A business partnership is much like a marriage. Whether the partnership is general or limited, the success of the company is going to depend heavily on whether partners can trust one another to manage with the firm's best interests, rather than their own personal gain.
Unfortunately, loyalty to the company's interests may not be a top priority for all involved. If one or more partners is involved in business actions that place their own benefit over that of the company, this is called "self-dealing." It's a breach of one's fiduciary duty to the partnership, and other partners involved may have a right to take legal action in the face of such a breach. One example of a possible case of self-dealing would be if one partner learned of a business opportunity that would benefit the partnership, but he or she instead takes that opportunity for themselves without first informing the rest of the partners.
This is essentially what's been alleged in one high-profile Texas partnership dispute involving one of the star's of HGTV's, "Fixer Upper." According to USA Today, defendant is accused of conspiring to cheat his ex-partners in a Texas real estate venture by buying out their stake in the company for a measly $2,500 each just two days before going public with the announcement that he'd signed on to be involved in a lucrative television show.
The former partners are seeking either more than $1 million each plus reinvestment in their ownership stakes, or else compensation for what their stakes would be worth if they were told about he potential financial benefit that would be reaped by Fixer Upper.
The show features defendant and his wife assisting clients who purchase and then remodel homes. It's also set to result in a spin-off series. The real estate company name is featured prominently in the show, and the success of the company has increased since then.
The business partnership had reportedly began with the three as close friends, who lived in the same neighborhood, hunted together, dined together and exchanged professional services for free.
Defendant reportedly stated the company was essentially worthless when he bought out the two business partners. One of those former partners saved a text message wherein defendant allegedly pressured plaintiffs to sell their shares, warning the two to "be careful" and essentially threatening physical violence.
Now, the former partners are accusing defendant of fraud.
As our Houston partnership dispute lawyers can explain, a defendant in such a case would have to show:
- Transaction was fair to plaintiff/ partnership.
- Defendant placed plaintiff/ partnership's interests ahead of his or her own without conflict of interest.
- Defendant fairly and fully disclosed all important information to plaintiff/ partners concerning the transaction.
We recognize that any partnership - whether it's a family business or a venture among friends or strictly professional - involves a significant investment of financial resources. If the partnership is still viable, it's important to resolve disputes in a way that helps preserve the best interests of the firm. However, if the partnership has gone completely sour, consulting with an experienced attorney may allow you to salvage your fair share in the investment.