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Darryl Horowitt, Esq.

On virtually any day of the week, you can pick up a newspaper and read about a lawsuit. You read the article and say to yourself: "There but for the grace of God go I." Then, the seemingly inevitable happens: You receive a letter from an attorney (or their client) that you are to be sued, or worse, you are served with a lawsuit.

In this litigious society, it often seems that it is not a matter of if, but when, you might be named a defendant in a lawsuit. Though many are familiar with litigation in general, they are not as familiar with the specifics of the process of what steps should be taken if sued. This article will discuss the litigation process in general and certain steps you should take if you are sued.

The Complaint

Lawsuits are started by the filing of a "complaint" in the proper court. The party initiating the lawsuit is known as the "plaintiff," while the party responding to the lawsuit is known as the "defendant."

The complaint is required to name all parties who may have responsibility to the plaintiff, and it is also required to concisely set forth facts upon which the plaintiff's claim is based.

In many instances, the lawsuit will contain one or more "causes of action," which is merely another name for a request for relief. For example, where a plaintiff is suing to recover money for a breach of a written agreement, the complaint may contain a cause of action for breach of written agreement and one for money on an implied agreement (known as a "common count"). Similarly, a complaint seeking to recover damages for injuries sustained in an automobile accident may set forth a cause of action for negligence in the operation of a motor vehicle, as well as a separate cause of action for general negligence.

The complaint may also set forth seemingly different causes of action to recover the same amount of money; this is known as alternative pleading. For example, a plaintiff seeking to recover money may sue for breach of contract (which is based in contract), as well as a cause of action for fraud, which is a tort.

Upon Receipt, Notify Your Attorney

As soon as practical after the receipt of a lawsuit, notify your attorney. Your attorney should carefully review the lawsuit for any potential defects in the complaint and should also meet with you to determine if there is another party who might be responsible for defending you in the lawsuit. Such a defense might be available either under an insurance policy or under the terms of a contract whereby another party has agreed to indemnify and defend you against such a lawsuit. For example, if you are sued to recover damages for injuries sustained by someone involved in an automobile accident with one of your employees, your general liability or automobile insurance should provide a defense. Similarly, where property damage is claimed for discharge of pollutants that may have occurred several years, if not decades, earlier, earlier issued insurance policies may provide a defense.

In many instances, you should also immediately notify your insurance agent of the loss so that your insurance carrier can hire an attorney to represent you. It is important that you do so as soon as possible, because most insurance policies require prompt notification of any known or possible claim, and the failure to provide prompt notification may provide grounds for the insurance company to deny you a defense.

If you believe an insurance company has a duty to defend you, and is refusing to do so, return to your attorney. Experience has shown that in many instances, an insurance company will attempt to avoid its obligation to defend you by raising certain clauses in the insurance policy that they believe permit them to deny you a defense. However, in many instances, your attorney may be able to negotiate an agreement with your insurer whereby they will provide you with a defense, either with or without a reservation of their rights to discontinue a defense in the future. Again, the primary goal is to get the insurance company to pay for a defense and negotiate with them to also pay to the plaintiff any damages that might be awarded at arbitration or trial.1

Where an insurer refuses to provide you with the benefits of your insurance policy, you may be entitled to sue to recover the benefits under the policy for what is known as a "bad faith" breach of contract. Where it can be established that the insurance company has a pattern of denying benefits even though it knows that benefits are due, you may also be entitled to recover punitive damages.

It is also important to contact your attorney as soon as possible, because generally you are required to respond to a lawsuit within 30 days after you are served with it; 20 days if the complaint was filed in federal court. If you fail to respond promptly, default may be entered against you. A request for entry of default prevents you from taking any other steps in your defense unless the default is set aside. Additionally, once a default is entered, the plaintiff can ask the court for a default judgment, which may be entered by the court without your input.

Generally, the only grounds for setting aside a default or default judgment are surprise, inadvertence, excusable neglect, or the failure to be properly served with the lawsuit.2 Thus, if you are properly served with a complaint, and simply fail to respond to it, you may not only have a default entered against you, you may be prevented from setting it aside, because the failure to merely note that the lawsuit requires a response within 30 days after its service is generally not a valid reason, by itself, for setting aside the default. However, if you promptly forward the claim to your attorney, who then misplaces it or otherwise fails to timely respond to it, a default may be set aside on the grounds of attorney neglect.3

The Response

As noted above, the response to the complaint needs to be timely filed. If it is not, default may be entered against you. Thus, the first step your attorney will generally take is to begin the preparation for a response.

The response may take several forms, the most common of which is the answer. The answer responds to the allegations of the complaint and also sets forth any particular defenses you may have to the lawsuit.

Other pleadings that may be filed by your attorney include a demurrer, which asks that the complaint be dismissed because the complaint, as drafted, does not state a claim against you. In federal court, a motion may be filed known as a motion to dismiss. For example, a party is generally required to sue within a specific period of time (known as the "statute of limitations") and thus the complaint may be improperly filed. A motion filed early on in the process based on the failure to timely file the complaint may be brought and, if successful, may dispose of the case before any great expense is incurred.

Discovery

. . .Continue to read rest of article (PDF).

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Darryl Horowitt, Esq., has conducted all phases of litigation in the areas of Banking, Business Disputes, Securities Fraud (class action and individual), Construction, Real Estate, Environmental, Casualty Insurance Defense, Personal Injury and Commercial Collections, from initial client contact to settlement, mediation, arbitration and trial - court and jury (State and Federal Court) and administrative proceedings (before the United States Environmental Protection Agency, Department of Agriculture, National Labor Relations Board, California Department of Fair Housing and Employment, Worker's Compensation Appeals Board and Agricultural Labor Relations Board).

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