What is Commercial Litigation in California?

No business owner wants to be involved in a dispute — but they are sometimes unavoidable. Breaches of contract, confidentiality matters, and shareholder disagreements are just a few of the common conflicts that arise during the ordinary course of doing business. When negotiation attempts fail and all other alternatives have been exhausted, commercial litigation might be the only option to resolve a business-related dispute.

What is Commercial Litigation?

Commercial litigation is a form of civil litigation that resolves disputes arising between companies, business entities, and individuals engaged in business relationships. In these types of cases, one party sues another to enforce its legal rights concerning a business transaction. Depending upon the facts of the case, commercial litigation can take place in either state or federal court.

What is the Commercial Litigation Process?

Before a commercial case is brought before a judge, the parties will typically try to resolve the matter outside of court. In some cases, a contract may specify that arbitration or mediation must be attempted before litigation can be pursued. However, if alternative dispute resolution is unsuccessful, it may be necessary to pursue litigation.

Business disputes typically go through the same phases of litigation as civil cases. Specifically, the stages of commercial litigation are as follows:

• The pre-suit investigation — Before litigation officially begins, the plaintiff’s attorney will investigate the business dispute and evaluate the merits of the case. The pre-suit investigation will also help the attorney develop a strategy in the case.
• The initial pleadings — The commercial litigation process is commenced when the plaintiff files the initial pleadings. The papers that begin the action are referred to as the “summons and complaint.” The complaint is the document that sets forth the allegations in the case and must be served on the other party. The summons is the document that informs the other party that they have been sued and when a response is required. The defendant will then have an opportunity to file an Answer and make any counterclaims.
• Discovery — The discovery phase of commercial litigation is typically the longest and involves obtaining information from the opposing party. Available discovery devices can include document demands, interrogatories, and depositions. In addition to conducting depositions of parties in the case, it may also be necessary to conduct depositions of non-party witnesses.
• Motion practice — A motion is a request to the court for relief. Motion practice can occur at any point during a commercial lawsuit and there are countless types of motions that can be filed, depending upon the relief sought. For instance, a common motion brought at the outset of a commercial dispute is a motion for a preliminary injunction. Other types of motions in a commercial case can include a motion to amend the complaint, a motion to compel discovery, and a motion for summary judgment.
• Trial — The last stage of commercial litigation, unless an appeal is filed, is trial. In a business dispute, a trial can either be heard by a jury or determined solely by a judge (this is known as a “bench trial”). At trial, each side will have the opportunity to make their arguments and present evidence that supports their case.

Parties are free to reach a settlement at any time during the commercial litigation process. This can be accomplished by using a form of alternative dispute resolution — or through vigorous negotiations. When parties reach a settlement, they determine the outcome between themselves, rather than let a judge or jury decide. In commercial litigation, it’s not uncommon for the parties to settle just before trial.

Available Damages in Commercial Litigation

To prevail in a business dispute lawsuit, a plaintiff must show that they have been harmed due to the wrongful conduct of the opposing party. The purpose of an award of damages in commercial litigation is to put the party back in the position they would have been but for the harm they suffered. Depending on the facts and circumstances of the case, a wide variety of damages may be awarded to a plaintiff who prevails.

Compensatory damages are the most common type of damages awarded in commercial litigation. This category of damages compensates for the monetary loss incurred by a business, including expenses, lost profits, and damage to the company’s reputation. In limited cases where it can be shown that the defendant acted with malice, fraud, or oppression, punitive damages may be available. Punitive damages are not meant to compensate the plaintiff, but rather to punish the defendant and serve as a deterrent.

A plaintiff may also be entitled to equitable relief when a monetary remedy would not sufficiently compensate them. For instance, equitable relief may be granted requiring a party to either act or refrain from acting. A common form of equitable relief is rescission of a contract in breach of contract cases — this form of relief cancels the contract and restores the parties to the position they were in before the contract was executed.

Contact an Experienced Commercial Litigation Attorney in California

Commercial litigation is complex and it’s crucial to have a knowledgeable business attorney by your side to help you navigate the process. At White and Bright, LLP, we work with business owners and entrepreneurs in California for a wide variety of commercial litigation matters. We welcome you to contact or call us at (760) 747-3200 to learn more about our legal services.