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Breach of partnership articles, whether or not committed in bad faith, do not cause a partner to lose his partnership interest.
After Donald Vigneau and Defendant Storch Engineers (Storch) entered into an agreement as a consulting engineering firm, Storch learned that Vigneau secretly became general partner of two other real estate partnerships and the partnerships sought and received Storch’s services unbeknownst to it that Vigneau was a partner, and one partnership was unable to pay its bill. Vigneau sought to recover the value of his partnership interest with Storch pursuant to the retirement provisions of their agreement. Storch counterclaimed on the grounds of breach of fiduciary duty, breach of contract, fraud, violation of the Connecticut Unfair Trade Practices Act (CUTPA), and negligence. Vigneau alleged the special defense of statute of limitations.
Can Vigneau recover the value of his partnership interest with Storch pursuant to the retirement provisions of their agreement despite his self-dealing?
The court concluded that Vigneau violated his fiduciary duty and breached the agreement requiring him to give full information and truthful explanation of all matters relating to partnership affairs and ethical duties. The court held that Storch could recover on his counterclaims of breach of fiduciary duty, fraud, and CUTPA plus interest less the value of Vigneau’s vested partnership interest, which was owed to him despite his self-dealing.