lousy tenants that keep moving out, I’m not cash-flowing at all. The last tenant was terrible.

Despite having a decent job as a nurse, she stopped paying the rent. I had to pay $500 to get her evicted and another $800 to get a judgment against her. Not only did she live rent-free for 3 months, but she trashed the place. I had to spend $3,000 on new carpeting and paint. The good news is that I now  have a judgment for $11, 428.32 against her.

The bad news is that its going to cost another $500 to get her to pay. I have to file a petition that she hasn’t paid the judgment  amount and issue a bench warrant against her. If she has a job, then I get to garnish her wages. Of course, if she’s changed employers and I can’t locate her, that means I can’t serve her. And if I can’t serve her, the judge won’t issue a warrant or garnish her wages. Even if I do locate her and she doesn’t have a job, there’s nothing to garnish against, so I’m back to square one.

If I get her to pay her $11,428.32, I not only get to cover my losses, I only stand to make about $4,500. 

Is it worth the additional expense? When do you come to the point of diminishing returns and cut your losses? I probably will fight it out because she has a job. I let the last tenant walk away because he developed cancer and diabetes and didn’t have a job.

Why don’t they have a debtor’s prison like they used to in England prior to 1867?