When you enter into a partnership, you tie yourself economically to your partners. Depending on the type of partnership you form, the financial effects of this relationship may be distributed differently, but you generally succeed and fail together. If that partner has done something to hurt the partnership relationship, hurt your business, or outright steal from you, you may be entitled to sue them
William S. Heyman of the Heyman Law Firm represents business partners in partnership disputes and lawsuits. If your partner has been committing fraud or embezzlement against you or you want to learn more about suing your business partner over business decisions, contact the Heyman Law Firm today at (410) 305-9287.
Suing a Business Partner in Maryland
The economic relationship between business partners is defined by the partnership agreement and the type of partnership that they have. Full partners generally share profits and debts equally, and these debts and profits pass straight through the business to them. These partners are also liable for each other’s business mistakes and accidents. Limited partners and partners formed through limited liability partnerships (LLPs) and other forms of partnerships share the business differently.
One thing that is clear in any type of partnership is that the partners are supposed to work together to accomplish common goals. If one or more partners begins to cause financial damage to the partnership or intentionally work to harm the business or even steal money from the other partners, that partner is likely in breach of contract or otherwise violated the partnership agreement.
When a partner does damage to the partnership, harms the business, or steals from you, there are usually grounds to sue them in court. Filing a lawsuit may be the best way to compensate you for the harm and work to end the partnership or remove the partner and reestablish the partnership among the remaining partners without the problematic partner. If the violation was severe enough, such as theft or embezzlement, you may be able to sue for substantial damages to recoup the stolen funds. You may also be able to report your business partner to the police if their theft constituted a crime, but your civil lawsuit against them can be filed as a separate case to recover damages.
Ending a Partnership with Litigation
Suing your partner is likely going to be the end of your partnership. In many partnerships, the terms of the agreement give alternate remedies and options that may allow you to come short of actually taking your case to court. It is important to talk to a lawyer about how to handle any partnership disputes, fraud, or breach of duty between partners.
While damages might be appropriate and you may be able to take your partner to court, there may be other solutions that allow you to keep the partnership intact, negotiate damages and compensation, and continue forward with business. However, not every partnership is worth saving, and your best business decision might be to sever ties and end or reform your business in another form.
It is vital to have an attorney guide you through this process, as you may need to change the underlying legal foundation of your partnership by reforming as another type of business entity (e.g., a corporation or an LLC). If you will be going independent, you may need to reform as a sole proprietorship instead of a partnership or form as another business entity to insulate yourself from liability.
Damages and Compensation in a Lawsuit Against Business Partners
The damages you can claim in a lawsuit against your business partner depend heavily on the type of harm they caused and how the partnership dispute distributes profits and debts.
If your partner’s actions violated the partnership agreement or another contract, that contract may set out the damages. Many partnership agreements and contracts between partners lay out damages that either party can claim in the event of a dispute or breach. If not, you can claim your fair share of any calculable harm that the business suffered because of your partner’s breach. The partnership agreement will dictate how profits and debts are shared and what proportion of the financial harm you suffered personally. Other partners may suffer different amounts of harm, so it is important to know what your personal damages are.
If your partner’s violations were a breach of fiduciary duty, you may be entitled to similar damages. Fiduciary duties require the individual to uphold certain standards, and any consequences of a breach of fiduciary duty can be claimed as damages. Your attorney can help you calculate these damages.
Damages for theft, fraud, and embezzlement are often clearer. These harms are intentional, and as such you can almost always sue your partner for the full value of the harm they caused you and your business. Again, the recovered compensation may be only partly yours if other partners are entitled to their share of the damages, but you can still claim the full value of any harm suffered and divide the compensation accordingly.
Call Our Baltimore Lawyer for Lawsuits Against Business Partners
If your business partner has breached the partnership agreement, breached a fiduciary duty, or stolen from your business, talk to a lawyer about taking them to court and claiming the damages you deserve. The Heyman Law Firm’s Baltimore attorneys for suing a business partner are available to schedule a legal consultation on your case today. Call (410) 305-9287 to start the process of taking legal action against a business partner.