Legal Question in Technology Law in California


me and my friend partnered in a start-up for a b-2-b website (something like in august 2010. we had 50-50 partnership in x thecnologies llc.

in md usa. the deal was me working 60-70 hours a week at a pizza shop while he handles the hiring ppl for making the software till we launch the website(

it did go on for about a year me financing the company(in cash ) he searches, hires, manages people for the website programming.

After a year, couple months before we launch the site, we had an argument and he took all the data and moved to CA. he started a new company and launched the site, i had to stay in md and deal with the all the debt left (mostly in cash) in MD.

Over the time, althought i didnt have the money to hire an attorney i tried to reason with him about the dept and my share of the partnership on the new company.He asked me to hold on till he finds an investor(saying it will make impossible to find investment for a start up if it has legal issues on it)

new companies over the country he makes the deal.

As of today he turned the web site, a paid membership site and went overseas to make deals with chamber of commerce agencies which will require to build

my question, is having only a 50% partnership on X thecnologies llc (whic he said applied to close the company with the accountant without my signature or approval) and having no idea on how much the website makes right now or values (according to website value sites on net more than $800.000) what can i do to secure my investment on such a complicated situation without hurting it.

Thank you for your time and help,

Asked on 8/24/13, 5:15 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

The first question is whether your new business is a partnership or a limited liability company. You mention the word "partnership" extensively, but also "x thecnologies llc." So, we need to know which it is. Different laws apply to partnerships than to LLCs, and your business probably is one or the other, not both, especially at the same time.

The next question a lawyer would need to know is what state's law will apply to the dispute between the other guy and you. Sounds as though the business was formed in Maryland, so the dispute would be adjudicated under Maryland's laws; although possibly a lawsuit could be brought in California if the other party now resides here.

Perhaps the way to approach this would be to sue the friend and the new company in California, alleging breach of fiduciary duty. People who are in business together, whether they are partners in a partnership or co-founders of an LLC, have a legal duty to act in good faith toward each other and in the best interests of the joint business enterprise. Leaving and starting a competitive business is generally unlawful unless there is a good justification for dumping the prior business and ones' associate(s).

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Answered on 8/25/13, 1:56 pm

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