What are my options to recoup money from a contract paid in full for incomplete services and the company closes its doors?

UPDATED: Oct 1, 2022

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What are my options to recoup money from a contract paid in full for incomplete services and the company closes its doors?

I purchased design services for a product from a
company in Florida that now closed its doors. What
can I do to get a refund? My business is in

Asked on January 18, 2018 under Business Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

You may not have any options:
1) If the company was an LLC or corporation, you can only sue the company, not the owners--the LLC or corporation is its own, separate legal entity, and the owners are not liable for its debts or acts. But if the company closed, almost certainly either a) does not exist any more (was dissolved) or b) may exist, but has no assets or income to repay you.
2) Even if the company was an LLC/corporation but still has assets to collect from, or the company was a sole proprietorship (so you can sue the owner, who legally is the same as the company--a sole proprietorship *is* the owner and vice versa), depending on the exact circumstances, you may have to sue in FL. Even if you could sue in PA (there was enough contact between PA and this company for a PA court to have jurisdiction), suing out-of-state always increases costs, time, and complexity--and if you sue and win but they still don't pay, you'd then have to go to out-of-state collections efforts, which can be expensive and are not guaranteed to work. You could put alot of effort and significant amount of moeny (e.g. legal fees) into the suit and not get back enough to justify it, or even anything at all.
(Note: even if a PA court would have jurisdiction, that would be regular county court--small claims courts have no power over out-of-state defendants. You'd have to sue in regular court and would most likely need a lawyer.)

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