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Partnership disputes are a common source of business litigation

| Nov 15, 2014 | Business Litigation |

A common category of business disputes in North Carolina and elsewhere involves conflicts between partners and owners of small closed corporations. These often involve claims of diversion of profits by partners or owners. Sometimes, the suing partner or co-owner will request an injunction to prevent the others from continuing the confiscatory activities. In such business litigation, the court may deny special injunctive relief if the plaintiff’s damages can be monetarily compensated.

That is the situation in another state where one of five partners in a lacrosse training center has sued his partners for allegedly misappropriating partnership profits and not paying him his share of those earnings. The plaintiff’s request for an injunction, however, was recently turned down by the court. The judge ruled that the facts were “highly disputed” and the plaintiff’s claims could be resolved by the payment of money damages.

Where money damages may adequately compensate the plaintiff’s losses, an injunction will not usually be granted. An injunction is designed to prevent “irreparable harm” that cannot be repaired or compensated once it is carried out. The denial of an injunction here basically means that one or more fact-finding hearings will be held prior to the court’s issuing a decision on the merits of the partnership dispute.

The plaintiff complained that the other partners were taking exorbitant travel expenses from the business coffers. This included for such things as wines, liquors, florists, Disney World tickets and other kinds of luxury items allegedly not business-related. The defendants countered that only a small percentage of the income was used for travel expenses and miscellaneous entertainment expenses.

They claim that other expenses included salaries and dividends, and that unequal payments reflected that the plaintiff’s contribution was relatively minimal. They also claimed that there were complaints from parents of lacrosse students that the plaintiff’s temperament and teaching style was inflammatory. In business litigation of this kind in North Carolina or elsewhere, the plaintiff must prove his case in one or more hearings before the court. The court will then make findings of fact and conclusions of law setting forth the respective rights of the parties.

Source: litinsider.com, “Judge Denies Injunction Request in Lacrosse Business Dispute“, Ben Bedell, Nov. 7, 2014

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