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Wagenseller Law Firm

555 W 5th St, FL 31

Los Angeles, CA 90013

Phone: (213) 996-8338

www.wagensellerlaw.com Real estate litigation Los Angeles

Partnership Litigation in California: Fiduciary Duties

Litigation attorneys often handle a variety of different types of lawsuits. In

Los Angeles alone there are thousands of different types of businesses with

different legal needs and different legal disputes. For those business

litigation attorneys who handle partnership and corporate litigation,

however, it is important to be well-versed in the California Corporations

Code and the different statutes that govern the partnership relationship. The

fiduciary duties of partners are a key concept in partnership litigation.

What Are The Fiduciary Duties Each Partner Owes To The Other?

California law sets forth a partner’s fiduciary duties in Corporations Code

section 16404. These duties include both duties of loyalty and duties of care.

A partner’s duties of loyalty include:

1. The Duty to Account

A partner and the partnership has a duty “to account to the partnership and

hold as trustee for it any property, profit or benefit derived by the partner in

the conduct and winding up of the partnership business or derived from a

use by the partner of partnership property or information, including the

appropriation of a partnership opportunity.”

In other words, partnership litigation can compel a partner to explain what

money was received and where it was spent. Show me the money!

2. To Refrain From Acting as Or On Behalf Of an Adverse Party

Attorneys must remind their clients that even in the winding up of the

partnership business, a partner may not be adverse or act on behalf of a

party who is adverse to the partnership. In other words, even if the partners

have decided to split up and go their own separate ways.