SAN DIEGO, CALIFORNIA -- Don't ever agree to sign a personal guarantee for a business vendor relationship
I owned a massage clinic in San Diego and we were in need of sheet service to service our clients. My administrative assistant did some research and choose Alsco, Inc. At the time we initiated our service we had to agree to sign a contract and I had to personally guarantee the contract. Things were going well, so what could go wrong?
From the beginning of the service, we were delivered unusable sheets. Some of the sheets had stains on them(red stains which we believed to be blood), some of the sheets arrived so coarse and starched that no reputable massage clinic could use them, and some very so thin, that we had to use two sheets to make the client feel comfortable.
When we brought the unusable sheets to the attention of the customer service agent at Alsco, they agreed to send more sheets to take the place of the unusable sheets. This would not have been as much of an issue if it was a one time, or couple of time occurrence. But, we had unusable sheets with every delivery. This forced us to create an accounting system, so that we could keep track of how many unusable sheets were delivered and the credits associated with these unusable sheets.
The massage therapists on our team began to complain to the point that I had to contact Alsco to see about canceling the service. When I contacted the manager at Alsco in the San Diego branch, his stance was that, Well you signed a ‘contract' so you cannot cancel without being penalized.
We were forced to continue, despite the fact that we were not satisfied with the delivery. Due the economy, and the great recession, our clinic was not in a position to pay for sheet service. I brought this to the attention of Alsco, and once again, they threatened penalties, because we signed a ‘contract'. Well, there was nothing we could do, but let them know that we could no longer afford the sheet service and to not deliver the sheets anymore. They stopped delivering the sheets, so I thought it was clear that we were no longer able to pay for service.
I had to close the business in the beginning of 2010. This did not stop Alsco from suing me personally since I signed a personal guarantee. So, despite the fact that I was unemployed, had to close the business(so we could not receive the sheet service if we wanted to), they continued with the suit and because I obviously could not afford an attorney, and there is no representation for a guy who is being sued in a civil matter, I was forced to settle and have a judgment placed against me, personally.
The real kicker is that the money that they were claiming that was owed to them was for ‘liquidated damages'. The total was around 3k. So, we did not actually owe any money to them, as we paid our balance in full, but based on the idea that IF I still ran a clinic they would have squeezed another 3k out of me.
The moral of the story is A. Never use Alsco for service and B. never sign a personal guarantee for a vendor that you do business with and C. have your attorney review any contracts you sign, so you do not end up like I did.