Starr v. Fordham

In Starr v. Fordham, 420 Mass. 178, 648 N.E.2d 1261 (Mass. 1995), a withdrawing partner of a law firm brought suit against the remaining partners for breach of fiduciary duty relating to their calculation of his share of the year's profits. The court explicated the rule: The founding partners argue next that the judge erred in concluding that the business judgment rule does not preclude judicial review of their determination of the plaintiff's share of the 1986 profits. There was no error. The test to be applied when one partner alleges that another partner has violated his duty of strict faith is whether the allegedly violating partner can demonstrate a legitimate business purpose for his action. Nevertheless, the business judgment rule does not apply if the plaintiff can demonstrate self-dealing on the part of the allegedly wrongdoing partner. Having properly concluded that the founding partners had engaged in self-dealing when they assigned to the plaintiff his share of the profit, the judge made no error in concluding that the business judgment rule did not apply to the founding partners' actions. (Fordham, 648 N.E.2d at 1265-66.)