Disputes Between Owners of Partnerships, Corporations and Limited Liability Companies

McLaughlin & Nardi’s New Jersey business attorneys are experienced at representing business owners in disputes with their “partners,” be they partners in a partnership, shareholders in a corporation, or members in a limited liability company (known as an “LLC”).

All owners enter a new business venture with a sense of optimism — if they weren’t optimistic about the business’s future and if they didn’t trust their co-owners, they wouldn’t have gotten involved in the first place. However, whether because of finances, market conditions, or personalities, many businesses experience partnership disputes. The very reasons that led the owners to go into the venture, trust and optimism, are often the same reasons which make partnership disputes so difficult — they are essentially business divorces, with all the emotion which accompanies a marital divorce. Our New Jersey business attorneys are experienced in representing owners in partnership disputes, and helping them to avoid problems in the first place.

The best thing that owners can do to avoid disputes is to have a well-written agreement governing their rights and responsibilities when the business is formed, or when new owners added. When there is no agreement, the statutes governing partnerships, corporations or LLCs control the dispute, and these laws often lead to consequences the owners neither foresaw nor desired. Our New Jersey business attorneys have negotiated and drafted many partnership agreements in partnerships, shareholder agreements in corporations, and operating agreements for LLCs.

However, even with the best of agreements, disputes sometimes occur, and many businesses have no written agreements between the owners at all. Our New Jersey partnership attorneys have litigated many ownership disputes.

Many ownership agreements provide for alternative dispute resolution, including mediation or arbitration. Mediation is a process where the parties try to resolve their differences with the help of an outside mediator. Our New Jersey corporate attorneys have significant experience in mediating ownership disputes, and Maurice McLaughlin has served as mediator in the successful mediation of many business disputes. Arbitration is a process where an outside third-party hears the evidence and renders a decision. The process is faster than litigation in court, and since it eliminates the opportunity for appeal, its decision is final. McLaughlin & Nardi’s New Jersey business attorneys have had considerable success in the arbitration of commercial matters.

Many times there is no shareholder, operating or partnership agreement, the existing agreement does not contain an alternative dispute resolution provision, or mediation is unsuccessful, and the partnership dispute cannot be resolved. These cases usually wind up in litigation in either state or federal court. Our New Jersey business attorneys have considerable experience litigating disputes between business owners.

Litigation is a long, complicated process, and often best avoided. However, ownership disputes can cause significant damage to an owner’s professional and financial well-being. In such cases, doing nothing is not an option, and litigation is often the only way to defend your rights. Partnership disputes lead to complicated litigation. It can be very difficult to review the company’s records and analyze where the money went — which is often the heart of the dispute. Often the dispute winds up with one owner being bought out for the “fair market value” of her share, rather than dissolving the business and selling its assets; however, determining “fair market value” often involves difficult and complicated forensic accounting. Tax issues are often contentious and complicated. Our New Jersey business attorneys, such as Maurice McLaughlin and Frank Nardi (who is also a certified public accountant and certified financial planner) have significant experience in these complex financial issues. Partnership litigation is a battle, and it is important to be well-armed. It is therefore important to have an experienced litigation team on your side.

Some examples of the partnership disputes litigated by our New Jersey business litigation attorneys include:

• Litigation and mediation of disputes between partners in a family limited partnership over management deadlock and one partner’s application for dissolution and a forced sale.
• Litigation over the ownership of an ambulance company, and theft of its assets by owners.
• Litigation over minority shareholder, member and partner oppression in retail businesses.
• Litigation over alleged breach of owners’ agreement about distribution of profits.
• Litigation over “lock out” of minority owner.
• Suit by employee of physical therapy business who claimed ownership interest.
• Alleged fraud in accounting and paying minority shareholder.
• Litigation over failure to meet capital call and other ownership responsibilities.
• Violation of restrictive covenants such as non-compete agreements.
• Partnership disputes leading to buy out of one or more of the owners.
• Owners conspiring to steal another owner’s interest in the business.
• Litigation over the interpretation of ownership agreements.
• Litigation over orders to show case and injunctions.
• Litigation over the forced dissolution of businesses.
• Litigation over loans owed to or from departing owners.
• Refusal by one owner to meet his responsibilities or perform his share of work.

McLaughlin & Nardi’s partnership dispute attorneys are experienced at protecting the rights of business owners. To obtain more information about how we can help in your partnership dispute, e-mail us, or call one of our New Jersey business litigation attorneys at (973) 890-0004.