How to Respond to a Business Lawsuit in California

Receiving a summons and complaint can be a destabilizing moment for any California business owner. Whether it involves a breach of contract, an employment dispute, or a partnership disagreement, the actions you take in the first few days significantly dictate the eventual outcome of the case. California's legal system is rigorous, and missing a single procedural deadline can result in the loss of your business assets or the forfeiture of your right to defend yourself.

What is the legal deadline to answer a business complaint in California?

In most California civil business disputes, you have 30 calendar days from the date you were personally served to file a written response with the court. This deadline includes weekends and holidays; however, if the 30th day falls on a day the court is closed, the deadline typically extends to the next business day.

If you were served via "substituted service" (leaving the papers with someone else at your home or office and then mailing a copy), the 30-day clock usually begins 10 days after the mailing date. It is vital to keep the envelope the documents arrived in to verify the postmark.

• Check the Proof of Service: Review the documents to see when the process server claims you were served. Discrepancies here must be addressed immediately by your attorney.
• Request an Extension: In many cases, the plaintiff's attorney will grant a 15-day or 30-day extension (stipulation) if you ask early, which must be filed with the court.
• Consequences of Delay: If you miss the window, the plaintiff can file a "Request for Entry of Default," effectively ending your ability to present a defense.

What happens if I miss the 30-day deadline?

You must immediately file a Motion to Vacate Default under California Code of Civil Procedure Section 473(b), which requires proving "mistake, inadvertence, surprise, or excusable neglect."

How do I check the court jurisdiction and the amount claimed?

You can identify the specific court and the financial stakes of the lawsuit by examining the first page of the Summons and the "Prayer for Relief" at the end of the Complaint. In California, business lawsuits are filed in the Superior Court of the county where the contract was signed, where the incident occurred, or where the defendant resides.

The "Case Type" and the amount in controversy determine which rules applies to your defense:

• Limited Civil Cases: Disputes involving $35,000 or less. These have simplified discovery rules and limited options for motions, designed to keep costs lower.
• Unlimited Civil Cases: Disputes involving more than $35,000. These involve more complex procedures, extensive depositions, and longer timelines.
• The Summons: This document lists the court's address and the Case Number. You can use this number to look up the "Register of Actions" on the California Courts website to track filings.

How do I know if the lawsuit is in the right county?

If the lawsuit was filed in an inconvenient or incorrect county, your lawyer may file a "Motion to Transfer Venue" to move the case to a proper location.

Should I negotiate, seek a dismissal, or file a counterclaim?

Your strategy depends on whether the lawsuit has legal merit and whether you have your own claims against the person suing you. In California, you are not limited to simply denying the allegations; you can actively challenge the lawsuit's validity or strike back with your own legal claims.

Common responses in California business litigation include:

1. The Answer: A formal document where you admit or deny each allegation and list "Affirmative Defenses" (such as the Statute of Limitations).
2. Demurrer: A motion arguing that even if everything the plaintiff says is true, it does not constitute a legal cause of action. This is a common way to get a case dismissed early.
3. Motion to Strike: Used to remove irrelevant, false, or "improper" matter from a complaint, such as an unsupported request for punitive damages.
4. Cross-Complaint: If the plaintiff owes your business money or caused you harm in the same transaction, you must file a cross-complaint or you may lose the right to sue them for it later.

Is mediation required in California business disputes?

Most California courts require parties to participate in Alternative Dispute Resolution (ADR) before going to trial to encourage a settlement.

What documents and evidence should I gather immediately?

You must implement a "Litigation Hold" immediately, which means pausing all automated document deletion policies and preserving every record related to the dispute. In California, "spoliation of evidence"-the destruction of relevant records-can lead to severe court sanctions and an automatic presumption that the destroyed evidence would have proven you were at fault.

Gather the following items before your first meeting with a commercial litigator:

• The Contract: The original signed agreement, including all addenda and exhibits.
• Communications: Printed or exported copies of all emails, text messages, and Slack logs between you and the plaintiff.
• Financial Records: Invoices, proof of payment, bank statements, and accounting ledgers relevant to the dispute.
• Internal Notes: Any memos or project management logs that document the timeline of events.
• Insurance Policies: Your full "dec pages" and policy booklets for General Liability, Professional Liability, or D&O insurance.

Can I be sued for deleting emails before I knew about the lawsuit?

If you had a "reasonable anticipation" of litigation, you have a legal duty to preserve evidence even if the lawsuit hadn't been filed yet.

How can a commercial litigation attorney control my risks and costs?

A California business attorney acts as a risk manager, identifying the fastest and least expensive path to resolving the dispute. Beyond just arguing in court, they analyze the "cost of defense" versus the "settlement value" to ensure you don't spend $50,000 in legal fees to fight a $30,000 claim.

A lawyer provides value through:

• Early Neutral Evaluation: Assessing the strengths and weaknesses of the case to decide if an early settlement offer is the wisest move.
• Procedural Shielding: Ensuring the plaintiff follows California's strict Rules of Court, such as proper service and discovery timelines.
• Leveraged Negotiation: Using legal "hammers," like the threat of a demurrer or a counter-suit, to force the plaintiff to the negotiating table.
• Discovery Management: Handling the intrusive process of depositions and "Requests for Production" to protect your company's trade secrets and private data.

What is the average cost of defending a business lawsuit in California?

While costs vary, a simple contract dispute can range from $10,000 to $50,000 in fees, while complex unlimited cases can exceed $100,000 if they go to trial.

Common Misconceptions About California Lawsuits

Myth 1: "If I don't sign for the papers, I haven't been served." In California, if you avoid service, the plaintiff can use "substituted service" or even "service by publication" in a newspaper with court permission. Ignoring the process server does not stop the lawsuit; it only makes you look bad to the judge.

Myth 2: "I can just represent my LLC or Corporation myself." Under California law, a corporation or LLC is a separate legal entity and generally cannot represent itself in Superior Court (except in Small Claims). You must hire a licensed attorney to file papers on behalf of your business entity.

FAQ

What happens if I am sued in Small Claims court instead?

In California, if the claim is for $10,000 or less ($5,000 for entities), it may be in Small Claims. You cannot bring a lawyer to represent you at the hearing, but you can consult one beforehand to prepare your evidence.

Can I recover my attorney fees if I win?

Only if the contract at the heart of the dispute specifically includes an "Attorney Fees Clause" or if a specific California statute (like the Civil Rights Act or certain labor laws) allows for it. Otherwise, each party pays their own fees.

Does the lawsuit affect my business credit?

A filed lawsuit is public record. While the filing itself might not immediately tank your score, an unpaid judgment will be picked up by credit bureaus and can severely limit your ability to get business loans or leases.

When to Hire a Lawyer

You should contact a commercial litigation attorney the moment you become aware of a potential claim, even before being served. Specifically, you need legal counsel if:

• You have been served with a Summons and Complaint.
• The dispute involves an amount higher than the Small Claims limit ($10,000).
• Your business is an LLC, Corp, or Partnership (which requires legal representation).
• The case involves complex intellectual property, trade secrets, or employment law.

Next Steps

1. Note the Date: Write down exactly when and how you received the legal papers.
2. Preserve Data: Send a "litigation hold" memo to any employees involved and stop any auto-delete cycles on your email server.
3. Call Your Insurer: Check if your business insurance covers the specific type of claim (e.g., slip and fall, professional error, or wrongful termination).
4. Consult an Attorney: Schedule an initial consultation with a California-licensed business litigator to review the complaint and calculate your 30-day deadline.