Legal Question in Construction Law in California

If your partner verbally dissociates from a partnership and feels they are owed a certain amount of money from a business without going over books with the other partner, is it legal for them to hold hostage the bank account and po box keys until they are paid off, so other partner can not continue business? If money for the amount they feel they are owed was never in the account, can they legally have the right to make checks out in large amounts of money to themselves while working for a competitor to the business. They are not considering bills that have to be paid to keep business afloat. Keep in mind they have not signed a letter of dissociation with partner and gave 0 days notice before working for competitor. Also, they have cancelled all accounts with no notice to partner when they were guarantor to purposely disrupt business. There has to be some illegal activity for such acts. Is there?


Asked on 7/23/09, 7:55 pm

1 Answer from Attorneys

Cathy Cowin Law Offices of Cathy Cowin

Obviously, this is wrongdoing. There are various legal actions that can be taken, including a legal dissolution of the partnership. The first place to start, however, is with the partnership agreement if there is one in writing. It may provide a process for dealing with disputes. The bank accounts should be changed to require two signatures or the money otherwise immediately controlled. Emergency relief can be requested from the court until a solution is worked out. Without knowing more, it is impossible to determine whether further action may result relating to the work for the competitor, but that is definitely something that should be considered. The actions taken to disrupt the business are likely actionable under unfair competition. Other than providing these generalized comments to confirm that there is a legal strategy available, it is impossible to provide a specific recommendation based on the limited information in your post. It would be necessary to review the partnership agreement and get additional information regarding the rogue partner's actions.

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Answered on 7/23/09, 8:12 pm


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