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How Can Your Small Business Avoid a Default Judgment?

Posted by Jonathan Krems | May 06, 2022 | 0 Comments

In this week's Freedom Friday blog and email newsletter, I want to pick up from last week's blog and email newsletter.  Last week I answered the question, “What is a default judgment?”  I also promised that this week I would answer a different question, and really a more important question, and that is, “How can my small business avoid a default judgment?”  If your small business ever gets sued, its very important to not get a default judgment and respond to the lawsuit.

First of all, in Oklahoma, if you or your business is sued, you have twenty (20) days to file a response to the lawsuit, which is legally called an “Answer.”  Sometimes a summons can be modified to give you 35 days to respond, but that is rare.  During this time, your first step should be to hire an attorney and not take the law into your own hands and file a pro-se response or Answer.  In fact, your business cannot represent itself in court, so it must be represented by an attorney.  Depending on the nature of the lawsuit, your commercial insurance carrier may be able to provide you with an attorney and a legal defense.  This is often the case with “tort” based claims like slips and falls.  If the lawsuit mentions “negligence,” call your commercial insurance company and notify them you were sued so they can hire an attorney for you.  However, if the lawsuit is about breach of contract or similar issues, you will need to hire your own attorney to defend your small business.

What else is required to avoid a default judgment besides hiring an attorney?  Your attorney will need to gather any facts that are necessary and file an “Answer” on your behalf in 20 days from the date your business was served with the lawsuit.  An Answer will have two different parts.  The first part of the Answer will most likely deny the allegations in the lawsuit.  It's possible that an Answer may admit certain allegations, but most will need to be outright denied in writing.  The second part of the Answer will list out various affirmative defenses.

Alternatively, your attorney might also recommend a motion to dismiss instead of filing an Answer.  Sometimes there is something procedurally defective with the way your small business was served, or your small business was sued in the wrong court, or something else is facially and/or procedurally defective with the lawsuit.  In such a case, your attorney can file a “Special Entry of Appearance and Motion to Dismiss” which will be set for hearing.  At the hearing, the judge will make a key decision.  The judge might grant your motion and allow time for the plaintiff (the person or business that sued your business) to fix their error, or the judge might deny the motion and give you an additional 20 days to file your Answer.  In some cases, the judge might also transfer the case to a different court if the plaintiff chose the wrong venue.

If your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth, please contact me at [email protected] to schedule a FREE strategy session.

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About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...


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