No Partnership Amongst Corporate Shareholders

No Partnership Amongst Corporate Shareholders

      In a recent decision from the United States District Court for the Southern District of New York, it found that the rights of participants in a corporation would not be governed by partnership law.  Growblox Sciences, Inc. v. GCMT Administrative Services, LLC, No. 14-CV-2280, 2015 WL 3504208 (S.D.N.Y. June 2, 2015).

      A venture being organized by a group of individuals and entities ultimately broke down. A subset of that group alleged that the other subset had breached obligations existing under an alleged partnership amongst them. Their arguments would run afoul of the fact that the venture had in fact been incorporated. Rather, if a partnership had existed amongst the participants in the venture:

Counterclaimants do not address what impact, if any, the creation of Tumbleweed had on the existence of the alleged partnership. The absence of any facts that show that the alleged partners retained their rights vis-a-vis one another, the Court cannot assume that the partnership - to the extent one existed - did not merge into the corporation.

      In support of this statement, there was cited Sagamore Corp. v. Diamond W. Energy Corp., 806 F.2d 373, 378-79 (2nd Cir. 1986).