Burkhalter Kessler Clement & George LLPBurkhalter Kessler Clement & George LLP2026-09-07T12:51:44Zhttps://www.bkcglaw.com/feed/atom/WordPress/wp-content/uploads/sites/1103897/2019/09/cropped-512-512-32x32.jpgOn Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[California LLC members: What to do when a partner breaches]]>https://www.bkcglaw.com/?p=563872026-09-07T12:51:44Z2026-09-07T12:50:59ZWhat duties LLC members owe each other
When all members share in running the business, each one owes the others two core obligations to the business and to each other.
The loyalty obligation requires members to act in the LLC's interest, avoid competing with it and refrain from personal dealings that conflict with it. The care obligation requires members to act responsibly and avoid conduct that is reckless, intentionally harmful or in knowing violation of the law.
When a manager runs the business instead, only that manager carries these obligations by default. However, if your operating agreement specifically states that members owe these duties to each other, those terms are still enforceable under California law.
Common ways LLC partners breach those duties
Most breaches do not happen overnight. They develop over time as one member works to gain the upper hand. Common scenarios include:
Self-dealing: Entering into transactions that personally enrich one member while shortchanging the company.
Diverting business opportunities: Steering contracts or clients into a competing venture.
Misappropriating funds: Making unauthorized withdrawals or using company assets for personal expenses.
Blocking access: Refusing to share financial records or excluding a co-member from management decisions.
Improper competition: Operating a competing business while still owing obligations to the LLC.
Recognizing these patterns early gives you a better chance of preventing the damage.
What legal remedies are available to you
California law provides several meaningful remedies when a co-member violates these obligations:
Claim for financial harm: You can sue for damages, including profits the other member wrongfully obtained.
Judicial dissolution: A court can order the LLC dissolved when a co-member's conduct makes it unreasonable to continue operating.
Court-ordered buyout: To avoid dissolution, the LLC or members holding 50% or more of the voting interests may elect to buy out the petitioning member at fair market value under court supervision. In practice, the threat of dissolution often forces a fair negotiation.
Injunctive relief: If harmful conduct is ongoing, you can ask a court to step in and stop it immediately.
Which remedy makes the most sense depends on your goals, the severity of the breach and how quickly you need relief.
Taking action before the damage gets worse
Every day a breach continues, more assets can be diverted and more records can disappear. Preserve financial records and communications early and move before the other side has time to restructure assets or strengthen their position.
If you are an LLC member in California and a co-member is undermining the business, speaking with a business litigation attorney early in the process can make a significant difference in the outcome.
]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[When the assessed value for a commercial property skyrockets]]>https://www.bkcglaw.com/?p=563692026-08-30T00:10:56Z2026-08-30T00:10:56ZOwners can appeal their assessment
County authorities set the taxable value for a property by establishing an assessed value for the property. The assessment process may involve a cursory inspection of the property, often conducted as a drive-by. Other times, assessors depend on public records, including information about the commercial property and details about other recent transactions for similar properties in the area.
The assessed value of a property can increase rapidly in cases where local property values soar. Businesses may then struggle to cover property tax obligations, putting them at risk of falling behind.
In cases where a dramatic increase in the assessed value for a property makes tax obligations problematic, it may be possible to challenge the change in the property’s assessed value. Direct negotiations with local authorities can sometimes result in a revised assessed value for the property. Other times, a formal appeal might be necessary.
An attorney familiar with property tax assessment appeals and other aspects of real estate law can help commercial property owners protect their investments. For starters, reviewing an assessment and comparing it to the prior year can help people determine if an increase in assessed value may be unreasonable.
]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[5 essential steps to ending a California business partnership]]>https://www.bkcglaw.com/?p=563662026-08-27T12:30:04Z2026-08-27T12:29:35ZStart with your partnership agreement
The partnership agreement is the foundation of any business split. This document sets the rules for how partners can exit. It may also outline how to value the business and divide shared assets. If your agreement covers these points, the process tends to move faster.
