Suing Former Partners

In an appeal in a breach of contract action, the New York Appellate Division for the Second Judicial Department held that the trial court had improperly dismissed the complaint of a former law firm partner that the defendant partners had failed to pay him the value of his interest in the partnership:

“The Court of Appeals recently made clear that the ‘liability shield’ created by Partnership Law § 26(b) for general partners of a registered limited liability partnership only applies to ‘a partner’s liability to third parties, and, in fact, is part of article 3 of the Partnership Law ( Relations of Partners to Persons Dealing with the Partnership’), not article 4 ( Relations of Partners to One Another’)’ (Ederer v Gursky, 9 NY3d 514, 524). Thus, Partnership Law § 26(b) ‘does not shield a general partner in a registered limited liability partnership from personal liability for breaches of the partnership’s or partners’ obligations to each other’ (Ederer v Gursky, 9 NY3d at 516).” 

(Mike Frisch)