Chicago Business Litigation Lawyer Blog
In Illinois, there are several circumstances under which a partner can sue another partner (Battles v. LaSalle Nat. Bank, 240 Ill.App.3d 550 (1992)), (In re Ascher, 141 B.R. 652 (1992), (Hux v. Woodcock, 130 Ill.App.3d 721 (1985)):
1. A partner can sue another for a breach of fiduciary duty, such as if a partner sells partnership property to a third party without approval from all partners (Battles v. LaSalle Nat. Bank, 240 Ill.App.3d 550 (1992)), (Nussbaum v. Kennedy, 267 Ill.App.3d 325 (1994).
2. A partner or partnership can bring an action against a co-partner if the plaintiff’s claim can be decided without a full review of the partnership accounts. This means that if the issue between partners can be resolved without an accounting, one partner can sue the other. However, if such an issue requires an accounting, that is the proper remedy to seek under the Illinois Partnership Act (In re Ascher, 141 B.R. 652 (1992)).
3. The capacity to sue is determined under Illinois law, and a partnership must sue in the name of all its partners (Stotler and Co. v. Reisinger, Not Reported in F.Supp. (1987). In other words, to sue a partnership, it is necessary to sue and serve all of the partners (Gerut v. Poe, 11 F.R.D. 281 (1951)).
4. A partner may not sue individually to recover damages for injury to the partnership (Hux v. Woodcock, 130 Ill.App.3d 721 (1985)), (Creek v. Village of Westhaven, 80 F.3d 186 (1996)). The lawsuit must be filed on behalf of the partnership and not the individual partner.
5. In cases involving a limited partnership, a limited partner can sue the general partners for alleged breaches of fiduciary and contractual duties arising under a written limited partnership agreement (Illinois Rockford Corp. v. Dickman, 167 Ill.App.3d 113 (1988)). However, limited partners do not have a cause of action for damages to their interest in a limited partnership as long as the partnership exists and has not been dissolved or liquidated (766347 Ontario Ltd. v. Zurich Capital Markets, Inc., 249 F.Supp.2d 974 (2003)).
6. A partner may maintain an action against a co-partner absent an accounting in certain situations, including upon claims involving express personal contracts between the partners, and also upon claims involving the failure to comply with an agreement constituting a condition precedent to the formation of a partnership (Hux v. Woodcock, 130 Ill.App.3d 721 (1985)).
7. Illinois courts may imply rights of action from Illinois statutes under certain circumstances. These include instances where the plaintiff is a member of the class for whose benefit the Illinois legislature enacted the statute; implication of the right is consistent with the underlying purpose of the statute; the plaintiff’s claimed injury is one which the Illinois legislature designed the statute to prevent; and a private right of action is necessary to effectuate the purposes of the statute (Bane v. Ferguson, 707 F.Supp. 988 (1989)). Continue reading ›