Understand your legal options
California offers partners a few different legal paths when ending a business relationship:
Formal dissociation: A partner officially withdraws from the partnership while the business continues operating without them
Buyout: One partner purchases the other's ownership interest and continues running the business alone
Full dissolution: Both partners agree to close the business entirely, divide remaining assets and move on separately
Choosing the right path depends on your agreement and the current state of the business.
Determine the business valuation
Knowing what the business is worth matters before dividing anything. Your partnership agreement may already outline how to get that number. If it does not, an independent appraiser may be able to help. California courts require that assets be split fairly during a dissolution. Settling on a clear number early can help prevent disputes.
Divide finances and assets fairly
Dividing assets is often the hardest part of any split. California law sets a clear order for distributing assets during a dissolution. The business pays creditors first. Partners who loaned money to the business get repaid next. Each partner then takes a share of what is left based on their ownership interest.
Keep communication professional
Hostile exchanges often escalate into expensive litigation. Even when tensions are high, keeping discussions constructive can help both partners reach an agreement more efficiently. Verbal agreements can also cause problems later. Having a formal separation agreement can cover asset division, debt responsibility, non-compete clauses and confidentiality terms. This documentation protects both parties if disputes come up later.
Planning for a smooth separation
A clean business split often comes down to how both partners handle the process. Taking a professional approach can help preserve the relationship and make the transition easier for everyone. Both partners can then close this chapter and move forward with confidence.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[How to fight minority shareholder freeze-outs in California]]>https://www.bkcglaw.com/?p=563642026-08-26T11:11:08Z2026-08-26T11:11:08ZCommon freeze-out tactics by majority shareholders
Freeze-outs rarely happen all at once. They build through a pattern of conduct designed to erode your position and pressure a discounted exit. Common tactics include:
withholding dividends while majority shareholders pay themselves inflated salaries
blocking access to financial records, board minutes and company financials
diluting your ownership through new share issuances without legitimate business justification
removing you from the board or management without cause
pushing a forced buyout at a valuation well below fair market value
In a privately held company with no public market for your shares, these tactics can make your stake effectively worthless if you do not act.
What California law allows you to do
California law gives minority shareholders specific legal remedies.
Inspection rights: You have the right to inspect corporate books, financial statements and board minutes. If the corporation refuses, you can petition the court to compel access. Financial records often reveal the full scope of what the majority has been doing.
Dissolution and the buyout remedy: If you own at least one-third of the company's shares and the majority has acted unfairly, fraudulently or mismanaged the business, you can ask a court to dissolve the company. To stop that from happening, the majority must buy your shares at a court-supervised fair value. That threat alone is often enough to force a real negotiation.
Dividend withholding and fiduciary duty claims: If the majority is withholding dividends in bad faith, that may be grounds for a legal claim. Majority shareholders also have a legal obligation to act in your interest, not just their own. When they breach that duty through self-dealing or steering business opportunities away from the company, you may be able to recover damages.
Used strategically, these remedies can shift the balance of power back in your favor.
How to protect your position
The longer a freeze-out goes on, the harder it is to stop. Acting early matters. Start by sending a formal written demand to inspect the company's records. Save every email, financial document and notice you have received or been denied.
Pull out your shareholder agreement and check what it says about buyouts and disputes. Move before the majority has a chance to dilute your shares or shift assets around.
If you believe your stake is being squeezed out, talking to a business litigation attorney sooner rather than later may be the most important move you make.
]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[When a former auto salesperson claims wrongful termination]]>https://www.bkcglaw.com/?p=563592026-08-11T14:48:20Z2026-08-11T14:48:20ZWhen is a firing inappropriate?
Generally speaking, in at-will employment states, businesses can terminate workers without notice and without providing an official explanation. They do not need to disclose a cause to fire a worker. However, especially when not given a reason, employees may convince themselves that the firing was inappropriate and illegal, when it was really a decision made for the betterment of the business.
Wrongful termination occurs when the business fires a worker for an unlawful reason. Most wrongful termination cases involve either credible allegations of discrimination or retaliation.
Discrimination involves an employer unfairly considering a worker’s protected characteristics when making employment decisions. If a worker believes they lost their job due to their sex, age or race, that might lead to them claiming wrongful termination. Retaliation involves an employer punishing a worker for a protected activity, such as reporting misconduct, requesting unpaid leave or attempting to unionize with their coworkers.
