The Partnership Flashcards
Case: Bohatch v Butler Binion 1998
**Facts whether it gives rise to a duty not to expel a partner who reports suspected overbilling by another partner.
Facts
Colette Bohatch, after working as Deputy Assistant General Counsel at the Federal Energy Regulatory Commission, joined the Washington, D.C., office of Butler Binion in 1986 and became a partner in 1990. Concerned about overbilling to Pennzoil by John McDonald, a managing partner, she reported her concerns internally. Following her report, Bohatch faced criticism of her work for the first time, was advised to look for other employment, and eventually, her partnership distribution for 1990 was denied, her future distribution reduced to zero, and she was informed that her monthly draw would be her last. The firm formally expelled Bohatch after she filed a lawsuit against it. The trial court found in favor of Bohatch, awarding her damages for breach of fiduciary duty and breach of the partnership agreement. The court of appeals reversed the tort judgment but found for Bohatch on the breach of the partnership agreement.
Issue
The central issue is whether a partnership has a duty not to expel a partner who reports suspected unethical behavior, such as overbilling, by another partner, within the context of whether such an action constitutes a breach of fiduciary duty.
Holding
The Texas Supreme Court held that the firm did not owe Bohatch a duty not to expel her for reporting suspected overbilling by another partner. However, the Court affirmed the court of appeals’ judgment that the firm breached the partnership agreement by reducing Bohatch’s tentative distribution for 1991 to zero without proper notice, and thus Bohatch was entitled to damages.
dissociation
We know a partner’s ceasing to be a part of the partnership (voluntarily or involuntarily through death or expulsion) is called “dissociation” in states that have partnership statutes based on RUPA or RUPA (2013).
dissolution
is the beginning of the end
What is a charge loss
When partnership experience a loss and the partners split to pay back the loss and some partners may not receive what they put in.
Capitol losses
Composition of Capitol accounts
A separate capital account shall be maintained by the Partnership for each Partner. There shall be credited to each Partner’s capital account (1) the amounts of money contributed by the Partner to the Partnership, (2) the fair market value of property contributed by the Partner to the Partnership), and (3) allocations to the Partner of Partnership income. Each Partner’s capital account shall be decreased by (1) the amount of money distributed to the Partner by the Partnership, (2) the fair market value of property distributed to the Partner by the Partnership, and (3) allocations of Partnership operating loss.
