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Can I sue my business partner for legal fees associated with having to dissolve the business due to her breach of fiduciary duty

Santa Barbara, CA |

My business partner ran up our credit card with personal expenses without telling me and then tried to play it off as an honest mistake when the facts suggest otherwise. We decided to dissolve the business over a month ago and I agreed at the time to let her lawyer brother draw up the paperwork to save money. I have contacted him over 3 times to see where the documentation is and he keeps promising to get it to us and failing. At this point, I need the paperwork to cancel our sellers permit, to present to my credit reparation service and for our final business tax preparation. If I have someone else prepare the documents, can I sue her for my legal fees? Can she be sued for the loss of business or my costs of having to dissolve and start fresh due to her breach of fiduciary duty?

Attorney Answers 3


You have options, but, trying to save money by hiring someone who is motivated to help the other person and who is not likely being paid is a bad move, period. I'm sure others will chime in with a more responsive answer, but, bottom line is you need to get in person counsel for yourself asap.

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I agree that using your partner's brother is a poor choice. Many of the matters you wish to recover damages on are possible, but very fact specific. Proof of damages is something that many attorneys, much less pro per have trouble with. Not all damages are "legal" damages". You probably need to file an action for an accounting, breach of fiduciary duty and for dissolution.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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You don't indicate the form of the business entity (limited partnership, general partnership, or possibly LLC or corporation), but generally speaking, yes, you can sue your business partner for dissolution of the partnership. You need to retain your own attorney to do so. If you have a written partnership agreement, the provisions for dissolution and winding up contained in the partnership agreement control. If you do not have a written partnership agreement, the dissolution and winding up provisions contained in the California Corporations Code will dictate the method and manner for dissolution and winding up.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.

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