Those running auto dealerships may need to respond proactively to claims of former employees who alleged wrongful termination. Partnering with a legal professional who is familiar with not only state employment statutes but also auto dealership law can help frustrated owners and executives address claims of unlawful termination as effectively as possible.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[3 potential expenses to address when workers claim misclassification]]>https://www.bkcglaw.com/?p=563562026-08-01T13:31:36Z2026-08-01T13:31:36Zhas misclassified them.
Should court authorities rule in favor of employees alleging misclassification, companies may incur substantial expenses, including the three below.
1. Legal expenses
Employers may spend tens of thousands of dollars on court costs and representation during a misclassification lawsuit. In some cases, a ruling in favor of the workers could also result in the courts ordering the company to pay for the legal representation of the employees who brought the lawsuit initially.
2. Employment taxes
Employers pay certain taxes on behalf of employees that they do not cover for independent contractors. Should the courts determine that misclassification occurred, employers may face a sizable past-due tax bill for the amount they failed to pay, interest and possibly even penalties.
3. Injury-related expenses
Many misclassification lawsuits begin with an on-the-job injury that reveals a professional is not eligible for workers' compensation. Should the courts determine that the company misclassified the worker, the business may face financial losses related to an injury or work-acquired illness.
Reviewing hiring decisions with a legal professional can help employers avoid scenarios in which employees are justified in claiming misclassification. Small and mid-size businesses may need guidance to better ensure that they adhere to the law and do not expose themselves when hiring new workers, and that’s okay.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[When can you file a shareholder derivative lawsuit?]]>https://www.bkcglaw.com/?p=563532026-07-30T22:58:25Z2026-07-30T22:58:25ZHow does the lawsuit protect the corporation?
A derivative lawsuit treats the corporation as the injured party. You act for the corporation when its directors or officers fail to pursue a valid claim.
The case may involve claims that company leaders misused corporate funds or breached duties they owed to the corporation. If the case succeeds, the corporation generally receives the recovery. A court might order a wrongdoer to repay or return an improper gain.
A derivative lawsuit is different from a direct shareholder claim. You bring a direct claim when the conduct harms a right that belongs to you, apart from any harm to the corporation. The nature of the wrongdoing usually determines which type of claim fits the dispute.
What must you do before filing?
For a California corporation, you generally must describe in the complaint the steps you took to ask the board to act. If you made no demand, you must explain why. You must also state that you gave the corporation or its board written notice of the key facts or a copy of the proposed complaint.
You also must address when you acquired your shares. California law usually requires you to have owned your shares when the disputed act took place, though limited exceptions apply. A court could dismiss a complaint that does not state these facts with enough detail.
Prepare to protect the corporation
A possible breach of duty may leave you concerned about your investment and the company’s future. Understanding whether the loss affected you or the corporation, then gathering the right facts and records, could help you handle the process with greater care and protect the corporation’s interests.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[Can your private company survive a boardroom coup?]]>https://www.bkcglaw.com/?p=563192026-07-16T08:27:08Z2026-07-20T08:13:12ZSpot the moment disagreement turns into a threat
Healthy debate can sharpen strategy. However, conflict turns dangerous when it disrupts operations and signals a power grab. Watch for these early warning signs:
Board members skip meetings or block votes to prevent a quorum triggering the deadlock provisions under California law.
Executives receive conflicting instructions from different factions
A hostile shareholder demands corporate records on short notice, invoking statutory inspection rights.
Key vendors ask who holds authority or pause work until they get clarity
Employees begin picking sides and productivity drops
Once you see these patterns, treat the issue as a business continuity risk, not a personality clash.
Lock down decision authority before chaos spreads
Next, confirm who can make decisions today. Start with your bylaws and any shareholder agreement. Those documents often control director votes, officer powers and removal rights. California rules can fill gaps, but your governing documents usually set the playbook.
