Most partnerships work harmoniously but, on occasion, honest partners can be victimized by a dishonest managing partner. This problem is not limited to partnerships. A dishonest “manager” can take advantage of others in closely held corporations, limited liability partnerships and limited liability companies. When a person is in control of a company either through company documents that appoint the person as a “manager” or because that person has a majority equity interest, the law still provides remedies to keep a dishonest “control person” in check. Sometimes the corporate documents, operating agreements or partnership agreements place limits on the powers of a control person. When those documents are silent, the law generally imposes a fiduciary duty on a control person.
When a person owes others a fiduciary duty, that means the fiduciary must act with the utmost good faith for the benefit of the other person. In other words, the fiduciary must put others first, and when he or she fails to do so, the law can impose harsh consequences.
If you find yourself in a dispute with a dishonest partner, you need the advice of counsel who understands how to address breach of fiduciary claims in a business setting. Klein & Wilson has significant experience handling partnership, corporation and other business entity disputes. If you have fiduciary duty questions, call Klein & Wilson at (949) 239-0907 and ask for Michael LeBoff.
The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.
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