Fiduciary Duty of Partners of a Dissolved Partnership
Partners are not entitled to compensation for acting in the partnership business other than their share of profits, absent an agreement to the contrary. (Former Corp. Code, 15018, subd. (f).)
An exception exists for partners who survive the death of another partner (former Corp. Code, 15018, subd. (f); see Chazan v. Most (1962) 209 Cal. App. 2d 519, 523 [25 Cal. Rptr. 864]), which is not relevant here.
The Uniform Partnership Act (former Corp. Code, 15001 et seq.) was repealed effective January 1, 1999 (Stats. 1996, ch. 1003, 1.2), and replaced by the Uniform Partnership Act of 1994 (Corp. Code, 16100 et seq.). the former act governs actions commenced and rights accrued before January 1, 1997 (Corp. Code, 16112), and therefore governs the present action.
A partnership does not terminate upon dissolution but continues until the winding up of partnership affairs is completed (former Corp. Code, 15030), so the unfinished business of a dissolved partnership is partnership business subject to the no-compensation rule. (Jewel v. Boxer (1984) 156 Cal. App. 3d 171, 176 [203 Cal. Rptr. 13]; Rosenfeld, Meyer & Susman v. Cohen (1983) 146 Cal. App. 3d 200, 219-220 [194 Cal. Rptr. 180], disapproved on another point in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal. 4th 503, 521, fn. 10 [28 Cal. Rptr. 2d 475, 869 P.2d 454].)
The distribution of profits from the completion of a partnership's unfinished business can be effected in an accounting. (Former Corp. Code, 15021, subd. (1), 15022, 15043; Rosenfeld, Meyer & Susman v. Cohen (1987) 191 Cal. App. 3d 1035, 1051 [237 Cal. Rptr. 14].)
The partners of a dissolved partnership owe each other a fiduciary duty to complete the partnership's unfinished business, and the failure to discharge that duty is actionable. (Osment v. McElrath (1886) 68 Cal. 466, 469 [9 P. 731]; Rosenfeld, Meyer & Susman v. Cohen, supra, 146 Cal. App. 3d at pp. 216-217; see Jewel v. Boxer, supra, 156 Cal. App. 3d at p. 179.)
The fiduciary duty includes an obligation to act in the highest good faith and not to obtain any advantage over the other partners in partnership affairs (Oliker v. Gershunoff (1987) 195 Cal. App. 3d 1288, 1305 [241 Cal. Rptr. 415]), such as by causing another partner to bear a disproportionate burden of unfinished business to complete (see Jewel v. Boxer, supra, 156 Cal. App. 3d at p. 179).
The remedy for breach of that duty ordinarily is money damages, which can be credited in an accounting.