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Under New York Partnership Law's adoption of the Uniform Partnership Act, N.Y. Partnership Law § 62(1)(d), partners have no common law or statutory right to expel or dismiss another partner from the partnership; they may, however, provide in their partnership agreement for expulsion under prescribed conditions which must be strictly applied. Absent such a provision, the removal of a partner may be accomplished only through dissolution of the firm.
Appellee James Beasley, Jr. sued Appellant Cadwalader, Wickersham & Taft for fraud and breach of fiduciary duty after appellant ended its affiliation with appellee. The trial court ruled that appellant breached the partnership agreement. It awarded appellee capital, interest, profits, punitive damages, attorney fees, and costs, but denied any interest in appellant's goodwill. Appellant challenged the decision awarding interest, profits, punitive damages, attorney fees, and costs to appellee former partner for wrongful expulsion. Appellee challenged the decision not to award him any interest in appellant's goodwill.
Did the appellant breach its duty to the appellee, thereby entitling the latter to damages above and beyond a return of capital?
The appellate court reversed the award of profits, attorney fees, and costs and remanded the case. The remainder of the order was affirmed. The appellate court ruled that appellee could not be expelled from the partnership where the partnership agreement did not provide prescribed conditions for expulsion. Thus, appellee was entitled to damages above and beyond a return of capital, including an interest in appellant's assets and punitive damages based upon appellant's decision to expel appellee for its own financial gain. However, appellee was not entitled to profits that were attributable to the efforts and skill of appellant's remaining partners or to attorney fees and costs not authorized by statute or contract. The evidence supported the determination that appellant had no valuable goodwill to which appellee was entitled.