Susquehanna Salt Lake Filed Suit Against Your Business: What to Do Before You Respond

You have 21 days from the time you are served to respond to this lawsuit in Utah. If you are served outside Utah, you have 30 days to respond. Businesses must have an attorney to file a response. No matter whether you intend to fight this lawsuit or work things out with the creditor, you must respond to this lawsuit. If you do nothing, Susquehanna can win its lawsuit by default, meaning it can get a judgment against you for whatever it is claiming. You can negotiate with Susquehanna at any time before or after you file a response.

To know when you have to file or do other things in court, you need to know how to count the days. These rules come from the Utah Rules of Civil Procedure, which Utah courts follow. Get the beginning date to count from the summons you got from the clerk, which tells you when a step has to be taken by. That beginning date is the day you got the summons. Do not count that day. Instead, count every day afterwards, including weekends and holidays, until you get to the last day. Then, you must do the thing or file your papers on or before that last day. If that last day is a day when the court is closed, then you have to file or do the thing on the next day the court is open.

If your business were sued in federal court, the deadline for responding would generally be 21 days after service. But if you waived service, the answer is due 60 days after the waiver request was sent to you.

| Situation | Days to answer | Clock starts | | Utah state court, served inside Utah | 21 days | Day after service; weekends and holidays count | | Utah state court, served outside Utah | 30 days | Day after service; weekends and holidays count | | Utah state court, Rule 12(b) motion denied | 14 days | Notice of the court’s ruling | | Federal court, served with summons | 21 days | Service of summons and complaint | | Federal court, service timely waived | 60 days | Date the waiver request was sent |

Not every case is properly filed and served. You have several options, spelled out in the Rules of Civil Procedure. Under Rule 12(b), a defendant can ask the judge for a court order dismissing the case (for lack of personal jurisdiction, improper venue, or insufficient service of process). The answer is not due until 14 days after notice of the judge’s order on the 12(b) motion.

If an owner has signed a personal guarantee on the business’s debt, the owner can also be sued personally. The owner can answer for himself or herself, but not for the business entity (which still has to have a lawyer).

What should you bring to an appointment with a lawyer about this lawsuit? It is especially important to have the cash advance agreement. Bring any personal guarantee and personal loan documents, since it is easy to confuse accounts. Bring letters and notices from the court, the attorney, or the creditor. Bring copies of any business records on file with the state, to prove the company’s existence.

Confession of Judgment

Many companies use contracts that have a sentence (a clause) allowing judgment to be taken against a business if it fails to pay the debt. This is called confession of judgment. With it, a plaintiff does not have to sue the business but can skip straight to judgment.

In Utah, debtors can agree to let a creditor have a judgment against them if the debtor does not pay the money claimed. This is found in the Utah Code, Section 78B-5-205, which allows a judgment “without action” for money due or to become due. The defendant swears out a statement, which is sent to the court along with a judgment for the court clerk to sign. In it, you will say the amount owed and give the clerk authority to enter judgment for that amount.

The situation in New York changed since August 30, 2019. CPLR 3218 now bars filing a confession of judgment against a debtor who does not live in New York. The confession of judgment can be filed only in the county where the debtor resided when the confession of judgment was signed, or where the debtor resides when the confession of judgment is filed. A business lives where it has a place of business. The affidavit states the county in New York where the debtor is located, and the basic facts showing that the debt is justly due. The confession must be filed in that same county within three years of when it was signed. Once the clerk has the confession of judgment on file, the clerk will enter it as a Supreme Court judgment, which is enforced like any other judgment.

You May Have a Defense

In 2020, a New York appeals court told how to tell if a cash advance is really a loan. It said that courts look at three things: 1) a reconciliation provision, 2) a finite term, and 3) recourse if the merchant goes bankrupt.

The date on a signed contract can help you. In Utah, a lawsuit on a written contract can be filed within six years. These things have to be checked by a lawyer before answering a collection lawsuit. Your lawyer will check all the papers to see if the creditor followed court rules.

There are times when it makes good sense to fight the lawsuit, either to win or to get a better deal. They include cases where the service was done wrong, or a confession of judgment was filed in a county that does not allow it. Also, the contract might really be a loan, and the suit may have come too late. While you may owe the money, if these facts are true, you may have a defense.

Settle with the Creditor

There is another path, though, and that is to settle with the creditor. Through talks, either by phone, email, or letter, the debt can be reduced to a new balance or the payment terms made easier. What matters here is that talks do not stop the answer deadline. They can go on forever, but while the lawsuit moves ahead and the deadline comes and goes, it could well happen that a judge gives the creditor a judgment against you, even while you are still talking with it. Review any guarantee and security agreement you have before settling with one creditor over another.

You probably will not decide on the spot what to do about your firm’s debts. What you do will depend on whether the business will go on or close down. If it has a viable future, you may need to work things out with the business’s creditors. If it is shutting down, the focus will shift to the owner’s personal guarantees and exposure, if any

Of course, bankruptcy is another option. Sometimes, it makes good sense. It is not the only way to go, though, and in some cases a bad one. While filing does halt many forms of collection (the automatic stay) the owner’s personal bankruptcy may not protect a separate business. A business bankruptcy is a different case.

If the court has already given the plaintiff its judgment, Utah Rule 60(c) allows you to ask to set that judgment aside within a reasonable time for (1) mistake, (2) excusable neglect, (3) newly discovered evidence, or (4) fraud. You do not have much time, though. Rule 60(c) motions must be made within 90 days after entry of the judgment.

A Utah judgment against you can also be enforced against property in Texas or Nevada. In Texas, the creditor must file an authenticated copy of the foreign judgment in a Texas court of competent jurisdiction. The debtor then has to be served notice of the filing. Business debts can follow you to Nevada, but in order for that to happen the foreign (out-of-state) judgment has to be “domesticated” in Nevada before it gets to the debtor’s assets.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.