Keep in mind, however, that mandatory statutory rules under the California Corporations Code—such as a shareholder's non-waivable right to inspect records or the statutory rules governing director removal under Section 303—will strictly override conflicting terms in your private agreements. If you act outside this legal boundary, you hand the other side immediate leverage to seek judicial intervention or emergency injunctive relief.
Create a clean record that protects the company
Then, document key decisions in real time. Use clear board minutes, written consents and short executive summaries. Keep a single source of truth for approvals, budgets and signature authority. This record reduces rumor, limits vendor confusion and helps you defend the company if litigation follows.
Tighten communications to protect reputation and morale
After that, control the message. Pick one spokesperson for employees and one for outside partners. Give managers a simple script and a clear escalation path. In entertainment, loose talk can damage deals, talent relationships and brand trust. Calm, consistent updates keep teams focused and reduce side-taking.
Use counsel to run a controlled negotiation process
Finally, bring in experienced California business counsel early. Your counsel can set ground rules, manage document requests and structure talks around business goals. That approach lowers disruption and keeps pressure off your leadership team. You gain a strategic partner who pushes for resolution, not noise.
A steady plan beats a sudden coup
Yes, your company can survive a boardroom coup if you act early and stay disciplined. You spot the warning signs, confirm authority and document decisions. You tighten communications and run negotiations through a controlled process. With seasoned legal guidance, you protect assets, stabilize your workforce and return focus to creative and commercial growth.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[4 ways to avoid joint IP ownership disputes]]>https://www.bkcglaw.com/?p=563172026-07-16T08:00:39Z2026-07-16T08:00:39ZDefine ownership before work begins
The best time to address ownership is before anyone starts creating new work. A written agreement should clearly explain who will own the IP once the project is complete and whether ownership will belong to one party or be shared.
If you expect the project to grow or change over time, your agreement should also explain how to handle new ideas, improvements or additions. Putting these expectations in writing early helps reduce misunderstandings early on.
Document each party's contributions
Keeping detailed records makes it easier to show who contributed to the project and how it developed. Even if everyone begins the collaboration on good terms, memories can fade and expectations can change.
Consider keeping:
Project timelines
Drafts and design versions
Emails or written decisions about the project
Notes showing each person's responsibilities
These can provide valuable context about ownership. They also create a clearer timeline of who contributed what, making it easier to address disagreements before they become more complicated.
Set rules for using the intellectual property
Ownership is only part of the picture. You should also decide how the IP can be used after creation.
For example, your agreement can explain whether either party may license the work, modify it or use it for future business ventures without the other's approval. Establishing these expectations early helps reduce disagreements about how the IP benefits each collaborator.
Plan for ownership changes
Business relationships rarely stay the same forever. A collaborator may leave the project, sell their business or decide to pursue other opportunities.
Your agreement should explain how to address ownership rights if those situations occur. Addressing transfers, buyouts or future assignments before they become necessary can help keep unexpected changes from disrupting your business.
Build a stronger foundation for future collaborations
Putting these protections in place before you begin working together can save you significant time, expense and frustration later. If you are planning a collaborative project or want to review an existing agreement, seeking legal guidance can help you create clear ownership terms and help protect your business relationships.]]>On Behalf of Burkhalter Kessler Clement & George LLP<![CDATA[When a partner refuses to honor a buy-sell agreement]]>https://www.bkcglaw.com/?p=563152026-07-15T00:40:51Z2026-07-15T00:40:51ZLitigation may be necessary
A buy-sell agreement is not just a friendly suggestion that one partner should cooperate in a buyout scenario. It is a binding agreement that both partners have an obligation to uphold. If the circumstances align with the requirements in the buy-sell agreement and one partner has the capital necessary to buy out the other, it may not be legally realistic to refuse to cooperate.
While one partner may insist they don't want to sell, the other could take the matter to court. Provided that a judge agrees that the buy-sell agreement is valid and that the circumstances warrant invoking the document, a judge can facilitate an involuntary buyout based on the terms established in the buy-sell agreement.
When one partner has ceased pulling their weight, refuses to take steps that could better the business or has engaged in misconduct, buying out their interest may be the best path forward. Working with a lawyer can help frustrated business partners determine if they can move forward with a buyout without voluntary cooperation.]]>