Question
Charles Fial and Roger J. Seeby entered into a partnership called Audit Consultants to perform auditing services. Pursuant to the agreement, they shared equally the
Charles Fial and Roger J. Seeby entered into a partnership called Audit Consultants to perform auditing services. Pursuant to the agreement, they shared equally the equity, income, and profits of the partnership. Originally. they performed the auditing services themselves, but as business increased, they engaged independent contractors to do some of the audit work. Fial's activities generated approximately 80% of the partnership's revenues. Unhappy with their agreement to divide the profits equally, Fial wrote a letter to Steeby seven year later, dissolving the partnership.
Fial asserted that the clients should be assigned based on who brought them into the business. Fial formed a new business called Audit Consultants of Colorado, Inc. He then terminated the original partnership's contracts with many clients and put them under contract with his new firm. Fial also terminated the partnership's contracts with the independent-contractor auditors and signed many of these auditors with his new firm. The partnership terminated about eleven months after Fial wrote the letter to Steeby. Steeby brought an action against Fial, alleging breach of fiduciary duty and seeking a final accounting. Who wins?
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